The Daily Dirt: Housing regulator revives “Frankenstein” apartment rules

It is alive!

“It” being rule changes that cap rents for vacant, rent-stabilized apartments that are combined.

The end is nigh for the “Frankenstein” apartment. 

Ok, now that I have that out of my system: Proposed rule changes that have loomed over landlords for a year were certified by the state’s housing regulator this week.

The changes, among other things, set parameters for the first rent for vacant, stabilized apartments that are combined. Instead of whatever rate the landlord thinks the market will bear, the rent is capped at the sum of the legal rent of the individual units.

The same goes for instances when a regulated unit is combined with a market-rate apartment, which will probably never happen under the new rules. In all cases, the newly created unit remains stabilized.

In other words, the rules get rid of a one-time rent bump, which has been a rarity since the 2019 changes to the rent law.

The rules also restrict deregulating apartments through substantial rehabs of buildings and redefine what is considered a demolition. Attorney Sherwin Belkin said the rules will lead to “more havoc, more litigation, more pain.”

Many of these changes are included in a bill that was approved by the state legislature in June. That measure, along with a second that dealt with what rent histories tenants can obtain to maximize landlord liability in rent overcharge cases, have not yet been delivered to the governor.

The approval of these regulations could signal that the governor will not sign the bills. That would be a compromise of sorts, though one of the bill’s sponsors, Assembly member Linda Rosenthal, does not view it that way. She told me it is important for the bills to become law because regulations can change with gubernatorial administrations.

They can also be wiped out by litigation. Landlords could argue that the rules are not supported by state law.

The governor could also sign one of the bills and veto the other, pointing to the regulations as the best course of action in terms of combining units and substantial rehabilitations. If you have a theory, please let me know!

What we’re thinking about: What did you make of New York magazine’s “50 Most Powerful New Yorkers” list? What “stealthy,” under-the-radar power players were left out? Send a note to kathryn@therealdeal.com.

A thing we’ve learned: Way to go, journalists. You denied the world DJ D-Sol.

That was the alter ego of Goldman Sachs CEO David Solomon, who apparently gave up spinning electronic dance records amid reports that the bank’s board feared the hobby was distracting him from his day gig, according to the Guardian.

“Music was not a distraction from David’s work,” a spokesperson for the bank told the publication. “The media attention became a distraction.” Thank you to Alexis Manrodt for passing along this tidbit!

Elsewhere in New York…

— Gov. Kathy Hochul spent last Wednesday and Thursday in Israel, but it is not clear who paid for the visit, Gothamist reports. A “New York-based nonprofit that works with the Jewish community” pledged to foot the bill, according to a spokesperson for the governor, but the arrangement has not yet been approved by the state’s ethics board.

— A state Supreme Court judge on Wednesday fined former President Trump $10,000 for, once again, violating a gag order in his ongoing civil fraud trial, Politico New York reports. Justice Arthur Engoron found that Trump made disparaging comments about his law clerk, Allison Greenfield. “I am very protective of my staff, as I should be,” Engoron said. “I don’t want anybody killed.”

— The Adams administration may pass out tents to migrants and create encampments in city parks and outdoor spaces, the Wall Street Journal reports. “It’s not ‘if’ people will be sleeping on the streets, it’s when. We are at full capacity,” Adams said at a press conference, during which he did not mention plans for tents. “We have to sort of localize it as much as possible. We have to make sure that people have some type of restroom facilities, some type of shower network.”

Closing Time

Residential: The priciest residential closing Wednesday was $8.1 million for a condo and parking space at Fortis Property Group’s Olympia Dumbo, 60 Front Street in Brooklyn.

Commercial: The most expensive commercial closing of the day was $165 million for 2 Times Square, as TRD reported.

New to the Market: The priciest residence to hit the market Wednesday was a co-op at 605 Park Avenue in Lenox Hill asking $12 million. Douglas Elliman has the listing.

Breaking Ground: The largest new building filing of the day was for a 3,740-square-foot residence at 115 Mason Boulevard, Staten Island. — Jay Young