The prolonged state budget negotiations this year didn’t leave lawmakers much time to pass bills before the end of this year’s legislative session. For real estate, that’s a blessing.
It seems like the industry plays more defense than offense in Albany because bills that would hurt property owners and developers outnumber those that would help.
I have no data on this. It’s just my impression. But I know for certain that for bills opposed by real estate, the industry is thankful that it can run out the legislative clock every June — unlike at the New York City Council, which operates year-round.
One measure that landlords are trying to stop is the Rent Emergency Stabilization for Tenants Act, or REST, which would allow localities to enact rent stabilization without showing that vacancy is below 5 percent.
Sen. Brian Kavanagh and Assembly member Sarahana Shrestha introduced the bill after Kingston, Poughkeepsie and Newburgh allegedly rigged their surveys to show a low vacancy rate, only to be challenged in court.
The vacancy requirement stems from the idea that in capitalism, price controls should be used sparingly and only in emergencies.
But rent control enacted during such an emergency — when soldiers returning from war flooded the housing market — spawned a constituency that favored permanent price limits. As a result, rent stabilization and the “housing emergency” that justifies it have been a fixture in New York City and some suburbs for more than half a century.
Among the many flawed arguments for the REST Act is this one from longtime Tenants PAC leader Michael McKee:
“If we trust local governments to handle public safety, zoning, budgets, and everything else under the sun, we can trust them to decide whether or not they want to stabilize rent,” he wrote on Substack.
New York doesn’t trust local governments to handle “everything else under the sun.” An axiom of New York politics is that the city is a creature of the state. Newburgh’s “good cause eviction” law, for example, was thrown out in 2022 because it violated the state’s multiple dwelling law.
The reason the state does not let local governments run amok is that their decisions tend to be selfish, myopic and not in the best interest of the state or region. Local zoning, for example, is a primary cause of the housing crisis and high rents.
What we’re thinking about: I received a notice from the state Department of Taxation and Finance saying my STAR tax credit was denied because my income in 2022 exceeded $500,000. Unfortunately, my income did not exceed $500,000, which the department can easily see from my state tax return.
I called the agency and said, “Please look again.” Instead, it offered me a “reconciliation conference.” Fine, I said; that should be an easy conversation.
Then I got a second notice saying I would get a third notice with a meeting date at least 30 days later, but “it may take 9 months or more.”
What has been your favorite interaction with state government? Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: A landlord who read my column about the end of buyouts for rent-stabilized tenants tweeted that he has an 85-year-old tenant who can no longer get up and down the stairs from her fifth-floor unit. “She’s homebound for the rest of her life,” he wrote. “I’d love to give her $100,000 to move, but I can’t.”
Elsewhere…
Another state bill that business interests are trying to stop this session is an expansion of the prevailing wage for construction workers, which would raise the cost of some affordable housing projects.
It’s sponsored in the Senate by Jessica Ramos, a longshot mayoral candidate best known for opposing a casino proposed by Mets owner Steve Cohen in her Queens district. Rochester’s Harry Bronson is the Assembly sponsor.
Prevailing wage kicks in for projects getting at least 30 percent of their funding from the public. The Ramos/Bronson bill would reduce that threshold to 20 percent. It would also eliminate an oversight board that found only six of the 36 projects that it reviewed required prevailing wage.
Bill opponents say that without such oversight, prevailing wage would be improperly imposed on many projects. Ramos and Bronson say the high rejection rate proves the board is ineffective.
This week, more than 50 business groups and other organizations launched a statewide coalition seeking to defeat the measure. The group claims that while 40 states added construction jobs last year, New York lost 7,000 of them, in part because its construction costs are among the highest in the nation.
The Business Council of Westchester found in 2020 that prevailing wage increases the cost of construction by 30 percent. A 2017 study showed increases of 13 percent to 20 percent.
Closing time
Residential: The priciest residential sale Friday was $46 million for 973 Fifth Avenue, a 16,000-square-foot house on the Upper East Side. The seller is linked to a former Goldman Sachs partner David Leuschen. The Corcoran Group’s Carrie Chiang had the listing.
Commercial: The most expensive commercial closing of the day was $8.3 million for 2160 Holland Avenue. The Bronx apartment building has 85 units and six stories totaling 82,500 square feet.
New to the Market: The highest price for a residential property hitting the market was $20 million for 1 Central Park West’s Unit 48A. The Trump Hotel condo unit is 4,500 square feet and listed by the Corcoran Group’s Leighton Candler and Jennifer Reardon.
Breaking Ground: The largest new building application filed was for a 37,556-square-foot, seven-story, mixed-use building at 3242 Riverdale Avenue in the Bronx. Diego Aguilera of Diego Aguilera Architects was the applicant on file.
— Joseph Jungermann