One step closer to budget deal and housing package

Each week we provide analysis of all the news you need to know about New York's ongoing housing crisis.

This week we'll cover some of the good, the bad and the ugly happening in New York housing. The good? We're one step closer to a state budget deal and hopefully a housing package. The bad... politicians are manipulating data for their own political agenda and downplaying the actual issues; and the ugly: bad landlords who cast a negative light on the many good owners out there. 

Shoutout to CNBC's Leslie Picker for her recent reporting on the fallout from New York City's rent stabilization law.

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Transcript

 This week, we want to cover some of the good, the bad, and the ugly happening in housing. The good, we're one step closer to a budget deal and hopefully a housing package. The bad, politicians manipulating data for their own political agenda and downplaying actual issues. And the ugly, bad owners who cast a negative light on the many good owners out there. 

Stay tuned.  We declared a housing emergency over 50 years ago. We need 800, 000 units.  What we have right now in the United States and what we have right now in New York City is almost a crisis of absurdity. We have to figure out a way to get these vacant units back online in a reasonable way that sets a rent that's affordable for most people.

And if it isn't, we hear from New Yorkers all the time, housing, housing, housing, housing. And welcome to Housing New York. I'm your host, Jay Martin. Each week we provide analysis of all the news you need to know about New York's ongoing housing crisis. If you don't know, I worked in the state Senate for more than a decade.

Now I lead the community housing improvement program, where we advocate for smarter housing policies that will help all New Yorkers. All the opinions in this show are my own and do not necessarily reflect the views of CHIP or its members. We're taping this Thursday morning of March 14th. So let's recap this week's top stories and stick around.

Cause after the news, I'll share my perspective on our current housing situation and what you need to know. going into the weekend.  Now's really when things start rolling in Albany. Uh, this week both houses put out their one house budget proposals. This is basically the blueprint that will lead negotiations over the next two weeks where the April 1st deadline for the state budget is due.

Um, the assembly side put out a very skinny on policy budget proposal as they often do. The Senate side was much more housing intensive.  And it, uh, wrapped up a lot of different issues. The real deal covered this in an article by Catherine Brazil called here's what the New York Senate real estate agenda does.

And doesn't include,  it talked a bit about how the Senate Democrats are once again, excluding a specific replacement for four 21 a, but they intend to address the expired property tax break as part of a comprehensive housing package that would also include the core principles of good cause eviction.

The Assembly's version does not mention either the tax break or good cause eviction. Rather than settling the long standing tensions around these two policies, the Senate's resolution only underscores the distance between the various stakeholders. This is something that's been constantly coming up in Albany and obviously has led to a bit of pessimism whether or not an actual deal could come together over the next two and a half weeks.

Hope springs eternal, but there's Still a lot of distance between those who are looking for a more supply-side solution to the housing crisis and those who believe that the only way to provide affordability is to regulate rents.  Uh, the article goes on to highlight a little bit more about Governor Hochul's plans for a new incentive program to build new developments and the omission of some of the vacancy proposals that organizations like ours have been proposing.

but a recognition from the Senate that there needs to be an adjustment of perhaps the IAI, IAI program and a putting aside of money for property owners to access to do renovations.  One of the more frustrating stories and reports we had to deal with this past week was a report by the New York City Comptroller Brad Lander to highlight what he argues is an extremely low infection rate.

nonexistent vacancy rate among low rent, rent-stabilized units.  Now, we know, and our organization has known by working with our property owners, that there are tens of thousands of rent-stabilized units that are currently vacant. The debate that the Comptroller is making is that those units are not low rent and that they're not in need of substantial renovations.

His argument is based off of the very limited information provided in the Housing Vacancy Survey, and And that information comes from census takers who are not building inspectors, uh, visually looking at some units and determining that a few of those units under 2, 000 need renovations. So that is where he's coming up with that 1, 700 figure of very low rent units in need of renovation.

The problem with that is it doesn't address the 26, 000 currently vacant rent-stabilized units across the entire rent-stabilized universe. We know those units exist. He also highlighted Unfortunately, 2021 sales data, which he claims supports the idea that property values based on sales and rent-stabilized buildings have not fallen.

We know this claim to be absolute nonsense. It can take anyone looking at currently for sale buildings. On sale for 50, 60 upwards of 70 percent off what they were for sale for just four or five years ago, in some cases, two or three years before 2019 to see that HSTPA has had a significant impact on the value of these buildings.

Now, tenant groups might say that this is a good thing that the devaluations have happened, and even the controller might believe that. But what is not deniable is that it's happened, and he is arguing that it hasn't. So, we look forward to refuting his claims and pushing back on this. There are folks, unfortunately, in the legislature who believe that vacancies are not a problem.

And so we need folks within the industry, we need everyone involved in this conversation to make sure they know. What's actually going on in the rent-stabilized housing market? Nearly half of all apartments in New York City are rent-stabilized. That's causing big problems for some lenders. Thanks to a 2019 law that many didn't think of much of the time.

One validation that there are vacancies in the rent-stabilized. Market is that we know the national media is talking about it on Thursday morning. CNBC reported from a vacant apartment What an apartment can look like when a tenant moves out of a rent-stabilized apartment after living here for nearly 30 years 778 Lower East Side apartment that needed at least 50 000 in renovation That the owner did not have to renovate and put the apartment back on now if you believe The prior reporting and the controller and HPD, that vacant unit does not exist.

The CNBC report also talked about the financial impact these vacancies are having not only on the valuations of the properties, but the loans that the buildings have on them and the ancillary effect that has on the lending institutions like New York community bank, as we've talked on prior podcasts. 

New York Community Bank was covered in Reuters. They highlighted the fact that the former Treasury Secretary, Steve Mnuchin, and his firm infused 1 billion in capital into the bank, which is struggling severely. A lot of people have reached out to me over the course of the last week asking kind of what this is and what this means.

Uh, I think it's pretty clear that the former treasurer's secretary is an aggressive investor. I think on prior earnings calls, New York Community Bank has already mentioned that they are going to be moving rapidly to de-leverage themselves from the exposure they have in rent-stabilized loans. I think the treasurer secretary's investment is a signal that they see value in the bank itself But they are very concerned about the exposure that it has the rent-stabilized loans broadly coming back to the city The New York City Council Progressive Caucus presented a two billion dollar proposal called homes now homes for generations Which proposed a two billion dollar package to? 

Buy and preserve 10, 000 units of affordable housing, including rent-stabilized properties that would be renovated through HPD at a cost of over 100, 000, which is kind of interesting considering rent-stabilized owners under the current law are capped at 15, 000 on their renovations. So in one breath, The Comptroller and the Progressive Council are standing and saying the government should be able to work with HPD to seize properties through a third-party transfer program and renovate them at a cost of over 100, 000 with government funding.

But if a rent-stabilized owner owns them, they should be capped at 15, 000 on their renovations. The math isn't adding up, it's not mathing, and it's something that isn't really terribly helpful to the overall housing discussion. But what is is the speaker in her state of the state or state of the city address, I should say, mentioned a reform of the city FEPs program, which we have highlighted many times.

As we saw,  it provides a pathway for people to exit shelters and can also be a tool for prevention, helping families at risk of eviction remain in their homes instead of slipping into homelessness.  She talked about the quagmire of paperwork and bureaucracy. that FEPS voucher holders have to navigate when they're waiting in shelters for housing, the property owner has to work with them and for a period of six to eight months to get them into a unit of permanent housing.

We can cut that down. The speaker, to her credit, flagged that. Most people who need help don't have the luxury of time to sink hours into this puzzle because of their work and family obligations. Wants to work with property owners and with the city agencies to get the FAPS voucher program as a much more effective program.

We fully support it and really appreciate her leadership on that issue.  I think President Joe Biden has actually listened to the podcast. The bottom line, you have to build, build, build. That's how we bring housing costs down for good.  Not so happy to hear that he believes property owners are colluding to kind of control the market on rents, something that we have talked about with local elected officials, that it's not so much something owners do, as something that they are monitoring the market and reacting to pricing that's going on.

in real-time,  but we will remain open-minded as to what the president suggests. He also talked about tax credits for new first time homebuyers and the 258 billion to preserve over 2 million of housing units. We're supportive of all efforts to guarantee affordable housing. We also know that there has to be an effort made to tackle the cost of providing housing, something we're constantly talking about.

The government always is interested in subsidizing the cost to the user of affordable housing, but Very rarely interested in tackling the cost of the construction and maintenance of that housing. And if we tackle the problem from both ends, we can probably save the government a lot of costs in the providing of the rental housing.

At the same time, it'll also help private property owners.  Now over to the news on inflation, just when we thought things were improving, inflation went up more than expected in February, with the consumer price index rising by 0. 4 percent and up 3. 2 percent over the last 12 months, and you know, this is something that obviously directly affects the housing market and rent increases.

Unfortunately, many lawmakers kind of write this off as greed, but every cost input that goes into the cost of providing housing is affected by inflation. And so just as the cost of basic goods goes up, the cost of housing goes up and every input that goes into it. So working collaboratively and collectively with property owners.

And lawmakers, we can figure out a way to tackle this, but again, if the constant response to inflationary cost drivers is simply the landlord is only trying to make more profit, when in reality, they're trying to cover more cost, then we're going to keep the cost. In this vicious cycle of blaming greed on inflationary cost drivers.

Last week we talked about how a statewide right to counsel program should also cover small owners. Well in Albany, just the suggestion that it cover small owners killed a program to stop evictions.  The Times Union's Steve Hughes covered Albany County Legislature's fails to pass an eviction prevention program.

So the legislature was considering Albany Legislature's Sam Fine, who originally sponsored the bill, said on Tuesday, He was quote unquote deeply disappointed not to get the support to pass an eviction prevention and intervention collaborative,  which had put 160, 000 in funding aside, 60, 000 to pay for attorneys and advocates for tenants facing eviction, and 100, 000 to help residents under certain economic thresholds pay for past rent. 

There was a debate that ensued. And the support wasn't able to be put together because there were questions asked about whether or not it should cover small property owners who might also need legal assistance during eviction proceedings. Again, this touches on something we talked about on prior podcasts.

There needs to be a holistic approach to funding housing court, making sure it's effective and efficient for all sides of both parties and most property owners we speak to want. Renters who have legal representation. They just don't want that legal representation to work in a way that delays proceedings forever.

Because more often than not, that actually adds rent arrears. That just delays the inevitable, makes the renter owe more money, accumulates more debt on the property owner's side when they have more bills to pay.  Which brings me to someone who should pay for their own legal fees. Unfortunately, um, Mahir Zavari from New York Times covered one of New York's worst landlords faces arrest over building neglect.

I happen to be quoted in this story by saying bad property owners are a threat to good property owners. For the last several years we have asked owners to sign a code of conduct to conduct their their businesses as honestly and fairly to their renters as they possibly can.  Uh, Daniel Obshalom has been a property owner that time and again has not done that, unfortunately.

And there are other owners like that around the city that are not good, frankly, who have violations, they don't cure.  Look, we're the first to advocate for property owners when they need resources, when they need more funding into their buildings, when they need rent increases, frankly, to cover the expenses and make sure that their buildings are safe for their renters.

We believe in a holistic housing policy and approach. But if you're going to ignore violations, if you're going to ignore HPD, if you're going to ignore tenant groups reaching out to you for help, if you're going to frankly ignore your responsibility as a property owner and create unhealthy conditions for renters, then you frankly deserve anything that comes your way.

And we are not going to be, as an industry, I don't think we should be providing safe haven for property owners like that because that forces lawmakers, frankly, to come up with worse bills and worse regulations for those good owners. The vast majority of owners who are doing everything that they can to provide safe, affordable, well kept housing under a very strict and difficult and expensive regulatory regime.

So collectively as an industry and as an organization, I think we should also make sure we're making examples of those who are not being the best examples of our industry and highlighting when they aren't.  Speaking of ignoring, uh, court orders, uh, it's the Wild West up in Newberg, uh, even after lawsuits and fights to stop an action of the rent guidelines board and rent regulation, Newberg has named a new.

Rent Guidelines board member. A week after the Landlord Association challenged the city of Newburgh rent stabilization law. The City Council Monday night approved nine people to serve on a rent guidelines board. All members must be city residents, and the council's vote was unanimous.  Obviously, we stand in support with the property owners who are making sure that if they will, of the voters and the Board of Newburgh is to enact a rent stabilization system.

That's done fairly and many of the owners believe that The vacancy survey in which. This vote was taken, was not done fairly, and we're advocating for it to be done fairly and determine what the true vacancy number is in Newburgh and that any regulations, in fact, once put in place, account for their actual expenses.

Certainly, Newburgh is pushed for rent rollbacks and rent decreases, and when, at a time when we're seeing inflationary numbers, And we're seeing the cost to operate housing go up. It seems unlikely that the rent not covering those expenses would be fair.  The Rent Guidelines Board in New York City, speaking of which, is getting ready to start its meetings.

Its first meeting is coming up already on Thursday, March 28th. Our website will have this information and you can also view this information on the RGB's website. Various reports will be issued and highlight the economic situation and around rent-stabilized housing before the final vote takes place in late June.

That vote will determine the rent rate or rent possible rent increases on one and two year leases and the rent-stabilized housing stock. We hope it does not devolve into the absolute circus that it devolved into last year in which city council members jumped on stage and screamed and yelled and threatened existing board members.

Look, we are very cognizant of the serious concern of affordability. But we believe the numbers will speak for themselves. Costs have gone up, expenses have gone up. We are fully advocating for everyone who qualifies for screen injury to apply so that they can get rent freezes for everyone who qualifies for a voucher.

But we have housing, we have housing costs, and they must be covered by rents. And if they're not covered by rents and the RGB increases, then that money has to come from somewhere. So let's figure it out together.  Our last item is something we're very excited about. We are working with Skye Ostreicher, who, um, first of all, I've never met her or you've never seen her online, just a ray of sunshine, just an amazing person.

Always positive, very exciting to work with. She was the voice of city and state doing interviews, um, for that publication. She's going to be working with us to start a new series where we're trying to dispel and break down some of the. Questions that are had in and around housing, much less about pushing a specific agenda, but much more about talking to everyday New Yorkers, doing interviews on the street, getting into depth about certain topics in and around housing to provide more information.

It's all part of a growing presentation we're putting together through our organization. To make sure New Yorkers have kind of a one-stop shop, both on this podcast, on our TikTok and social media accounts to find out what's going on in housing, questions they may have and how they can get involved. 

That's a wrap on this week's news. Now for some final thoughts on what you need to know.  I've been in politics a long time, about 17 years total, actually, probably more than that. I think my first campaign was, I was 18. I had a non-paid role.  I'm coming up on 42 in July.  I've seen a lot of things this week.

I saw some things that I never thought I'd see before, which is city agencies and elected officials very clearly denying reality. And of course, you know, we talk about we get jaded in politics and we talk about, you know, lawmakers and elected officials not being truthful and everybody says, you know, politicians.

But I've always hold out hope that, you know, at the end of the day, there's a gray area between the truth and the lies. What people are trying to do with the best intentions. We're in a very real housing crisis. And the rent stabilized housing stock of over 900, 000, nearly a million apartments, is the front line of that housing crisis. 

It's systematically being defunded by the 2019 rent laws. There's no denying that. There's no denying that those properties have been systematically devalued by the 2019 rent laws. In fact, if you ask some lawmakers, they will flat-out tell you that was their goal. They believe the laws before that were too lenient and too beneficial, financially beneficial to the property owners.

The idea that agencies and organizations would put out reports and talk to the press and claim that The law has had no impact whatsoever on the financial well-being of these buildings that has had no impact on the vacancies. When everyday New Yorkers can look at buildings for sale, they can look at buildings that they live in and know that there are vacant units.

The thousands of property owners we work with who report vacancies, DHCR  who gets them reported to them directly knows that there are many low-rent unit vacancies and many more than the agencies Claiming is very concerning because if agencies will do that, what else will they mislead the public on, especially in the throes of a housing crisis?

Look, no one is denying that the vacancy rate is low and no one is denying that there is a tremendous need to build new housing. In fact, We took a position in our organization, and we're very proud of this. As a landlord, property owner organization, for lack of a better term,  we support new housing.

That's something that's not historically, something that's attributed to property owners. Generally, it's believed property owners benefit from a lack of supply.  We don't take that position. Our units are rent-stabilized. Whether or not there is a thousand new units built on a block or 10, 000 in the city, our units are always going to be needed because they are workforce housing and they are tremendously important to the well-being of New York.

We just ask that we are able to set a rent that covers their operating costs, and the 2019 laws prevent that from happening. And as long as that remains, Their well being and the quality of that housing will continue to deteriorate for the New Yorkers that call them home day in and day out.  And if lawmakers and leaders in this city and state continue to deny that reality, it's only going to keep getting worse.

Banks are collapsing. Massive amounts of wealth are being lost. and financial well-being are being lost. Generations of equity are being lost. Some lawmakers may not care about that, but what they should care about is the impact that we'll have on the property taxes and the values that the property taxes pay into for the City of New York.

All of housing is holistic, and if housing doesn't have money to function, it doesn't function for the renters in them as well. So we're hopeful for some relief in the budget package, We're pessimistic that lawmakers will come together for a comprehensive solution, but we will continue to push and advocate because the problem is not going away.

It is only going to get worse and we need real solutions to our housing crisis. 

We appreciate you listening each week. We'll continue to provide the most up-to-date information and the nuance perspective you need to engage with the world of New York housing. We all call this city home. And it's going to take all of us working together to solve this crisis. If you have any thoughts, comments, or suggestions, you can reach out to us at chipnyc.org.  Catch you all next week on Housing New York.