Why Real Estate Won’t Miss State Senator Brian Kavanagh

When Brian Kavanagh’s reign as chair of the state Senate’s housing committee ends this year, the real estate industry will celebrate — his departure, that is. Not his accomplishments.

Kavanagh, who is not seeking re-election, might not be quite as reviled by owners of rent-stabilized buildings as his militant Assembly counterpart, Linda Rosenthal. But his record from the industry’s perspective was poor, and he will leave office with the housing affordability crisis still raging.

To say the senator got off on the wrong foot with real estate would be an understatement. Just before being tapped in December 2018 to chair the housing committee, Kavanagh warned, “Everyone can expect that we will have a very strong effort to strengthen the rent laws to protect tenants.”

A Senate page on rent arrears hasn’t been updated since 2021.

Unfortunately, rather than air out the issues and craft a balanced, effective policy, he and other legislative leaders waited until mid June 2019, when rent stabilization was due to expire. Then, behind closed doors over two days, they threw seven of the nine bills on tenant activists’ wish list into a pot and cooked up the Housing Stability and Tenant Protection Act of 2019.

By overcorrecting for past abuses, the law has triggered a wave of bankruptcies and an inexorable deterioration of the city’s rent-stabilized housing stock.

It has also devastated regional banks, unleashing a scourge of toxic mortgages that ripped through their loan books like cancer. Signature Bank collapsed in 2023 and New York Community Bank was nearly wiped out in 2024. Major lenders now avoid the sector entirely.

Tenants, the supposed winners, haven’t exactly thrived under the new law. Violations and vacant units have piled up in their buildings and they are skipping rent payments more often than before the HSTPA. Collection rates have fallen by about 5 percentage points and show no signs of improving.

Plague of vacant units

As the flaws in the hastily written law became apparent, Kavanagh did virtually nothing to fix them. It took the legislature five years just to raise the maximum rent increase for individual apartment improvements from a preposterous $15,000 to a still meager $30,000, or $50,000 for a small subset of units.

Because renovations often cost far more than that, about 5 percent of rent-stabilized housing — some 50,000 units — now sit vacant year after year.

The revision in 2024 did make rent increases for improvements permanent, but given the severe supply shortage and revenue crisis for rent-stabilized buildings, the empty apartments are a travesty on two levels. Although the problem was wholly created by the government, nothing suggests Kavanagh will even try to fix it in his final year.

To be sure, some of the issues punishing housing providers, such as rising interest rates and insurance premiums, were beyond Kavanagh’s scope.

Yet he seemed oblivious to them in failing to address concerns within the state’s purview, such as backlogged housing courts and high property taxes on rentals. The result was a perfect storm for owners of fully rent-stabilized and other regulated housing.

“He often seemed afraid of rankling people rather than leading,” one observer said. “He seemed afraid of [organized] labor, he seemed afraid of NIMBYs. People who deal with him say, ‘He’s not going to stick his neck out.’”

Minimal progress

During Kavanagh’s tenure Albany has passed some positive measures for real estate, such as anti-squatter legislation, an increase in the maximum floor-area ratio in New York City, an extension of the 421a construction deadline and the 467m program for office-to-residential conversions. (Long-overdue reform of the state’s environmental review act will likely follow this year.) But these were all championed by Kavanagh’s colleagues and Gov. Kathy Hochul.

“As housing chair, he created obstacles on all of that stuff in the years prior,” said one supporter of the reforms. “It took [the bill on] conversions years to get done because he said, ‘I don’t think you need a tax incentive.’”

Lawmakers, after making clear they wouldn’t replace the 421a multifamily tax break without agreement from construction unions, passed 485x with wage provisions that have effectively capped projects at 99 units. Rather than defy the unions, Kavanagh blamed the Real Estate Board of New York for making that concession, as if REBNY had a choice.

Meanwhile, Kavanagh-backed bills favored by the industry haven’t come close to becoming law, as he has failed to build support for them.

One such bill, for example, would help tenants get one-shot deals to pay rent arrears without landlords’ having to slog through New York’s tediously slow and dysfunctional housing court. Although this would help tenants and landlords alike, it hasn’t passed.

The same is true for a major expansion of state rental vouchers and proposed diversion programs to resolve nonpayment cases before they get to court. Legislators settled last year for a $50 million voucher pilot program.

Kavanagh also agreed with landlords that one-shots should not be a revolving door — that tenants who seek them repeatedly should be steered toward some other kind of assistance, such as a rental voucher.

“He said he had all these bills to help do that, and they didn’t move,” said one person who has followed Kavanagh’s career. The Senate’s Eviction Prevention Updates page appears not to have been updated since 2021.

Instead, “He seemed really interested in applying provisions of HSTPA retroactively,” the source said. Kavanagh framed this as closing loopholes. But it has greatly complicated the sale of rent-stabilized buildings, many of which were in a death spiral already.

“The due diligence is impossible,” one investment sales broker said.

Another broker, Bob Knakal, has said he now focuses on air rights because selling buildings has become selling “boxes of paperwork.”

Housing crisis persists

Kavanagh was conscious of the big issues plaguing New York’s housing market, notably a demand-and-supply imbalance that has made it the most expensive in the nation.

But that imbalance persisted as Kavanagh nibbled around the edges and sought affordability mandates that blunt the impact of incentives to spur housing production. One critic said he kills bills by “questioning things to death” or insisting they “meet these 10 policy goals” — a recipe for paralysis.

Even a bill Kavanagh supports to allow religious institutions to build affordable housing on their own property has failed to pass, despite a strong push from YIMBY groups.

“There’s an argument that he didn’t make things worse,” the critic said. “But he certainly didn’t make things better.”