Get me Gov. Cuomo: Real estate mobilizes before “disastrous” rent bills are signed

The agreement deals a significant blow to the industry
By Georgia Kromrei and Kathryn Brenzel | June 12, 2019 08:15PM

From left: RSA president Joseph Strasburg, REBNY president John Banks and Community Housing Improvement Program director Jay Martin (Credit: Getty Images, LinkedIn, and iStock)

From left: RSA president Joseph Strasburg, REBNY president John Banks and Community Housing Improvement Program director Jay Martin (Credit: Getty Images, LinkedIn, and iStock)

It’s been a difficult 24 hours for real estate lobbyists in Albany. They’re walking the halls of the Capitol, catching legislators in the hallway outside the Senate chamber. They’re ducking into nearby coffee shops, fielding calls and texts from shell-shocked clients. You won’t find them at the nearby eatery the Hollow, where tenant advocates are celebrating with Bloody Mary’s.

The lobbyists will fight the good fight, but they know changes to the state rent laws — which include the elimination of vacancy decontrol and reforms to the Major Capital Improvements and Individual Apartment Improvement programs — are all but guaranteed at this point. Gov. Andrew Cuomo is expected to sign the bill later this week.

“Gutted and neutered”

Under the bill, MCIs would be limited to 2 percent and would expire after 30 years. These changes would also apply to MCIs awarded as far back as 2012. Legislators have proposing capping IAIs at $15,000.

Community Housing Improvement Program director Jay Martin

Community Housing Improvement Program director Jay Martin

Jay Martin, executive director of the Community Housing Improvement Program, said MCIs and IAIs are so “gutted and neutered” that the legislature might as well have eliminated the programs altogether. In the days leading up to the expected vote before the rent laws expire June 15, he said CHIP is still seeking to schedule meetings on the second floor of the Capitol building — meaning with the governor. Other groups are also looking to the executive chamber.

“The governor and legislature have a choice: They can work collaboratively to change the legislation and pass responsible reforms or pass the bill and worsen the city’s housing crisis,” Real Estate Board of New York president John Banks said in a statement.

Multiple real estate groups, including CHIP and the Rent Stabilization Association, indicated that they plan to explore potential legal challenges to the legislation. Cuomo also said that the permanency of the rent laws was “legally irrelevant,” adding “You can’t say you bond future legislatures.”

Seeking unlikely allies in a brave new world

Dave Weinraub, a lobbyist with Brown & Weinraub who represents Brookfield Properties, Taconic Investment Partners and Cammeby’s, said that the disastrous outcome for the real estate industry is a result of a fundamental shift in the state legislature.

“It’s a new paradigm. That was made clear yesterday,” he said. “There has been a profound change in the senate.”

Unlike developers, landlords don’t often hire lobbyists to represent their interests at the state level. In addition to direct lobbying, the urgency of this legislative session gave rise to even unconventional strategies for individual landlords to ensure their voices were heard: Taconic was among the group of rental landlord firms who met with affordable housing advocates in March to negotiate a compromise. We can expect more meetings like that, according to Weinraub.

“It’s become tougher and tougher to communicate,” he said. “More voices help — and we have to get away from the ‘us versus them’ narrative.”

CHIP’s Martin said his group is also seeking allies in the affordable housing community. While CHIP is willing to meet with advocacy groups such as Housing Rights Initiative, there are some groups he wouldn’t see eye to eye with.

“I would meet with the [Democratic Socialists], but it’s difficult when a group says that rent is theft. It seems they don’t believe in the housing market as a business commodity,” he said.

Julia Salazar (Credit: Getty Images, iStock, and Wikipedia)

The Democratic Socialists of America are behind much of the sea change in the Senate, most notably with the election of Sen. Julia Salazar, whom the political organization endorsed in a heated 2018 primary ahead of her upset victory over real estate-backed Brooklyn Sen. Martin Dilan, a protégé of former Brooklyn kingmaker Vito López.

Salazar introduced the most radical of the nine initially-proposed bills, “Good Cause” eviction, which was still being considered by the Senate as late as last Monday. No version of Salazar’s bill was included in the final package. Martin described the DSA’s politics as antagonistic and hostile.

“The Democratic Socialist wing of the Democratic party controls politics in Albany,” said Martin.

Cuomo hasn’t come to real estate’s aid

If you ask Martin, former gubernatorial candidate Cynthia Nixon’s Universal Rent Control platform defined much of the current proposal and may have contributed to Cuomo’s handling of negotiations.

“New Yorkers believed the governor was the adult in the room, but it’s clear he has acquiesced his leadership to the most vocal advocates in the two houses.”

A source with direct knowledge of the rent law negotiations said that Cuomo’s behavior — challenging the Senate to pass the bills — indicated that he does not want to be blamed for watering down the rent bills package.

“When you play chicken with a bus, you get run over, and I think that’s what happened,” the person said.

RSA president Joseph Strasburg said the proposals released by both houses Tuesday are likely to get signed into law without revisions.

“It’s a moot issue,” Strasburg said. “I don’t think we could have done anything differently.”