Gotham Gazette Thu, 22 Apr 2021 23:20:57 +0000 Joomla! - Open Source Content Management en-gb (Webmaster) The Pandemic Slowed Housing Construction in New York City; What's Next? 2 how pandemic impact

Mayor de Blasio at a housing construction site (photo: Ed Reed/Mayor's Office)

Last year, as the pandemic crushed the economy and public life, annual new housing construction in New York City dropped by 4,600 units to 20,200, the lowest since 2015, according to the city Department of City Planning. While new affordable housing kept pace with previous years and overall housing production picked up in the latter half of 2020, building permits remain relatively low in the first several months of this year, portending an uncertain future for the city's housing stock.

New York has faced a housing emergency for years before the onset of the pandemic, with low vacancy rates and a large portion of residents rent-burdened. The number of units on the rental market more than tripled last summer and remains more than double what it was pre-pandemic. But the ratio of new jobs to housing has remained high since the Great Recession and there is broad agreement among city planners and developers, among others, that more housing is a critical need in the near- and long-term.

“New housing, especially affordable housing, is key to an equitable recovery. Since construction resumed last year, New York’s housing production has been resilient, with ongoing significant levels of development, permits issued and a large amount of housing in the pipeline," wrote Joe Marvilli, a Department of City Planning (DCP) spokesperson, in an email. "DCP will continue to prioritize affordable housing, economic development, health and other facilities that meet community needs.”

A number of factors contributed to the dip in new housing, including an economy in freefall and a statewide construction halt on market-rate housing last spring. While the freeze on construction was lifted and economic conditions are improving, the fate of tax abatements in Albany and the attitude of incoming city lawmakers'  toward development could make the difference between a slow ramp-up to pre-pandemic levels and an explosion of housing production.

"Maintaining this average rate of production in the teeth of the pandemic is, in one sense, very good – perhaps, even surprising – news," said Carl Weisbrod, an urban development consultant and former head of the Department of City Planning and City Planning Commission, in response to the latest housing construction figures. "On the other hand, if New York City is to significantly address its housing shortage, it must up the game on housing production."

While low compared to recent years, the number of new housing built in 2020 was buoyed by ongoing affordable housing production, especially in the Bronx, which continued through the construction freeze (from March 30 to June 8) thanks to an exemption for "essential" projects. New housing in the Bronx was stable between 2019 and 2020, with roughly 4,400 units completed each year, according to the Department of City Planning, while Brooklyn, Queens, and Manhattan saw completion numbers dip. Seventy percent of the new housing in the Bronx was considered affordable.

East New York, the first neighborhood to be rezoned under Mayor Bill de Blasio's signature affordable housing initiative, Housing New York, had the most units finished of any neighborhood in 2020 at around 1,000, due largely to the completion of several fully-affordable buildings on Fountain Avenue.

The city is advancing rezonings in the SoHo-Noho section of Manhattan and in Gowanus, Brooklyn, to allow new housing construction and residential conversions in more affluent, amenity-rich neighborhoods. Under legislation enacted in 2016 known as Mandatory Inclusionary Housing (MIH), a certain percentage of new units in the rezoned areas would be required to be affordable (there are different ratios of market-rate to rent-regulated units that can be applied depending on affordability levels). A number of other neighborhoods and swaths of the city have been discussed for such rezonings to foster more housing and community improvements under the next administration.

"We came up with a target of about 25,000 units a year...and that's what we've been able to do despite the pandemic," said Jeremy House, a spokesperson for the city's Department of Housing Preservation and Development (HPD). In 2020, HPD financed the construction or preservation of roughly 29,500 units, more than the 26,260 the year before. He said the city is on pace to reach 300,000 affordable units by 2026, Housing New York's twelve-year goal. To date, the city has financed almost 178,000 apartments, according to HPD's website. The full scope of changes to the affordable housing landscape is hard to determine because HPD does not track how many units exited affordability.

There were about 3.5 million housing units citywide in 2017, according to the HPD's latest available Housing and Vacancy Survey

On top of the unhalted affordable housing construction, "[w]e have made real progress on affordable housing during the de Blasio administration in large measure due to the allocation of substantially more capital dollars to affordable housing, in part due to [Mandatory Inclusionary Housing]," said Weisbrod, referring to the 2016 legislation that requires a certain level of affordability when rezonings for more housing are approved, whether for a single plot of land or a larger area. Other programs like legal services for tenants facing eviction "have also helped reduce the number of affordable units falling out of the affordable housing stock – a not insignificant data point,” Weisbrod added.

As the city continues to finance affordable housing under the mayor’s plan, key questions include how much overall housing will be produced in the city in the near-term and beyond, and whether city government can help encourage a building boom that may contribute to a more affordable city with space for everyone who wants to live in it.

"It was wise for government officials to recognize the critical need for affordable housing by ensuring those projects could continue moving forward last year," said Basha Gerhards, senior vice president for planning at the Real Estate Board of New York (REBNY), the city's largest association of developers. "We absolutely need more affordable housing. However, it’s important to understand that we also need more housing overall and we need City and State policies that can practically facilitate efforts to increase the number of below market rate units as part of that housing growth.”

According to the Real Estate Board of New York, since the end of the 2008 recession, the city added over 858,000 jobs but only 125,000 newly constructed units, a rate of .15 new units per job. Pre-pandemic, the population was expected to grow by over half a million by 2040.

In the last decade, New York has trailed behind 17 other major U.S. cities in terms of housing units permitted per resident (25.3 units per 1,000 residents), according to an analysis from Citizens Budget Commission. The city added 206,000 units to the housing stock in the last decade, just over 20,000 per year. In this year’s mayoral election, former federal and city housing secretary Shaun Donovan, has said the city should be building about 50,000 units of housing per year, the largest number cited by any candidate.

The need for affordable housing has increased in the past two decades. From 2002 to 2017 median rents increased 37%, while renter income grew only 20%, according to a presentation from DCP and HPD. While the New York City Housing Authority (NYCHA) accounts for 8% of the city's housing stock, it makes up 79% of rentals under $500 per month. Close to 50,000 individuals stay in city Department of Homeless Services shelters each night, with tens of thousands more in other shelters or types of temporary housing.

Coming out of the first year of the pandemic, encouraging employment figures and businesses reopening mean the landscape is ripe for new housing growth, experts say. According to the Bureau of Labor Statistics, New York City's seasonally-adjusted unemployment rate dropped below 12% in March for the first time since March 2020. Last month, private-sector employment topped 3.5 million, an increase of about 42,000 from the month prior, according to a recent report from city Comptroller Scott Stringer's office. "Private employment remains 578,000 below pre-pandemic highs of February 2020, but has grown by 324,000 since the shutdown of April 2020," according to the report.

While after an early-pandemic dip median asking rent has been relatively stable since last fall, the number of available units has dropped, which the comptroller's report suggests indicates "a stabilizing market." The number of available rentals fell to 55,000 in February, far greater than pre-pandemic levels but significantly lower than the decade-high of 75,000 reached in August. "Some of the decline may be due to landlords pulling apartments from the market in anticipation of a stronger demand in the future," the report warns.

With robust vaccination efforts, businesses reopening, and jobs increasing, the city is poised to begin increasing housing production. But whether and when it will reach pre-pandemic levels depends on more than just improving macroeconomic factors.

"There is going to be a slow and steady ramp up, it's not going to be like this one 'aha' moment," said Alicia Glen, a former Deputy Mayor for Housing and Economic Development who spearheaded the Housing New York plan, in an interview.

"But I also think because of a bunch of regulatory things that are happening -- the...expiration of 421a -- and the very, very toxic anti-development politics which have taken root, you're going to see an overall slowdown in production," she added.

By the end of 2020, the number of units with active permits issued in any year was around 89,000, roughly the same as previous years, according to the Department of City Planning, though Glen believes much of that could evaporate before units are completed. "People could have filed for lots of plans but nothing counts until you have foundation permits and it's real. There's a big fall off between what DCP will have and what will actually happen, generally speaking."

In the current fiscal year (FY21) through March, the number of new housing units permitted, either in new construction or alterations to existing buildings, stood at roughly 21,400, a 10,000-unit drop in permitted units from the year prior and the lowest it's been since at least fiscal year 2018, according to the city Department of Buildings. Foundation permits in 2020 dropped by about 500 to roughly 1,300 from the year before.

“Of course developers want to advance new projects that will deliver more housing, including affordable housing," said Gerhards of REBNY. "But we need to remember that even before the pandemic created new economic challenges, virtually all below market rate housing construction in New York City relied on both private sector financing and some form of property tax benefit to address immense construction costs and the City’s inequitable property tax system that disincentives the creation of rental housing. It’s going to be crucial for elected officials and policymakers to keep that in mind as we move forward."

Also on the table are proposals to convert distressed hotels and office buildings into housing, to legalize and advance ways to create livable basement housing ("accessory dwelling units"), and more.

Developers are concerned about the expiration of the 421-a tax abatement program, which is set to lapse in June 2022 and provides incentives for building affordable housing, though it has been questioned for its efficiency. At least one leading candidate in this year’s race for mayor, Comptroller Stringer, has called for an end to the program.

"Not sending signals that that is going to be renewed is having a real deterrent effect," Glen said. Critics of the program have called it a give-away to developers, who they say would build the housing anyway, and that it often does not lead to housing that is affordable enough for New Yorkers with the lowest incomes. But, according to Gerhards of REBNY, the last time 421-a expired there was a massive drop in permit filings until there was a new program.

by Ethan Geringer-Sameth, reporter, Gotham Gazette

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The Pandemic Slowed Housing Construction in New York City; What's Next? Tue, 20 Apr 2021 04:00:00 +0000
What's The [Data] Point? $4 Billion, Resetting the Development Debate in New York City gov cuomo hq

Where an Amazon HQ was to be (photo: Kevin P. Coughlin/Governor's Office)

What's The [Data] Point? Episode 100 -- $4 billion, The Development Discussion [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

As we continue our series on land use, housing, and development in New York City, we were joined by Michelle de la Uz of Fifth Avenue Committee and the City Planning Commission and by Paimaan Lodhi, Senior Vice President at the Real Estate Board of New York to discuss where the city is and should be heading on the theme.

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

What's The [DATA] Point? · Episode 100: $4 billion, with United for Housing

by Ben Max, Gotham Gazette

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What's The [Data] Point? $4 Billion, Resetting the Development Debate in New York City Tue, 22 Dec 2020 05:00:00 +0000
Campaign Donations from Real Estate Lobby Drop Dramatically as Democrats Decline Them groundbreaking shovels Manhattan development

Real estate groundbreakings may be less celebrated (photo: governor's office)

In a few short years, real estate money has gone from the norm to “toxic” in New York State Democratic politics, with many of those who once gladly accepted thousands of dollars from the industry now pledging to take none. While there are still exceptions — including notables such as Governor Andrew Cuomo and Brooklyn Borough President and 2021 mayoral candidate Eric Adams — the overall trend is reflected in the recent June primaries for seats in the state Legislature, where the main New York real estate lobbying group donated a fraction of what it has in past election cycles.

The 2018 loss of the State Senate by Republicans, the latest campaign finance filings, and a growing list of Democratic candidates pledging to refuse donations with ties to real estate interests suggest the once-formidable Real Estate Board of New York, or REBNY, is in something of a political no man’s land.

Real estate plays a pivotal part in the New York economy, grossing around $1 billion annually for the state through the real estate transfer tax, according to the State Assembly; boasting around $5 billion in taxable sales in 2019, according to the New York State Department of Taxation and Finance; and employing thousands. But although Senate Republicans, who held a majority in the body through 2018, were often sympathetic to the industry, Democratic-aligned activists and politicians alike see it as one that requires reining in and reform in order to make New York City more affordable and equitable.

The changing majority in the Senate paved the way for historic tenant-friendly legislation passed in 2019, which was strongly opposed by REBNY and real estate interests generally. It also correlated with a marked decrease in campaign donations by REBNY’s political action committee (PAC): while in 2018 the organization spent $450,000 during the primary elections alone, that number is less than $80,000 this year, which as usual featured almost exclusively Democratic contests in New York City.

A large chunk of REBNY’s 2018 spending — well over $100,000 — went to support the Independent Democratic Conference (IDC), a group of real estate-friendly state senators elected as Democrats but who formed a rogue conference and had a power-sharing agreement with Republicans, often preventing progressive legislation, including major rent regulation reform, from being passed. Six of eight members of the IDC lost their primary races in 2018, with a wave of progressive challengers who ran in part on their commitment to fighting big real estate interests.

Besides the change in control of the Senate that REBNY attempted to prevent, a shift in voters’ perspectives and its impact on many Democratic politicians was a likely cause of the decrease in the donations by REBNY to candidates, according to Cea Weaver, Campaign Coordinator of Housing Justice for All.

“At this point real estate money is toxic,” said Weaver, a leading organizer in the pro-tenants coalition that has fought for tighter rent regulations and more affordable housing. “It’s a testament to the tenant movement that real estate money has become basically a litmus test that you can’t run in New York as a progressive if you take it, no one’s going to take you seriously.”

Weaver said it was Diana Richardson who first ran on a promise to not accept real estate money during her 2015 bid for State Assembly in Brooklyn and that her success encouraged others, especially in districts with areas facing rising rents and gentrification, like Crown Heights in Richardson’s district and other neighborhoods in Brooklyn, Queens, and beyond. Senators Julia Salazar, Zellnor Myrie, and Alessandra Biaggi are examples of those who have since run and won primaries against incumbents on platforms centered around opposing and limiting the extensive power of real estate developers and big landlords.

Both Myrie and Biaggi challenged incumbents (Jesse Hamilton and Jeff Klein, respectively) who were members of the IDC. Those upsets, among others, left REBNY with fewer allies, Democrat or Republican, in New York government.

Weaver said those wins, and others, propelled the movement to reform the rent laws that resulted in last year’s landmark legislation.

“The reality is winning on that demand created a mandate to deliver,” Weaver said, given that the expiring rent laws were a major focus of 2018 Democratic primary campaigns, mostly in the city, and a rallying cry for general election races to flip the chamber, including one race in Brooklyn and several in city suburbs.

It wasn’t always this way, though. In 2016, the campaign fund for Democrats in the State Assembly was third behind the State Senate Republican Campaign Committee and the campaign committee of the Independent Democratic Conference in receiving donations from REBNY. That year, the Democratic Assembly Campaign Committee received over $100,000 from the real estate group, and in 2018 REBNY donated four times as much to Democrats as it had in 2016 (including the support for the IDC and its members).

“They recognized in 2018 that it was a threshold moment for the real estate industry in terms of the balance of power in Albany,” said Erik Engquist, the senior managing editor at The Real Deal, a publication that covers real estate, and a longtime New York City journalist. “Giving money to the Republicans in the Assembly accomplishes nothing. So, you can’t read that as support for the Democratic Party, it’s more like ‘we want influence, period.’”

Engquist said REBNY may have hoped Assembly Democrats would serve as a moderating force to counteract the soon-to-be more liberal Senate. Although REBNY was extremely displeased with the rent laws passed in 2019, and some were mystified by how little influence Cuomo injected on behalf of his allies in real estate, there were indications that its strategy worked to some degree.

For example, a number of officials and advocates wanted to fully eliminate the Major Capital Improvement (MCI) program, which allows landlords to increase rents by a capped amount if they enhance the building in a way that benefits all tenants. Instead, the cap on rent increases after MCIs was reduced from 6% to 2%, something Engquist credited to Assembly Speaker Carl Heastie. And, even as bad as the legislation may have been for REBNY, it would still “want to at least play defense, prevent it from being tweaked more in tenants’ favor,” Engquist said.

An analysis of the REBNY PAC’s financials shows the shift after 2018. While it donated over $10,000 to each of 42 different political campaigns in 2018, only one candidate (Democratic Bronx State Senator Luis Sepúlveda) has received more than $10,000 in 2020 as of June 20. Donations of around $5,000 or less were made to Democratic State Senators James Skoufis, Kevin Parker, and Diane Savino, and Assemblymembers Amy Paulin and Inez Dickens, among others in both houses.

And you can’t spend money you don’t have: contributions to REBNY’s PAC went from over $1.3 million in 2018, a similar amount to what it received in 2016 and 2017, to about $200,000 in 2019.

Deputy Majority Leader of the State Senate Michael Gianaris, who successfully defended his seat in the recent primaries, is himself instructive. The Queens senator had previously taken real estate money, including roughly a few thousand dollars a year from REBNY up until 2018, but has since then upheld a pledge to not accept real estate donations. He said he took the pledge due to his newfound power when the Senate flipped, and to ensure his supporters knew he was on tenants' side leading up to the renewal of the rent laws in 2019.

Gianaris said the organizing done by pro-tenant groups was vital and will have a long-lasting effect on the ability for real estate interests to find support from politicians.

“All these things are interwoven,” said Gianaris, who represents parts of Western Queens that have seen rapid development and rising costs of living in recent years. “The organizing that the tenants did played a role in helping us obtain the majority, obtaining the majority helped wane the power of big real estate and the more that happens, the more candidates are comfortable not taking their support.”

REBNY spends on political campaigns through other avenues than direct contributions to candidates or committees, including through independent expenditure campaigns for or against certain candidates, which can include television ads, phone banking, and mailers paid for by an outside group, such as its Jobs For New York super PAC. Jobs For New York has spent, for example, over $100,000 to boost City Council Member Donovan Richards' bid for Queens Borough President, as reported by the Queens Eagle. And REBNY appears tied to several somewhat mysterious groups spending money in suburban Democratic primaries to boost the more moderate candidates, as reported by the Times Union.

In addition to campaign donations and independent expenditures, REBNY also has its connections and the promise of concrete community benefits to try and gain influence, Engquist said.

“REBNY will have less influence, but it won’t have no influence,” Engquist said. “There are elected officials out there who want development in their district. They want to tailor it and shape it, but they do want to have projects so they can say ‘I provided so much affordable housing, I got a subway station fixed up,’ or whatever.”

He gave the example of the redevelopment by the company Two Trees of Williamsburg’s Domino Sugar Refinery into large residential buildings. Engquist said politicians who want development that is too large for non-profit or small developers to handle would need the connections REBNY has with big-name developers like Two Trees.

One of the looming questions in New York City has been the extent to which even development with a large number of apartments with affordability caps is embraced by elected officials, especially local City Council members who often get significant say over any change to zoning rules in their districts. The anti-real estate trend has coincided with the city’s affordability crisis, but some have wondered if that pro-tenant movement will succeed in seeing enough housing built to help provide affordable apartments, whether new or existing, for those who need them.

That is a conversation less applicable to the state Legislature, where regulations on rent stabilized apartments are crafted and elections are being held this year, and more for the City Council, where local development projects are negotiated and elections are being held next year. Not to mention the 2021 mayoral race, where housing affordability and real estate development will undoubtedly be central, hotly-debated issues. Whether or not candidates accept real estate-linked campaign donations is alread splitting the likely Democratic mayoral field, with, for example, Adams taking them and both Comptroller Scott Stringer and City Council Speaker Corey Johnson saying they are refusing such funds.

The roles played by REBNY and individual real estate developers in the 2021 city elections, particularly with regard to candidate donations, independent expenditure campaigns, and policy advocacy, will play out over the coming year-plus. They will coincide with the much larger discussion of how the city will recover from the economic devastation wrought by the COVID-19 outbreak and its fallout.

“As we begin to rebuild after this pandemic, leadership is critical,” said a REBNY spokesperson, who did not answer several specific Gotham Gazette questions about its campaign donations while providing a broader statement. “We need officials at every level to implement meaningful, measurable and smart policies that can lead our City and State towards a strong recovery. We continue to watch how the [2020] primary races will shake out and look forward to working with thoughtful elected officials who understand that New York City’s economy isn’t healthy unless the real estate industry is healthy enough to generate the taxes needed to create jobs, build more affordable housing and fund essential services.”

With only 22 Republicans in the 60-seat Senate and 43 in the 150-seat Assembly, Gianaris said REBNY may have to rethink its strategy if it is going to play any role in New York State policy.

“I hope they figured out that their traditional model of just throwing dollars at politicians and expecting them to do their bidding is over,” Gianaris said. “What I would say to the real estate industry is throw the old models out the window, start working with your tenants to come up with a collaborative approach to setting policy. The idea that — on a political basis — the tenants are without allies in power is out the window.”

by Victor Porcelli, Gotham Gazette

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Campaign Donations from Real Estate Lobby Drop Dramatically as Democrats Decline Them Mon, 06 Jul 2020 04:00:00 +0000
What's the [Data] Point? 6/15, Crunch Time in Albany as Rent Regulations Expire whats the data point

What's The [Data] Point? Episode 75 -- 6/15, Crunch Time in Albany as Rent Regulations Expire, with REBNY's John Banks and Assemblymember Harvey Epstein [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

faceoffRent regulations impacting about 1 million New York City apartments home to 2 million people are set to expire June 15. State lawmakers and Governor Cuomo have been negotiating how far to go in strengthening those laws in tenants' favor and whether to extend regulations beyond where they currently apply, both in terms of geography and a proposal that would effectively regulate rent increases for all apartments outside the traditional rent-regulated stock.

John Banks, president of the Real Estate Board of New York (REBNY), and Assemblymember Harvey Epstein, a Manhattan Democrat and longtime tenant advocate, joined the show to discuss the future of rent laws in New York.

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

by Ben Max, Gotham Gazette

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What's the [Data] Point? 6/15, Crunch Time in Albany as Rent Regulations Expire Fri, 07 Jun 2019 04:00:00 +0000
Panel Previews 2019 Rent Regulation Discussion in Albany rent reg agen

(photo: Edwin J. Torres/Mayoral Photography Office)

This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

One of the most contentious issues on the 2019 docket in Albany will be the expiring rent regulations that apply to roughly 1 million apartments in New York City and determine several ways in which rents are capped and when and by how much landlords are allowed to increase rents or remove a unit from the regulated rolls. While the regulations are set to expire in June, it is widely expected that they will be extended, the main question is what exactly they will look like, and whether the fact that Democrats are set to control both the governor’s office and both chambers of the state Legislature will mean sweeping changes that benefit tenants.

Though that debate is certain to heat up when Governor Andrew Cuomo gives his State of the State address and the legislative session begins in the new year, a lot of discussion is already happening. On Tuesday, the New York Housing Conference hosted a panel discussion with key stakeholders in the rent regulations debate: State Senator Liz Krueger, a Manhattan Democrat; Assemblymember Steven Cymbrowitz, a Brooklyn Democrat; John Banks, the president of the Real Estate Board of New York; and Thomas McMahon, principal of consultancy TLM Associates. The hour-long discussion, which largely focused on rent regulations, but also touched more generally on housing development, was moderated by Gotham Gazette’s Ben Max.

“The Senate Democrats will be heavily focused on ensuring an improvement and strengthening of tenant protections in our rent regulation system,” Krueger said at the event, signaling that her new majority conference is looking forward to working with an Assembly majority that has held rent regulations as a top priority for many years.

Housing was one of the most prominent issues of the recent elections in New York, with the broad and ever-present issue of affordability talked about all over the state, some state Senate candidates in New York City running campaigns largely focused on rent regulations, and public housing crises popping up throughout. A slate of progressive Democratic reformers were swept into the state Senate on the promise of, among other things, reforming rent laws such as vacancy decontrol and how major capital improvements are assessed, and many candidates rejected campaign contributions from real estate developers. Those Democrats now join other state senators who will take over the majority from Republicans who were especially close with large real estate interests, and plan to team with Assembly Democrats who have been looking to strengthen rent regulations on behalf of tenants for years.

As legislators, negotiating with the governor, look to reform rent regulations and get the new formula right, there are certain to be complicated discussions, as members of Tuesday’s panel made clear. Stakeholders, from activists to developers, tenants to landlords, legislators to bureaucrats, will want their say in how new laws will be shaped. The state’s rent regulation laws are set to expire in June, two months after the state budget is due. Working rent reforms into the budget would provide faster resolution and may offer an opportunity for broader horse-trading as often happens in Albany, but a rushed job could also potentially leave open loopholes or fail to adequately address the issue.

To the potential chagrin of some, the panelists advocated a slow and steady process instead of immediate legislative reform, while hitting on a variety of specifics that must be considered.

“We will move slowly,” said Cymbrowitz, the Assembly housing committee chair, after Banks, the head of the city’s most powerful real estate lobby, advocated the same. “We will not just throw legislation, take them out of committee and just put them on the floor. We will have discussions with our partners, we will talk about it, and if there has to be changes to existing legislation, we’ll look at that as well.”

The Assembly has passed rent reforms such as repeal of vacancy decontrol, which allows apartments to be removed from rent regulation, on several occasions, but the Senate has been opposed. Krueger said that while the new majority with many new members that she will be a part of has not held a conference she believes the Senate Democrats will be “very open” to repealing vacancy decontrol. Governor Cuomo, who has close ties to real estate, recently said on WNYC radio that if a vacancy decontrol repeal bill passed the Legislature, he would sign it into law.

Vacancy decontrol, vacancy bonuses, preferential rent, the Urstadt Law preventing New York City from controlling its own rent laws, and the way landlords can account for major capital improvements (MCIs) are just some of the policies that could be on the table in 2019. Advocates who want to do away with or drastically modify vacancy bonuses, vacancy decontrol, and how MCIs can be passed on to tenants argue that they will protect tenants in rent regulated apartments from abusive practices by landlords and will protect the city’s rent regulated housing stock, which has diminished significantly in recent decades.

After Senator Krueger said that her conference will be focused on strengthening tenant protections, she later added that vacancy decontrol would definitely be taken up, and singled out MCIs in particular as well.

“People are not saying end MCIs, we’re saying end the ridiculous system where if you put in for an MCI, you get to get paid back for it forever by adding it onto the rents and inflation-adjusting it forever, when on average you’re getting your full money back in seven years,” Krueger said.

For Banks, whose organization is made up of and lobbies on behalf of the city’s largest real estate developers and landlords, reforms pose a fundamental threat to the industry’s ability to do business, and to the availability of good and abundant housing in the city. He argued that vacancy decontrol, wherein an apartment leaves regulation after rent passes a certain threshold, is a tool to subsidize regulated units.

“At a fundamental level, rent regulations affect the amount of money that can go into a building, the revenue streams that go into supporting a building,” Banks said. “If those numbers are not sufficient to support the construction and maintenance of the building, then it will further chill production. It will limit people’s incentive to create additional supply.”

“We shouldn’t vilify the entirety of a segment of our economy that is as important to New York City and New York State as the real estate industry is,” he said.

Banks, as well as the other panelists, also singled out the city’s property tax system as a culprit in the increasing unaffordability of housing. A commission jointly empaneled by the mayor and City Council is currently working to discuss potential reforms to the property tax system, and City Comptroller Scott Stringer introduced a housing proposal last week to fundamentally alter the city’s real estate tax scheme. Whatever the city commission puts forth will have to then be dealt with in Albany -- like with rent regulations, the city has limited powers over its own affairs with regard to taxes, though property taxes are one area the city has significant leeway.

“It is so complicated, it is so obtuse, and there are layers upon layers of abatements and other incentives to try to get to the fundamental problem, which is it doesn’t reflect the policy realities,” Banks said, also referring to the system as “broken” and specifically calling out Class 2 property taxes, the owners of which he characterized as shouldering the greatest tax burden.

McMahon, who worked in government for decades before moving to the private sector, argued that the property tax reform commission could be used as an opportunity to help vulnerable New Yorkers.

“Should we be looking at using property tax reform to supplement low-income tenants?” he asked. “I think it’s a conversation that could be had. So it’s important that the budget be cognizant of the need to extend this program.”

On the issue of public housing, both Krueger and Cymbrowitz lent their support to using Rental Assistance Demonstration, which Mayor de Blasio recently announced would be expanded to dozens of developments throughout the city and leverages both federal vouchers and private funding to allow private companies to manage NYCHA properties, providing additional sources of revenue for housing authority developments and key upgrades to the deteriorating housing stock.

“The RAD model seems to be working very effectively in other parts of the country and the state,” Krueger said. She clarified her remarks by noting that she is not in favor of privatization of NYCHA, which some say RAD effectively does, or at least is a gateway toward.

Krueger also didn’t outright dismiss the idea of building on unused NYCHA land, a controversial process known as “infill,” but argued that the balance of market-rate and affordable units needed to be carefully found, noting that she has a development in her district where a building is being built that will be 50 percent market rate and 50 percent affordable.

Cymbrowitz talked about using NYCHA land to build senior affordable housing, but acknowledged that more senior and other affordable housing means less revenue being brought in by infill for NYCHA’s tens of billions of dollars in needs.

But Krueger also cautioned about how infill developments are designed in terms of revenue.

“A real sticking point for the community was who’s getting the money that NYCHA will get from the building,” Krueger said. “Residents want their problems fixed, and many of their position is if you’re going to be putting a new building on our site, you’re taking away a playground, at least the money that’s coming in should come to meet the needs of this facility.”

This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

by Ben Brachfeld, Gotham Gazette

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Panel Previews 2019 Rent Regulation Discussion in Albany Tue, 04 Dec 2018 05:00:00 +0000
As Affordability Crisis Becomes More Acute, Real Estate Donations Emerge as Litmus Test for Some Democrats  Ocasio-Cortez Teachout

Alexandria Ocasio-Cortez & Zephyr Teachout (photo: Gotham Gazette)

This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

Queens City Council Member Jimmy Van Bramer has said he will refuse donations from wealthy landlords and the real estate industry as he runs for borough president. Julia Salazar, a democratic socialist in Brooklyn, defeated an eight-term incumbent state senator using her rejection of real estate donors as a rallying cry. Alexandria Ocasio-Cortez did the same when she toppled Democratic Rep. Joe Crowley and became the youngest woman elected to the United States House of Representatives. Zephyr Teachout sought the Democratic nomination for attorney general while eschewing real estate contributions and making it a core plank of her campaign. Nomiki Konst, an investigative reporter, recently launched her campaign for New York City public advocate with the same promise.

New York’s real estate industry, most of it concentrated in the dense confines of New York City,  has long played a significant role in funding candidates for elected office up and down the ballot across the state and beyond, a role that candidates of both major parties and political insiders have always recognized. But as voters, particularly energized, activist Democrats, focus on the affordable housing crisis and take heed of the state’s broken campaign finance laws, including loopholes that donors, especially those in real estate, have exploited to pad the coffers of legislators and executives, some progressive Democrats have begun to reject campaign contributions from the real estate industry.

Affordable housing policy, including the already-begun debate over rent regulations decided in Albany that will be a significant issue in 2019, is at or toward the top of many activists’ lists, and housing justice advocates increasingly see campaign finance pledges as a litmus test for candidates. Increasing numbers of Democrats eschewing real estate money, or at least any given through the so-called LLC loophole, has given those activists and advocates cause for optimism that real estate’s role in state elections may be on the decline and that their elected representatives will heed the clarion call to protect tenants and listen to small donors over wealthy special interests.

“I think that it’s clearly a concern amongst a growing number of voters,” Van Bramer told Gotham Gazette. “I think it’s increasingly one of those issues that people want a response on from their elected officials and candidates. And I think that they’re right to be concerned about the influence of big money, generally speaking.”

“Money still plays a huge role in our elections and real estate is a good way to raise money in New York City and New York State,” said Celia Weaver, research and policy director at New York Communities for Change, a leading housing and economic justice advocacy group pushing campaign finance reform, strengthened rent regulations, and deeper affordable housing development. “It’s like oil in Texas.”

Though questions about the influence of real estate money have swirled for decades, Weaver traced the budding trend of declarations against taking any of it to Diana Richardson’s election to the state Assembly in 2015, in a district that includes rapidly gentrifying Crown Heights and at a time when state rent regulation laws were up for renewal in the state Legislature. “Her decision to refuse real estate money in that election turned what would ordinarily be a pretty boring special election where the Democratic machine just gets to anoint the person who’s going to run and take the line to a widely covered exciting race that was really a referendum on the real estate industry and its role in politics,” Weaver said. “That became a huge touchstone for voters in the district.”

It’s common knowledge that the real estate industry has been a staple in electoral politics for decades and its members’ donations have been part of the picture across the political spectrum. Democrats and Republicans have benefited from them, none more so than Governor Andrew Cuomo, a Democrat recently re-elected to a third term. But the recent election cycle, the first since Donald Trump was elected president, saw greater awareness among voters about the power of state government and the special interests that fund campaigns. Actor and education activist Cynthia Nixon also used that backdrop to run a competitive primary challenge against Cuomo. She refused donations from real estate and issued a scathing indictment of the governor’s reliance on big donors in the industry, while calling for sweeping housing justice reforms.

Weaver also pointed to the high-profile corruption convictions of former State Assembly Speaker Sheldon Silver, a Democrat, and former Senate Majority Leader Dean Skelos, a Republican, in trials that exposed how a real estate firm, Glenwood Management, attempted to wield influence over legislation. Glenwood, an enormous donor to Cuomo and many legislators, recently made massive contributions to Senate Democratic candidates ahead of the November election where it appeared likely they would become part of a new majority in the chamber.

The primary mechanism for real estate donations has been the gaping loophole in state campaign finance law that allows limited liability companies with opaque ownership -- a common instrument in the real estate business -- to circumvent contribution limits. City Limits reported in September that LLCs had been used to donate more than $188 million to political campaigns since the late 1990s, with about $31 million given to gubernatorial candidates alone, including Cuomo. “Combining his campaign for attorney general in 2006 and his three runs for governor, Cuomo has received roughly one of every eight dollars donated by LLCs,” City Limits found. Those donations are largely dominated by the real estate industry.

Mayor Bill de Blasio has also come under scrutiny for accepting significant real estate donations, especially to a political nonprofit he established to push his agenda that became the subject of law enforcement investigations related to whether City Hall did favors for its donors.

A collaborative report in 2016 by ProPublica, The Real Deal and the National Institute on Money in State Politics tracked how real estate developers who benefitted from a prominent tax incentive called the 421-a program gave about $21 million to party committees and candidates since 2000, out of $83 million that the real estate industry donated in the same time.

“I think people are very much aware that rich donors including real estate developers and landlords are distorting our election system,” said Michael McKee, treasurer of Tenants PAC, a political action committee dedicated to affordable housing. “I think that’s the growing awareness. There’s no question about it.”

It was in that context that a slew of progressive Democrats ousted their more moderate and real estate-tied partymates from office with the support of smaller donors and by rejecting corporate backers. “The housing crisis in this city is out of control and going into a year when candidates are going to be debating rent regulations in Albany, voters wanted candidates that are gonna act with integrity and widely believed that candidates who work for the real estate industry won’t,” said Weaver.

Besides Salazar, Zellnor Myrie and Alessandra Biaggi similarly ran for and won Democratic primaries in the state Senate in opposition to wealthy real estate interests. Each of the three represents a district, much like a lot of the city, grappling with a deep affordability crisis and pockets of gentrification displacing low-income residents of color. Their opponents all received significant contributions from real estate.

The decision to reject real estate seems based in both principle and pragmatism. Biaggi made housing justice a prominent campaign issue as she successfully dethroned Senator Jeff Klein, once the powerful leader of the Independent Democratic Conference, a breakaway faction of eight senators that propped up Republican control of the Senate. Democratic voters rejected six of the IDC members, blaming them for preventing the passage of many bills, including stronger rent regulations, and replaced them with progressive Democrats, including Biaggi and Myrie.

“It’s not necessarily that taking real estate money makes you a bad legislator or a bad person...but for me, it’s very clear that it’s a slippery slope,” Biaggi said in a phone interview.

Even as she acknowledged how difficult it can be to run for office without wealthy donors, Biaggi said it was important to her to retain her independence and answer to everyday constituents, not just those who can write big checks. “The winning can’t take precedence over the fact that, once you’ve won, the people who have helped get you there are the people who are going to come knocking on the door and that’s really a very challenging thing to come to terms with,” she said. Biaggi spent about $330,000 on her campaign and won with 53.1 percent of the vote, while Klein disbursed more than $3 million to try to keep his seat and got 44.5 percent.

Salazar said her commitment, and Myrie’s and Biaggi’s, to refuse real estate donations proved that it’s possible to run a viable campaign with small donors, and build grassroots support and trust in communities by doing so.

“I think advocates have long recognized the correlation between the amount of real estate money that many electeds have taken and their failure to advocate vigorously for tenants,” she said. “When other candidates see those campaigns being successful and they see this growing and increasingly loud demand from advocates, I think that is what is translating to them paying more attention.”

Those in the real estate industry push back against being made the boogeymen of state politics. Real estate is, without a doubt, central to New York City’s fortunes and the industry comprises a large part of the city’s tax base. The sector is scapegoated more so than other industries and groups, like those in health care, finance, or education, that also employ somewhat similar tactics in state elections. And of course, many candidates regularly pursue real estate donors when running for office.

“There are people who are willing to accept our contributions because our philosophies or the ideas that we are espousing are aligned with their philosophies,” said John Banks, president of the Real Estate Board of New York, in an interview. “There are people who don’t want to accept real estate money because their philosophies don’t align with the work that the real estate industry does and there are people who move back and forth across that continuum.”

Banks pushed back against any notion that his industry has used the LLC loophole to improperly sway the political landscape to its benefit. “The real estate industry respects and follows both the letter and the intent of the law and to say that someone who follows the letter of the law is in someway undermining the legitimacy of the political process is a naive statement,” he said.

And, he noted, the real estate industry is intrinsically a part of New York’s landscape, more than any other, even finance, or technology. “Unlike some of the other industries, mobility is not something that is an option for us,” he said.

There are also Democrats, even those who call themselves progressives, for whom real estate donations are far from an insurmountable liability, even if they are unpopular with the party’s left wing. Cuomo sailed to reelection, in part by taking millions combined from LLCs and the real estate industry that he then used to overwhelm his less-funded primary and general election opponents over the airwaves. New York City Public Advocate Letitia James, not a close friend to real estate, accepted similar donations and was resoundingly elected the next attorney general of New York State. In the attorney general primary, for instance, James ran on a platform that included criticism of bad landlords and yet received $10,000 from an LLC linked to the Durst Organization, one of the largest real estate developers in the city. That LLC and seven others under the Durst umbrella also gave a combined $150,000 to one of James’ opponents, Rep. Sean Patrick Maloney, which became a line of attack from Teachout.

“The real estate industry is pretty broad and diverse,” said Jordan Barowitz, spokesperson for the Durst Organization. “I work in it, as do members of 32BJ and the super in your building and the residential broker who leased you your apartment.” He said “painting all these people with a pretty broad brush” is problematic. “Unfortunately there’s a lot of blaming in politics these days and it’s easy to point to one group or person or industry and say they’re responsible for everything that’s bad in this world and that’s pretty simplistic and wrong.”

“Honest politicians don’t take bribes and reputable donors don’t request quid pro quos,” he added.

There is a distance between bribes and quid pro quos on one hand, of course, and donations having some influence on policy-making, even if simply by virtue of how donations help candidates get elected.

McKee of Tenants PAC noted, for instance, that REBNY had begun donating larger sums in this election cycle to Democratic candidates once it seemed apparent that the party was going to regain control of the state Senate and, by result, the entire Legislature.

“REBNY saw the handwriting on the wall. They’re equal-opportunity opportunists. They don’t care who’s in the majority. They’ll try to buy influence with them by giving them money,” McKee said. “I’m not suggesting in any way that the mere fact that REBNY has started giving money to Democratic senators means that those Democratic senators are going to sell tenants out. That’s not my point. My point is that this is how they try to win friends and influence people, with big money.”

The influence of such donations can come down to seemingly small changes in policy, like the exact threshold at which an apartment leaves rent regulation, not necessarily major new legislation that would raise flags as donor-favors.

Gotham Gazette: Myrie wanted to avoid even the perception of corruption when he took his pledge, he said. “The number one reason that I did it was because...when we were gonna be facing the fight in Albany on whether or not we’re gonna protect tenants, I wanted there to be no confusion about which side I was on,” he said.

It would be hard to argue, he said, that real estate hasn’t had a corrupting influence on politics. “Albany for the longest time has passed watered down legislation,” Myrie added. “We have not protected tenants the way that we’ve needed to and that, you can draw the direct correlation to the increase in the amount of real estate donations to the Legislature. I think anyone looking at that objectively could say that it has had a corrosive effect on how we pass policy affecting our tenants.”

“Once you take that money, of course it influences how you legislate,” Biaggi said. “Now I think there are ways to protect against that, and that goes into campaign finance reform.”

Biaggi asserted that the path to stronger rent regulations runs directly through reforming the state’s campaign finance system, primarily through closing the LLC loophole, but also through lowering individual donation limits, where New York has some of the highest in the country. Closing the LLC loophole alone, advocates say, would take away real estate’s biggest weapon of political influence, and they insist it should be accompanied by a public campaign financing program, like the one currently used in New York City, to boost the voices of ordinary New Yorkers who only give $25 or $100 to a candidate.

Democrats in the Assembly have repeatedly attempted to reform campaign finance law but have been roadblocked for years by Republicans in the Senate, who have been major beneficiaries of real estate donations. Many, Cuomo included, have emphasized that ending the LLC loophole is among their priorities in the upcoming legislative session in January.

“If you had these kinds of reforms, candidates wouldn’t have to spend so much time cultivating rich people to make big donations,” McKee said.

On the other hand, Republicans have long-argued that labor unions often use campaign contributions to support and influence Democrats, and that any LLC reform should also institute limits on how local chapters of unions are classified in campaign finance law.

Weaver, from Communities for Change, said, “Not only are rent laws coming up in 2019 but I think there’s gonna be a big referendum on the role of money in politics generally…and the campaign finance stuff is also gonna be a referendum on tenant issues and real estate money in politics specifically.”

This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

by Samar Khurshid, senior reporter, Gotham Gazette

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As Affordability Crisis Becomes More Acute, Real Estate Donations Emerge as Litmus Test for Some Democrats Thu, 29 Nov 2018 05:00:00 +0000
Calls for Public Discussion of New Affordable Housing Incentive Program REBNY speaker

The REBNY gala (photo via REBNY on Facebook)

Earlier this year developers and labor unions failed to reach a deal to renew the controversial 421-a tax abatement program that is designed to entice the development of affordable housing. Gov. Andrew Cuomo and legislators agreed to extend the program early last year while putting the longterm future of the program in the hands of the special interests that benefit from it--an unprecedented move that was met with loud criticism.

With negotiations failed and the program expired, it appears that real estate groups are looking to Cuomo and state legislators to figure out new life for the program. Without it, the future of rental housing, including affordable units, in New York City is in question. Expressing serious concern, Mayor Bill de Blasio has called on Albany leaders to make the situation right.

Asked about how he would like to see the 42-1 issue resolved, Republican Senate Majority Leader John Flanagan said, "I believe that it should be people of good faith sitting in a room working - I'm not kidding - working on a compromise. The housing question in the City of New York is unbelievably important." Flanagan was speaking to reporters after giving a speech to the Association for a Better New York on Jan. 28.

Tenant advocates also want to get key players in a room to hash out a solution, but they want those meetings open to the public and including all stakeholders, not just the ones that make large campaign contributions.

Left out of the last round of discussions, advocates insist that any discussion of renewing the program should be held in full view. They want the housing committees of the legislature to hold hearings to consider alternatives to 421-a. "Everything in Albany is done in secret," said Michael McKee, treasurer of Tenants PAC. "You would expect the housing committees to hold public hearings on this, but that is just not convenient."

"I would like to see more of a public discussion so that maybe REBNY will come and tell us what happened in negotiations," said Thomas Waters of the Community Service Society, referring to the Real Estate Board of New York, the major association of developers and one of the two main parties left to negotiate an extension of 421-a.

"No other interest gets this kind of special treatment," Waters said, referring to real estate. REBNY and individual developers are known to be among the most prolific campaign donors and spenders throughout New York.

Dan MacEntee, spokesperson for state Senator Betty Little, who chairs the Senate committee on housing, said that there had yet to be any discussions on hearings. "The Senator does recognize the impact of the program and would like to see it continue," MacEntee told Gotham Gazette of 421-a. Little, a Republican, represents several upstate towns.

A spokesperson for Assembly Member Keith Wright, a Harlem Democrat who chairs the Assembly housing committee, said that Wright was not available for comment.

Senator Liz Krueger, a Democratic member of the Senate housing committee, believes that there should be a joint hearing of the legislature's housing and finance committees before anything on 421-a is decided, given that the program deals with housing and taxes. Krueger told Gotham Gazette last year that she would like to see 421-a replaced with a more efficient program.

However, many legislators and advocates say that REBNY is pushing Cuomo and legislators to move quickly on a basic renewal, and one that either does away with Cuomo's insistence last year that prevailing wages for labor are included, or sets a lower increase than the building trades council sought during private meetings.

REBNY President John Banks recently wrote in Real Estate Weekly that he is committed to working with stakeholders to "address the need for more rental housing" while pushing back against calls from labor and Cuomo to include a prevailing wage requirement.

"Given the high cost of property taxes, land costs and construction costs, most owners will opt to do something else rather than build multi-family rental housing with a substantial below market component unless there is a tax benefit program like 421a in place," wrote Banks.

"For example, in the absence of a tax benefit program like 421-a, in many areas of the City, owners will build market rate condominiums where sales prices can offset the high cost of new development (e.g., property taxes, construction, land)."

Advocates say the city simply isn't getting the return on its investment through 421-a and that if the creation of affordable housing is what is motivating public officials then finding a more efficient alternative is paramount.

"The first step is to let 421-a die and spend the money on other housing programs," Waters told Gotham Gazette. "Rather than a program that provides the right to a tax break I'd like to see something like the federal low-income tax credit and have developers apply and have the credit go to those who provide the most affordability."

Tenant advocates have long decried the 421-a program as terribly inefficient.

Waters research has shown that 421-a has only produced one affordable apartment for every $833,000 in tax breaks. "Before the state acted to renew 421-a last June, New York City was foregoing $1.1 billion in revenue each year for a program that led to no more than 1,275 apartments per year," Waters recently wrote in NY Slant.

Meanwhile, advocates point out that provisions in the state's rent laws allow landlords to deregulate 20,000 affordable apartments a year, with landlords voluntarily reporting the deregulation of around 6,000 affordable apartments each year.

"As far as I'm concerned the lapse of 421-a can only be a good thing," said McKee of Tenants PAC. "It is an absurdly inefficient way to get affordable housing. Even if you deliberately tried to create an inefficient program it would be hard to end up with something as absurd as 421-a. I could design a better program than 421-a in my sleep."

A number of observers see the failure to renegotiate 421-a as just another example of how the feud between Mayor Bill de Blasio and Gov. Cuomo has impacted public policy. Last year de Blasio announced a deal with developers to renew 421-a - the mayor was anxious to renew the program that is a key piece of his promise to build 80,000 units of affordable housing over ten years.

Cuomo countered, saying de Blasio had a reached a sweetheart deal with developers and blamed the plan for disrupting the legislature's negotiations. In the end, Cuomo and legislators reached a deal that included much of de Blasio's plan. It mandated that 25 to 30 percent of projects be set aside for affordable housing, banned most coops and condos from receiving abatements, and increased the length of the abatement from 25 to 35 years. All of that came with the caveat that real estate and labor had to come to a deal on wages.

Now many doubt de Blasio will have much of a say at all on the program as legislative leaders and the governor negotiate behind closed doors. Gov. Cuomo has spoken to the importance of reestablishing an affordable housing program at the state level. The de Blasio administration has lamented the loss of 421-a while simultaneously downplaying its importance.

"Having every single set of a tools at our disposal is optimal," Deputy Mayor Alicia Glen told Gotham Gazette when asked about the uncertainty around the 421-a program. Glen noted that the city has several programs at its disposal to encourage the construction of affordable housing but each one is important. "Not one of these individual levers not being available will undermine our efforts or significantly impact our plan, but not having something, a tax 421a, you know, does hinder our ability to do what's really important...which is to make sure that there is affordable housing in every corner of the city."

by David King, Albany editor, Gotham Gazette

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Calls for Public Discussion of New Affordable Housing Incentive Program Tue, 02 Feb 2016 23:50:22 +0000