News
AFFORDABILITY SNUFFED?
June 27, 2011
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| Landlords, co-ops, and condos are feeling a financial punch thanks to major issues impacting the cost and availability of housing, according to Stuart Saft, who chairs Dewey & LeBoeuf’s global real estate practice. Real estate taxes have skyrocketed, in addition to expensive City mandates that owners must comply with, like: discontinuing use of Nos. 4 and 6 heating oils (which can cost upwards of $100k per average-sized building); the next round of Local Law 11 inspections; and the unknown expenditures that will come with new energy benchmarking requirements. There’s also a question of what the City will do in regards to timing and fines if these mandates are not followed. Another: the City Council bill on living wages, which will increase costs for both owners and retail tenants in mixed-use buildings. “How do you maintain affordable living while the City keeps increasing costs?” Stuart asks. |
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| People are concerned with the effects of second-hand smoke, and the burden is being placed on the landlords and non-smokers, particularly in post-war buildings with older central HVAC systems. Some landlords have even restricted smokers (so painter Cornelis Kruseman’s pipe-smoking subject may need to find another window). And lastly, limits on financing available—especially with new Fannie Mae and Freddie Mac rules—are keeping home sales locked, with no solution in sight. Even though banks are somewhat more flexible, it’s still an economic problem. But there are green shoots, Stuart says: he’s working on new offering plans for condo conversions, and he is also beginning to discuss new construction plans due to the continuing shortage of housing. He has four offering plans being submitted to the AG for review next week. After all, he says, there are 9.5M people living in NYC and 3.1M housing units; between ‘98 and ‘08, building permits to build 140,000 units of housing were issued, far less than what is needed. |
