If politicians like home ownership, why did they kill it in 2019?
That’s what some subscribers asked after reading the Dec. 24 Daily Dirt about elected officials’ wanting more affordable co-ops instead of rentals.
Readers were referring to the HSTPA, or Housing Stability and Tenant Protection Act, which is notorious among landlords for severely limiting rent increases and virtually ending deregulation, but also brought co-op and condo conversions to a screeching halt.
The law did that by more than tripling the percentage of a building’s tenants that must agree to buy their units for the owner to convert it to a condo or co-op.
Instead of getting 15 percent to sign contracts, landlords had to get 51 percent. The law also eliminated the “eviction plan option” to convert buildings. In the first year after the HSTPA passed, the number of filings for such conversions plunged 80 percent, an NYU Furman Center study found.
I couldn’t find any analysis on how many conversions have been started since 2021, but all indications are they have been rarer than Eric Adams buying basic-economy tickets to Des Moines.
“The conversion market went over a cliff,” said Herrick partner Scott Mollen, who has negotiated some of the city’s most important conversions, including of Ruppert Yorkville Towers on the Upper East Side. Before homeownership started to regain currency, lawmakers also took condos out of the 421a program, limiting the tax break to rentals.
Legislators saw conversions as exacerbating the housing crisis by replacing affordable units with expensive ones, one research paper explained. “But this exemption gave some regulated tenants the option of home ownership and a greater voice in how their buildings are operated,” it added.
Lawyers who used to handle these conversions see that as a loss for owners and tenants.
“In the 1970s and 1980s, hundreds of thousands of tenants were able to buy homes at affordable prices and become homeowners, which is now virtually impossible,” said Stuart Saft of Holland & Knight, who represented tenants opposite Mollen on the Ruppert Towers conversion from a Mitchell-Lama rental to a condominium.
Saft said in the past 18 months he has received many calls from struggling owners of rent-stabilized buildings asking if conversions could be their way out of the landlord business.
But few rent-stabilized tenants will give up what are now perpetually renewable, bequeathable, low-rent leases. Persuading free-market tenants would be a lot easier, but owners of those units are generally doing well and have little reason to pursue a conversion.
“All the legislature has to do is restore the 15 percent threshold for a conversion from the historic high of 51 percent and hundreds of thousands of low- and moderate-income tenants will become homeowners,” Saft said. “Who is hurt by this?”
What we’re thinking about: The City Council hearing on the Arrow Linen/Apex Development rezoning is scheduled for Jan. 9. The rezoning is typical in that local Nimbys are frantically claiming that two 13-story buildings on an expansive lot would destroy life as we know it in Park Slope and Windsor Terrace. But it’s also a litmus test for increasingly pro-housing City Council progressives, in this case Shahana Hanif. What will the outcome be? Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: Bedford Gardens, a city Mitchell‐Lama housing development in Williamsburg, was built by Blitman Construction using a system that was expected to cut construction time from four or five months to about five weeks, according to a 1974 New York Times story. The walls were precast concrete and eight inches thick. United Jewish Organizations of Williamsburg sponsored the project.
Elsewhere…
Starting Sunday, passenger vehicles with E-ZPass entering the “congestion relief zone” — local streets and avenues at or below 60th St in Manhattan — will be charged $9 in the peak period and $2.25 overnight, once daily. (It’s more for larger vehicles or those without E-ZPass, and less for vehicles with “crossing credits” from other tolls.) Vehicles that stick to the FDR Drive, West Side Highway/Route 9A, and the Hugh L. Carey Tunnel connections to West Street won’t pay. Full details here.
New York’s manufacturing districts and suburbs have lots of commercial buildings with expansive, flat roofs, but for whatever reason, most lack solar panels. Suffolk County is trying to change that with a new tax incentive that also applies to other forms of renewable energy, Newsday reports. It’s part of a push by County Executive Edward Romaine, whose Solar-Up Suffolk initiative seeks to quadruple solar-generated electricity in the county by 2027. The Republican pushed solar for office and factory roofs during his 12-year run as Brookhaven Town supervisor.
Apartment completions exceeded 500,000 units for the first time last year, according to RentCafe. The New York metro had the most, 33,000, followed by Dallas and Austin. New starts will slow in the next year or two, but 2 million new units are expected in the U.S. by 2028.
Closing time
Residential: The priciest residential sale Friday was $14.5 million for a townhouse at 113 East 78th Street on the Upper East Side. The 6,000-square-feet home last sold in 2009 for $12.5 million.
Commercial: The most expensive commercial closing of the day was $50.5 million for 548 West 22nd Street. California cybersecurity firm Fortinet bought the 45,000-square-foot building from Atlas Capital Group for use as its office.
New to the Market: The highest price for a residential property hitting the market was $59 million for Unit 121 of Central Park Tower, 217 West 57th Street. The sponsor-sale unit is 7,000 square feet. Corcoran Sunshine Marketing’s Kane Manera and Janet Wang have the listing.
— Joseph Jungermann