The Daily Dirt: The biggest winners of security deposit reform

An analysis of New York's top real estate news

TRD New York /
Feb.February 13, 2020 02:50 PM
From left: Obligo COO Omri Dor, Jetty CEO Michael Rudoy, Rhino CEO Paraag Sarva and TheGuarantors CEO Julien Bonneville (Credit: The French Studio via YouTube, Twitter, LinkedIn)

From left: Obligo COO Omri Dor, Jetty CEO Michael Rudoy, Rhino CEO Paraag Sarva and TheGuarantors CEO Julien Bonneville (Credit: The French Studio via YouTube, Twitter, LinkedIn)

The biggest winners of the mayor’s plan for security deposits? Renters and startups.

During his State of the City address, Mayor Bill de Blasio proposed offering renters an alternative to upfront security deposits. To start, owners of city-financed buildings would need to provide renters another option, such as insurance. Eventually, the mayor hopes to mandate such a choice citywide.

Last month, Cincinnati became the first U.S. city to require landlords to offer renters options other than security deposits. That policy evolved, in part, from discussions between Council member P.G. Sittenfeld and the chairman of venture-backed company Rhino. The startup enables renters to pay smaller monthly payments rather than a lump sum at the beginning of a lease.

Providing an alternative to deposits, while relatively rare, is not a new concept. Surety bonds, a form of insurance that allows renters to pay a fraction of the typical deposit amount, have been an option for decades. Over the last few years, venture-backed startups including TheGuarantors, Obligo, Jetty and Rhino have offered versions of such insurance or other options. They stand to benefit from more cities and states adopting policies requiring alternatives. So far, at least five other states and cities (other than New York and Cincinnati) have moved forward with drafting legislation.

“It’s going to open up a little bit more of the market,” said Rhino chairman Ankur Jain. “It also increases the competition, the more this becomes mainstream.”

Brookfield’s Ric Clark is still defending his company’s 666 Fifth Avenue deal.

At an event Tuesday, Clark made a cringe-worthy comment about his company’s decision to pay Kushner Companies $1.3 billion for the 99-year ground lease at the 1.5 million-square-foot office tower. The deal closed in 2018.

“Notwithstanding the constant conspiracy theories in some of the media outlets, there was no quid pro quo,” he said at the event hosted by the Young Men’s/Women’s Real Estate Association in The University Club. “And we think this is a great building that we’re going to renovate.”

He was referring to controversy surrounding the tower, Eddie Small reports. At the time, critics raised questions about whether Jared Kushner, President Trump’s son-in-law and senior adviser, used his foreign policy connections to secure what seemed like a bailout for the over-leveraged property. (The government of Qatar has invested with Brookfield, and Kushner supported a blockade of that Middle Eastern country. Both Brookfield and the Qatari government maintain that country officials were not aware of the deal before it went through.)

As part of its planned overhaul of the building, Brookfield is rebranding the tower 660 Fifth Avenue (from the appropriately ominous 666) and building a new façade with floor-to-ceiling windows.

What we’re thinking about: What will we do without The Pennsy? Where are your go-to spots near Penn Station when you have the misfortune to be near Penn Station? Send a note to [email protected].

CLOSING TIME

Residential: The priciest residential closing recorded Wednesday was for a co-op unit at 930 Park Avenue on the Upper East Side, at $8.8 million.

Commercial: The most expensive commercial closing of the day was for a development site at 301 First Avenue in Gramercy Park, at $64.5 million.

BREAKING GROUND

The largest new building filing of the day was for a 60,090-square-foot school at 1935 Eastern Parkway in Stuyvesant Heights, Brooklyn. Soly Bawabeh filed the permit application.

NEW TO THE MARKET

The priciest residential listing to hit the market was for a co-op unit at 791 Park Avenue on the Upper East Side, at $9.5 million. — Research by Mary Diduch

A thing we’ve learned…

Realestate.com, for some reason, redirects to Zillow.com. Thank you to Kevin Sun for pointing out the ubiquity of the Zillow Group.

Elsewhere in New York

— What better way to celebrate Valentine’s Day than to ensure you’re registered to vote in the April presidential primary? The deadline to switch or declare a political party is Feb. 14, WNYC reports.

— State Senate Democrats have quietly been discussing amending New York’s new bail reform law, the New York Post reports. The officials want to return discretion to a judge to hold suspects ahead of trial in certain serious cases.

— The planned expansion of the ferry system is complicated by toxins at the bottom of Coney Island Creek, including mercury, PCBs, lead, dioxins and pesticides, the City reports. The ferry is slated to connect Coney Island with Sunset Park and Lower Manhattan next year.


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