NEW YORK : De Blasio Unveils Affordable Housing Initiative

[chris08876]

A federal law change will lift foreign investment in New York City real estate

A tax rule that real estate developers and owners believe discourages foreign investment in the U.S. appears on track to finally being loosened. The change would open the door to overseas money at a time when such buyers are increasingly investing in property in the city.

Two proposed bills that would change the Foreign Investment in Real Property Tax Act have passed through the U.S. Senate finance committee and will move for a vote by the Senate and U.S. House of Representatives by the end of the year. The amendments would allow foreign pension funds to invest in U.S. real estate without having to pay capital-gains taxes on the proceeds of those investments

The bills have been championed by real estate industry groups like the Washington, D.C.-based Real Estate Roundtable, as well as unions such as the International Union of Painters and Allied Trades, who would also benefit from increased investment activity.

"Passing an amendment to FIRPTA would unlock a significant amount of foreign capital that can be put to use for real estate development, improvements, and investments in New York City and across the nation," said Steven Spinola, president of the Real Estate Board of New York, a powerful industry trade group, in a statement. "We are encouraged by the unanimous passage of this bill by the Senate finance committee, and hope to see it passed by Congress and signed by the President soon."

The bills' sponsors are hopeful that the legislation, which would also allow foreigners to buy bigger stakes in U.S. real estate investment trusts without having to pay capital-gains taxes, could be put into law by the end of the year.

In recent years, foreign pensions have invested billions of dollars in New York City real estate. Canadian pensions have invested billions of dollars into a Hudson Yards development, for instance. The change to FIRPTA would save these funds an estimated $3.7 billion in capital-gains taxes over the next decade, according to the Real Estate Roundtable.

"Unfortunately, because of FIRPTA, much of the investment is going elsewhere," Jeffrey DeBoer, president and CEO of the Real Estate Roundtable, in a statement. "Excluding foreign pension funds from FIRPTA will put them on a more level playing field with tax-exempt domestic pension funds.”

The change would further spur an already hot investment market in the city. According to estimates by Colliers International, the city’s commercial real estate sales market is on track to record one of its biggest years with more than $5 billion of deals in just the first three months of 2015. Foreign buyers have played a huge role in the city’s commercial and multifamily sales markets.

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http://www.crainsnewyork.com/article...-new-york-city

[chris08876]

De Blasio will announce start for review process leading toward East New York redevelopment

In a major step toward transforming East New York, Brooklyn, Mayor de Blasio on Friday will announce the start of a public review process that will set the stage for the neighborhood to be redeveloped by early 2016.

The lengthy land-use process will kick off by September, when the city will reveal the final boundaries of the area to be rezoned as well as the affordability requirements for buildings constructed.

It’s part of de Blasio’s affordable housing plan, which aims to construct or preserve 200,000 units in the next decade.

City Councilman Rafael Espinal, whose district is East New York, said he was happy with the timeline.

"It gives the community more time to give input to the plan, which is what a lot of the community wanted," he said.

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http://www.nydailynews.com/news/poli...icle-1.2205805

[chris08876]

De Blasio Pushes For New Rent Stabilization Protections

With New York City's rent stabilization laws set to expire in just over a month, Mayor de Blasio has proposed three reforms that he hopes will both stop the city's pool of one-million rent stabilized apartments from shrinking, and slow rent increases in stabilized apartments.
According to official city documents, 35,000 apartments have lost their stabilization status since 2011, and have been converted to market-rate units.

De Blasio's announcement comes in the wake of some tempered news from the city's Rent Guidelines Board (RGB). Every June, the RGB sets a legal cap on how much rent is allowed to increase in stabilized apartments. And while a report issued last month foreshadowed the first rent freeze in the RGB's 46-year history, and possibly even a rent rollback of up to 4%, last week the board voted to recommend 0.5-3.5% increases over the next two years, and 0-2% increases over the next year.

The first of de Blasio's three major proposals is the elimination of vacancy decontrol. Under current law, a rent stabilized apartment is no longer protected once the rent reaches $2,500. The mayor wants to make sure that more expensive rent stabilized apartments will still be subject to the RGB's tiny-percentage rent increases.

The second is a reform to Individual Apartment Improvement (IAI) and Major Capital Improvement (MCI) rent increases. As of right now, landlords have the right to permanently increase the rent when individual apartments, or entire apartment buildings, undergo renovations. According to a press release issued this morning by the Mayor's office, de Blasio would spread out renovation-related rent increases over a set period of time, leaving the long-term rent unchanged:

Costs from increased services or improvements to individual apartments would be spread over 10 years, while building-wide or system improvements could be spread over 7 years. Long-term rent would be unaffected, and would reset after the fixed period.

Lastly, de Blasio proposed an elimination of vacancy allowance. Landlords are currently allowed to increase the rent in rent-controlled apartments by a whopping 20% between tenants. This law, in particular, has encouraged landlords to "nudge" tenants to vacate by implementing decidedly evil measures.

================================
http://gothamist.com/2015/05/05/de_b...ent_albany.php

[C.]

Hey DeBlasio, keep your promise of more housing and start building before you even think about extracting more from landlords to benefit a small few while putting the rest of us through misery.

[dchan]

Originally Posted by dchan

Rather than fruitlessly trying to preserve the few patches of single room occupancy (SRO) spaces left in the city, should the city legalize building new SROs instead?

http://www.cunylawreview.org/wp-cont.../09/CNY109.pdf

As it is, SROs already exist within the city illegally (think of houses filled with multiple beds per room). The City just turns a blind eye to them because they're needed to house immigrants and other low-wage workers who would be unable to live anywhere else.

Since nobody responded to my SRO post, I'll get some questions rolling.

I think it's safe to say that nobody will deny that this is an extremely crowded city, no? And that residential space is precious and often expensive depending on where you live. A 400 SF studio can set you back over $600k in some areas.

So my question is that if residential living space is a scare and precious commodity, why have we decided that we must build affordable rental units of the same size as normal free market units? Why is it that we must be democratic about this resource for those who can't afford it?

There was a time when fully 1/10th of the rental housing stock in NYC consisted of SROs. From the journal article I linked, these units were often located in flophouses, transient hotels, and apartment buildings built to house SROs. They differ from what we call a legal residential space nowadays in that they were usually somewhat smaller than a studio apartment, and they lacked a dedicated kitchen and bathroom. Instead, multiple SROs would share bathrooms. Kitchens may or may not have been available, and some landlords would cook meals for their SRO tenants.

In essence, SROs were essentially like your first or second year dorm at college.

Sometime in the 50s, the children of the early 20th Century Progressive movement decided that because some families were living in SROs, that they were inhumane living conditions. And they had enough clout to get NYC to ban all new SRO construction, and in fact, made SROs illegal for much of the city. So what did these so-called "Progressives" do to replace this very affordable living space? There are of course, the new housing projects that the City was building at that time that were more "humane" because they featured large living spaces and a dedicated bathroom and kitchen in each unit. Good fortune for those who were chosen to live in these projects (or not; see conditions of projects over the last few decades).

But for those schlubs who were kicked out of their SROs? The "Progressives" gave them NOTHING. No affordable alternative whatsoever. They lived in the streets. They squatted in abandoned indoor spaces.

This is a good lesson for you who may be enamored with "Progressive" movements, which are often spearheaded by upper middle class privileged folk who are largely unaffected by the consequence of the actions they advocate. The same lessons apply to such movements nowadays.

Anyway, getting back to my point. First off, I think DeBlasio is a good person at heart. But he's also a liberal nut who's slowly coming to grips that he can't be be that progressive do-gooder who many voted into office. He realizes now that he needs to make compromises. He wanted to abolish the 421a Tax Abatement program to help provide more taxes to the city's coffers. He also wanted to get a bunch of affordable housing built. But nowadays, he's realized that he cannot do both. So he's scaled back his anti-421a aggression so he could get developers to build his affordable housing.

My problems with his affordable housing plan is many-fold, but my main problem is that he's ignoring basic economics principles. Again, why "must" we build affordable housing units roughly the same size as normal free market units? Why "must" we allocate 20% of units for affordable housing in new buildings in highly desirable (and expensive) neighborhoods, and consequently make free market units even more expensive?

My solution is not fully developed, but here goes. There is technically a smattering of SROs still in the city that's being "preserved" to keep the affordable building stock intact, but I think that's a lost cause. Many of these SROs are located in highly desirable neighborhoods, so wouldn't it be better to release them into the free market? Instead, allow new SROs to be built to reasonable modern living standards. These SROs can be built anywhere, but developers will build them in less expensive neighborhoods, of course. They can be built more cheaply per tenant than the affordable units that DeBlasio wants built because they're far smaller.

All we need to do is plan out the general requirements and impact of SROs, legalize them, and incentivize developers to build them near transit routes. That would go a long way to alleviate our current affordable housing crisis IMO.

[chris08876]

The power is mostly with the developers as they are the ones who choose which plot or which assemblage to buy, and put a majority of soft and hard costs on their hands.

De Blasio means well, but his affordable housing solution is not very beneficial to the masses. The odds of people getting those units are very very slim. Its doesn't make sense when you hand it to the private sector as it does interfere with basic economic principles like you said.

The problem with De Blasio is the city that he is in charge of and the current state of doing business here. Most of the promises he made are really for show, but he is actually turning into a Bloomberg. Making prices go up through his actions, which consequently affect market-rate units. His plan doesn't work well in expensive neighborhoods. As market rate units go up, so do the affordable housing units; even if they are much cheaper.

I've been saying for a while that the city needs to return to public housing funded by Federal Government. Its the only way to house the masses and make it affordable. Unfortunately such housing currently is very underfunded. When you leave it to the private sector, its capitalism at its finest. It will weed out the weak, and make people pay enormous rents and so on. A city thats growing by 70-80k a year needs better solutions to meet its demand.

De Blasio's plan is actually garbage from a numbers standpoint. Its not enough units. Two of the biggest issues in NYC are housing, and transit. Transit being the one that can cripple the city, and if solutions aren't make to expand and fund it, its going to make life painful for those who use it.

[BrownTown]

There's a lot I'd like to say on this subject, but I'll just make the two points:

1. Nobody HAS to live in NYC. There are millions of people who would love to move there if they could afford it, but they live somewhere else because they can't. If someone can't afford to live in NYC then they can move pretty much anywhere else in the country and find a far cheaper place to live. NYC is the best of what the US has to offer and unfortunately not everyone can afford it, but that's just life. If the prices of housing in NYC dropped in half today what would happen is that hundreds of thousands of people would start to try and move in and that would just bid the prices back up to where they are. The benefits of NYC are WORTH what people pay for it and the market will keep prices high as a result. It's just like widening freeways into the suburbs brings more growth and results in the freeways getting jammed again in a few years. Building more housing in NYC will simply bring more people in and fill that housing up because the market places a very high value on that housing. You need to change the rules of the game if you want to find a permanent solution.

2. People really need to understand just where the subsidies end up for subsidized housing. When you subsidize more housing for low income workers that just means the companies that employ them will pay less because these workers now have lower costs. The low income workers don't really benefit, only the corporations that employ them do. If there weren't subsidized housing then the only way that these companies could find workers for their low level jobs would be by raising wages to the point that workers can live on without subsidies. It's a basic tenet of economics that unskilled labor wages tend towards the minimum necessary to keep such workers alive. Supplying subsidies to unskilled laborers only reduces wages to compensate and helps the rich by allowing them to pay lower wages. Wealth transfers don't improve the lot of the working poor, only increased benefits do (education, mass transit, health care, etc). Subsidizing necessities like food and shelter (IE: subsidized housing and food stamps) do nothing to help the poor.

[chris08876]

Originally Posted by BrownTown

There's a lot I'd like to say on this subject, but I'll just make the two points:

1. Nobody HAS to live in NYC. There are millions of people who would love to move there if they could afford it, but they live somewhere else because they can't. If someone can't afford to live in NYC then they can move pretty much anywhere else in the country and find a far cheaper place to live.

Not that easy. Especially for those with family and certain careers. Its can be difficult financially to move somewhere. A lot of risk, especially if employment is not secure or guaranteed. Your solution will turn the city into a rich only zone. We need people of all classes and incomes to support the city. Many jobs and industries rely on them. This would also ruin the creative and cultural edge that NYC has. I'm a bit of a classist myself (neighborhood preference to live), but I understand that the city should be accessible to all when it comes to the overall bigger picture. Sure certain neighborhoods it won't, but we shouldn't kick out residents and newcomers due to inadequate housing solutions. It could be done, but the current plan low balls it.

What I would like to see is higher figures, much of which will go up in Queens, Brooklyn, and the Bronx. Plenty of room in the city. If we look at the whole city, there's actually areas that are very affordable. NYC is not just Manhattan which is a small portion of it. But for the city to be competitive, we need housing for future talent which will fuel the industries in the city.

I don't like the argument for people moving elsewhere. Its not what this city was built upon.

[mhays]

Of course more housing would moderate prices, or moderate the increase.

Let's say you add 200,000 units to the central million. Prices would reflect what 1,200,000 households are willing to pay, not what only 1,000,000 are willing to pay.

It might be even better than that sounds. The number of people who want to move into that zone might not be so limitless. At some point you're dealing with people whose desire to live there is more casual.

Further, you're also freeing up space outside that core zone, as some of those residents move closer-in. They might get substantially cheaper.

Dchan, you make a lot of good points about the importance of SROs (aka micros), and the usefulness of smaller units for subsidized cases.

[BrownTown]

Originally Posted by chris08876

I don't like the argument for people moving elsewhere. Its not what this city was built upon.

It's EXACTLY what the city was built upon. The poor are continually being pushed further and further away from the central core as gentrification occurs near the center and drives prices up in areas that used to be affordable. Sure many of them just moved further out, but if you go to fast growing cheaper cities like Houston and Atlanta you will find tons of NYC transplants who moved there for a more affordable lifestyle. I understand that moving isn't what some people want, but that's a choice they make. If you want to make good money that often means chasing the job market around instead of hoping it comes to you. Every new job I've ever gotten in my life involved moving to a new city or state. The world doesn't stand still and if you want to succeed in life you can't stand still either. As for your statement about the city needing the low-income workers, that's my whole point. If there is no subsidized housing the city will still need these workers and companies will have no choice but to raise wages. That's how the market is supposed to work. Subsidizing big businesses with below market rate labor isn't. Not even the Mayor is powerful enough to change how the market works and his pie in the sky hopes are doomed to fail if they don't take into account economic realities.

[Qubert]

Originally Posted by BrownTown

It's EXACTLY what the city was built upon. The poor are continually being pushed further and further away from the central core as gentrification occurs near the center and drives prices up in areas that used to be affordable. Sure many of them just moved further out, but if you go to fast growing cheaper cities like Houston and Atlanta you will find tons of NYC transplants who moved there for a more affordable lifestyle. I understand that moving isn't what some people want, but that's a choice they make. If you want to make good money that often means chasing the job market around instead of hoping it comes to you. Every new job I've ever gotten in my life involved moving to a new city or state. The world doesn't stand still and if you want to succeed in life you can't stand still either. As for your statement about the city needing the low-income workers, that's my whole point. If there is no subsidized housing the city will still need these workers and companies will have no choice but to raise wages. That's how the market is supposed to work. Subsidizing big businesses with below market rate labor isn't. Not even the Mayor is powerful enough to change how the market works and his pie in the sky hopes are doomed to fail if they don't take into account economic realities.

Thank you. I agree with just about everything you've ever written on this site so far.

What's the wrong thing about NYC becoming a rich city? We should be happy America has an example of a functioning, desirable, wealthy urban center. In the long run, it will boost Americans image of cities and lead to more urbane developments.

Before the cries of "Heartless Monster" come, consider how NY and other cities were for the poor when they were burned out and sinking. The plight of the urban underclass would exist without gentrification. All this social engineering only subsidizes the corporations and 1% anyway. Pay people more and you'll solve not only the housing issue, but also help improve the wealth inequality situation as well.

[chris08876]

City Council Announces New Task Force on Tracking and Preserving Affordable Housing

City councilman Mark Levine announced Wednesday the creation of the Affordable Housing Preservation Taskforce, which will track existing affordable units across the city on the brink of becoming market rate. The task force is the latest in an effort to address the monumental task of preserving the city’s affordable housing.

According to Crain’s NY, the 14-member task force, which will be led by Council Speaker Melissa Mark-Viverito, will work with residents, landlords and nonprofits to identify buildings headed toward market rate rent status. Rent regulation, for example, stipulates that rent can only be raised by a certain percentage each year as set by the New York City Rent Guidelines Board.


Even as the de Blasio administration has pledged to address the issue, the city has been losing affordable apartments faster than new ones can be provided–about 250,000 units became market rate between 1994 and 2012. Barika Williams, deputy director of the Association for Neighborhood and Housing Development added that, “All of the units created during the Koch administration will start to expire beginning in 2017″ in addition to the above, which translates to about 11,000 units a year until 2037.

According to Levine, council members are well-equipped to help alert the city about vulnerable buildings, as they “have direct communication from tenants who are distressed, and also often we have direct communication with landlords.”

By teaming up with local nonprofits and other community members, the task force hopes to provide a better picture of where city resources should be directed. Mr. Levine also said the task force will look at already-existing policy, identify potential pitfalls and draft a citywide strategy for the preservation of affordable housing.

==================================
http://www.6sqft.com/city-council-an...dable-housing/

[Ryanrule]

Originally Posted by chris08876

A federal law change will lift foreign investment in New York City real estate


===============================
http://www.crainsnewyork.com/article...-new-york-city

what a bunch of shit.

[Gantz]

Originally Posted by chris08876

Your solution will turn the city into a rich only zone.

Are there even enough rich people in this country who would be willing to live and able to fill up NYC? I am not convinced. How many of the top 5%-10% are actually willing to live within NYC city limits permanently? I think the demand for NYC living/decent paying jobs goes up once you get to middle class and below, for the rich its just a lifestyle choice.

[lio45]

Originally Posted by dchan

Since nobody responded to my SRO post, I'll get some questions rolling.

I am pretty sure that on this forum almost no one has ever had to landlord SROs...

I have, for ten years now.

And if that particular building had been physically compatible with a conversion to bigger units that made at least a bit of sense financially, it would definitely not be still rented as 12 SRO units on three stories with a couple bathrooms and public areas.

The free market will never favor SROs, ESPECIALLY not in a rules/regulations-heavy, pro-tenant, anti-landlord environment. You'd have to be crazy to build new SRO units. Sharing a bathroom/kitchen is something that only a certain type of customer will accept.

For a while when I cleaned up that SRO building from its initial (when I got it) near-slum status, I had university students as my SRO occupants... including a few females... worked decently well, but it was really annoying to continously have to replace tenants.

Over a number of years I then let it gravitate back to the natural long-term tenant type for SROs... single men, often middle age, poor working class or welfare, with a few problems usually (minor alcohol abuse, mental health, etc. quite frequent) but who are still held on a short-ish leash from our management perspective.

That's of course not in NYC but I am pretty sure the observations would apply there too.

Considering the construction costs are nearly the same, you'd have to be nuts to favor a setup that is a big hassle to manage and that will attract only the worst customers.

If you want the free market to embrace SROs I think the only way for that to happen would be to let the SRO units be a special case of rental that is, in status, close to being nearly free market goods. i.e. any tenant problem, the tenants can be legally thrown out immediately with no recourse, whether the problem is real or imagined. (Partial lease refund for the current month, if it's during the course of a month, would be fair.)

That way, many vulnerable people in NYC, many of them homeless at the moment, could at least aspire to have some chance(s) to get a decent SRO unit and possibly keep it, if they can manage to be acceptable tenants.

[lio45]

Originally Posted by dchan

All we need to do is plan out the general requirements and impact of SROs, legalize them, and incentivize developers to build them near transit routes. That would go a long way to alleviate our current affordable housing crisis IMO.

Illegal SROs work well in practice because tenants don't officially exist, which makes this housing product tailored to a poor and problematic clientele a not-too-unreasonable management proposition from a landlording point of view.

Legal SROs, on the other hand, don't work. The remaining legal SROs are still there because they can't be easily converted, or because landlords have been getting reasonably lucky so far, or because of landlord inertia, or a mix of those. None of that would apply to new SRO construction, so they're a no go unless incentivized.

I agree with you there. I think the best incentive would be to make them free market goods.

People with problems often end up in the street precisely because no landlord wants to take a chance with them -- eviction is a lengthy and costly process, the last thing you want to do is to officially let a risky tenant start to have tenancy rights, that's just insanity.

Creating an environment where you'd reducing that risk to the point of nearly eliminating it would go a long way to help get people off the streets.

[Ryanrule]

Originally Posted by lio45

If you want the free market to embrace SROs I think the only way for that to happen would be to let the SRO units be a special case of rental that is, in status, close to being nearly free market goods. i.e. any tenant problem, the tenants can be legally thrown out immediately with no recourse, whether the problem is real or imagined. (Partial lease refund for the current month, if it's during the course of a month, would be fair.)

That way, many vulnerable people in NYC, many of them homeless at the moment, could at least aspire to have some chance(s) to get a decent SRO unit and possibly keep it, if they can manage to be acceptable tenants.

ok, if the same applies to the landlord, they fuck up, and they lose the property.

[mhays]

Seattle's "micro" trend is much like SROs. The only problem is much of the most SRO-ish of the concept has recently been eliminated by new codes. I don't have the details in front of me, but the bedroom-sized units with kitchenette and bathroom plus a shared kitchen down the hall are largely not happening anymore, but the standard 250 sf studios are still fine, and being proposed and starting at a decent rate.

The economics aren't that tough. You can't have parking because that would double the square footage per unit, from perhaps <350 gross to >700 gross, and that market doesn't demand it at the prices that would be needed. Rents are higher per square foot than a larger unit, because there's a higher density of expensive components like sewer pipes, front door, maybe casework, etc., as well as more exterior surface per square foot and so on. So here micros are often $4/sf rents instead of $3/sf.

These are run as apartments, under apartment laws. New buildings are generally about students and other bohemians of various types, not the drunk old man types. But they'll gradually become more affordable as the buildings age, offset by the high demand for housing, but augmented by our continued (hopefully) construction of newer units to keep supply ahead of demand. (Actually supply is only doing that for normal-sized units...the super-micros are full since the flow of new ones is cut off...in changing the rules, the city council decided that nimbys win over affordability.)

[lio45]

Originally Posted by Ryanrule

ok, if the same applies to the landlord, they fuck up, and they lose the property.

Not sure what you mean exactly but it's always been very possible to lose properties if you "fuck up" badly enough.

[lio45]

Originally Posted by mhays

Seattle's "micro" trend is much like SROs. The only problem is much of the most SRO-ish of the concept has recently been eliminated by new codes. I don't have the details in front of me, but the bedroom-sized units with kitchenette and bathroom plus a shared kitchen down the hall are largely not happening anymore, but the standard 250 sf studios are still fine, and being proposed and starting at a decent rate.

The economics aren't that tough. You can't have parking because that would double the square footage per unit, from perhaps <350 gross to >700 gross, and that market doesn't demand it at the prices that would be needed. Rents are higher per square foot than a larger unit, because there's a higher density of expensive components like sewer pipes, front door, maybe casework, etc., as well as more exterior surface per square foot and so on. So here micros are often $4/sf rents instead of $3/sf.

These are run as apartments, under apartment laws. New buildings are generally about students and other bohemians of various types, not the drunk old man types. But they'll gradually become more affordable as the buildings age, offset by the high demand for housing, but augmented by our continued (hopefully) construction of newer units to keep supply ahead of demand. (Actually supply is only doing that for normal-sized units...the super-micros are full since the flow of new ones is cut off...in changing the rules, the city council decided that nimbys win over affordability.)

Personally, I see micros as a completely different animal. They're totally apartments... just small apartments. They're much closer to a somewhat larger apartment than to a SRO setup in every possible aspect.

For a given interior volume in a building, the most expensive components by far are bathroom and kitchen (including all wiring and pipes and drains for both of them), so regardless of what you do, micros are inevitably still going to be quite a bit more expensive than SROs.

SROs are indeed the cheapest housing form, I'd say it's about halfway between sleeping under the bridge, on one side, and living in new Seattle-style "micro" housing, on the other side.