New York City (photo: Michael Appleton/Mayor's Office)
After months of being on pause and the ravages of COVID-19, we need to be thinking of ways to jumpstart our New York economy. Just as one can take a seemingly dead battery and revive it with the right charge and a set of jumper cables, we too can help to restart our economy with a charge of the right stimulus: changing the condo conversion laws to make condo conversion easier again.
Condo conversion refers to when a developer changes a rental residential building, typically owned by one landlord, to a condominium in which the units can be purchased by the current tenants or by “outside” buyers who did not live in the building before it became a condominium.
Prior to last summer, it was required that 15 percent of the units in a building had to be purchased by a combination of existing tenants or outside purchasers in order for a building to be converted to a condominium. In summer 2019, the law was changed to require 51 percent of tenants to purchase in order to convert buildings to condominiums. This increase has effectively resulted in stopping new conversions and the economic activity related to it, as well as the opportunity for tenants to purchase their units at a discounted price.
New York should once again permit condo conversions with 15% of units sold while adding in an affordable housing component.
This would help those in need of housing assistance, an especially dire need with New York unemployment at more than 20%. An affordable housing contribution from both developers and purchasers on initial and future closings would be a source of private funds to help support this important and critical public need.
This simple stimulus formula costs no infusion of cash from the public sector. To the contrary, it generates funds for the public sector in the form of city and state transfer taxes, income taxes, and filing fees, and most importantly at this time of high unemployment, it generates increased jobs thereby reducing unemployment and the cost of unemployment payments from the government.
Condo conversions not only help to stabilize neighborhoods and improve old housing stock, they create jobs and work for many types of businesses. In addition to development companies, they create work for contractors, electricians, plumbers, carpenters, security and building maintenance staff, architects and engineers, lawyers and accountants, advertising and public relations firms, advertising for newspapers, creative and web design firms, photographers, real estate brokers, mortgage brokers, lenders, title companies, furniture stores, lighting stores, decorators, appliance stores, hardware stores, and more.
Non-eviction condo conversion plans improve the living conditions of all building residents, whether they choose to purchase their apartment or not. In addition, tenants purchasing under condo conversion plans often secure their unit at a discount to the current market rate, and can typically obtain financing with lower down-payments, making home ownership more affordable.
In summary, simply amending the condo conversion laws with these proposed changes will create jobs, reduce unemployment, generate revenue for government, reduce governmental expenditure, generate private sector income, and help those in need of housing assistance. So, what are we waiting for? Now is the time to make this change and let a public-private partnership be a spark of needed energy in our recovery economy.
Roberta Axelrod is Director of Condo Conversions, Time Equities, Inc.