Rent-pocalypse 2.0: Real estate industry reacts to tenant demands

UPDATED, Oct. 18, 2019, 6:27 p.m.: Real estate industry experts say the tenant coalition’s latest demands won’t solve the housing affordability crisis and could grind construction and development to a halt.

The coalition’s wide-ranging proposal goes well beyond last year’s tenant advocate agenda, a package of nine bills that were nearly all passed.

“If we rely on the government to build new housing, it’s doomed to failure,” said Frank Ricci, the top lobbyist for the Rent Stabilization Association. “Only the private sector can accomplish what they want. More taxes don’t do that.”

Housing Justice for All, the statewide coalition of tenant groups that successfully pushed for rent reforms earlier this year, released a set of demands this week for next year’s legislative session. They include “good cause” eviction, $3 billion in state funding for public housing and the elimination of rent increases for major capital improvements and the tax abatement formerly known as 421a.

The tenant coalition’s aggressive approach is in line with their overall strategy, according to Jay Martin, who has locked horns on social media with the groups behind the platform. His group, Community Housing Improvement Program, criticized “violent rhetoric” from groups including the Democratic Socialists of America last week.

“They started with the rent regulation, to close those ‘loopholes,’ and now those victories are an inroad to market-rate units,” Martin said. Senator Julia Salazar’s “good cause” eviction bill would cap rent increases at three percent plus the consumer price index. “It is universal rent control,” Martin said.

CHIP, which represents landlords of rent-regulated buildings, said last week their members were holding as many as 1,000 rent regulated apartments of their total 400,000 units vacant due to limits on reimbursable renovation costs passed in June.

Some in the industry are also puzzled at the array of proposed new taxes, which they say do nothing to address the inequities of the property tax system.

“It’s a little confusing as to why the tenant advocates are not linking themselves up with groups advocating for property tax reform,” a real estate industry source said. “It’s not possible to build unless you have some sort of tax abatement.”

The plan has alarmed not only owners of rent-regulated housing stock, but affordable housing developers who depend on property tax breaks, including the Durst Organization, which halted development plans for its $1.5 billion Hallets Point megaproject in 2016 when 421a expired. The residential project on the Astoria waterfront moved forward after the program was resuscitated as Affordable New York.

“Eliminating 421a and 485a will destroy the creation of mixed income housing in New York City,” said Jordan Barowitz, vice president of public affairs at Durst. “It’s a great plan if your goal is gleaming condos for the wealthy and dilapidated rentals for everyone else.”

But there may still be some hope for real estate.

One Albany insider said that while some of the items the tenants want will be discussed, there isn’t any “real traction,” in large part because lawmakers will be busy in an election year and rent regulations are no longer set to expire.

A spokesperson for the Real Estate Board of New York said that the latest “menu of items” would discourage investment and exacerbate the affordable housing crisis.

“We remain committed to working with a diverse array of stakeholders to advance sensible, data-driven policies that actually address the need for more affordable housing and sustainable growth across New York,” the spokesperson for REBNY said.

Adam Leitman Bailey, who has recently returned to his real estate law practice after being suspended for threatening a tenant, said that requiring 15 percent of new construction to be set aside for low-income earners would “stop development.”

According to Bailey, if Salazar’s “good cause” eviction were to pass, attorneys like him would be the only ones to benefit, because they would litigate exactly what defines a “good cause,” and whether a tenant qualifies.

“And whoever is thinking of these proposals needs to work in real estate for a few years and get out of the classroom,” Bailey said.