In New York City, millions of New Yorkers apply to the Housing Preservation and Development for the slim odds of scoring an affordable apartment.
But those odds are still better than those for rent-stabilized buildings applying to HPD for financial relief. In November, HPD deferred every application for an Article XI property tax exemption under its Housing Preservation Opportunity program until February, citing project capacity, according to an e-mail exchange shared with The Real Deal. The agency said in the email exchange that it received over 75 applications in the fall and will select a limited number of projects in February.
HPD’s program website states that it has “limited staff capacity and a significant backlog of projects. As a result, the assignment of a project manager can take up to one year.”
An HPD spokesperson said the agency has not seen a significant increase in applicants over the last few years.
The program grants exemptions of up to 40 years on a needs basis for rent-stabilized portfolios with dwindling cash flows. Applicants have to jump through a number of bureaucratic hoops, like forming a housing development fund corporation, and HPD evaluates projects based on factors like their financials, their level of affordability and vacancy and potential repairs.
Buildings also agree to other conditions, like keeping all units rent-stabilized, limiting rents and incomes and accepting a homeless set-aside filled from vacancies. “It’s a serious preservation tool, not a light-touch tax break,” said Belkin Burden Goldman’s David Shamshovich.
Applicants walk a tricky line. Show too robust an operation, and HPD will likely put its money towards the needier; but show a portfolio on the precipice of foreclosure and HPD might resist throwing good money after bad.
In the case of the most recent set of applications, none of those considerations appeared to matter, as they were all stymied by what seems like yet another understaffed city organization.
Shamshovich submitted several applications for the fall term, all of which will now be considered next year. One of them related to a 400-unit portfolio with all rents below the 50 percent area median income that is struggling due to its rising debt service.
His team submitted a host of paperwork, including a line-item capital budget showing the building’s need for roughly $1.7 million in near-term work to keep the building up to code.
He summed up the state of affairs thusly: “It’s a good deal for the city, and it saves these buildings and preserves them, but if you don’t have bodies to process them, then they’re essentially unhelpful.”
And despite the building meticulously filing all of the paperwork, the decision has been postponed while the building’s finances continue to suffer.
The backlog comes during what has been a nightmarish period for rent-stabilized building owners, who have already had many of the levers to manage their balance sheets pulled out from them with the Housing Stability and Tenant Protection Act of 2019.
With the soaring costs of insurance, utilities and interest rates alongside a new mayor likely pushing for a rent freeze on rent-stabilized buildings, it wouldn’t be surprising to see Article XI applications only increase going forward.
Those owners might as well start checking their Powerball numbers instead.
What we’re thinking about: After reporting that billionaire Larry Ellison bought two apartments from Shari Redstone at the Pierre, The Real Deal learned that the co-op sale was part of the broader Skydance Media and Paramount merger. Now that we have another massive media merger between Netflix and Warner Bros. Discovery, I’m wondering if we’ll see any other house swaps as part of the deal. Know of any homes used as deal sweeteners? Email me at jacob.indursky@therealdeal.com.
A thing we’ve learned: I had always assumed that avoiding New York taxes was as easy as spending your 183 days elsewhere (Florida, most likely). But this New York Times article shed some light on the extent to which the tax auditors will go to catch town-skippers. Auditors caught one fishing enthusiast who said that he was a New York resident to get a $25 discount on his state fishing license (ultimately, he won his case but paid more in legal fees than he saved on the license).
Elsewhere…
— Stricter safety regulations are coming for cranes, Gothamist reported. City officials said they are going to begin requiring diesel-powered tower cranes to have fire suppression and detection systems after determining the 2023 Midtown crane collapse was caused by a fire started on the crane’s deck. Crane operators will also need to meet higher qualification requirements.
— Mayor-elect Zohran Mamdani said he will end homeless encampment sweeps, The City reported. The city spent $6.4 million on the sweeps since 2024; of the 3,500 people who were moved out of encampments, 114 (3 percent) were placed in shelters.
Closing time
Residential: The top residential deals recorded Friday were 1010 East Eighth Street in Ocean Parkway and 1289 Lexington Avenue, 19B in Carnegie Hill, both for $8 million. The Ocean Parkway single-family home is 2,600 square feet. The Carnegie Hill condo is 3,500 square feet of new construction. Brown Harris Stevens Jill Bernard has the listing for the condo.
Commercial: The top commercial deal recorded was $38.1 million for 26 Bleecker Street. The Manhattan Health Center in NoHo is seven stories and 43,365 square feet. Planned Parenthood sold the building to Izaki Group Investments, per property records.
New to the Market: The highest price for a residential property hitting the market was $5.8 million for 15 Renwick Street, Unit TH3. The Hudson Square condo triplex is 3,500 square feet. Serhant has the listing.
Breaking Ground: The largest new building permit filed was for a proposed 104,970-square-foot, 14-story, mixed-use development at 54 Sullivan Place in Prospect Lefferts Gardens. Kao-Hwa Lee Architects is the applicant of record.
— Joseph Jungermann