Tenants Lost as Sheldon Silver pushed through bad bill

 

On Jan. 28, 2013, Speaker Silver pushed through A.3354, a bill that saps the City's budget without protecting its residents. *

Tenants lost as Assembly Members felt constrained to vote for tax breaks for condo and coop owners - and therefore also voted (in the same bill) for tax breaks for 5 specified billion-dollar luxury developments, and to renew J-51 tax breaks with no serious protections for tenants.

Now it's up to the Governor.  Given the speed with which the bill was rushed through the Senate and Assembly, optimism is not in order.

Nor will it be as long as big Real Estate has all upstate voters in their pockets.  (Those legislators are not accountable to NYC renters.)

Come to the Real Rent Reform's meeting on Monday, February 25, 2013 to discuss Campaign Finance Reform!     (Time and place to be announced.)

*Click on "read more" for R3's memo in opposition, sent to all the Assembly Members before the lopsided vote (139 to 7). 

MEMORANDUM IN OPPOSITION

January 28, 2013

 The Real Rent Reform Campaign strongly opposes the following bill:

 A3354            Sponsored by Wright, Braunstein, Silver, Kim, Weprin, Simanowitz, DenDekker, Cymbrowitz
Multi-sponsored by Arroyo, Benedetto, Boyland, Brennan, Brook-Krasny, Clark, Colton, Cook, Dinowitz, Espinal, Glick, Goldfeder, Heastie, Hevesi, Hikind, Lentol, Markey, Miller, Millman, Mosley, Nolan, Ortiz, Perry, Pretlow, Robinson, Rozic, Sepulveda, Simotas, Titus, Weinstein
– On Ways & Means agenda for today

This bill is a classic exercise in Albany cynicism and costly, unfair tradeoffs that benefit the     wealthy and powerful at the expense of everyone else. It includes billions in taxpayer-funded giveaways to deep-pocketed real estate titans who bankroll state politicians. It helps only a very small number of tenants, while continuing legislative policies that harm all other tenants.

The bill renews the expired tax abatements for coops and condos, but links this necessary renewal to a massive giveaway of tax dollars to the richest New Yorkers. And it does this as New York City struggles to meet its financial obligations – which is shameful and wrong. This kind of legislation deepens the public’s mistrust of state government. It sends voters a clear message: Albany is owned by real-estate barons and corrupt lobbyists who are paid to make state government do their bidding.

WASTEFUL TAX BREAKS SUBSIDIZING HOUSING FOR BILLIONAIRES

A3354 carves out wasteful tax breaks for five high rise luxury housing developments located in areas of Manhattan that are currently ineligible for tax benefits under the 421-a program. Included is One57, the “billionaires’ tower” across from Carnegie Hall owned by Extell that was featured in an article in The New York Times on September 18, 2012. A penthouse on the 75th and 76th floors at One57 that was sold to a billionaire for $90 million will have its annual real property tax bill reduced from $230,000 to $20,000, thanks to the 421-a carve-out in A3354.

Jonathan Miller, CEO of Miller Samuel, Inc. has quantified the lost revenue to New York City from five luxury housing developments that received 421-a subsidies: the City collected a mere $567,337 in real property taxes from the Avery, the Orion, the Aldyn, the Rushmore, and Ariel East in their first year of occupancy. Without the 421-a subsidy, the City would have collected $22,430,543 from these luxury properties. This represents an annual loss of $21.8 million from these five buildings alone.

That annual windfall of nearly $22 million for the affluent residents of these five luxury towers is $22 million that is not available for schools, parks, service for the poor, fire fighters, child care or public safety. The 421-a program cost the City $755 million in 2010, according to the Pratt Center for Community Development.

It is not surprising that the Republicans in the State Senate want to subsidize housing for billionaires. But we expected better of the State Assembly and the Governor.

A FEW HUNDRED LOFT TENANTS BENEFIT

The one positive feature of A3354 are two changes to the 2010 Loft Law that extended rent and eviction protections to illegal loft dwellings that were not covered under the original 1982 Loft Law. These amendments are important to these tenants and to the preservation of the units affected. One amendment in particular is important because it will provide coverage to smaller lofts that were excluded in the 2010 bill because of opposition from the Bloomberg administration.

But this will benefit only a few hundred tenants and protect only a few hundred units, most of them in north Brooklyn. There is not a single provision in A3544 that will stop the hemorrhage of rent-stabilized apartments, or put the brakes on mechanisms that landlords use to get stabilized rents up to levels so unaffordable that many stabilized tenants are forced to move.

J-51: A QUARTER OF A BILLION DOLLARS IN TAX BREAKS TO LANDLORDS WITH NO ACCOUNTABILITY AND NO TENANT PROTECTIONS

A3354 also renews the controversial J-51 program of real property tax abatements and tax exemptions that expired December 31, 2011. This program now costs the City of New York $257 million annually in lost real property tax revenue.

According to a June 2012 analysis by the Citizens Housing and Planning Council, more than half the J-51 benefits in the last ten years went to market rate housing, not affordable housing. The CHPC study made no attempt to determine how much of the J-51 benefits subsidized useful improvements as opposed to cosmetic enhancements. It seems that no one in city or state government makes an effort to learn what we are really getting for all that money.

While A3354 makes some minor improvements in targeting J-51 benefits to affordable housing, these improvements fall far short of real reform – contrary to the glowing description of the changes in the January 25 letter to Assembly members from new Housing Committee chair Keith Wright.

More fundamental reform proposals from the City of New York and from tenant advocates did not find their way into this bill. Among these proposed reforms:
● Bar benefits to cosmetic improvements such as granite countertops;
● Restrict J-51 eligibility to structural, building wide systems (i.e., new         wiring, new roof, new heating system) that would be eligible for Major Capital Improvement rent increases under the rent laws;
● Require landlords to apply for J-51 benefits, and have their application granted or denied before they could apply for MCI rent increases, thus ensuring that MCI rent increases would be offset by the J-51 benefit, a provision of current law that now goes unenforced; and
● Increase the MCI rent increase offset from 50 to 100 percent of the J-51 benefit, to prevent double dipping by landlords.

Instead, the bill makes cosmetic changes that will not achieve their stated goal of ensuring that J-51 benefits offset rent increases for Major Capital Improvements. Few tenants ever receive the J-51 offset because they don’t know they are entitled to it, there is no enforcement, and there is no coordination between the city agency (HPD) that acts on landlords’ J-51 applications and the state agency (DHCR) that acts on landlords’ MCI applications. 

Rather than sensibly requiring written agency notification to the tenant, this bill calls for HPD to post J-51 information on a web site (which in the words of Chairman Wright will allow tenants to “independently check” on the status of their units) and convene a task force to improve enforcement. When you don’t have a legislative solution, you set up another task force.

IT IS TIME FOR PRO-TENANT LEGISLATORS TO STAND UP

For forty years, Assembly Democrats have called themselves supporters of tenant protection laws. And for forty years they have been making the same excuses for why they cannot ever seem to use any leverage to win stronger tenant protections from the intransigent Senate Republicans.

If this bill passes, those claims will appear to have been a cynical ploy to placate tenants while our rights are being gutted and our supply of affordable housing is being constantly reduced.

Our rent regulation laws have been dramatically weakened in the last twenty years, most notably by enactment of Vacancy Destabilization amendments in 1993, 1994 and 1997 that allow landlords to remove apartments from regulation when they become vacant. Vacancy destabilization and other loopholes have cost New York City and the suburban counties of Nassau, Westchester and Rockland hundreds of thousands of affordable apartments that have been converted to market rate, unregulated status.

It is time to stop the phase-out of the rent regulation system. Any legislator who wants to claim to be pro-tenant must step up now and get serious about this issue.

The Real Rent Reform Campaign opposes A3354 and urges its defeat.

REAL RENT REFORM CAMPAIGN
c/o Metropolitan Council on Housing          339 Lafayette Street    New York NY 10012