Vacant but unavailable: The Real Deal article

In housing-starved NYC, tens of thousands 

of affordable apartments sit empty

Landlords blame the state’s rent law for making repairs

 a money-losing proposition; lawmakers don’t believe them.

 July 2022 Issue /

July 05, 2022 07:00 AM

By Suzannah Cavanaugh and Sasha Jones

CHIP executive director Jay Martin (left) and 

State Assembly member Linda Rosenthal

Landlords fighting proposed state regs. Tenants, testify FOR them!

Landlords say the NYS Division of Housing & Community Renewal's proposed regulations will do Terrible Things!  Here's an excerpt from one developer's email update, spelling out doom and gloom for owners - but not so bad for the rest of us :

"What happens if these changes pass?

These changes have been proposed only and nothing is set in stone. Stakeholders have up until November 15th to draft comments and submit them here.*  Looking out in the future, downstream effects of this ruling could be:

1. Value of vacant units decreases - vacant apartments may become liabilities, where having empty units lowers building valuations, like in most US markets. Occupancy levels below 90% on rent stabilized assets will spell collection or lease-up issues.
2. Value of vacant buildings declines - if the ability to achieve market rents through substantial rehabilitation isn’t guaranteed, valuing empty rent stabilized assets will become harder. If a subjective party is deciding whether a given building is old and dusty enough to merit a revamping, that’s a problem. Buyers will want to pay commensurately with the non-zero probability that their application gets denied and their building’s rents cannot be elevated.
3. More apartments delivered to NYC market - removing any incentives to keep apartments vacant is aggressive, but it could work. With nothing to gain, owners will strictly be losing out on a monthly rent check by keeping apartments vacant, without any benefit. This will push many owners to re-lease their apartments. Kind of like when someone you don’t like suggests the least bad idea. The upshot here is that more apartments will come online, and this will make NYC slightly more affordable. It’s this last piece that is most important for HCR in terms of their ability to get this package of proposals inserted in the rulebook. The steps taken here demonstrate a coherent effort towards unlocking more apartment availability for residents of NYC."

Excerpted from Greysteel's Critical News Update email of September 12, 2022

*This website manager has changed the link so comments go to HCR instead of to Greystone, and changed the date from November 20 to November 15th.

Those results would be great, so tenants can and should submit testimony in support of the regulations before the November 15, 2020 hearing!  

WHERE: U.S. Custom House auditorium, Alexander Hamilton U.S. Custom House, One Bowling Green, New York, New York 10004 

WHEN: Tuesday, November 15, 2022.  10:00 am to 4:30 pm.

HOW: 

• Pre-register to guarantee when you'll be heard.  Call 718-262-4816 and leave a message with your name, phone number, and when you wish to speak.  
• You'll have 5 minutes to speak - with a mask.  
• Bring 3 copies of your complete testimony with you to give to the panel - but it's best to make your points when you speak looking directly at the panel, to engage with them.  
• Submissions may also be sent in advance to Michael Berrios, Division of Housing and Community Renewal, 92-31 Union Hall Street, 6th Floor, Jamaica, New York, 11433 (718) 262-4816 or by email to 2022RentRegulationComments@hcr.ny.gov. 

See the regulations themselves at pages 23-25 of chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://hcr.ny.gov/system/files/documents/2022/08/rsc-proposed-rule-text-8.16.22.pdf. 

State proposes regs to rein in Frankensteining

Landlords have been warehousing vacant rent stabilized units and then merging them with other space (sometimes unregulated apartments) to create "Frankensteined" apartments with brand new rents - often sky-high. 

The State's housing agency has just proposed regulations to implement the 2019 Housing Stabilization and Tenant Protection Act.  Rent Stabilization Code Amendments - HSTPA Revisions, pages 23-25.   These amendments include a new section, §2521.1(m) to regulate the rents and status of Frankensteind (combined) apartments.  The section says:

1. Rents for combined apartments will be the combined last rent of each rent stabilized apartment, plus any individual apartment improvement increases.  If a rent stabilized apartment is increased in size by adding a market apartment, the new rent stabilized unit will combine the two legal rents.  If a rent stabilized apartment is reduced or increased in size (for example by adding hallway space), the rent is changed by same percent as the square footage is changed. 

2. Rent stabilization will cover the whole new combined apartment if even one of the original apartments was rent stabilized. 

3. Landlord fraud, harassment, or evasion can bar any rent increase.

The hearing on these and other regulations will be on November 15, 2022 from 10 AM to 4 PM at 1 Bowling Green in lower Manhattan. 

Click on "read more" for the proposed section. 

Credit for photo: CreativeCommons, 5-24-2015.