News
RENT REGULATION & VACANCY DECONTROL
May 11, 2009
| We have a more serious side, too, and we hear that rent regulation and vacancy decontrol are on readers' minds, especially with court determinations affecting Stuy Town and Peter Cooper Village. We spoke with top execs on 10 related bills already passed by the Assembly, which may affect multifamily owners, related industries, and NYC upon Senate decisions in June. | ||
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| REBNY prez Steve Spinola tells us that the bills may repeal preferential rent adjustments and propose new deregulation incomes and rent thresholds. The bills' outcomes are questionable, he says. REBNY visited Albany and added an additional lobbyist to keep an eye on the bills, which he notes offer protection for the well-to-do who can already afford NYC. Apartments are available and tenants need to accept that they can't always live where they'd like. | ||
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| Billions have been poured into multi-housing construction, Steve adds, and new homes were created because investors banked on long-term upside. Legislation could hamper major capital improvement payback for millions in investment, he says; these improvements created 100k jobs and higher taxes for NYC, and industry needs to discuss this more. Finally, these regulations don't exist elsewhere in the US, and the world didn't end after they were knocked down in Boston. | ||
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| Massey Knakal chair Bob Knakal likened the bills' potential effects to the '70s "Bronx is Burning" market, when tenant-protective rent regulation caused owners to walk away from buildings with no upside. Over $500M/ year of private investment goes into multifamily building renovations, he estimates, which may decrease to $200M. The domino effect will force thousands out of blue-collar contractor jobs; construction material suppliers, manufacturers, and related industries may also see biz decreases and forced job elimination. | ||
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| NYC will also be negatively affected, Bob says. Rent increases haven't kept pace with real estate tax and operating expense increases, and capping rents will further decrease tax revenue. How NYC could go without this revenue in this economic climate makes no sense, he says. Also expect more multifamily sales at lower prices, abandoned properties, and delayed maintenance. He urges mobilizing the support of contractors and related industries to bring more awareness to Albany. | ||
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| We also met with Borah Goldstein attorneys Robert Goldstein and David Cabrera, who tell us that many owners are in a quandary. They're unsure whether to follow the determination imposed on Tishman Speyer by courts, which say it wrongfully deregulated units after receiving J-51 abatements for improvements, put in place as an incentive for landlords to maintain housing stock. | ||
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| Owners wouldn't have accepted the abatements if they'd thought they wouldn't be able to deregulate empty apartments, David says, and now potentially face overcharge claims and reduced rent rolls. They're telling clients to speak to their attorneys with any specific questions they may have, Bob adds. |
