NY Appeals Section 8 Decision, Brooklyn Project Advances

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

The New York Attorney General’s office is appealing a controversial court ruling that struck down a state law banning landlords from discriminating against Section 8 users.
Brooklyn’s largest megaproject in years advances to a gauntlet of city reviews.
A Republican Assembly member is making a last-minute push to squeeze a makeover of New York’s mansion tax into the state budget.
A State Senate proposal would make it illegal for real estate professionals to use AI-generated listing photos and videos to mislead consumers about a property.
A potential freeze on rents for stabilized units looms over building worker contract talks.

In this edition we mention: New York Attorney General Letitia James, City Council member Chi Ossé, State Assembly member Jake Blumencranz, State Sen. Rachel May and others.

We Heard

Section 8 appeal: New York Attorney General Letitia James’ office quietly signaled plans to appeal a controversial March court ruling that struck down a state law banning landlords from discriminating against Section 8 voucher holders. On Wednesday, Assistant Solicitor General Patrick Woods filed court papers declaring that the A.G.’s office will fight to overturn the ruling in the New York Court of Appeals, the state’s highest court. The decision has left New York City landlords and voucher-reliant tenants in limbo as officials weigh whether it overrides a separate New York City law that prohibits discrimination against voucher holders or has jurisdiction over the municipally-funded CityFHEPS voucher program. In the weeks since the ruling, landlord and tenant attorneys have waited to see how James would respond. But the court papers filed on Wednesday only initiate the appeals process, which will still take several months to resolve. We’ll have more on that as the appeal progresses.

ULURP watch: One of the largest new developments planned for Brooklyn in years is entering the city’s gauntlet of environmental and land use reviews. City planning officials hosted a hearing Thursday for the public to weigh in on potential environmental impacts of the proposed Fulton Park rezoning in Bedford-Stuyvesant — a key step ahead of the city’s contentious seven-month land use review process. The proposal by L+M Development Partners, SMJ Development and the city's Department of Housing Preservation and Development is a massive undertaking that would erect 12 buildings between six and 17 stories, bounded between Fulton Street and Atlantic Avenue, and Utica and Rochester avenues. If approved, it would rise on land currently housing parking lots and 38 low-rise buildings with 209 apartments, where tenants tend to rely on federal Section 8 housing vouchers. Council member Chi Ossé, who represents the neighborhood, has yet to take a position on the development, but last month held a town hall at the Fulton Park houses to discuss the proposal with residents. Saha Guerrero, a spokesperson for Ossé, told The Real Deal that talks about the project are in the preliminary stages but that the Council member is “advocating for a resident vote to ensure current residents have a voice throughout this process.” Of the roughly 2,035 apartments the redevelopment would create, up to 856 would be affordable. The income-restricted units would include replacements for those living in the existing housing on the site; another 351 would rise on the portion of the land currently owned by HPD. The project would also include homeownership opportunities, the development team has said.
Mansion tax makeover: State Assembly member Jake Blumencranz introduced the Middle-Class Homebuyer Protection Act on Wednesday, aiming to raise the threshold for New York’s mansion tax (between 1 and 3.9 percent depending on the purchase price) from $1 million to at least $4.5 million. The Republican lawmaker said the bill seeks to modernize the state’s 1989 tax, arguing that “a million dollars meant something very different then than it means today.” The measure comes as both the Assembly and Senate, in their March budget proposals, called for increasing New York City’s mansion tax on sales above $5 million. Blumencranz represents part of Nassau County and his proposal would extend beyond the five boroughs and also include an annual adjustment tied to inflation. The Assembly member is pitching the bill as a late addition to budget negotiations.

AI real estate slop: The NY Attorney General’s office could go after real estate brokers and salespeople if they use AI-generated virtual tours and images to mislead consumers, under a new bill proposed by State Sen. Rachel May. The legislation prohibits “deceptive media” that falsely advertises or misrepresents a property’s condition, layout or dimensions. Under the bill, real estate professionals must be explicit if an image or video features AI-generated elements or has been digitally altered with virtual staging. Conceptual renderings for new construction or a remodel would be allowed, provided they are labeled as such. If a broker or salesperson is caught violating the measure, the New York Attorney General’s office could issue an up to $2,000 fine and suspend or relocate their licenses.

Rent freeze shadow contract talks: Building owners are invoking a likely stabilized unit rent freeze as a way to negotiate concessions from building workers ahead of a strike authorization vote scheduled for April 15. The Realty Advisory Board on Labor Relations’ President Howard Rothschild is pointing to the prospect of diminished income for some landlords if a rent freeze comes to pass this summer. “We are hopeful both sides will recognize and confront the realities facing the industry,” said Rothschild. But the head of the 32BJ-SEIU union calls that argument an exaggeration. Union president Manny Pastreich said just 2 percent of the more than 3,000 properties its members work at are in mostly rent-stabilized buildings. “Is there some level of stress on the bottom of the market in certain buildings? There is,” said Pastreich. “But to say that 34,000 workers should fall behind because of that is a significant overreach.”

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
A10812	Assembly member Jake Blumencranz	Would increase the property value threshold for the state mansion tax from $1 million to at least $4.5 million	Referred to the Ways and Means Committee	April 1	None yet
S9584	State Sen. Rachel May	Would make it illegal to mislead consumers with AI-generated and digitally altered listing images and videos	Referred to the Committee on Consumer Protections	March 26	None yet

The Catch-Up

New York City treats homeownership like an afterthought in a system built for renters. With roughly 70 percent of residents renting, housing policy prioritizes tenant protections, rent stabilization, and rental development — leaving aspiring homeowners sidelined. A newly passed (and previously vetoed) bill to subsidize homeownership highlights this tension, writes TRD’s Kathryn Brenzel.

The City Council claims it found a $6 billion alternative to raising property taxes and dipping into the city’s reserves. The mayor calls the proposal “unrealistic,” reports Brenzel.

One thing the Council left out of its preliminary budget proposal: expanding the CityFHEPS housing voucher program, opting to wait out legal and cost uncertainties, writes City & State.

Energy experts and climate advocates say the spike in gas and oil prices since the U.S. and Israel went to war against Iran demonstrates why the state should not roll back its ambitious 2019 climate law — something the governor is pushing for in state budget negotiations — and its investments in renewable energy, reports Gothamist.

Mayor Mamdani’s “Rental Ripoff Hearings” will wrap in Staten Island on Tuesday. In an interview with the Staten Island Advance, Executive Director of the Mayor’s Office to Protect Tenants, Cea Weaver, mentioned the high cost of heating, transparency around electric bills and access issues for the city to certify repairs made in apartments are among the many issues tenants and landlords have raised at the borough-based hearings.

The Kicker

“Can you imagine? You’re sleeping in your bed, and you saw a bunch of people walking into your bedroom with guns?” Vesta Louis told Politico on federal investigators’ harrowing raid of the homes of her daughters, Council member Farah Louis and Debbie Ester Louis, a staffer in Gov. Hochul’s administration, last week.