Though this year’s mayoral election seemed a done deal from the get-go, the last six months have brought a few surprises. For instance, Bill de Blasio told New York Magazine that he’d love to dramatically curb private property rights. Republican challenger Nicole Malliotakis called the mayor “pro-criminal.” And Independent Bo Dietl encouraged people to urinate on Gracie Mansion. It’s been a journey.
Now, as the dust settles and de Blasio prepares to embark on his second term as mayor, the question on many minds is: what’s next? For the real estate industry, the answer is a bit of a mixed bag.
In the lead up to the election, the mayor publicly — in debates, interviews and press conferences — positioned himself as someone who will stand up against big-bad real estate interests. At the same time, his affordable housing program relies heavily on buy-ins from the private sector so any anti-development rhetoric comes with an asterisk.
This is all with the backdrop of a federal trial that’s raised questions about the mayor’s relationship with the industry. Brooklyn developer Jona Rechnitz, a witness in the NYPD corruption trial, testified that a $102,000 donation to the mayor resulted in favors from City Hall. (The mayor has vehemently denied these claims, dismissing Rechnitz as “a liar and a felon.”)
But, ultimately, real estate’s relationship with the mayor will depend on what happens in the next four years.
Here are a few issues to keep an eye out for:
1. A pricier affordable housing program
Last month, the mayor announced that his affordable housing program — which set out to preserve or build 200,000 affordable units by 2024, was two years ahead of schedule. He also decided to up the ante, pledging to add another 100,000 to that total by 2026. According to Politico, this change more than doubles the estimated budget for the program — $82.6 billion — and means the city will be on the hook for $16.9 billion instead of $8.2 billion.
It remains to be seen how these new goals will play out, in conjunction with the newly rebooted 421a (dubbed Affordable New York), which gives developers a 35-year break from taxes, as well as the mayor’s Mandatory Inclusionary Housing program.
2. Property tax reform
When de Blasio took office in 2014, he said that property tax reform would be a priority for his administration. But he said over the summer that the task of changing the system would ultimately fall to his second term. At the Association for Better New York’s breakfast this week, the mayor vowed to address the city’s “wildly inconsistent system,” noting that it would likely take a few years and legislation on both the state and city level. De Blasio has opposed a lawsuit filed by Tax Equity Now NY attempting to force reform, warning against punting the fate of property tax reform to the courts. The lawsuit argues that homeowners in predominantly minority areas are unfairly taxed because their properties are overassessed. State law requires that the city to base property assessments on sales of comparable properties and caps increases on assessments at 6 percent.
Malliotakis indicated that she would freeze taxes in her first year and then implement a 2 percent cap for the rest of her term.
3. Commercial rent control
Though there hasn’t been a hearing on the subject since 1984, commercial rent control could make a comeback. During a recent Crain’s forum, most of the candidates for City Council Speaker said they’d be in favor of commercial rent control to help mom-and-pop stores compete in the city. The Real Estate Board of New York has called commercial rent control “unconstitutional.”
4. Land use/zoning
A few recent measures have called into question how the city handles rezoning proposals and as-of-right development. Council member Margaret Chin proposed legislation in August that would force three projects planned for the Lower East Side’s waterfront to go through the arduous Uniform Land Use Review Procedure (ULURP). If the bill is passed, Chin would have a lot of leverage to shape the projects, since — when it comes to rezonings — the City Council historically votes according to the wishes of the local council member. In another case, a neighborhood-led proposal to scale back Gamma Real Estate’s 430 East 58th Street, is making its way through City Planning. Gamma has argued that if the proposal prevails, it will imperil as-of-right development throughout the city.
5. Construction safety
In September, the City Council approved a contentious construction safety bill that will require workers to undergo at least 40 hours of safety training. It remains to be seen exactly how the new requirements will be financed and how the Department of Buildings will enforce the new rules. Two other bills passed a month later hiked up penalties for building code violations and another pending measure will impose fines ranging from $500,000 to $1.5 million when a construction worker is seriously injured or dies on a site.