Mamdani Pitches New Real Estate Taxes

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Good afternoon, let’s get into today’s news at the intersection of policy and real estate:

The mayor is quietly proposing more real estate tax increases to Albany lawmakers.
Luxury building workers are preparing for a strike as they negotiate for a new union contract with the city’s building owners.
The City Council approved a bill that would green light cellar apartments in newly-constructed one- and two-family homes.
State Sen. Luis Sepúlveda introduces a bill that would guarantee counsel to anyone facing eviction proceedings in the state’s housing courts.
The Department of Buildings is exploring facade inspection and sidewalk shed reform.

In this edition we mention: James Whelan, president of the Real Estate Board of New York; Kenny Burgos, CEO of the New York Apartment Association; Ann Korchak, board president of the Small Property Owners of New York; 32BJ-SEIU President Manny Pastreich and others.

We Heard

Mamdani pitches more real estate taxes: As part of his efforts to close New York City’s multi-billion dollar budget gap, Mayor Mamdani is pitching Albany lawmakers on a new trio of real estate taxes. One proposal would raise the real property transfer tax on cash-only deals over $1 million. Another would create a property tax surcharge of 1 percent on Class 1 and Class 2 properties with a market value of $5 million or more. A third would boost the city’s mansion tax and the supplemental tax on residential properties valued at more than $5 million by an unspecified amount. The Mamdani administration floated the preliminary details to Albany lawmakers last week in a memo exclusively shared with and reviewed by The Real Deal. The three proposals would generate an estimated $1.2 billion in new revenue for the city, according to analysis from the mayor’s office.

Landlord groups argued to The Real Deal that the proposed taxes — combined with a separate 9.5 percent property tax increase — would deter investment and worsen the city’s housing shortage. James Whelan, president of the Real Estate Board of New York, said the measures would “discourage investment, halt housing production and worsen the city’s affordability crisis.” Kenny Burgos, CEO of the New York Apartment Association, urged the city to reduce the tax burden on owners of rent-regulated buildings. “Punishing rent-stabilized apartments is not pro-tenant, it’s anti-housing,” Burgos said. Ann Korchak, board president of the Small Property Owners of New York, said she would be among the small owners hit by the property tax surcharge. Korchak owns two 10-unit rental buildings on the Upper West Side, which include 40 percent rent-regulated apartments, each valued at just over $5 million. “That’s money I can’t spend on plumbing repairs or long-term capital investments,” she said.

Contract talks kick off for NYC building workers: Building workers and doormen at more than 3,000 properties kicked off contract talks with the city’s landlords. The powerful 32BJ-SEIU union met with the Realty Advisory Board on Labor Relations on Thursday. Nine more bargaining sessions are on the calendar. Wage increases and defending workers’ employer-paid health insurance are among the union's top priorities, said 32BJ-SEIU President Manny Pastreich. But things are a little different this year: a big policy win for the union in January has put wind in the sails of negotiators and could embolden contract asks. On January 29, the City Council passed The Aland Etienne Safety and Security Act, which set minimum wage standards for private security guards at buildings that take effect next year. If a new contract isn’t brokered by April 20, when the union’s current one expires, Pastreich said a work stoppage is on the table. The union held an organizing call with its 1,100 so-called strike captains on Thursday night to prepare for the possibility. “It is definitely in the air,” said Pastreich. Howard Rothschild, president and CEO of the Realty Advisory Board on Labor Relations, said he looks forward to “a fair and mutually agreeable resolution.”

More basement apartments: The City Council approved a bill, Intro. 421, that would allow cellar rentals known as ancillary dwelling units, or ADUs, in newly-constructed one- and two-family homes. Council member and housing committee chair Pierina Ana Sanchez sponsored the bill and described it as “a technical clean-up” to align it with the city’s recently approved City of Yes zoning reforms to increase housing supply. The bill will advance to the full City Council for a yet-to-be-scheduled final vote. The city’s Department of Housing Preservation and Development said it supports the zoning tweak.

New bill pushes statewide right to counsel: A years-long push for a statewide right to counsel has a powerful new ally: State Senate Judiciary Committee chair Luis Sepúlveda. The Bronx lawmaker introduced a bill that would enshrine the right to an attorney for anyone facing eviction proceedings in housing court. It would mandate an automatic stay on an eviction proceeding if a tenant does not have counsel. When he was appointed in January, Sepúlveda said he intended to prioritize equity in the state’s courts. The Right to Counsel NYC Coalition, made up of more than 70 tenant groups and legal services organizations, has kept the issue in the spotlight since 2017, when it successfully advocated for New York City to guarantee access to free legal representation for tenants facing eviction. More recently the city program has run into problems largely due to a shortage of funding and attorneys, and an overwhelming case load in the wake of the pandemic.

Sidewalk shed reforms: The Department of Buildings said Friday that it intends to reform facade inspections and sidewalk shed rules to cut red tape and target unnecessary scaffolding. Based on a study DOB conducted with the engineering firm Thornton Tomasetti, the agency said it would extend the Local Law 11 facade inspection cycle from five to six years. DOB also intends to create a streamlined program that would enable lower-risk, well-maintained buildings to reduce their required inspections to every 12 years — instead of the currently mandated five. Additionally, building officials are proposing new rules designed to enhance oversight of sidewalk sheds, including new penalties for keeping sheds up for longer than 180 days. New Yorkers will get a chance to weigh in on the rule-making in the coming weeks. The regulations are expected to take effect during the summer.

Have a tip or feedback? Reach me at caroline.spivack@therealdeal.com.

Bill Tracker

Bill Number	Lead Sponsor(s)	Summary	Committee	Last Action Date / Status	Next Scheduled Event
Intro. 0421	City Council member Pierina Ana Sanchez	Would allow cellar apartments in newly-built one- and two-family homes	Committee on Housing and Buildings	Approved by committee on March 9	Full City Council vote on March 10
S9357	State Sen. Luis Sepúlveda	Would establish a fundamental right to counsel for anyone facing eviction proceeding in housing courts throughout the state	Referred to State Sen. Judiciary Committee	March 4	None yet

On The Agenda

The Landmarks Preservation Commission on Tuesday, March 10, at 9:30 a.m. is hosting a hearing on several buildings up for landmark status or buildings with landmark protections that aim to be renovated.

The City Planning Commission will hold a scoping hearing on the Columbia Heights rezoning project Thursday, March 12, from 2 p.m. to 5 p.m. The meeting gives the public a chance to weigh in on the proposal’s environmental impact statement.

The Catch-Up

Mayor Zohran Mamdani plans to shut the city’s aging men’s homeless intake shelter at Bellevue by April, opening the door for a major redevelopment of the East 30th Street site, writes TRD columnist Erik Engquist.

U.S. senators added a new provision to their latest housing legislation that would require large single-family home investors to sell their newly built rental properties to individuals within seven years of completing them, the Wall Street Journal report.

A New York appellate court ruled that compelling landlords to participate in the Section 8 voucher program is unconstitutional, deciding that it forces them to accept building inspections and therefore violates their Fourth Amendment rights, reports Gothamist.

Gov. Kathy Hochul’s administration may have a workaround to tweak New York’s sweeping climate mandates without going back to lawmakers. State regulators are weighing whether they can use existing authority through the Public Service Commission to adjust parts of the law, reports the Times Union.

The Kicker

“I think what you’ve seen is that it’s impossible to make it work. The math is just the math,” said A&E’s executive chairman Douglas Eisenberg, who walked New York Times Magazine writer Jonathan Mahler through making the fiances pencil out on his rent-regulated city buildings.