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Tag: Legislation

At Josh Lipton, we pride ourselves on being your trusted source of information and analysis on legislative matters. We diligently research and interpret the implications of these changes, distilling complex legal jargon into clear and concise insights that you can readily apply to your business.

Our in-depth analysis covers a wide range of legislative topics, including property rights, zoning ordinances, building codes, landlord-tenant regulations, tax incentives, financing laws, and environmental policies

NYC’s Conundrum: High Density But Still Too Few Units

Published on December 1, 2022
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News alert: there is a significant affordable housing problem in NYC and, sadly, we don’t have the brainpower to fix it.  Or perhaps the truth is more nuanced, no one capable of fixing the problem cares to join the legislative ranks to do so.  Countless development projects in high-density zoned areas in Manhattan where thousands of affordable apartments could have been created were not.  Instead, developers opted to build high-rise, low-density towers or, put more simply, big buildings with few units.  Urban planners say the developers are squandering precious few sites left while builders argue the cost of land and construction is too high for anything but luxury condominiums, without tax incentives and more favorable zoning. 

A few examples that highlight the issue include:

  • (i) 60 East 86th Street with 14 apartments (zoning allowed for 77 units)
  • (ii) 15 West 96th Street with 21 apartments (66 units possible)
  • (iii) 200 East 75th Street with 36 apartments (144 units possible)
  • (iv) 1165 Madison Avenue with 11 apartments (88 units possible)

City Councilwoman, Gale Brewer, asks “in a city that’s desperate for housing…how can you allow a builder to build fewer units” and that none of the newly built projects contain anything affordable is “boggling” to her.  The fact that she is dumbfounded and confused is telling but also disheartening that leaders like her can’t understand basic principles of capitalism. Make no mistake: for each of these projects, the developers played by the rules working within zoning regulations and in-place height restrictions. Force their hand and developers will build only what is economically viable. In this case, multi-million dollar condominiums that sell at a brisk pace to the uber wealthy where bigger units command premiums is what makes sense.  

There are proposals out there but they require legislators to work with builders (instead of demonizing them) and they include reinstating tax benefits and increasing density in exchange for affordable apartments or obligating apartments eliminated during demolition be built back.  To Ms. Brewer and others of her ilk, you can blame the developers or whomever, but your failures are entirely your own responsibility.  All NYC residents and especially those of little means deserve better from their so-called leaders. 

Chen, Stefanos. “Taller Towers, Fewer Homes.” The New York Times, 23 Sept. 2022, www.nytimes.com/2022/09/23/realestate/nyc-apartments-housing-shortage.html.
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Enough Apartments in NYC To Go Around But NY State Legislators Can’t Seem to Get It Right

Published on September 1, 2022
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Good intentions can often produce bad outcomes and, in NYC, we are beginning to see the unwanted ill effects of the June 2019 Housing Stability and Tenant Protection Act (HSTPA).  The law—noble enough in its pursuit to preserve affordable housing—has proven to be an unmitigated disaster.  In June 2019, we at Invictus Property Advisors wrote an article setting out ten (10) key takeaways from what was then newly enacted legislation.  Two items of concern flagged by us were units falling into disrepair and landlords keeping rent stabilized units vacant after tenants departed, describing the latter as a “perverse and unintended consequence of the new rent laws.”  Three years on, many of our gloomy prognostications came to pass, much of it detailed in the Real Deal article.

Of note:

  • The cost to gut renovate an apartment vs. allowable rent increases: $60,000-$120,000 vs. $89 increases per month
  • The monthly operating costs per unit vs. median monthly rent for a stabilized apartment: $1,548 vs. $1,422
  • The number of homeless New Yorkers vs. number of vacant apartments: 60,000 homeless (of which 15,000 are children) vs. 43,000 vacant stabilized units
  • The percentage of affordable units (i.e., under $1,500 per month): less than 1% of the housing stock, the lowest in three decades
  • The percentage of NY state legislators voluntarily accepting lower pay to share in the pain: zero  

The numbers don’t lie: this law has resulted in disincentives to renovate and rent up very much needed affordable apartments.  A shameful reality is that there are even enough vacant units to house two thirds of NYC’s homeless.  But rather than embrace widely understood market forces and basic economics, legislators blame landlords for creating artificial scarcity (i.e., keeping stabilized units off the market to drive free market rents higher) or painting apartment walls with “gold” paint presumably to inflate renovation costs.  The response from state assembly member Linda Rosenthal (who holds a B.A. in history) was to introduce a bill charging a “warehousing fee” or a penalty on landlords for failing to place tenants in rent stabilized apartments starting three months after a unit becomes vacant.  Unlikely to pass and arguably unconstitutional but demonizing landlords plays well in liberal circles and masks the lack of a real plan.  Ms. Rosenthal and legislators of her ilk are outside their core competence on this issue and should bring experts into the mix—history will treat her well if she does.   

Suzannah Cavanaugh, Sasha Jones. “Vacant, Rent-Stabilized and Locked up: NYC’s Ghost Apartments.” The Real Deal, 1 Sept. 2022, therealdeal.com/magazine/national-july-2022/that-empty-feeling/.
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Are NYC Properties Falling in Protected Tax Classes 2A/2B on The Chopping Block

Published on September 1, 2022
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Like many things, it starts with a whisper before morphing into a collective roar and this author fears that protected tax class 2A and 2B buildings in New York City may become Albany’s next target. The evidence of a legislative backlash involving the cancellation of protected tax classes is anecdotal at this point but the private equity behemoth, Carlyle Group’s, recent moves into this “mom and pop” space may have put the issue front and center for legislators. Over the past year, Carlyle has spent more than $500 million buying smaller apartment buildings in bite-sized $2 and $3 million checks.

Small potatoes for a group like Carlyle so what’s going on? Protected 2A/2B buildings enjoy the benefit of limited tax increases to no more than 8% annually and 30% over a five year period. And in a city with ever growing expenses, the 2A/2B  properties provide predictability to an owner’s net income and serve as an inflationary hedge against other operating expenses. The end game is to amass a portfolio of these properties and sell them at a premium. Take Highpoint Property Group, led by Drew Popkin, who caught on to the 2A/2B game early and recently put 20 such buildings on the market at an asking price of nearly $300 million. 

In 2018, Michael Shah of Delshah Capital purchased 28 2A/2B properties from Silvershore Properties that had done the heavy lifting of assembling the properties. To be clear, there isn’t anything illegal about this (nor should there be); in fact, it is quite savvy and, put simply, just an example of capitalism at work. But in current times, City Council members and NY senators are bound to start asking whether multi-million and multi-billion dollar owner/investors like the Carlyle Group should be benefitting from the 2A/2B tax class designations.  In a nation of laws, the rules that benefit the “little guy” should and must also benefit the larger players as well.    

Rebong, Kevin. “Carlyle Group Builds Empire of Small Brooklyn Apartment Buildings.” The Real Deal, 28 July 2022, therealdeal.com/new-york/2022/07/28/carlyle-goes-big-on-small-brooklyn-buildings/. Accessed 24 May 2023.
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New York State Takes an Unorthodox Path to the Opening of Marijuana Retail Stores: A Friend with Weed is a Friend of Albany

Published on July 19, 2022

Either the craziest idea ever conjured up over an evening of bong hits or the most brilliant proposal to come out of Albany in decades? Time will tell but NY’s Governor has proposed legislation that will give the state’s first licensed marijuana retailers to individuals or family members who have been convicted of a marijuana-related offense. Taxpayer money would be spent to find, secure and renovate storefronts for retailers. 

The first wave of applicants will likely include individuals like Baron Fajado, a real gem who was arrested for smoking marijuana at 16 which was followed by a half dozen other pot arrests as he moved from smoking to dealing. Perhaps there is some nobility in all of this as people with past drug charges have certainly “gone on to do great things,” according to Chris Alexander, the executive director of the state’s Office of Cannabis Management but handing out licenses to convicted felons without legitimate business experience on taxpayer’s dime seems a bit misguided.  

This author couldn’t be more in favor of the legalization of weed and like Hunter S. Thompson who viewed marijuana “as a basic staple of life, along with beer and ice and grapefruits,” I can concur with most of those things but I don’t think he should spearhead a multi-million dollar retail operation.

Mckinley, Jesse, and Grace Ashford. “New Yorkers with Marijuana Convictions Will Get First Retail Licenses.” The New York Times, 9 Mar. 2022, www.nytimes.com/2022/03/09/nyregion/marijuana-sellers-licenses-hochul.html.
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