Senate, Assembly hit real estate industry in budget proposals

Legislature seeks pied-à-terre and income taxes, but also more rent aid

New York /
Mar.March 15, 2021 04:38 PM
Andrea Stewart-Cousins, Carl Heastie and Andrew Cuomo. (Getty)

Andrea Stewart-Cousins, Carl Heastie and Andrew Cuomo. (Getty)

State lawmakers proposed new taxes on the second homes and income of the wealthy, defying the real estate industry’s warnings, and omitted a building emissions provision it sought.

The Assembly’s proposal would raise an estimated $7 billion and the Senate’s more than $8 billion. The Assembly also included a tax on second homes valued over $5 million and condo and co-op units with assessed values of more than $300,000 (the rough equivalent of a $5 million market value).

In another thumb in the eye for building owners, the budget bills, released Sunday, omit any provision related to New York City’s building emissions statute, Local Law 97. Gov. Andrew Cuomo’s proposed budget, in response to industry requests, had offered a new avenue for meeting the law’s emission caps, allowing property owners to buy renewable energy credits outside the city to offset their emissions.

Cuomo’s proposal was opposed by environmental advocates and elected officials, who argued that any changes to the measure should be handled at the city level. The Real Estate Board of New York, 32BJ SEIU and the Building and Construction Trades Council backed the governor’s bill, though the labor groups floated a compromise.

One positive for landlords in the legislature’s proposals is another $400 million in rent aid. The Senate’s bill includes language from a measure sponsored by Sen. Brian Kavanagh and Assembly member Steven Cymbrowitz, which covers rental arrears for up to 15 months for struggling tenants.

The program would prioritize tenants earning less than 50 percent of the area median income and those who are unemployed. The state also has the option of giving preference to tenants who were facing eviction on or before Feb. 1, those who apply jointly with their landlord, certain mobile home residents and victims of domestic violence.

As a condition of receiving relief under the program, landlords can’t evict tenants for nonpayment and aren’t able to increase rent for one year after receiving assistance.

The one-house budget bills aren’t binding, but lay out the Democratic majorities’ positions as state budget negotiations head down to the wire; a spending plan is due April 1. The omission of a Local Law 97 workaround does not bode well for a compromise, but does not rule one out.

The same could be said of the governor’s pitch to allow owners of certain hotels and office buildings to convert their properties into housing.

Senate leaders favor a version proposed by Sen. Michael Gianaris, which would permit the state’s housing regulator to purchase vacant hotel and office buildings and convert them into permanent affordable housing. The Assembly budget bill includes no language about conversions.

Real estate and other business leaders blasted the legislature’s plans.

“At a time when New York’s elected officials should be focused on creating new jobs, producing more affordable housing and stimulating more economic activity, these proposals take us in the opposite direction and, like the 1960’s and 1970’s, will discourage investment and eventually lead to a diminished tax base and fewer resources for the delivery of government services,” REBNY President James Whelan said in a statement.

The tax hikes were proposed despite a lavish federal aid package signed into law by President Joe Biden last week that eliminates Albany’s budget deficit and, by some accounts, creates a surplus.

Cuomo had proposed a $1.5 billion tax increase on the wealthy in the event that the state didn’t receive $15 billion in federal aid. New York is receiving $12.6 billion in the Biden package.

The tax hikes proposed by the legislature, while exceeding the governor’s, fall short of the $50 billion in increases sought by housing advocates.

The governor largely controls the budget process, but lawmakers may have more leverage than usual this year: Cuomo is facing impeachment by the Assembly and calls for his resignation amid investigations into sexual harassment allegations and his administration’s handling of Covid-19 nursing home deaths.

Maritza Silva-Farrell, executive director of Alliance for a Greater New York, one of several groups urging any changes to Local Law 97 be made at the city level, said it is crucial that legislators “hold firm against Cuomo’s reckless and harmful budget proposal.”

“The New York state Assembly and State Senate must protect the green jobs in New York City that Cuomo is actively trying to destroy,” she said in a statement. “These green jobs can play a key role in economic recovery after Covid for low-income communities of color on the front lines of climate change and the pandemic.”

But the industry argues that it is impossible for certain properties to get under the emission cap by retrofitting their buildings and would have no alternative but to pay fines, which would have no impact on the city’s carbon footprint.





    Related Articles

    arrow_forward_ios
    REBNY's Zachary Steinberg (REBNY, Getty)
    Landlord fines for building emissions could hit $900M by 2030
    Landlord fines for building emissions could hit $900M by 2030
    CarbonQuest's Shane Johnson and 1930 Broadway ( CarbonQuest, Getty, Google Maps)
    Glenwood aims for Local Law 97 compliance with carbon capture aid
    Glenwood aims for Local Law 97 compliance with carbon capture aid
    (Illustration by The Real Deal; Getty)
    Multifamily faces stricter emission caps
    Multifamily faces stricter emission caps
    New York skyline
    NYC condos, co-ops face costly emissions bill
    NYC condos, co-ops face costly emissions bill
    A photo illustration of Mayor of New York City Eric Adams (Getty)
    Proposed rules for emissions caps leave neither side happy
    Proposed rules for emissions caps leave neither side happy
    From left: Mayor Eric Adams, Governor Kathy Hochul, and Assemblymember Edward Braunstein (Getty Images, Assembly District 26, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
    Say goodbye to another property tax break
    Say goodbye to another property tax break
    Empire State Realty Trust’s Tony Malkin and L+M’s Ron Moelis. Carbon molecules floating from an open book, against nyc skyline (iStock, Illustration by Kevin Cifuentes for The Real Deal)
    NY unveils “playbook” for building owners to cut emissions
    NY unveils “playbook” for building owners to cut emissions
    NYC Mayor Eric Adams (Getty Images, iStock)
    City eyes emissions-cap reprieve for some buildings
    City eyes emissions-cap reprieve for some buildings
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...