By Sabina Mollot
Last Thursday, the City Council passed legislation aimed at making it more difficult for speculative landlords to price or harass tenants out of the buildings they’ve just bought.
City Council Members Dan Garodnick and Ritchie Torres are the authors of what’s been dubbed the “Predatory Equity Bill,” which calls for the New York City Department of Housing Preservation and Development to establish a list of recently sold, rent-regulated buildings owned by potentially predatory investors.
Garodnick, who’s been working on the legislation for over a year, said it was inspired by the disastrous sale of Stuyvesant Town in 2006.As has been well documented, then owner Tishman Speyer tried to make up for its over-leveraged $5.4 billion purchase by issuing primary residence challenges to over 1,000 rent-regulated residents, before finally defaulting and walking away in 2010.
Garodnick said the reason for the bill now is that, while he isn’t seeing speculative deals as often as they occurred from 2007-2009, the real estate industry still hasn’t completely learned its lesson.
“It is an ongoing issue,” he said. “What we saw in Stuyvesant Town was a big and ugly example of this practice, and at the time of our issues this was repeating itself all over the city. I would be surprised if this is not a problem again. We want to take a stand and protect tenants from future abuses.”
The mayor has been supportive of the bill and is expected to sign it, Garodnick said, although it’s not clear when. (Mayor Bill de Blasio’s office didn’t get respond to Town & Village’s request for comment by deadline.)
If passed, the HPD, which has partnered with Garodnick and Torres on the bill, would publish its first list within 10 months and then update it quarterly. The “Speculative Watch List” would include information on sales where the price paid for a property seems to be higher than in similar transactions, indicating it’s too high for an owner to recoup the investment based on the current rent roll.
The information will be available publicly to be used as a resource for tenants as well as for the city in detecting any possible patterns of tenant harassment.
Asked if there was any way for landlords to appeal if they didn’t feel they belonged on the watch list, Garodnick said the decisions are based on numbers, which are hard to argue with.
“It’s a calculation of a sale price in relation to the revenue of a property, so it’s not a subjective test,” he said.
In a written statement, HPD Commissioner Maria Torres-Springer said, “The city is working on multiple fronts to stop tenant harassment in its tracks, and to protect residents from the looming threats that predatory investment poses to communities.”