Tag Archives: rent stabilized

Mamdani and Affordable Housing Development

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CNN quoted me in Zohran Mamdani Has Big Housing Plans. Here’s What Stands in The Way. It reads, in part,

Mamdani’s rent freeze plan could undermine his goal of building 200,000 publicly subsidized, rent-stabilized, permanently affordable homes over the next decade for low-income households and seniors.

That’s because the private sector may be dissuaded from participating if these buildings don’t include market-rate housing. The private sector has a “very important role” to play in building housing, Mamdani has said.

“A rent freeze will change how a conversion might pay off for the developer,” said David Reiss, a law professor at Cornell University who served on the Rent Guidelines Board under Mayor Bill de Blasio.

And to be permanently affordable for extremely low-income renters, it will require deeper government subsidies than Mamdani has pledged, experts say. Previous New York City mayors have attempted to produce housing for a wide range of incomes to help offset higher subsidies for deeply-affordable units.

“It’s in the right direction to focus on people with the greatest affordability challenges,” said Alex Schwartz, an urban policy professor at The New School and a current member of the Rent Guidelines Board. “It’s important to recognize that the capital dollars won’t go as far in terms of total numbers of units if they only go toward people with extremely low incomes.”

Mamdani wants the city to borrow $70 billion to build affordable housing over the next decade, on top of the roughly $25 billion it already plans to invest.

That’s no easy task – he will need state approval since the plan would exceed the city’s debt limit by around $30 billion, as well as the New York City Council’s approval of zoning reforms that would make it easier to build.

“This would be a significant increase in city capital to produce deeply affordable housing,” said Rachel Fee, the executive director of the New York City Housing Conference, a non-profit affordable housing policy and advocacy organization. “It’s not something he can just implement on his own. It will take a political coalition to make this happen.”

 

Rent Freezes in NYC

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Zohran Mamdani, Democratic Nominee for Mayor of NYC

The New York Times quoted me in Free Buses and Billions in New Taxes. Can Mamdani Achieve His Plans? It reads, in part,

A major pillar of Mr. Mamdani’s economic plan is housing: He wants to build 200,000 units of affordable housing and freeze rent on the city’s nearly one million rent-stabilized apartments.

But to build, he has said the city will have to borrow $70 billion, exceeding its debt limit by some $30 billion. Going over the limit would require state approval.

Freezing rent, on the other hand, is relatively straightforward and has precedent. But there are consequences.

Mayors cannot freeze rent on their own, but they do appoint the nine members on the Rent Guidelines Board, which sets rents on the city’s rent-stabilized units.

David Reiss, who served on the board under Mr. de Blasio, said that before it voted, members generally considered the overall state of housing in the city, including affordability, landlord expenses and economic conditions.

He said that members could decide that affordability was the most important factor and vote to freeze rents, as they did in 2015, 2016 and 2020.

“A rent freeze would meet the needs of a lot of people who are having a hard time keeping up with their rent,” Mr. Reiss said, “but it’s an unsustainable operation.”

Landlords, including those whose buildings have a large majority of rent-stabilized units, are increasingly saying that they are not collecting enough rent to maintain units.

“Are we going to be pushing a distinct portion of the housing market into great distress because their expenses are outstripping their income?” Mr. Reiss said.

NYC’s Housing Supply

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The New York City Rent Guidelines Board (of which I am a member) released its 2017 Housing Supply Report. It has a lot of interesting data for housing nerds as well as those of us obsessed with NYC. Here is a taste:

  • There are a total of 3,217,521 units of housing.
  • 2,184,295 are rental units.
    • 848,721 are non-regulated rentals.
    • 1,335,574 are regulated rentals in one form or another (rent stabilized, rent controlled etc.)
  • 1,033,226 are owner units.
    • 116,134 are condos
    • 330,679 are coops
    • 586,413 are conventional homes.

Some other highlights include,

  • Permits for 16,269 new dwelling units were issued in NYC in 2016, a 71.2% decrease over the prior year and the first decrease since 2009.
  • There was a 31.3% decrease in the number of co-op or condo units accepted in 2016, to 282 plans containing 8,671 units.
  • The number of housing units newly receiving 421-a exemptions decreased 17.8% in 2016, to 4,493.
  • The number of housing units newly receiving J-51 abatements and exemptions decreased 22.5% in 2016, to 34,311.
  • The number of new housing units completed in 2016 increased 61.9% over the prior year, to 23,247.
  • Demolitions were down in 2016, decreasing by 2.0%, to 1,849 buildings.
  • City-sponsored residential construction spurred 23,408 new housing starts in FY 2016, 74% of which were rehabilitations.
  • The City-owned in rem housing stock declined 70.2% during FY 2016, to 125 units. (4)

For those who do not know the byzantine world of NYC housing policy, 421-a exemptions relate to new construction and J-51 abatements relate to renovation of existing construction. It is interesting to see how policy changes impact housing construction.

Any one year’s figures provide just a snapshot, so if you really want to get a sense of the big picture, you should check out the earlier reports too. For instance, last year’s report stated that there were permits for 56,528 new dwelling units in 2015, an increase of 176% from 2014.  This is way more than the long term trend. Permits for new dwelling units never got much higher than the low thirty thousand range but fell to a low as six thousand during the depths of the Great Recession.

When you realize that the 421-a tax abatement was set to expire at the end of 2015, this big jump in permits makes sense as developers filed a ton of permits to take advantage of the program while they could. It will be interesting to see how the new 421-a regime will impact permits for new construction going forward.

Primer on NYC Affordability Crisis

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"2014 July NYC's 432 Park Avenue" by The Hornet

Enterprise has released a report, 2015 New York City Housing Security Profile and Affordability Housing Gap Analysis. Its conclusions are not shocking, but they are sobering:

  • Of 2 million renter households in New York City, nearly 640,000 are low-income and severely cost-burdened.
  • There is not a single neighborhood in NYC that provides enough affordable housing to match the number of very low-income households in that community.
  • Both the regulated and unregulated rental housing markets of NYC are not meeting the affordable housing needs of low-income renters.
  • Even though the market added rent stabilized units between 2011 and 2014, the stock affordable to lower income families declined.
  • Competition exacerbates the gap between the number affordable units and the number of low-income renters, forcing many to pay beyond their means. (33)

As with many such studies, it offers a cogent analysis of the problem but offers very little by way of possible solutions. It hints at one such solution when it notes that

By any measure, the demand for affordable housing in New York City outstrips supply – even on the rent regulated market. Low-income households are squeezed even further by competition from higher income households for the cheapest units. The acute shortage forces the majority of lower income households in housing that costs beyond their means. (27)

Increasing the supply of housing will, if everything else is equal, reduce the cost of housing. The de Blasio Administration is certainly on board with an approach to increase density in NYC but many other elected officials are not — or at least resist it when it comes to their own backyards.  While more housing is not a sufficient solution to the affordability problem in NYC, it is certainly a necessary component of a solution.

The report also does not deal with the big elephant in the affordable housing policy room — the social demographics of NYC are undergoing a secular shift as the city gets hotter and hotter for global elites. It is unclear how much government can affect that trend, particularly at the local level.

Abusive Non-Rent Fees for Rent Stabilized Tenants

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The Urban Justice Center’s Community Development Project has issued a report, The Burden of Fees: How Affordable Housing is Made Unaffordable. The introduction reads,

Tenants in New York City’s poorest neighborhoods are under attack. Despite the existence of laws such as rent stabilization to protect tenants from high rents, landlords are creating new ways to push rent stabilized tenants out of their homes. One such tactic is the use of non-rent fees, a confusing and often times unwarranted set of charges that are added to a monthly rent statement . . .. These include fees on appliances (air conditioner, washing machine, dryer, and dishwasher), legal fees, damage fees, Major Capital Improvement (MCI) rent increases and other miscellaneous fees. Often these fees appear on a tenant’s rent bill without any explanation. If a tenant fails to pay, even if they are unaware of why the fee was imposed, they are sent letters that make them feel that they are being harassed and are threatened with eviction by the landlord. Most tenants have a right to object to many of these fees, and landlords are legally prohibited from taking tenants to Housing Court solely for non-payment of additional fees. But many tenants don’t know their rights about the fees and often pay them when they shouldn’t. For low-income and working class tenants who struggle each month to pay rent, these fees add up and make their housing costs unaffordable. While some of the fees are legal, many of them are not, and the consistency and pattern of the way the fees are being charged and collected suggests that some landlords are intentionally increasing tenants’ rent burdens to push out long- term, rent stabilized tenants.

This problem is proliferating in the Bronx, where New Settlement’s Community Action for Safe Apartments (CASA) works to improve living conditions and maintain affordable housing. This is particularly apparent in buildings owned by Chestnut Holdings, a company that is fast becoming one of the biggest landlords of rent stabilized buildings in the Bronx.

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All survey respondents live in rent stabilized buildings owned by Chestnut Holdings. In total, the coalition collected 172 surveys from 23 buildings, representing 13% of the number of apartments in those buildings. The research sample accounts for 4% of all the apartments that Chestnut Holdings owns, and 28% of the buildings. Researchers also collected rent bills and other supplemental materials (including letters to and from landlords, housing court decisions, and more) from 196 Chestnut Holdings tenants. Coalition members chose to focus on these buildings because they are rent stabilized and located in the neighborhoods where each organization is actively working. Data in this report comes from surveys, recent rent bills collected from Chestnut Holdings’ tenants and interviews with tenants.

Overall, we found that the problem of non-rent fees is serious and widespread in the Bronx. 81% of the tenants we surveyed had been charged some sort of fee. From the rent bills we reviewed for this report, the average tenant had $671.13 in non-rent fees on their most recent rent bill. (1-2)

This document is obviously an advocacy document and not a piece of objective scholarship. Moreover, its methodology may not be rigorous enough to allow us to extrapolate much from its findings. That being said, the survey responses themselves reveal a serious problem: alleged average non-rent fees of nearly $700 for each survey respondent seems very, very high, even if we limit the findings to the respondents themselves.

In the 1970s, predatory landlords hired bruisers with bats and pit bulls to frighten tenants into leaving their homes. In the 2000s, a new generation of predatory landlords used abusive court filings to achieve the same purpose. There is a very real risk that high non-rent fees represent a new tactic for predatory landlords to drive out rent-regulated tenants with under-market rents. To the extent that non-rent fees represent a new tactic to harass tenants, government regulators should actively seek to end it and punish those who employ it.

Housing and Vacancies in NYC

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New York City’s Department of Housing Preservation and Development (HPD) has released its initial findings of its 2014 Housing and Vacancy Survey. There are some interesting findings about the housing stock, particularly for those of us who follow the NYC housing markets closely:

  • There were 1,030,000 rent-stabilized units, which amounted to 47 percent of the housing stock.
  • There were 27,000 rent controlled units, which amounted to 1.2 percent of the housing stock.
  • The city-wide homeownership rate was 32.5 percent, although the rate varied significantly among the boroughs.
  • The rental vacancy rate was 3.45 percent.
  • There were 55,000 vacant units that were unavailable because of occasional, seasonal or recreational use.
  • The median annual income for all households (renters and owners) was $48,040. The median annual income for renter households was $38,500 and for homeowner households was $75,000.
  • The median contract rent-income ratio was 31.2 percent.

There were also some interesting findings about housing and neighborhood conditions:

  • “In 2014, housing and neighborhood conditions in the CIty were good.” (8)
  • “The proportion of renter-occupied units with five or more of the seven maintenance deficiencies measured by the 2014 HVS remain extremely low; only 4.3 percent” (8)
  • “The proportion of renter households that rated the quality of neighborhood residential structures as “good” or “excellent” was very high: 71.7 percent” (8)

Crowding remains a problem in the City, a finding that is unsurprising to all who are familiar with this housing market. The proportion of renter households that were crowded was 12.2 percent.

These numbers should inform numerous debates about housing in NYC, including those relating to rent regulation, foreign ownership of apartments and affordable housing goals, to name a few. It is important that these debates be data driven if we are to arrive at policy choices that are good for New Yorkers and good for the long term health of NYC itself. The whole document is worth a read for those who care about the City’s housing market and its impact on the overall health of the City.

Wednesday’s Academic Roundup

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