Mitchell Schorr came perilously close to being evicted from a Mitchell-Lama development known as East Midtown Plaza (EMP).
Mitchell contended that he was entitled to remain in his parents' unit as a tenant in his own right but EMP didn't agree and started the process to evict Mitchell from his unit. Once a certificate of eviction issued, Mitchell filed an Article 78 proceeding with the New York County Supreme Court challenging EMP's efforts to have him removed from the building.
After reviewing the evidence, a Supreme Court Justice found in Mitchell's favor and, on appeal, the Appellate Division, First Department, agreed.
Both courts were persuaded by the following facts:
In 1999, Mitchell's father had requested that the apartment be transferred to his son.
EMP corresponded with Mitchell and accepted rent checks from him.
Only Mitchell's name appeared on rent bills.
Several lawsuits concerning the apartment were settled with Mitchell without a challenge from EMP as to Mitchell's status.
In an interesting twist, the AD1 suggested that Mitchell's inability to demonstrate that he contemporaneously occupied the unit with his parents for a two-year period preceding their departure was of little consequence since Mitchell lived in the unit for some four years with "EMP's apparent consent."
While Mitchell certainly shored this case up, what's with this "succession by apparent consent" concept?
(While it's an interesting theory, we can't find it in the regulations.)
For over three decades, Sonia Rosario has lived in a New York City rent-stabilized apartment and, for a good chunk of that time, has received benefits from the Tenant Based Assistance: Housing Choice Voucher Program, commonly known as “Section 8.”
In February 2003, Rosario’s landlord, Diagonal Realty, LLC, informed her that it would no longer accept Section 8 payments. When Rosario did not tender the full rent herself, Diagonal commenced a non-payment proceeding in the New York County Civil Court.
New York’s Rent Stabilization Code is a regulatory scheme that affords tenants an array of protections. One such protection is that landlords are required to provide renewal leases to these tenants "on the same terms and conditions as the expired lease, except where the owner can demonstrate that the change is necessary in order to comply with a specific requirement of law ....”
The state’s highest court concluded that the acceptance of payments made by the Section 8 Program is a “term and condition” of the parties' lease. Thus, a landlord who has accepted Section 8 payments on behalf of a rent-stabilized tenant may not later refuse to do so.
Diagonal argued that it was not required to continue accepting Section 8 payments due to a change in federal regulations allowing landlords to terminate participation in the program “without cause” upon the expiration of the lease. This new regulation, Diagonal contended, preempted the state’s Rent Stabilization Code.
The Court of Appeals rejected that interpretation and was of the opinion that Congress intended to allow state protections to remain in place when federal protections for Section 8 tenants were repealed.
Thus, while “free-market” Section 8 tenancies may end upon the expiration of a lease term, rent-regulated Section 8 participants remain "untouchable."
On Tuesday March 13, 2007, Stephen Ross -- Chairman, Chief Executive Officer and Founder of the Related Companies -- appeared before a packed audience at New York Law School’s Center for Real Estate Studies, and addressed the question, “Will New York City Remain the Capital of Real Estate?”
According to Ross, the answer is yes … with a few caveats.
Mr. Ross noted that as a developer, “I wish we could freeze time because you know it can’t get any better.”
According to Ross, New York real estate is at its “best moment in history.”
What explains this phenomenon?
Land prices in New York City have risen 300% in the last three years and commercial and residential rents are rising to unprecedented levels. Wall Street firms, taking advantage of the current economic climate and stellar returns, are willing to invest in some of the world’s largest real-estate development projects. Ross suggests that development will slow when financing dries up, but no one knows precisely when that will occur.
Despite this euphoria, Mr. Ross warned that “storm clouds are on the horizon. If we don’t address them, the results could be disastrous.”
One of those threats includes the city’s diminishing supply of affordable housing, (something we’ve commented on this blog before). According to Ross, unless the city addresses how middle class residents -- the bulk of the city’s workforce -- can afford to live within our great metropolis, New York is in danger of losing its social and commercial preeminence to other cities.
Mr. Ross also criticized the City’s elimination of certain tax-abatement programs designed to offset developers’ upfront real-estate taxes. Without the tax relief, developers spend up to 35% of their gross income from new development projects on real-estate taxes, which are often passed onto the purchasers/renters, causing rents and purchase prices to rise even further.
The Real Estate Board of New York, also lead by Ross, is working to address these and other issues of concern to the industry. Ross portends that only if we plan now for the future, will New York City remain steadfast as the world’s real estate capital.
To view Mr. Ross’s speech, please use this link: Ross video
To learn more about Mr. Ross, please use this link: Ross bio
The Emergency Tenant Protection Act of 1974 (ETPA) enables municipalities outside of the City of New York, with populations of under 1 million, to declare “housing emergencies” when vacancy rates dip below 5%.
In Executive Towers at Lido, LLC v. City of Long Beach, the City of Long Beach declared “housing emergencies” for residential buildings with 100 or more units in both 2000 and 2001. Executive Towers (ET) -- owners of 6 different apartment buildings with 100 or more units -- presented proof that the vacancy rate for that particular class of structures exceeded the requisite 5% from January 2003 through May 2003 and argued that the City must rescind the emergency declaration.
In August 2003, the City responded by enacting an ordinance which consolidated into a single classification those residential buildings with 60 to 99 units with those containing 100 or more apartments and then issued a report reasserting a “housing emergency” for this new group of residential housing.
ET challenged both the validity of the City’s “state of emergency” claim and the enforceability of the new ordinance creating the single classification for buildings with 60 or more units. In addition, ET asserted civil rights violations.
The Nassau County Supreme Court found that ET properly established that the vacancy rate for residential buildings with 100 or more units exceeded 5% between January and May of 2003 and granted partial summary judgment. However, the Supreme Court also held that ET’s challenge to the enforceability of the new ordinance was without merit and then granted summary judgment dismissing ET's civil rights claim.
On appeal, the Appellate Division, Second Department, affirmed the lower court’s decision and agreed that the “housing emergency” for residential buildings with 100 or more units had come to an end. In its decision the AD suggested that while a municipality need not conduct a comprehensive housing survey, it must demonstrate in good faith that the survey was derived from precise data. Since the City’s report failed to satisfy that standard, any prior housing emergency was thus extinguished.
Will somebody from the City of Long Beach, phone home?
The Metropolitan Council on Jewish Poverty is accepting applications for 23 studio and one bedroom apartments now under construction on the Upper East Side for moderate income individuals and couples.
Rents for these units will be from $782 to 836 per month depending on unit size. To be eligible, applicants must have incomes between $33,040 to $42,432, based on unit and family size. Single applicants must be 62 years of age or older at the time of the application. For couples, one applicant must be at least 62 and the co-applicant must be at least 55 at the time of the application.
A lottery system will be utilized, with preference given to New York City residents. Applicants residing in Community Board 8 will receive priority for 50% of the units. In addition, visual/hearing impaired applicants will receive priority for 2% of the units, applicants with mobility impairment will receive priority for 5% of the units, and applicants who are New York City municipal employees will receive a preference for 5% of the units.
You may request an application by mail from Met Council/92nd Street Senior Residence, 80 Maiden Lane, 21st Floor, New York, NY 10038. Include a self-addressed envelope with your application request. Applications must be postmarked no later than March 12, 2007 and must be returned by regular mail to the post office box listed on the application form.
Only one application per household will be accepted.
In an effort to combat escalating housing costs, the Honorable Christine Quinn, Speaker of the New York City Council, in a State of the City Address given on February 15, 2007, announced a new set of initiatives.
Among them is a Renter’s Tax Credit Act (RTCA), a bill which she plans to bring to the state legislature. The RTCA would provide tax relief of approximately $300 per apartment for working and middle class New Yorkers -- defined as families of four earning $75,000 or less, or, individuals making $43,000 or less. Quinn hopes that this credit will ease the hardship of rising rents. As she noted in her remarks, “Two-thirds of New Yorkers rent their homes, and for too long, they’ve been forgotten and ignored when it comes to tax relief.”
Quinn also seeks to bring middle-class homeowners back to the fold. As Quinn stated, “In 1970, the middle class made up nearly 50% of the City; in 2000, it was 30%, and the numbers are decreasing every year.” To stem the decline, Quinn has proposed revisions to city programs such as the Renters to Owners Opportunity Fund (ROOF). This Fund, which is currently available to families earning less than $56,720 a year, would be expanded to include those making approximately $92,170 a year; thus allowing a larger group of home purchasers to be eligible for assistance with closing costs and down payments.
To read the complete version of Speaker Quinn’s remarks, please use the following link: www.nyccouncil.info/soc
There is a need for “smart growth,” announced New York City Comptroller William C. Thompson, Jr., at a breakfast sponsored by New York Law School, on January 19, 2007.
While noting that New York City’s future was bright -- as evidenced by a burgeoning economy, a rise in tourism, and a low crime rate -- the Comptroller’s presentation highlighted a significant problem.
Thompson acknowledged that our great city suffers from an “affordability problem.” About 29% of all New Yorkers spend more than half of their monthly income on rent, with 1.5 million people -- roughly 20% of the city’s population -- living below the poverty line. Escalating housing costs also pose a threat to the City’s diversity and economic stability, as we also price out our working class.
While the Comptroller was encouraged by the city’s construction boom, he questioned whether we are building what we, as a city, need. The key, according to Thompson, is to strike a balance between economic and social interests, a balance which can only be achieved through thoughtful planning, he termed as “smart growth.” A policy which “takes into account the big picture of neighborhoods, resources and needs, and minimizes harm to communities.”
One of the central principles of “smart growth” is to encourage a mix of housing types and costs. This is particularly important given New York City’s need for affordable housing, which, according to Thompson has reached “crisis proportions.”
Thompson suggests a reexamination of the meaning of “affordable housing.” While historically comprising low- to moderate-income families, he called for an expansion of our sense of that term.
Middle-income families must also be able to live in our great city, and a balance achieved, or “the gap between what we have and what we need, threatens to worsen in the coming years.”
According to Thomson, positive change can be effected when all voices are heard and participate in this formulative process. By working collaboratively, we can ensure New York City’s livability, affordability, and greatness.
Here is a video showing Comptroller Thompson’s speech.
May an owner of a New York City rent-stabilized building recover an unlimited number for of units for "owner's use?" (Yes.)
Should they be allowed to do so? (We'll get to that in a minute.)
In Pultz v. Economakis, the tenants of five different regulated units, in a Manhattan building on East 3rd Street, objected to their landlords' attempt to recover possession of all the remaining regulated apartments in the 15-unit structure. While two Justices of the New York County Supreme Court believed that such such a recovery "would be incompatible with the statute's intent to provide affordable and stable housing to New York City residents," in a decision released yesterday, the Appellate Division, First Department, disagreed.
Finding that the two Supreme Court Justices had disregarded a clearly delineated legislative policy which allows owners to recover an unlimited number of regulated apartments, the appellate court concluded, in part, as follows:
[T]he clear and unambiguous provisions of both the Rent Stabilization Law and Code permit an owner to recover an unlimited number of stabilized units for personal use and occupancy without DHCR approval, as long as good faith intent to use the premises as a primary residence is established. Rent Stabilization Law (Administrative Code of City of NY) § 26-511(c)(9)(b) provides that any rent stabilization code adopted by DHCR must "provide[] that an owner shall not refuse to renew a lease except: (b) where he or she seeks to recover possession of one or more dwelling units for his or her own personal use and occupancy as his or her primary residence in the city of New York ..." (emphasis added). Notably, nothing in this subdivision may be read to require DHCR approval before defendants are entitled to recover "one or more" of a building's apartments for personal use.
With the number of affordable housing units in the New York City area on the decline, should we be allowing entire residential structures to be permanently removed from rent regulation in the guise of "owner's use?"
According to a June 1, 2006 report issued by the New York City Rent Guidelines Board (RGB), in a single year (2005), approximately 6,667 apartments entered stabilization, while 14,045 units were removed from the system.
While we certainly recognize the right of owners to control their property interests, we can't help but wonder how a mounting net loss of affordable housing units impacts the citizens of our great City and State. With Manhattan condos and co-ops averaging $1.3 million, and rents averaging $3,142 a month, housing options for those earning under six figures per year are becoming increasingly limited.
If affordable housing continues its precipitous decline, legislative intervention appears to be an inevitable reality.
Peter Grannis, the State Assemblyman who has represented the eastern part of the Upper East Side (Yorkville) and Roosevelt Island for 32 years, has been nominated to the position of Commissioner of the NYS Department of Environmental Conversation by Governor Eliot Spitzer. As a result, there will soon be a vacancy in the 65th Assembly District.
Our good friend, Micah Kellner, is currently the Democratic State Committee Member representing that Assembly District and is seeking to make a run for this seat. (The Democratic nomination would be filled in a County Committee meeting likely to take place in February.)
Micah has worked for a number of Manhattan public officials, including Congressmember Carolyn Maloney, Assemblyman Jonathan Bing, and Councilwoman Inez Dickens. He currently serves as a staff member to NYC Comptroller Bill Thompson.
Micah would be a forceful new voice for reform in the Assembly's Democratic Conference, as well as an effective advocate with respect to such issues as gay marriage, increased mass-transit funding, improved access to affordable housing, and greater support for people with physical challenges.
To assist Micah's candidacy, we invite you to consider a (non-deductible) contribution to his campaign. Checks may be made payable (to a maximum of $3,400) to "The Kellner Committee," and forwarded to the following address:
The Kellner Committee, 217 East 85th St., #117, New York, New York 10028
The recent $5.4 billion sale of Stuyvesant Town has heightened concerns about the diminishing number of low-cost housing within New York City. Fortuitously, Mayor Bloomberg has unveiled a plan to create a "New Housing Marketplace." Bloomberg's goal is to "ensure long-term affordability and sound project operations; to address projects' current and future capital needs, financial viability, and existing project debt; and to provide mechanisms for continuing asset management oversight." Included in this plan is a $7.5 billion pledge to create and preserve over 165,000 units by 2013.
One way to realize that goal is to offer financial incentives to developers. The Department of Housing Preservation and Development (HPD) has been using property-tax exemptions and credits as a way to help fuel the construction of over 110,000 units throughout the city since 1971. In early 2006, Bloomberg assembled a task force to undertake a comprehensive review of the City's property tax-abatement programs. This group--comprised of members of HPD, various government offices, and members of the real estate, affordable housing, advocacy and non-profit communities--will be evaluating the effectiveness of current tax exemption policies (such as the "80/20 program," where a developer must set aside 20% of their units for low- and middle-income affordable housing in order to receive certain tax abatements). In addition to relieving developers of certain property taxes, the program also offers zoning incentives, tax-exempt bonds and financing packages to those who commit to reserving a certain percentage of their new developments to affordable housing.
While the plan does not seem to address the immediate crisis our low- and middle-income residents face, Bloomberg has committed the City to help developers increase and preserve the housing stock in a variety of different ways over the course of the next decade.
To download a copy of the October 11, 2006 press release entitled, "Mayor Bloomberg Endorses Task Force Recommendations To Create More Affordable Housing And Continue Strong Housing Construction," and to find out more about these financing options, please click on the following link: Press Release
To download a copy of the "Ten Year New Housing Marketplace Plan," released by the New York City Department of Housing Preservation and Development, please click on the following link: http://www.nyc.gov/html/hpd/downloads/pdf/10yearHMplan.pdf
It's an ugly reality, which few in our industry are willing to discuss openly and candidly, but with each passing year, New York City is losing rent-stabilized apartments at an alarming rate. According to a June 1, 2006 report issued by the New York City Rent Guidelines Board (RGB), approximately 6,667 apartments entered stabilization in 2005, while 14,045 units were removed from the system. "High rent/vacancy decontrol" accounted for the biggest chunk of last year's loss: 9,272 units or 66% of the total number of subtractions.
Under current law, a unit may be permanently removed from regulation when the legal regulated rent (rent stabilization) or the maximum rent (rent control) of a vacated unit reaches $2000 or more per month. Typically, this "high rent/vacancy decontrol" is achieved when an owner implements substantial improvements ("individual apartment improvements" or "IAIs") to a unit upon a regulated tenant's departure from the space. These renovation expenditures, together with any lawful rent increases permitted upon a vacancy, can then be used to bump-up the "old" rent to the deregulation threshold.
According to the RGB, since 1994, the City has lost 50,702 stabilized units to this decontrol process.
While we certainly recognize a fundamental right to control one's property interests, and believe there is an entitlement to achieve a favorable rate of return on one's investment (without undue or unreasonable governmental interference), we can't help but wonder how this drain of affordable housing units is impacting the citizens of our great City and State. Data released by various residential brokers reinforce the existence of a disturbing trend. With Manhattan condos and co-ops averaging $1.3 million, and rents averaging $3,142 a month, housing options for those not earning six or more figures per year have become increasingly limited.
Make no mistake, it is not our position that private owners should shoulder the brunt of the responsibility for these disturbing developments. This is a problem that must be shared by society-at-large. But until creative solutions are forged, at a minimum, more government incentives are warranted to encourage the private-sector's creation and maintenance of affordable housing for all.
Mitchell Schorr came perilously close to being evicted from a Mitchell-Lama development known as East Midtown Plaza (EMP).
On Tuesday March 13, 2007, Stephen Ross -- Chairman, Chief Executive Officer and Founder of the Related Companies -- appeared before a packed audience at New York Law School’s Center for Real Estate Studies, and addressed the question, “Will New York City Remain the Capital of Real Estate?”
The Emergency Tenant Protection Act of 1974 (ETPA) enables municipalities outside of the City of New York, with populations of under 1 million, to declare “housing emergencies” when vacancy rates dip below 5%.
