The weather is cold, but the housing news is hot. Following the passage of City of Yes, Mayor Adams is moving to create a charter commission to address housing issues. We'll tell you about it. Plus, we discuss the new FARE Act. Will it create a black market? And there is some weird stuff happening up in Kingston that we just have to talk about.

Let's start Housing New York. 

[THEME]

“We need 800,000 units to meet the demand today. What we have right now in the United States and what we have right now in New York City is almost a crisis of absurdity. We have thousands of people with rent vouchers and no place to use them. Housing needs to be addressed from literally every angle, and what that means is we're all going to have to compromise…”

[INTRO]

Hello friends. I'm Kenny Burgos, CEO of the New York Apartment Association. This is Housing New York, our weekly podcast discussing all the stories and developments that impact housing policy in this great state. We're taping this on Monday, December 16th. 

We had a busy weekend: I spoke to both NY1 and FOX-5 about housing issues, including the City of Yes and the FARE Act. We will talk a little more about that later in the podcast. Now, it's time to get to the news.  

[01:16] [Charter Review for Housing]

We're kicking off this podcast talking supply.

A few weeks ago we told you that the passage of the City of Yes was a big deal. But what happens next will be more important. 

We said then, and we still believe it now, that lawmakers couldn't rest on their laurels after passing the City of Yes. Well, maybe Mayor Adams was listening because he has floated a new bold idea that will build on the housing success: A Charter Commission, which would allow voters to immediately approve changes that would increase supply.  

For those unfamiliar with this process, the mayor can convene a charter commission for any election year. The commission puts forth ballot initiatives that voters can then decide on. We don't know what the commission will do for next year, but reporting has suggested that they will focus on reforming the Uniform Land Use Review Procedure, or ULURP, which basically creates a timeline for zoning changes to be approved or rejected.

New York City needs to build half a million homes in the next decade. We don't have the current zoning to make that happen. Even if we did, operating costs are too high in the city to incentivize private investment. And the city coffers don't have close to enough money to build that much housing. So we need to use whatever tools we have to increase supply.

Charter Commission is a good tool. Plus, it puts the power in the voters hands, which we think is a good thing. 

If a Charter Commission is convened to address the city's housing scarcity, we will be sharing our thoughts on a host of issues, from property taxes, to runaway insurance costs, and a host of regulations that could be streamlined. We encourage all of you to share your ideas, either with us, or directly with the mayor's office.  

[02:47] [Will the FARE Act create a black market?]

Sticking with city news. On Saturday, the FARE Act officially became law. This is the bill that changes the way broker fees can be applied when leasing an apartment. The crux of the bill is that the person who hires the broker pays the broker.

There is a belief that property owners hire brokers, when in reality most brokers serve more like middlemen that offer their services to property owners for no charge. We spoke to FOX-5 about this over the weekend and explained that we expect this bill to shake up the market, and the outcome of that shakeup may not be what everyone seems to think will happen. 

One example of this is the idea of a black market for rent-stabilized apartments, which The Real Deal wrote about. This idea stems from the basic truth that rent-stabilized buildings cannot absorb a new cost to lease apartments. Owners of these buildings will search for the cheapest alternatives, which could be a secret market set up by brokers who pool a list of available units. It's important to understand that nothing in the FARE Act requires a property owner to list an available apartment publicly on a place like StreetEasy. 

Our organization knows the very real financial troubles that thousands of rent-stabilized buildings are facing right now. We're going to help our members reduce costs any way possible. 

We're going to advise them how to comply with the FARE Act without increasing costs. We think the logical assumption about this law is that renting apartments will change. Capitalism is predictable. If a law increases the cost for buildings that didn't exist before, then the buildings will change how they do things.

Maybe apartments just get rented through a referral and aren't publicly listed. Maybe brokers keep private listings. What we know is that in a supply constrained market, owners do not need StreetEasy or other sites to rent desirable apartments. That dynamic will never change, so long as the vacancy rate remains below 7% in the city. 

[4:32] [Critiquing Brad Lander’s housing pitch]

Shifting our focus to the mayor's race, Earlier this year, The New York Times made waves when they announced they wouldn't be endorsing local candidates. Following that, several veteran journalists joined together to fill that gap, creating The New York Editorial Board. This weekend, they interviewed their first candidate for mayor, Comptroller Brad Lander. 

We want to thank the board and give props to Lander for sitting for the firing squad. But we also want to talk a little bit about what the comptroller said about housing. 

First off, the positive. Lander spoke about a housing first approach, which basically means that homeless people are moved directly into permanent housing instead of being forced to live in a shelter for months. He made it clear that increasing housing supply is vital for the future of New York City. And he also spoke about property tax reform, which is something we believe is necessary.  

Now to unfortunately throw some cold water on his ideas. Housing First is fantastic if you have ample supply of housing and a functioning housing court. It works well in Houston, Texas, because there are a lot of apartments and if a tenant loses their voucher, the owner has quick due process. The tenant will either get the voucher renewed or they will get evicted in less than three months. 

It's important to understand that in Houston, owners don't have to rent to voucher holders, but they choose to do so because the system works.

On supply, upzoning and property taxes, the comptroller is saying the right things. But he touts a zoning success in Gowanus that took three years longer than it should have, simply because they wanted the community to chime in over and over again. If every upzoning is going to take three years, we will never meet the scale of the problem.  

On property taxes, his proposal for reform doesn't address the core inequity in the system, which is that older multifamily buildings pay significantly higher taxes than single family homes or two family homes, and that new construction pays nothing. His approach is to maneuver around the edges and make it more fair inside the classes, which is admirable, but won't increase supply.  

Again, we have to give the comptroller credit for showing up and speaking in detail about these proposals. It's important for voters to know where everyone stands, and we encourage other candidates to do the same thing. 

[6:41] [What’s going on in Kingston?]

Making our way upstate now, we want to tell you about a few things happening in Kingston. As many of you know, the city implemented rent stabilization over a year ago, but the housing and vacancy survey they conducted using in-house staff was challenged in the courts. The case is on its way to the Court of Appeals right now.

This week, the Ulster County District Attorney issued a subpoena for all documents connected to the HVS. This met with immediate backlash from the city of Kingston. A few days later, the DA withdrew the subpoena request, but there may still be a criminal investigation into this.

I hate to say I told you so, but we did talk about this process on the podcast a few episodes ago. 

Under the law, rent stabilization can be triggered after a housing and vacancy survey is conducted and finds a vacancy rate below 5%. We also said that there is nothing in the law that prevents a mayor from having friends or political allies conduct a survey, so long as the survey is done fairly and accurately.

We sincerely hope that this survey was done in accordance with the law. On a fundamental level, I think we can all agree that government officials should never make up information so they can declare an emergency and gain more power. We'd all be pretty upset if the police made up data and then used it as a pretense to declare martial law and restrict our rights.

Whatever happens in Kingston is not likely to impact New York City's rent stabilization system, but it definitely has become a focal point that will shape the housing debate in Albany for years to come. We're going to continue to watch this closely.  

[8:09] [Housing violations lead to $6.5 million settlement]

Before we end this podcast, we wanted to take a moment to discuss a story that was in The Real Deal, discussing a $6.5 million settlement the state attorney general reached with the owner of a fairly large portfolio of rent stabilized buildings. The case stemmed from their failure to address lead paint, mold, and other violations in a timely manner. 

We wanted to applaud the Attorney General's office for this work. Property owners who intentionally fail to maintain their buildings should be punished. 

We want to make it clear that this case is an outlier, though. The majority of buildings are well maintained, or the owners are trying very hard to maintain them even though costs are skyrocketing and rent increases are about half of inflation for the past five years.

The current trend of defunding older rent stabilized buildings is unsustainable. The government can't keep increasing property taxes and ignoring the rising costs of maintenance on buildings that are more than 80 years old, and then simultaneously tell the Rent Guidelines Board they need to ignore taxes, inflation and skyrocketing insurance costs, and just freeze the rents.

The outcome of this policy, which has been in place now for a decade across two mayors, is buildings falling apart. The status quo is not working. If the government and elected officials are not going to reduce costs, then the Rent Guidelines Board needs to step in and protect the long-term viability of this housing stock. 

[OUTRO]

A quick heads up to our listeners. We'll be off next week for the holidays and we'll be back at the top of the year for 2025. Look out for our Year-in-Review podcast, and if I don't get to see you or speak with you, have a happy holiday and a safe new year.  

The Housing New York podcast is a proud product of the New York Apartment Association. You can follow us @HousingNY on most social media channels. Please keep sending us feedback on our website or in the comments below. 

You've been listening to Housing New York with Kenny Burgos, and I'll see you all – not next week, but at the top of the year. And remember, good housing policy starts with good conversation.