Pied-à-Terre Tax Swings; Bill Curbs Condo Lawsuit Risk

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

A NYC pied-à-terre tax could generate between $340 million and $510 million annually, depending on its structure, according to analysis from Comptroller Mark Levine’s office.
State lawmakers want to encourage condo construction by lowering litigation risks.
A new Assembly bill would launch a state “insurance stabilization association.”

In this edition we mention: City Comptroller Mark Levine, REBNY President James Whelan, Assembly member Dana Levenberg, State Sen. Rachel May, Assembly member Erik Dilan and others.

We Heard

Devil in the details: A New York City pied-à-terre tax could bring in up to $510 million a year from roughly 11,200 properties, but that could fall to as low as $340 million depending on how it’s structured, according to an analysis released Thursday by Comptroller Mark Levine’s office. The gap reflects open questions for the Department of Finance — including whether to exempt rented units, how to value co-ops and condos and how to handle small multifamily and mixed-use buildings — as well as the likelihood that some owners would change usage to avoid the tax. Two weeks after floating the idea, Gov. Kathy Hochul has offered few specifics. Her office says the tax would apply to about 13,000 properties worth $5 million or more that aren’t primary residences or are rented full-time, and could raise $500 million annually to help close the city’s budget gap. Levine’s estimates draw on earlier proposals, including a 2019 State Senate bill and a 2014 Fiscal Policy Institute plan, along with city finance data. The Real Estate Board of New York seized on the findings, arguing the tax would fall short of expectations. “This proposed tax also presents significant logistical issues,” REBNY President James Whelan said. “If implemented haphazardly, this tax would result in less investment, less housing and less revenue for the city.”
Curbing condo costs: State lawmakers are taking aim at litigation risks they say are choking off condo development in New York. A new bill from Assembly member Dana Levenberg and State Sen. Rachel May would curb construction-defect lawsuits by setting clearer procedures for claims and limiting the damages condo boards can pursue against developers and contractors. The goal: rein in insurance costs that have ballooned amid frequent lawsuits over issues like leaks, faulty elevators and facade cracks. Those costs have helped stall new supply. Condo unit production in the five boroughs fell 53 percent, from 8,795 units in 2019 to 4,137 in 2025, according to a TRD analysis. Last year alone, new units dropped 27 percent, from 5,720 to 4,137. The proposal, modeled on a measure passed in Colorado last year, is pitched as a way to reverse that slide. “This will enable more investment in the production of this much needed housing,” Levenberg said in a statement to TRD.
Reining in insurers: Brooklyn Assembly member Erik Dilan is pitching a lifeline to the state’s battered affordable housing sector, targeting soaring insurance and liability costs. His bill would shield certain low-income housing providers — including nonprofits with at least a 45 percent ownership stake — from some civil lawsuits, so long as misconduct isn’t deemed willful or grossly negligent. It also bars cases where non-medical damages fall below $500,000 and medical costs meet state reimbursement benchmarks. The centerpiece of the bill is the creation of the New York Housing Insurance Stabilization Association, a joint underwriting body that all commercial general liability insurers in the state must join. To cap the risk, the association’s annual losses are limited to $50 million, with the state’s Division of Housing and Community Renewal on the hook for any claims exceeding that threshold.

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Bill Tracker

Bill Number	Lead Sponsor(s)	Summary	Committee	Last Action Date / Status	Next Scheduled Event
A11065 /S8731	Assembly member Dana Levenberg / State Sen. Rachel May	Creates new rules to settle condo construction defect complaints	Referred to the Assembly and Senate judiciary committees	April 24	None yet
A11059	Assembly member Erik Dilan	Limits the liability of certain low-income housing providers, and establishes a Temporary Insurance Stabilization Program	Referred to Assembly housing committee	April 24	None yet

The Catch-Up

The state attorney general and housing commissioner are trying to make an example of Peak Capital Advisors, which gut-renovated 31 century-old buildings, removed them from rent stabilization and rented them out at market rates, writes The Real Deal columnist Erik Engquist.

Pressure is building on New York lawmakers to rescue renters in their districts who could be on the verge of homelessness and landlords who will feel the financial pain of missed payments as a federal housing voucher program for low-income tenants runs dry this year, reports Gothamist.

Many American cities — from New York to San Francisco — have pledged to modernize bulky urban permitting. They might look to an unexpected peer for inspiration: The Mexican City of Guadalajara, which has spent the last decade overhauling its permitting, The City reports.

HUD has proposed rolling back protections for gender identity and sexual orientation in nearly 50 housing regulations, a move that is drawing criticism from affordable housing advocates who say the changes could further marginalize vulnerable communities, reports Housing Wire.

The state attorney general is investigating two Brooklyn developers over allegations of misappropriating funds and failing to comply with condo conversion laws, Bisnow reports.

The Kicker

“We would be able to speed up our land-use process for these types of projects to around six months, which is a game changer,” said New York City Planning Director Sideya Sherman, on Gov. Kathy Hochul’s proposal for SEQRA reform. Sideya and Housing Commissioner Dina Levy traveled to Albany this week to make their case for the changes to state lawmakers. (You can catch Levy next week at TRD’s NYC Forum.)