Mayor Zohran Mamdani faces some hurdles to get his housing plan and pied-à-terre tax through Albany.
The housing plan, we keep hearing, is coming soon. A major issue will be how he intends to build 200,000 affordable homes over the next 10 years with union labor.
His mayoral campaign’s housing plan called for borrowing $70 billion, for which the city would need state authorization. That doesn’t jibe with what Gov. Kathy Hochul said during her state of the state speech in January:
“We’ve managed our money responsibly. And that means we can make transformative investments in our future without raising taxes, without saddling the next generation with mountains of debt.”
I’d say $70 billion is a mountain of debt.
This and every other Hochul decision before the November election will be made with one question in mind: “How does this affect my race against Bruce Blakeman?”
Blakeman, the county executive in Nassau and Hochul’s Republican challenger, would love to run commercials saying Hochul saddled generations of New York taxpayers with $70 billion in debt for Mamdani’s socialist spending spree.
The governor won’t risk that. Hochul aims to help Mamdani just enough to get his voters in her corner — by funding child care and raising taxes on luxury second homes in the city — without giving Blakeman fuel for attack ads.
Her proposed pied-à-terre tax walks up to that line but doesn’t cross it.
However, the $500 million that it will allegedly raise cannot fund Mamdani’s housing plan. Instead, it would help close a $5.4 billion budget gap.
Getting political support for the tax from Assembly and Senate Democrats should not be a heavy lift. The real challenge will be implementing it. That’s the main reason the tax wasn’t approved in previous years.
Take, for example, a co-op building where some units (second homes worth more than $5 million) are subject to the new tax and some are not. The building pays one tax bill. How will individual shareholders be held accountable for paying the tax? Their units don’t even have a property tax profile or a unique block and lot.
If a co-op shareholder doesn’t pay his pied-à-terre tax, will the city be able to force a foreclosure sale? Will the debt be treated as unpaid income taxes rather than as a property tax lien?
How will the government know the value of units that haven’t changed hands in years? Or which co-op and condo units have been renovated to the point that they’re worth more than $5 million, and which have dated interiors and are worth less? It’s not as if tax assessors ever set foot in people’s apartments. The new surcharge would trigger a lot of assessment challenges.
None of these questions will be answered in Mamdani’s smug videos. But they will have to be dealt with, and soon. The state budget is overdue and the city’s fiscal year starts July 1.
What we’re thinking about: Is it wise to dole out $77 million for a single job? We’re not talking about the Mets signing a third baseman who is hitting .217 with a single home run. Rather, the Rockland County Industrial Development Agency in 2024 quietly awarded $77 million in tax breaks for JPMorgan Chase to expand a data center, New York Focus reported. The project will add one worker to the facility’s staff of 25.
Two state legislators have introduced a bill to cap IDA subsidies at $500,000 per job and ban them for projects that use more than 100 megawatts of power. Send thoughts to eengquist@therealdeal.com.
A thing we’ve learned: The median land price per acre in the Northeast has doubled since the first quarter of 2019, the highest increase of any region in the U.S., according to Realtor.com. The Midwest was second, up 89 percent.
Rising land prices are one reason no one builds starter homes. Who would build a home to sell for $300,000 when the land costs that much or more?
Buyers seeking starter homes have to look at houses built long ago, like this 504-square-footer in Suffolk County. Built in 1945 and recently renovated, it’s listed for $379,000.
Elsewhere…
Landlord lawyer Sherwin Belkin suggested on LinkedIn that if owners of luxury second homes in New York City have to pay a tax surcharge, so should tenants who keep rent-stabilized apartments as pieds-à-terre.
The concept makes sense, but the state would have to call it a fine, not a tax. By law, a rent-stabilized unit can’t be a non-primary residence.
Stiff fines would give the state a financial incentive to catch rent-stabilized tenants who break the residency rule.
Landlords are no longer motivated to evict non-primary residents who are reliably paying the rent. The 2019 rent law removed the 20 percent vacancy bonus and luxury decontrol, which were landlords’ main incentives to bring a residency case.
The policy rationale for the state to enforce the rule is to make apartments available to people who actually need them. But the Division of Housing and Community Renewal doesn’t have the capacity or inclination to do this.
Belkin was making a point; he knows his proposal will never happen. But if it did, landlords would want enforcement to be at their request only. I doubt many of Belkin’s clients want the state to evict their absentee tenants who pay rent and don’t cause any trouble.
Closing time
Residential: The most expensive residential sale Tuesday was $15.4 million for a 3,727-square-foot, sponsor-sale condominium at 16 Fifth Avenue in Greenwich Village. The Tara King-Brown Team at Corcoran represented the developer, Madison Realty Capital.
Commercial: The most expensive commercial transaction Tuesday was $26.6 million for a portfolio of eight multifamily properties totaling 246 residential units in three boroughs. They include 87-50 Kingston Place in Jamaica Estates; 544–548 West 50th Street in Hell’s Kitchen; 241–251 Sherman Avenue in Inwood; and 915 Washington Avenue and 1042–1048 Union Street in Crown Heights.
New to the Market: The highest price for a residential property hitting the market was $34 million for an 8,386-square-foot condominium at 1 Central Park South. The listing combines units 909, 913, and 915. Charlie Attias with Compass has the listing.
Breaking Ground: The largest new building permit filed was for a proposed 62,128-square-foot, 99-unit residential project at 21-18 Cornaga Avenue in Far Rockaway. Nikolai Katz filed the permit on behalf of Joel Steinmetz.
— Matthew Elo