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Month: April 2023

Unlocking Doors: A Good Name But a Plan that Falls Short

Published on April 24, 2023

Affordable Housing

The first step in fixing any issue is recognizing that there is a problem in the first place. According to an internal state housing agency memo, New York City has the makings of an affordable housing crisis with more than 61,000 vacant rent-stabilized apartments in 2021 (probably much higher now). Mayor Eric Adams seems to have a plan; it isn’t a good one and the approach is the equivalent of putting a band-aid on a gaping wound, but it’s a plan bound to fail nonetheless. It is called Unlocking Doors—a $10 million program that provides $25,000 for repairs of 400 rent-stabilized apartments (less than 1% of the currently vacant rent-stabilized units) to house those experiencing, or on the brink of, homelessness. To an outsider, this may seem like a good start for a pilot program, so what’s the problem?  There are a few:

  1. $25,000 Isn’t What It Used To Be: $25,000 may fix a few toilets and sinks but it simply isn’t enough to cover the cost of rehabbing most rent-stabilized apartments into modern living standards given higher inflation impacting labor and material costs. Furthermore, with upcoming local laws soon to go into effect that requires emission caps and additional lead-based paint compliance, the $25,000 falls far short of the amount needed when permits alone can cost $10,000.
  2. Chronically Vacant Standard: To gain access to the Unlocked Doors program, landlords need to show the unit has been “chronically vacant” and has been registered with the state. Waiting for a city agency to provide the “chronically vacant” certification (and whatever interpretation of that phrase the city decides to apply) could take months to obtain and require a mountain of paperwork that would make a data entry clerk blush. This is to say nothing of showing the unit was properly registered with DHCR. If I had a nickel for every incorrectly registered DHCR legal rent, I’d be hobnobbing with Leonardo Dicaprio and Vlad Doronin on a football-field sized yacht off the island of Saint Barthelemy.
  3. City FHEPs Tenants Only: The newly renovated units must be rented to tenants through the City FHEPS program that provides vouchers to families facing eviction or homelessness but the program already pays landlords for rent stabilized apartments in excess of $2,000 per month for one and two bedrooms without needing to do the repairs so why would landlords bother with this bureaucratic debacle? And because the housing crisis is so acute, it isn’t reasonable to think City FHEPs would hold back on giving out vouchers until a unit has been repaired as that would exacerbate the housing shortage. Of course, there’s no shortage of ill-conceived ideas by those that make the rules so who’s to say for sure?
  4. Pay Now, City Reimburses Later: The Unlocked Doors program will not provide the renovation funds upfront; instead, it will reimburse landlords for qualifying expenses only after repairs are completed and reviewed by HPD.  Oh boy, if ever a case could be made for counterparty risk, this is it! Imagine shelling out $25,000 to repair your unit after waiting a year to have the apartment declared “chronically vacant” only to wait another year for the city to review and sign off on the repair work, taking the chance that they don’t because you failed to obtain a property conditions report they didn’t tell you was needed at the time before the work was commenced. Add the 7% inflationary environment we are experiencing and this seems like a program suitable only for thrill seeking economically reckless landlords with lots of time and little to do.  No thanks. 

To NYC’s Chief Housing Officer, Jessica Katz, who declared that this pilot program “demonstrates this administration’s commitment to housing New Yorkers experiencing homelessness,” I respectfully demur in suggesting you missed the mark.  This program neither “improves the quality of [the city’s] housing stock” nor provides “incentives to property owners to make vacant units available for the lowest-income New Yorkers.” Back to the drawing board, the people of New York and especially the most economically vulnerable, need city officials to do better. Until then, the doors are likely to remain locked.

Dilakian, Steven. “NYC to Fund Repairs at 400 Vacant, Rent-Stabilized Apartments.” The Real Deal, 19 Apr. 2023, therealdeal.com/new-york/2023/04/19/city-to-fund-repairs-to-vacant-rent-stabilized-apartments/.
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New York’s Lack of Affordable Housing is Serious But…Good Cause Eviction isn’t the Answer

Published on April 13, 2023
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Resource from Clio Chang at Curbed. (n.a.). https://www.curbed.com/author/clio-chang/. https://www.curbed.com/2023/03/good-cause-eviction-new-york-courts-losing.html

Call it good cause eviction or universal rent control, but the truth is a wretched legislative proposal by any name reeks just the same. A sincere and candid economist (preferably with one hand as President Truman liked them) will tell you that rent control is not a sound way to increase the amount of affordable housing as price ceilings create supply/demand disequilibrium. Sound economic theory be damned, however: the “give-them-what-they-want-and-then-some” Bernie Sanders has called for the need for “national rent control” while Alexandria Ocasio-Cortez—never one to be outdone when it comes to grandstanding and bloviating—demanded, “it’s time that we stop commodifying the housing market.”

Local judges, fortunately, are obligated to adhere to the rule of law and have ignored the politics on this issue. In cities such as Newburgh, Albany, and Poughkeepsie, judges are shooting down local measures aimed at limiting a landlord’s ability to increase free market rents on the rationale that cities simply don’t “have the power to draw a circle around [themselves]” and declare that “state laws [d]on’t apply” to them. That’s sound legal reasoning for sure (as good cause eviction is not the law in NY—it has been mired in legislative limbo for years). Sadly, however, the median household income in many of these cities is below $50,000 while free market rents have increased at a torrid pace (i.e., more than 50% in some cases) leaving many residents floundering on the brink of homelessness.

Rent control is in vogue because America’s housing market is increasingly unaffordable with real housing prices having doubled in NYC since 1970. Nationwide, 25% of renters spend over half their income on housing. Skyrocketing prices are the result of a demand-supply disequilibrium: housing demand across the US is outstripping supply by 370,000 units a year. Rent control is often presented as a solution to greedy landlords taking advantage of pinched renters—it takes aim at the landlord’s profits by limiting rents at below-market levels.

The problem of course is complicated and the fix isn’t simple. There has been a chronic lack of supply (newly built apartments) throughout the state but most notably in NYC. The issue is further exacerbated by the fact that nearly one-third of all units are rent-stabilized putting significant pricing pressure on the remaining available market-rate units. Furthermore, the population has increased by 800,000 people over the past decade but only 200,000 new places have been created for them to live. This isn’t a baffling Millenium Problem on the scale of the Poincare Conjecture, the math here is easy: New York hasn’t built nearly enough and the scale of new housing required to meet current demand is significant. Housing cannot become more affordable without becoming more available…meaning we need more of it. And wishing or wanting developers to build without the right economic incentives is as ludicrous as expecting to run a sub-4-minute mile with a daily diet of Double Trouble Bacon Bites and a training regimen that involves streaming endless hours of Succession.

The 421-a tax incentive worked. While in place, developers built an abundance of rental projects with 25% or more of these new buildings allocated to affordable apartments. It expired in June 2022 and legislators in Albany, to date, have yet to extend it or replace it with something similar. Local councilmembers share some of the blame too. In May 2022, Harlem Councilmember Kristin Richardson Jordan blocked the construction of a pair of two 363-foot-tall towers to be built in Upper Manhattan, known as One45, which called for 915 apartments, half of which would have been affordable. Ms. Richardson Jordan, however, wasn’t persuaded even after the plans were altered to include more affordable units. One45 isn’t dead, however; instead, the developers will build a combination of market-rate condominiums and a self-storage facility without any affordable housing. Way to go Ms. Richardson Jordan! That’s what the kids call a pyrrhic victory.

As time goes on, saying “no” to proposed development projects will—in this author’s view—become politically untenable. Governor Hochul and Mayor Adams certainly want to “build, baby, build” but the question remains whether the legislative dotards in Albany are on board or will they keep pushing for universal rent control, described by the socialist economist Assar Lindbeck in 1977 as the most efficient technique known for destroying cities “next to bombing.”

Chang, Clio. “Good-Cause Eviction Keeps Dying in Court.” Curbed, 30 Mar. 2023, www.curbed.com/2023/03/good-cause-eviction-new-york-courts-losing.html.
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