Tenants lose bargaining power under new state budget

State Senator Brad Hoylman (Photo by Sabina Mollot)

By Sabina Mollot

On Sunday night, when the New York State budget was passed by the Senate, landlords won an extension of the 421 tax break for new developments while tenants lost some leverage in the ongoing effort to renew and strengthen the rent laws.

The combined budget bills had totaled nearly 2,000 pages, as noted by State Senator Brad Hoylman last week. He’d voted no as a protest to being expected to review a Bible-sized stack in a matter of hours.

However, with the voting now over in the Senate as well as the Assembly, Hoylman gave Town & Village a recap.

The 421a tax break for developers, which was included in the budget, will no longer sunset at the same time as the rent negotiations. The timeline had previously been seen by tenants as an opportunity to bargain for stronger rent laws.

“The fact that the 421a real estate tax exemption was negotiated behind closed doors is scandalous,” said Hoylman, “but what is also extremely scandalous is that it was not linked to renewal of the rent laws. Albany made a colossal mistake in de-coupling the renewal of 421a with rent laws. That was a major leverage point.”

Additionally, ethics reforms, including the closure of the LLC Loophole (which allows donors to give nearly limitless campaign cash to politicians through LLCs), were not included.

“There was no mention of ethics reform in any part of the budget,” said Hoylman, “which is extremely disappointing. Not an iota. They blocked the LLC Loophole (closure), they blocked measures to limit outside income. Once again the Senate majority refused to take action. The budget process itself was dysfunctional.”

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Old Post Office site owners reduce height request

Rendering of 432-438 East 14th Street

By Sabina Mollot

The owners of the former Peter Stuyvesant Post Office, who’d proposed a 12-story residential building for the site, have since changed their request, by proposing a smaller, nine-story building instead. In January the owners, Benenson Capital Partners, partnering with Mack Real Estate Group, had gone to the Board of Standards and Appeals to request a zoning variance they’d need to build 12 stories since current zoning only allows for an eight-story structure. Their plan however was fought by community residents as well as the Greenwich Village Society for Historic Preservation.

The owners’ most recent proposal, which would boost height 14.5 feet higher than what is currently allowable, has also already been blasted by the preservation group. The GVSHP has argued that a building that high is out of context for the East Village and has also claimed that the owners’ main reason for wanting the variance — higher than expected construction costs due to underground water and soil conditions — doesn’t constitute a unique hardship.

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14th St. developer grilled on height request

Commissioners of the Board of Standards and Appeals, including (from left to right) Chair Margery Perlmutter, Susan Hinkson and Eileen Montanez Photo by Maria Rocha-Buschel)

Commissioners of the Board of Standards and Appeals, including (from left to right) Chair Margery Perlmutter, Susan Hinkson and Eileen Montanez (Photo by Maria Rocha-Buschel)

By Maria Rocha-Buschel

The Board of Standards and Appeals accused developers of getting ahead of themselves in a rush to get a new apartment building started before the deadline for a lucrative tax break in the project at the old Peter Stuyvesant Post Office on East 14th Street between First Avenue and Avenue A.

BSA chair Margery Perlmutter said in a hearing this past Tuesday that Benenson Capital Partners and Mack Real Estate Group (MREG) “went ahead and, at enormous expense, installed foundation slabs even though their project wasn’t necessarily viable.”

The developers’ attorney John Egnatios-Beene, of Stroock & Stroock & Lavan, argued at the hearing that the extra cost for building out the foundation was partially due to the construction of a full basement and the difficulties that resulted in building it due to the ground conditions. This rationale was given in addition to the developer’s previous argument that additional apartments were needed to make the project economically viable due to apartments that would be rented below market rate because of the building’s participation in the 421a affordable housing program.

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Tenants blast ‘framework’ deal for rent regulations

June25 Cuomo Heastie Flanagan

Assembly Member Carl Heastie, Governor Andrew Cuomo and Senate Majority Leader John Flanagan (Photo via Governor Andrew Cuomo Flickr)

By Sabina Mollot

On Tuesday afternoon, the rent regulations, over a week after their expiration, were discussed in what was called “the framework of an agreement” that was immediately blasted by tenant advocates for not repealing vacancy decontrol or reforming preferential rents. The plan was announced by Governor Andrew Cuomo, Assembly Speaker Carl Heastie and Senate Majority Leader John Flanagan in an Albany press conference.

The plan, which, as of Town & Village’s press time, was still being discussed by both legislative houses in conference, calls for a four-year extension of the rent laws, reforming major capital improvements (MCIs) so that tenants’ payments are lower though they will still have to be paid in perpetuity. Other changes include increasing penalties on landlords who harass tenants and raising the threshold at which an apartment can be subject to vacancy deregulation. Additionally, according to a press release put out by Cuomo, the state housing agency’s Tenants Protection Unit will be put into statute and vacancy bonuses and will be limited for tenants paying preferential rent, although how much or in what way it would be limited wasn’t explained. Cuomo’s office did not respond to a request for clarification by Town & Village’s deadline.

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Rent regs expire with no hint of progress in Albany

ST-PCV Tenants Association Chair Susan Steinberg and other tenants at a vigil on Sunday outside the midtown Manhattan office of Governor Cuomo. (Photo by Anne Greenberg)

ST-PCV Tenants Association Chair Susan Steinberg and other tenants at a vigil on Sunday outside the midtown Manhattan office of Governor Cuomo. (Photo by Anne Greenberg)

By Sabina Mollot

It wasn’t quite the climactic end to another four years tenants were hoping for when at midnight on June 15, the laws regulating rents in New York expired without being renewed or strengthened.

The following morning, the talks continued in Albany, though there was no sign that that they’d be concluded any time soon.

Part of the reason was that Governor Andrew Cuomo has been hoping to include the passage of an education tax credit in the negotiations, while Senate Republicans also last week passed a set of rent regulation legislation that’s wildly different from the package the Assembly passed in May. The much hyped 421-a tax abatement for developers who include some affordable housing in their projects has also been a factor, but hasn’t been given as much attention as it was expected to get, according to State Senator Brad Hoylman.

Hoylman described the tax program, which also expired on Monday, as being “radioactive” to many of his colleagues because of its being “at the heart of the investigations” into corruption in Albany by U.S. attorney Preet Bharara.

“It’s understandable that it wouldn’t be a front burner issue,” said Hoylman, adding he wouldn’t be mourning the program’s loss if it isn’t ultimately renewed and that he thinks it ought to be negotiated separately.

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Pols tell tenants their stories are needed in rent law fight

 

Over 400 people listen as local state elected officials brief them on the uphill battle over the rent laws coming in June. (Photo by Sabina Mollot)

Over 400 people listen as local state elected officials brief them on the uphill battle over the rent laws coming in June. (Photo by Sabina Mollot)

By Sabina Mollot
On Saturday, over 400 residents of Stuyvesant Town and Peter Cooper Village gathered for a meeting held by the Tenants Association that focused on the upcoming expiration of rent laws and the uphill battle tenants would have in trying to get them strengthened.

Speakers briefed the audience on the current power dynamic in Albany, while also telling those in attendance that without tenants writing to Albany lawmakers, especially the governor, the effort is a lot less likely to succeed.

“If I go to Albany and say (to Governor Cuomo) two and half million people are going to be very upset with you, if that’s not clear in the streets and not in the mail in his email inbox, it’s very hard to believe,” said Assembly Member Brian Kavanagh.

Kavanagh was one of the speakers of the event, which was held at Simon Baruch Middle School, along with State Senator Brad Hoylman and TenantsPAC treasurer Mike McKee.

McKee told the crowd if the laws are renewed in their current state, “It would be a terrible defeat for tenants.” Referring to a recent Daily News article that quoted Cuomo as saying the laws and the controversial 421-a tax abatement for developers could possibly just be renewed and not changed, due to the federal investigations being conducted in Albany, McKee added, “I’m sorry, but that is crap.” McKee has said that 421-a is expected to be used as leverage during the rent law negotiations.

Both Hoylman and Kavanagh spoke about Albany’s power system and how with the Senate in the hands of Republicans whose campaigns are financed largely by real estate, the only hope for tenants is in swaying the Assembly, led by Carl Heastie, and the governor.

Meanwhile, Kavanagh has said he wants to close the “LLC loophole” that makes New York one of the few states where each LLC created counts as a separate campaign contributor, but, he admitted, “I’m not sure we’re going to do that this year.”

However, he added that recent media attention on the issue may prove helpful anyway.
“There may an opportunity to shame people into backing off,” he said.

Assembly Member Brian Kavanagh, ST-PCV Tenants Association Chair Susan Steinberg and State Senator Brad Hoylman (Photo by Sabina Mollot)

Assembly Member Brian Kavanagh, ST-PCV Tenants Association Chair Susan Steinberg and State Senator Brad Hoylman (Photo by Sabina Mollot)

McKee said that while in the past, major decisions in Albany have been made behind closed doors by the “three men in a room” (the governor, the Assembly speaker and Senate Majority Leader Dean Skelos) this year there might be four — if Jeff Klein is allowed to participate. Klein is the head of the State Senate’s Independent Democratic Conference, a breakaway group that caucuses with Republicans. McKee, who’s often blasted Klein as being a tool of the real estate industry, commented that his participation would only be to tenants’ disadvantage.

As for Skelos, McKee added, “Dean Skelos will not do anything voluntarily to help tenants or to hurt landlords. The Assembly has to do what’s called taking hostages. There are dozens of things everybody wants at the last minute. Some of it is minor stuff, nothing to do with housing even.”

One advantage of tenants, he added, is that with Heastie being new as speaker, “he has to prove himself. He has to be accountable not only to us but the members that elected him speaker.” Heastie has said he considers strengthening the rent laws a priority. That said, McKee warned, there’s still always the possibility a tough talking pol will “wimp out” at the eleventh hour. “There is always a wimp factor in Albany,” he sighed.

As for what tenants could do, he urged people to write to the aforementioned three men (letters rather than postcards), and get three neighbors to do the same as well as turn out, if possible for any upcoming rallies. One rally, organized by the Real Rent Reform campaign and the union 1199SEIU, which is aimed at strengthening the rent laws, is scheduled for Thursday, May 14 at 5 p.m. at Foley Square (corner of Centre and Worth Streets). The group will then march over the Brooklyn Bridge.

“We need a very big turnout,” said McKee.

Another rally is on Wednesday, May 6 in front of Cuomo’s Manhattan office at 633 Third Avenue (between 40th and 41st Streets) from 10 a.m.-noon.

He then claimed to have a plan aimed at shaming Cuomo into helping tenants. McKee declined to discuss this further. “That’s all I’m prepared to say,” he said later.

When taking his turn at the podium, Tenants Association President John Marsh echoed the sentiment of the other speakers, calling on neighbors to get involved. “If everyone takes a small step, we can have a very loud voice,” said Marsh.

He also mentioned a door-knocking campaign that he and Council Member Dan Garodnick led through ST/PCV the following day, with Garodnick’s two young sons in tow. Garodnick later said the building walk-throughs resulted in many tenants being appreciative of the reminder of the looming rent negotiations in June.

Kavanagh, when addressing the audience, said that while he realizes many new residents at ST/PCV probably feel the rent laws have no teeth when they look at the numbers on their rent bills, being rent regulated still offers New Yorkers protections they wouldn’t have otherwise.

“It prevents landlords from arbitrarily evicting tenants and that doesn’t exist for most tenants in the city,” he said.
Because of the outcome of the “Roberts v. Tishman Speyer” lawsuit, all units in ST/PCV will be regulated until the property’s J-51 tax abatement expires in 2020.

Kavanagh reiterated the goals for strengthening the rent laws, which include repealing vacancy deregulation and other policies that give incentive to owners to vacate units such as vacancy bonuses and reforming the way individual apartment improvement (IAI) rent increases are issued. Reform of major capital increases (MCIs) is another goal.

Kavanagh also got a round of applause after saying he wanted to close the preferential rent loophole. Due to preferential rents, which are given to most new residents in renovated apartments in ST/PCV, rent increases can be far higher than those issued by the Rent Guidelines Board, if the tenants’ legal rents are higher than what they’ve been paying (the preferential rent).

“In our community it’s a particular problem due to the way ‘Roberts’ played out,” said Kavanagh. “(Tenants) are facing enormous increases.”

Manhattan Borough President Gale Brewer, who’d been sitting in the audience at the meeting, along with Garodnick, at one point, popped up to comment about preferential rents, which she said was happening all around the city.

“We go case by case and try to fight it but there is no great answer,” she admitted.

The meeting then concluded with a Q&A period, with most of the questions from the audience—which were limited to the topic of rent—being on the theme of MCIs. Tenants mainly asked why they were being forced to pay them. Hoylman and Kavanagh suggested that tenants’ use their frustration and personal experiences as inspiration to write to the governor.

When a woman asked where the mayor was in this fight, saying, “He seems to have had a low profile lately,” Kavanagh responded to say he thought the mayor would be more visible soon. “This is the time we roll out this fight and I think you’ll see the mayor rolling out this fight,” he said. Hoylman added that a lot is done “behind the scenes,” going on to note that this is part of Albany’s dysfunction.

When a man asked if strengthening of the rent laws would help a conversion effort, Kavanagh said he thought it would in that it would help thwart predatory bidders.

Another tenant then asked if it could work to tenants’ advantage if Skelos, who’s being investigated by U.S. Attorney Preet Bharara, were to be indicted. The answer, however, was that it wasn’t likely to have any impact during rent negotiations.

“If he’s indicted and forced to step down, it’s unlikely that he’d go to trial before June and you don’t have to leave office until you’re convicted,” said Hoylman. “It would have a greater impact next year than this year.”

Town & Village later contacted the office of the governor to ask his position on strengthening the rent laws. In response, a spokesperson emailed prepared statements made by Cuomo at the Association for a Better New York breakfast on rent laws and 421-a.
Included in the written statement was a comment that “At a maximum maybe we can make some fine modifications in both of them.”

“The 421-a, first I believe has to be extended and I believe that’s essential,” the statement read. On changes to it, which he said he believed were needed, he said, “If it was a different time in Albany, frankly, and Albany was a little bit more of a stable situation I would normally take those negotiations to Albany and try to work it out among the parties. Albany has a lot going on right now let’s say, so I’m hoping and I’m asking the parties to work out the disagreements among themselves or their desires for modifications. If they can great, in any event 421-a has to be extended.”

He went on to say, “Rent has to be extended. It is a New York City issue. If we don’t extend rent you would have chaos in the real estate market, these are rent regulations, rent stabilization etc. You would have chaos in the real estate market unlike anything we have seen because it regulates the private industry not another government. It lapses one day you will see real estate entities and landlords start rising rents and evicting tenants. I mean it would be immediate mass mayhem.

“So at a minimum we have to extend those protections but in truth, because everyone has been watching the situation, to have these final negotiations on these delicate points is going to be problematic this year. So, at a minimum rents extended 421-a, is extended. At a maximum maybe we can make some fine modifications in both of them. The democratic assembly is going to be more aggressive on extending rent than the senate Republicans. 421-a, both houses want.”

A spokesperson, Frank Sobrino, when asked if the governor could clarify what was meant by “fine modifications,” said this was a general statement in response to suggested changes. He also denied that the statements were an attempt to remain neutral.

“He said that ‘at a minimum,’ both rent regulations and 421-a must be extended,” said Sobrino. “That’s not neutral.”

TenantsPAC: It’s time for tenants to step up the pressure in Albany

TeantsPAC Treasurer Mike McKee (Photo by Sabina Mollot)

TeantsPAC Treasurer Mike McKee (Photo by Sabina Mollot)

By Sabina Mollot
As is well known by tenant activists, the State Senate has long been the realm where any tenant-friendly legislation, from MCI limitations to elimination of preferential rents, has gone to die. While it did seem likely that the Democrats would be controlling the Senate after Election Day, following a decision by rogue Democrat group, the Independent Democratic Coalition, to end an alliance with Republicans, the Republicans then managed to win a narrow, but still clear majority, making an alliance with the IDC unnecessary.

Some critics have been quick to put the blame on the Election Day results on nation-wide voting trends as well as low turnout during a non-presidential election year. Others have said the blame is Governor Cuomo’s for not making an effort to help the Democrat candidates.
Mike McKee, treasurer of Tenants Political Action Committee, is in the latter camp, saying he believes Cuomo would rather have Republicans running the Senate.

“I’m very cynical about whether we will get any help from the governor,” he said. “On the one hand it’s better to have a governor who wants the rent laws on the books unlike George Pataki, but to keep them the way they are — containing the seeds of their own destruction — is not the answer.”

As for what all of this will mean for tenants with the rent regulation laws up for renewal or expiration next year, McKee said while the real estate industry clearly has the edge with a Republican-controlled Senate, tenants may still have a shot at getting some meaningful reform. That is, if they’re willing to fight for it.

“We have some leverage we didn’t have three years ago if Shelly Silver chooses to use it,” said McKee, “things that can be traded.”

The leverage, he believes, is in the 421-a and J-51 tax breaks, which owners want to be passed and property tax caps, “which the governor very much wants.”
McKee made a point to note that he personally abhors the 421-a tax abatement since it subsidizes “billionaires buying condos.” But developers want it as well as J-51, with McKee saying they hadn’t been scared off by “Roberts v. Tishman Speyer,” which ruled that owners accepting those breaks couldn’t deregulate apartments in those properties. “Those programs are extremely lucrative,” he said. And, said McKee, tenants should keep their eyes on the prize, which is vacancy deregulation.

“We mean full repeal. Not simply raising the threshold like they did three years ago. They raised the threshold and called it a great victory and they’re still trying to spin it as a victory when it was a cosmetic change.” This was in reference to the amendment of the law that allowed landlords to de-regulate an apartment if the rent was $2,000 and the tenant’s income was $175,000 for two years, by increasing that amount to $2,500 or more and $200,000.

“We have rent stabilized apartments in Stuyvesant Town renting for $5,000 or more because politicians allowed the rent laws to be trampled,” McKee added.

What tenants can do, he said, is ask their Assembly members to put pressure on Speaker Sheldon Silver to get tenant-friendly legislation to become more than just one-house bills.

“Do I think Shelly Silver is likely to do this on his own initiative? No. He’s going to have to be pushed,” said McKee. “If he’s going to just posture and introduce bills that die in the Senate, and put out press releases saying how pro-tenant the Assembly is, we’re in trouble. The question is whether or not the governor and the speaker will use that leverage.”

What doesn’t need to be fought for, said McKee, is repeal of the Urstadt Law, which would return home rule on housing to the city. Focusing on that this year, he believes is a trap, since the odds of the Senate agreeing to to it are too slim.

“We need a lot of things,” he said. “We need MCI reform so MCI increases aren’t permanent and compounded into the base rent and reform of the Rent Guidelines Board and stopping the 20 percent vacancy bonuses. But without vacancy deregulation, none of those changes are going to mean anything, because without the rent regulation system, in a few years there won’t be anything left.”

McKee believes that close to 400,000 units of affordable housing have been lost in the past 20 years due to erosion of the rent laws. In 1996, 56 percent of rental units in the city were rent controlled or rent stabilized, based on figures from a city housing and vacancy survey that’s done every three years. Fifteen years later, in 2011, that number had been whittled down to 47 percent, based on the same source. “That should tell you something about the rate of loss,” he said. In some cases, this is due to condo or co-op conversion, but the majority of those cases are vacancy deregulation.

And as always, said McKee, tenants should also keep their mouths open — not to mention their wallets —in the effort to help TenantsPAC.
“I’m talking about money, I’m talking about bodies,” he said. “We have all volunteers so 95 percent of all we raise goes directly to the candidates we support.” (The other 5 percent goes to the organization’s phone, internet, and office rent expenses.) The money, however, never comes close to what the real estate industry spends to elect Republicans. (As of October 20, the Real Estate Board of New York had spent $1.9 million and owner group the Rent Stabilization Association spent $500,000.) Additionally, unlike REBNY, the RSA did this quietly, funneling the funds to a Washington, D.C.-based Republican State Leadership Committee which then gave an even larger amount to a New York group which spent heavily to elect Republicans, Crain’s reported on Friday.

The tenants do have one advantage though. “One of the things we bring to the table that the real estate lobby doesn’t is volunteers.”

He noted that many volunteers as well as donors have been residents of Stuyvesant Town and Peter Cooper Village. But for those whose rent demands don’t allow for large donations or work schedules don’t leave time for trips upstate to go door-knocking, McKee recommends phone banking as a good alternative for would-be volunteers. This can be done at home, usually in the evenings, and even after elections, since TenantsPAC phone banks in support of legislation.

As for why Election Day was such a dismal one for Democrat legislators and candidates, McKee believes Democrat voter apathy is partially to blame. While he was in upstate Kingston going door to door to campaign for Democrat Senator CeCe Tkaczyk, who ended up losing, he saw it firsthand.

“In non-presidential election years, Republican voters show up and Democrats tend to stay home,” he said.