Tag Archives: NYC

Affordable Enough for NYC?

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Real Affordability for All has released a report, Real Affordable Communities: Mayor Bill De Blasio and the Future of New York City. The report opens,

Across the five boroughs, the affordability crisis is growing every day. Today, low- and moderate-income New Yorkers continue to be priced out of their neighborhoods. The incomes of countless New Yorkers are not increasing while rents keep rising. The growing gap between lower incomes and higher rents is making New York City increasingly unaffordable.

Indeed, a recent study released by StreetEasy, The High Burden of Low Wages: How Renting Affordably in NYC is Impossible on Minimum Wage, found that a New Yorker earning $15 an hour could afford just one neighborhood: Throgs Neck in the Bronx.

“The extent to which rent growth has outpaced income growth in New York City means low-wage workers face three options: find several roommates to lower their personal rent burden, take on more than one job, or move out of New York City,” the study finds.

According to a close analysis of the most recent Census data, Bloomberg’s housing efforts generated a shortage of more than 400,000 affordable units for low-income New Yorkers. Low-income here is defined as a household earning less than 50% of Area Median Income (AMI). For a household of four, that means an approximate annual income of less than $42,000. (In 2012 New York City area median income was $83,600 for a family of four; the 2015 New York City area median income for a family of four is $86,300).

Overall, utilizing the 2012 census data, more than 700,000 low-income New Yorkers were left behind by Bloomberg’s housing plan. To tackle the affordability crisis, Mayor de Blasio has proposed preserving or creating 200,000 units of affordable housing. He wants to achieve that goal through mandatory inclusionary zoning and dense new residential development in various neighborhoods.

To succeed, de Blasio will need to avoid repeating the mistakes of Bloomberg’s housing agenda, and ensure that real affordable housing is created for the huge number of low-income New Yorkers who were not served by the previous administration and still struggle to survive. (1-2)

The Real Affordability for All advocates that “Low-income neighborhoods like East New York and the South Bronx will be empowered to offer a ‘density bonus’ to developers in exchange for real affordable housing below 50 % of AMI and for career-oriented union construction jobs for local residents at new development sites.” (7)

The report provides an example pro forma for one building to demonstrate that this plan is do-able. The report does not, however, indicate where the De Blasio Administration would find the $15 million in additional subsidies it would take for this one building to be built according to the Real Affordability for All guidelines.

At this point, the plan is more of a wish list than a serious proposal, but it does make clear that there is a deep need for deep housing subsidies among low- and moderate-income households.

Wednesday’s Academic Roundup

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Rapid Growth for Property Managers

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hot air balloons

Buildium.com quoted me in Can Rapid Growth Endanger Your Business? It reads, in part,

For property managers, the prospect of rapid growth can be thrilling. You lease the units in your first building, fill vacancies quickly, add services that let you charge higher rent, the building owner compliments your work, and before you know it, you’re thinking: “Why not more?” After all, why waste a great opportunity to make more money by simply repeating what you’ve done so well at your first property? All the stars seem aligned…

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7 Steps to Find Out If You’re Ready to Expand Your Property Management Portfolio

Here are seven steps to take before fast-tracking you company’s expansion:

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#6: Know the local rules & the laws

If the buildings you manage are different entities — one rent-controlled and the other a cooperative in an historic neighborhood, for example — you must understand their different requirements. The same can hold true for buildings in different communities where regulations covering trash pick-up and snow removal may vary.

And differences can be even greater for buildings in different states. In New York City, multifamily buildings with more than four units [may be] rent-regulated and involve a complex set of regulations between landlord and tenant, says attorney David Reiss, a professor of law and the Research Director at Brooklyn Law School’s Center for Urban Business Entrepreneurship. “If you don’t know what they are, it can be a recipe for disaster,” he says.

Also important to know, he says, is that some buildings are located in historic districts, which the Landmarks Preservation Commission can authorize, and that affects how owners and managers can renovate, rehab, and maintain exteriors, Reiss says. “You might have to place an air conditioning unit a certain way.”

#7: Consult with other property managers

Besides doing your homework, talk to owners and managers of similar properties who’ve expanded beyond a single listing. Reiss says many communities have property management organizations that share information, or your city or town may have an association of like-minded businesses. If not, maybe, you can become a local hero by starting one.

 

Airbnb in NYC

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Airbnb latte

New York Communities for Change/Real Affordability for All have issued a housing report, Airbnb in NYC. This is an advocacy piece that raises important questions about how Airbnb is changing the nature of housing markets in a hot destinations. The report states that

A new independent analysis of Airbnb’s website by www.InsideAirbnb.com shows that nearly 16,000 or just under 60% of Airbnb listings are entire homes or apartments for rent (in violation of state law and/or NYC zoning laws), and that they are available for rent an average of 247 days a year. To put that in perspective, those 16,000 Airbnb listings that are not available for everyday New Yorkers would be the equivalent of a loss of approximately one full year of Mayor de Blasio’s ten-year plan to build and preserve 200,000 affordable housing units, negating nearly all of the affordable apartments the administration has financed in the past year.

Despite Airbnb’s claims that the nearly 90 percent of their listings are from regular New Yorkers renting out spare rooms to make extra cash, the InsideAirbnb.com data show that nearly one-third of Airbnb listings come from hosts with multiple units, such as commercial landlords. (3)

While Airbnb has criticized the methodology of this report, it does appear to undercut Airbnb’s characterization of its hosts.

Opponents of the sharing economy will find a lot in this report that confirms their concerns. For instance, in the top 20 Airbnb zip codes in NYC, “housing units are rented on Airbnb for rates equivalent to more than 300% of the neighborhood’s average rent.” (5)

But supporters of the sharing economy will also find much to confirm their own views: “In 20 different zip codes in Manhattan, Brooklyn and Queens, entire/home/apartment Airbnb listings comprise at least 10% of total rentals.” (5) Supporters will say that the people have spoken with their pocketbooks — the sharing economy is here to stay, notwithstanding what the law says.

The sharing economy continues to shake up the old economy. The fact that so many Airbnb listings in NYC appear to violate the law means that the controversy over its appropriate role will probably come to a head sooner rather than later. The outcome of that controversy will then spill over and permeate the hottest residential neighborhoods in the hottest cities in the U.S.

Showdown at the Dakota

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"The Dakota May 2005" by Makemake at the German language Wikipedia. Licensed under CC BY-SA 3.0 via Wikimedia Commons - https://commons.wikimedia.org/wiki/File:The_Dakota_May_2005.jpg#/media/File:The_Dakota_May_2005.jpg

Jeremy Cohen, a partner with Wolf Haldenstein Adler Freeman & Herz, and I discussed a lawsuit brought by a New York City co-op owner who says he’s been unable to move into his apartment at the famed Dakota coop for 16 years.

We spoke with June Grasso on Bloomberg Radio’s “Bloomberg Law” show. The podcast of the show is here and the complaint in the case is here. A Bloomberg news story summarizes the allegations:

Robert Siegel, chief executive officer of Metropole Realty Advisors Inc., said in his lawsuit that he paid $2.23 million in 1999 for an apartment at the Dakota and has never spent a night there because the board refused to approve his renovation plans and took part of his unit as storage space for the building. He’s seeking $55 million in damages and a court order allowing him to make the renovations.

“These bad-faith acts foreclosed the possibility of Mr. Siegel constructing bedrooms there and thus ensured that the apartment could not be used by Mr. Siegel and his family,” according to the June 29 complaint, filed in New York State Supreme Court.

Before buying the street-level duplex at the building on 72nd Street and Central Park West — once home to celebrities such as John Lennon and Lauren Bacall — Siegel got permission from the co-op board to convert the lower level into four bedrooms with air conditioning for his children, according to the lawsuit. Once the sale was complete, the board said it would only approve Siegel’s plans if he agreed to buy additional shares of Dakota co-operative stock for $1.8 million, which would about double his monthly maintenance charges, according to the complaint.

After Siegel refused to make the additional payments, the board voted to reclassify half of Siegel’s apartment as “non-habitable storage space,” according to the lawsuit. The board also barred him from adding air conditioning or ventilation to the lower level, thereby making it unsuitable for bedrooms, according to the complaint.

The Challenge of Rising Rents

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NYU’s Furman Center has issued a research brief, The Challenge of Rising Rents: Exploring Whether a New Tax Benefit Could Help Keep Unsubsidized Rental Units Affordable. The brief considers whether the creation of “a new property tax subsidy program aimed at maintaining affordability in buildings that currently provide affordable rents could be attractive to owners.” (1)

The brief concludes that

The bulk of New York City’s housing stock that is affordable to low-income households is in buildings that currently receive no government subsidy to maintain low rents. In a city where the real estate market is booming and the supply of housing is constrained, the upward pressure on these rents is likely to continue. However, our analysis here suggests that there are some markets in the city where an owner of an unsubsidized building would agree to restrict future rent increases in exchange for a tax benefit.

If owners think their building is in a neighborhood likely to experience rapid rent increases, they are not likely to participate in a program like the one we have outlined. But, owners who are less optimistic about rent growth in their neighborhood may be willing to sign up in exchange for the certainty of a 30-year tax break. Owners might be more likely to participate in this program than our modeling suggests if it were bundled with another benefit or if the regulatory requirements were less onerous. (11)

This is obviously a good exercise to undertake, but I wonder if most landlords believe that their buildings are like Lake Wobegon children — above average, one and all. So, if the success of this proposal rests on reaching pessimistic landlords, it may be relying on a very small pool of landlords indeed.

The Dense State of NYC’s Housing

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NYU’s Furman Center released its State of New York City’s Housing and Neighborhoods in 2014. I found its discussion of urban density to be the most notable aspect of this nexcellent and data-rich annual report. The discussion on density concludes,

The renewed attractiveness of New York City since the 1970s means population will likely keep increasing, and so will population and housing density. In 2010, few other U.S. cities had any neighborhoods that matched the density experienced by the typical New Yorker. Yet, by recent historical standards, today’s density levels are not extreme. In recent years, the typical New Yorker lived in a lower-density neighborhood than the typical New Yorker in 1970, as population growth in the city since 1980 was focused in moderate-density neighborhoods. Further, while great disparities in education and crime across neighborhoods exist, these differences are not generally associated with density levels.

High density cities like New York are playing an increasingly important role in the economy as drivers of productivity and innovation. This means the accessibility of the city to new residents is important both for New Yorkers and the nation. We have demonstrated that significant numbers of new residents can be accommodated without elevating density to levels above what the city has historically experienced, and that high-density neighborhoods do not perform lower on key quality of life indicators. City officials will need to ensure that neighborhoods have sufficient infrastructure to accommodate their new residents. (20)

This last point is key: density is not a problem so long as the appropriate infrastructure is built to support it. And while current residents are concerned about the impact of local increases in density, the city as a whole benefits from the increased economic activity and cultural creativity that comes along with heightened density. The De Blasio Administration knows this. Other local elected officials should sign on to increased density along with thoughtful zoning and infrastructure policies.

As a final note, I would compare the transparent acknowledgement of the report’s financial sponsors in the front matter with the much less transparent acknowledgment found in Harvard’s Joint Center for Housing Studies State of the Nation’s Housing 2015 report that I blogged about yesterday.