Multifamily heavyweights pitched rent plan before Albany hammered landlords

The plan included increased oversight and funding for enforcement

TRD New York /
Nov.November 07, 2019 08:15 AM
Taconic Investment Partners’ Charles Bendit and A&E Real Estate Holding’s Douglas Eisenberg (Credit: Getty Images, iStock)

Taconic Investment Partners’ Charles Bendit and A&E Real Estate Holding’s Douglas Eisenberg (Credit: Getty Images, iStock)

As lawmakers considered changes to the rent laws earlier this year, two of the city’s largest landlords floated an alternative. The proposal, which was never made public, could be a starting point for future negotiations.

Taconic Investment Partners’ Charles Bendit and A&E Real Estate Holding’s Douglas Eisenberg together drafted a proposal that included an annual cap on rent increases and a penalty for landlords with violations in their portfolios in order to fund enforcement measures, Bendit told The Real Deal.

The fees, assessed on a per-unit basis, according to Bendit, would have gone to the Department of Homes and Community Renewal, the state regulatory agency that oversees the rent stabilization system, or perhaps to a new agency. The plan focused on enforcement, oversight and encouraging investment in affordable housing. According to Bendit, it even included a rent increase cap for existing tenants of 6 percent to 7 percent — similar to California’s recent rent control measure, which was a compromise reached by California’s real estate lobby and tenant advocates.

“We proposed a per-unit fee every year that would go into a fund that would provide the necessary money to pay for an agency to do the oversight,” Bendit said. “Whether that’s a contracted third party or a separate division of DHCR to enforce the types of rent increases that are permitted, and to make sure ‘bad actors’ aren’t acting inappropriately.”

The plan was submitted to several legislators, policy experts, the Real Estate Board of New York and Governor Andrew Cuomo, according to sources familiar with the negotiations. While REBNY was in agreement with the goals of the plan, the strategy was out of step with the trade association’s preference for one-on-one negotiations, according to a source with direct knowledge of the negotiations.

“REBNY pulled the plan back, because they thought the governor would take care of it,” the source said. “It was consistent with their strategy.”

“That’s not true,” said James Whelan, executive director of REBNY, in response to the suggestion of a different strategic approach. “No. And I would question the motives of the person who told you that.”

The alternative plan was not included in the final bill, passed in June, which enacted sweeping changes to New York’s rent stabilization system.

“In that light, I don’t think the two-house bill took up many of the ideas that Taconic, A&E and REBNY put forth,” Whelan noted.

Now, according to sources, multifamily landlords including Cammeby’s International, another of New York City’s largest ones, may be looking to craft a similar strategy for the next legislative session, which begins in January.

Bendit did not discount a collaboration with Cammeby’s and said that he “often talks to Cammeby’s,” although he said that no lobby group has been formalized. Lobby filings for Cammeby’s detail its focus on the changes to the rent law, and its most recent filing said the firm will determine its lobbying focus “based on current hot topics.”

A&E’s Eisenberg did not comment. Cammeby’s did not respond to requests for comment.

Together, Taconic Investment, Cammeby’s and A&E have at least 26,745 residential units in New York City, including Taconic’s Eastchester complex in the Bronx, with more than 1,400 units; A&E’s Riverton Houses in Harlem, totaling more than 1,200; and Cammeby’s Trump Village in southern Brooklyn, with 885 units.

But while Taconic and Cammeby’s tapped Albany lobbying firms to make their case to lawmakers, Eisenberg, A&E’s founder and principal, penned a letter in May to the state’s lobbying regulatory agency stating that he would lobby lawmakers directly.

A&E’s lobbying efforts, “in connection with the renewal of rent regulations,” were focused on Democratic members of the State Senate and Assembly, as well as Cuomo’s top aides. A&E and Taconic both met with affordable housing advocates, as well as with Partnership for NYC President and CEO Kathryn Wylde and a representative from Blackstone ahead of the changes to the rent law. Those discussions were not successful.

“The important thing for this coming session is to re-look at our various housing subsidy programs and determine where the biggest benefit is,” said Wylde, who convened the meeting with landlords and tenant advocates. “Should we resurrect a viable J-51 modern rehab type program as an incentive for investment in those units, rather than capping the investment, to provide another source than the tenant pocketbook to help pay for it?”

The crafting of the alternative proposal may signal a shift to an “all hands on deck,” multi-pronged approach to real estate lobbying in Albany going forward, sources told TRD.


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