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Category ArchiveBill de Blasio

Real Estate Board, Brokers Outraged About Vacancy Tax Talks

As Mayor Bill de Blasio jumps on the “vacancy tax” bandwagon, the Real Estate Board of New York and brokers are crying out in opposition.

Details on a potential vacancy tax—which would levy landlords that let their retail spaces sit vacant for long periods of time—have been scant, but Blasio said he would support one in an interview on the Brian Lehrer Show on WNYC last Friday.

“I am very interested in fighting…for a vacancy fee or a vacancy tax that would penalize landlords who leave their storefronts vacant for long periods of time in neighborhoods because they are looking for some top-dollar rent but they blight neighborhoods by doing it,” de Blasio said.

REBNY said the new tax, which originated with Manhattan Borough President Gale Brewer last year, is hogwash. The organization claimed that that’s not the solution when vacancies are coming as a result of economic issues that tenants face, rather than landlords, such as minimum wage increases, the paid sick leave requirement and the battle against e-commerce.

“The city’s retail environment is going through a transition primarily due to macro-market forces, like Amazon, and increasingly unfriendly local regulations,” John Banks, the president of REBNY, said in a prepared statement provided to Commercial Observer in response to the mayor’s comments. “Property owners take a substantial financial hit when they are unable to secure a tenant. A vacancy tax, premised on a flawed set of assumptions, will punish owners further and do nothing to address vacancy.”

Brewer’s office did a survey last May that identified 188 empty storefronts from the Battery to Inwood. While she didn’t didn’t provide the total number of storefronts, she said at the time that the “data will be the starting point in finding policy solutions to this problem.” In response, Cushman & Wakefield studied a slightly smaller area the following month. On Broadway between Bowling Green and 146th Street, the brokerage recorded 133 vacant stores out of 1,580 storefronts, representing a vacancy rate of 8.4 percent.

Brokers with whom CO spoke called allegations that landlords are leaving their spaces purposefully empty is erroneous, because it would result in landlords losing revenue.

“I have never met a single one of them that thinks like ‘let’s keep it vacant and I am confident that rents will go up in the next few years,’ ” said Steven Soutendijk, an executive managing director at C&W. “There is almost no justification for keeping your space vacant.”

He added later: “It’s not good for [landlord’s] buildings. It doesn’t help if you have 30 apartments that you are trying to rent and a vacant space on your ground floor.”

Other brokers said that ultimately tenants will be the ones that end up paying for any new tax, because landlords would have to raise rents higher to offset the cost.

But because of all of the vacancies—if there is no new tax—brokers expect rents will come down and subsequently deals will get done to fill those empty spaces.

In fact, asking rents for the top commercial strips in Manhattan were flat or down in the final quarter of 2017 when compared with the same period in 2016, according to C&W. (The 2018 first-quarter statistics were not available yet.)

The largest declines could be found in Soho, which experienced an 16.7 drop to $440 per square foot from $528 a year earlier. Also, there was an 11.7 percent slump in Herald Square to $691 a foot from $783 a foot.

Not only will rents continue to fall to meet the market demands, but also more tenants are taking shorter-term leases to test the market, such as one- or two-year deals, according to Chris DeCrosta, a co-founder of retail brokerage GoodSpace. Afterward, if sales are up, they’ll sign longer leases.

“[Tenants] are just trying to justify that the rents justify the sales. They are tired of landlords saying that this is market rent,” DeCrosta said. “They’ll pay market rent but they want to make sure that they can make money there.”

There are some legitimate reasons for keeping a space vacant, according to TerraCRG’s Peter Schubert. Landlords could be planning to redevelop or renovate their building or are currently in negotiations with tenants, which could last around six months but sometimes as long as two years.

He also explained that sometimes when a deal gets done, stores don’t open immediately because they are waiting on permits, like a liquor license.

“People complain about [vacancies], but they don’t know what is happening behind the scenes,” Schubert said.

To find out more about what is going on behind the scenes, Brewer has called on the City Council to establish a database of vacant properties, in which landlords would be required to report the space as empty and when a new lease is signed and when tenants begins to use it, according to her testimony at the City Council in December 2017.  

There would be a small fee for registration and a larger fine for owners who don’t adhere to the rules after a certain period, a spokesman for Brewer told CO via email.

“If we’re going to tackle vacant storefronts, we need to know what we are dealing with,” Brewer said via prepared remarks. “If we can get a handle on how many vacant storefronts there are, where they are, and how long they’re vacant, we’ll have a much better idea of what the problem is and how to solve it.”

Regarding the vacancy tax, Brewer’s spokesman noted that there is no specific proposal on the table yet and a vacancy tax would likely require authorization from the legislature in Albany.

Source: commercial

Former SL Green Exec, Massey Mayoral Adviser David Amsterdam Lands at Colliers

Colliers International Group has found a new president for eastern-region investment and leasing in David Amsterdam, a veteran commercial real estate executive, formerly of SL Green Realty Corp., Colliers announced today.

The new role will put Amsterdam in charge of the company’s team in New York, Boston and Washington, D.C., leading the firm’s advisory business for clients including investors, corporate tenants and landlords.

“I am very excited to join Colliers and assume a leadership role in driving the company’s future growth … in New York City, the world’s most important real estate market,” Amsterdam said in a statement. “Colliers has demonstrated a commitment to hiring a world-class leadership team and I look forward to capitalizing on the many opportunities we see that will bring value to our clients and our professionals.”

Amsterdam, a graduate of Syracuse University, joined SL Green in 2011 from Cushman & Wakefield, but left the real estate investment trust in August 2016 to head the mayoral campaign of Paul Massey, the C&W executive who challenged Bill de Blasio in his 2017 reelection bid. After struggling to gain support, Massey dropped out of the race five months before election day, citing the high costs of campaigning against an established incumbent with a nascent national profile.

“[Amsterdam] is one of my favorite people in the industry, and has been for a long time,” Massey said. “He’s a tireless worker, and I think Colliers is lucky to have landed him.”

Dylan Taylor, Colliers’ COO, emphasized that Amsterdam’s hiring is part of a long play for preeminence in the northeast.

“We have known David for several years and are thrilled to have him spearheading our firm in these extremely competitive, important markets,” Taylor said in prepared remarks. “This strategic hire greatly strengthens our U.S. leadership team and further positions our platform as a leading global real estate services provider.”

Amsterdam—who worked as a Beverly Hills talent agent before beginning a career in the real estate industry—was not immediately available to comment further on his new position.

Source: commercial

While Occupancy Skyrockets, NYC Hotel Players See Cause for Concern

Over the past several years, the unofficial motto of the New York City hotel market has been “If you build it, they will come.” The city has seen tens of thousands of new hotel rooms crop up across the city this decade, and there are tens of thousands more in the pipeline due to arrive in the coming years—but despite all that new supply, the rooms keep getting absorbed.

That’s undoubtedly good news for the hotel developers and operators who built those new rooms and plan on bringing more to the market in the near future. But a closer look at the statistics and conversations with hotel market participants reveal a more mixed view of the city’s hotel landscape—one that finds it attempting to strike a balance between the number of rooms sold and the prices being paid for those rooms, and bracing for a variety of headwinds that could make it hard to sustain future development.

The clear, undoubtedly positive story is that while the U.S. hotel industry has struggled recently—with declining tourism figures among the factors that have made it difficult to absorb the roughly 2 percent supply growth experienced nationally last year—New York City has shown little problem handling the 4 percent growth in its supply that it saw in 2017. As Jan Freitag, the senior vice president of lodging insights for data and analytics firm STR, put it, the city’s hotel market is experiencing a dynamic that “doesn’t make sense in any other market but does make sense in New York City.”

The average occupancy of New York hotels in 2017 stood at 86.7 percent, up 1.1 percent from the previous year—with the city now home to more than 119,000 hotel rooms across the five boroughs, according to STR. That 86.7 percent occupancy rate means that nearly nine out of 10 hotel rooms available in the city were sold out through the course of last year—a “stunning” figure given the added supply, Freitag said.

“What demonstrates the strength of the New York market is that all of those hotel rooms are being absorbed in the year that they open,” said Mark VanStekelenburg, a managing director in the hotels division at CBRE. “From an occupancy standpoint, the market is at or near its peak occupancy and is continuing to be, even while we’re experiencing 4 to 6 percent [annual] supply growth. We’ve never really seen something like that in the U.S.”

That should give confidence to the city’s hotel developers, given that room supply will only continue to grow in the next few years; STR tracks more than 22,000 new rooms presently in the city’s development pipeline, including nearly 12,000 that are presently under construction.

But while the city has shown an ability to absorb that kind of supply influx, the underlying economics of doing so—such as the daily rates those rooms are able to command and the revenues flowing into the pockets of hoteliers—are somewhat murkier.

Though hotel occupancy in New York has been on an upward trajectory, average daily rates have not; those slipped 1.4 percent to $255.54 in 2017, according to STR. Room rates in the city have continued to slide since peaking at more than $271 per night in 2014, as has the metric of revenue per available room (RevPAR), which has fallen 4.6 percent to $221.60 in that time.

Market observers attribute this inability to translate high occupancy rates to improved room rates and revenues to a number of factors. Some noted that most of the city’s new hotel rooms fall under the booming limited- or select-service category, where rates are on the lower end of the spectrum (such rooms comprise more than 6,000 of the nearly 12,000 rooms currently under construction in the city, per STR). Others cited the influence of Airbnb, which has forced hoteliers to re-evaluate the prices they ask of consumers who can now choose a cheaper, often more spacious lodging alternative.

Still, despite softening rates and the promise of even more supply to come, it’s not hard to find real estate players willing to bet on the hotel market’s continued viability.

“You can see from our commitment to the city hotel market that we’re still very bullish in our long-term view of hospitality investments,” Mitchell Hochberg, the president of the Lightstone Group, said.

Hochberg pointed to his development firm’s hotel projects around the city, such as its Moxy brand hotels in Times Square, NoMad and the East Village, as examples of Lightstone’s continued faith in the hotel sector. “New York is one of the strongest economies in the country, and it’s a global center for finance and media,” he said. “Although there’s been a supply increase in the last couple of years, the data indicates that demand has kept up with supply.”

1713 pod twin 026 While Occupancy Skyrockets, NYC Hotel Players See Cause for Concern
Guest room at the Pod Times Square Hotel. Photo: The Pod Hotels

But other hotel market players are far less convinced. Richard Born, the co-founder of BD Hotels and the hotelier behind boutique Manhattan brands such as the Mercer Hotel, the Greenwich Hotel, the Ludlow Hotel and the Jane Hotel, espoused his view that, “with some exceptions, by and large the hotel market in New York is terrible.”

He cited a combination of factors including the “erosion” of daily rates (which he attributed to the influx in room supply as well as Airbnb’s vast “shadow inventory”), higher property taxes and operating costs, and the increased influence of third-party booking websites like Expedia and Travelocity (which have brought more transparency and reduced hotels’ “pricing power” while also charging booking commissions that are an additional “line item” for operators).

“Any hotel operator operating today is making a fraction of their net operating income compared to what they were making 10 years ago,” Born said. He added that the operators best positioned to succeed in such a challenging market are the ones capable of differentiating themselves from the more malleable product of their competitors. “There’s a fungibility to the hotel market that makes pricing very difficult because everyone is looking at everyone else’s rates. But the exceptions are the hotels that are not fungible—the ones that are unique, designed and have something different to offer their customers.”

In addition to its higher-end boutique brands like the Mercer, Bowery, Ludlow and Maritime hotels—where rates are on the higher end of the pricing spectrum—BD Hotels has sought to differentiate itself from the landscape with projects like its Pod hotels, which have parlayed the micro-apartment trend into a concept the hotelier terms the “micro-hotel.” With four locations in New York and one in Washington, D.C., the Pod hotels offer nightly rooms of around 100 square feet but also come equipped with food-and-beverage concepts and boutique-minded aesthetics (such as the mural from Brooklyn artist JM Rizzi that adorns the elevator shaft at the recently opened Pod Times Square).

Born pointed to the Pod BK—the brand’s Williamsburg, Brooklyn location—as offering something specifically different from the new luxury hotels that have cropped up in that neighborhood in recent years, such as the Wythe Hotel and the William Vale. “We have a hotel that we don’t think is fungible, in a marketplace where all the hotels are four-star boutiques looking for high rates,” he said.

Hochberg cited a similar rationale behind Lightstone’s Moxy brand; the developer teamed up with Marriott International with the goal of “delivering an affordable product with a lifestyle component to it”—one that offers the sensibilities of a boutique product at a lower price point with smaller rooms and limited-service offerings.

“The industry has introduced many more products and choices for the consumer of the past few years,” Hochberg said. “There’s a whole variety of new genres and brands that are focusing more on the consumer and trying to understand what today’s consumer is looking for.”

Hoteliers may also receive a boost from the fact that, beyond this decade, the city’s hotel development pipeline is slated to slow down significantly, making it easier for the incoming supply to be absorbed and potentially driving up room rates again.

Multiple market observers and participants noted that the supply influx the city is now seeing is the result of plans initiated a few years ago, adding that a variety of factors—from risk-averse lenders shying away from financing new projects to regulatory pressures being placed on the hotel sector by the de Blasio administration—could slow future development significantly.

“When we go out to find financing, there are less people able to provide debt than there were before,” said Eastern Consolidated’s Adam Hakim, a managing director in the brokerage’s capital advisory division. “Lenders control supply and demand; when they give hotel developers money, people build hotels, and when they don’t, they can’t.”

Hakim’s colleague James Murad, a director at Eastern, described the hotel market as “one of the thinnest construction financing markets you can go out for” to procure funds, with lenders mindful about the sheer volume of new supply and how that may affect borrowers’ abilities to refinance in the future.

“That said,” Murad added, “for quality sponsors and the right product, there’s appetite.”

wythe guestroom 4 credit matthew williams While Occupancy Skyrockets, NYC Hotel Players See Cause for Concern
Guest room at the Wythe Hotel in Williamsburg. Photo: Matthew Williams

Jared Kelso, a senior managing director in  Cushman & Wakefield’s global hospitality group, echoed that sentiment. “The last 24 months have been very challenging to find construction financing [for hotels],” he said, attributing the slowdown to lenders being in a “checklist underwriting” mind frame in considering hotel market fundamentals.

But Kelso added that financing is still available to “sponsors with a long and proven track record” with debt funds and alternative lenders also stepping in to fill the void left by the more risk-averse banks. He also noted that the tightening of the financing market is “frustrating for developers but not a bad thing at large” given the impact it will have on restricting supply. “After 2018, the supply pipeline thins dramatically, and that will ultimately be a good thing for the [hotel market] at large.”

And then there are regulatory obstacles that market observers say will impede hotel development in the future. That includes the de Blasio administration’s proposal to limit projects in industrially zoned M1 manufacturing districts by requiring developers to obtain a special permit, as well as the extension of Local Law 50, which prohibits large hotels (150 keys or more) from converting more than a fifth of their rooms to residential units or other non-hotel uses without city approval.

Both measures are perceived by many observers as meant to preserve the interests of the influential hotel workers’ unions and potentially damage the city’s future hotel supply. In the case of the zoning proposal, it will make it harder for developers to find parcels to build on and likely subject those projects receiving a special permit to higher-cost union labor requirements; in the case of Local Law 50, its preservation of existing hotel rooms would dampen the need for new supply in the interest of preserving existing hotel jobs.

According to Hakim, some of the developers behind the current supply pipeline—such as prolific hotel builder Sam Chang of McSam Hotel Group, a client of Eastern’s—are operating on the “thesis that hotel values are going to go up significantly in the next few years. The inventory is going to stabilize, and once it stabilizes, the theory is that you won’t be able to build new ones.” (Chang did not return a request for comment.)

“Twenty-four months from today, in 2020, I think your pipeline of hotels is going to drop to pretty close to zero,” Hakim added. “From there, you’ll see an increase in [room] prices.” But he was also critical of the influence that the current regulatory environment has had on exacerbating this dynamic. “I believe markets should correct themselves properly; you have a lack of [financing], and that’s a correction you’re seeing. But public policy and zoning laws being arbitrarily changed—that’s not how it should work.”

The de Blasio administration, for its part, does not think the proposed zoning regulations will negatively impact the flow of new hotel projects in the city. “We don’t believe the proposed rules will hinder hotel development across the city, which remains strong,” a mayoral spokeswoman said in a statement. “But we do aim to prioritize manufacturing businesses in the zones specifically designated for manufacturing. While hotels have a lot of options for where they can open and operate, these industrial firms don’t.”

The impact of all these various influences could start making themselves felt sooner rather than later, sources said. C&W’s Kelso said that the brokerage believes New York City room rates could start ticking upward as soon as the fourth quarter of this year, while Hochberg said Lightstone projects RevPAR “to be flat to slightly increased in 2018.”

That would be good news for hotel operators in the city—and a testament to its voracious appetite for hotels. Despite all the new supply, the city’s churning economy and robust tourism sector seems to always make room for even more places where people can stay.

“It’s a cultural mecca for the world,” Born said. “Every 14-year-old lives on a handheld device, looking at all this and dreaming of coming to New York, whether you’re in Oklahoma or Bangladesh, to live, work, study and visit here. It’s always going to be a dynamic place for tourism—the issues are going to be the costs of operating and the supply. But we do live in the greatest tourism market in the U.S. and in the world.”

Source: commercial

Sterling Equities, Related Strike a New Willets Point Deal With the City

Mayor Bill de Blasio’s administration has hammered out a new deal to resurrect the long-planned redevelopment of the Willets Point area in Queens, sparking hope that hundreds of auto shops will eventually give way to housing.

Community groups and two developers, Related Companies and the Wilpon family, which also owns the Mets, have been fighting over the fate of the 23-acre industrial area next to Citi Field for years in state court. But the legal battle is finally over, and the two developers chosen by former Mayor Michael Bloomberg will build 1,100 affordable apartments, open space and retail on six acres at Willets Point Boulevard and Roosevelt Avenue, The New York Times reported this afternoon.

The de Blasio administration will create a task force with Queens Borough President Melinda Katz and local City Councilman Francisco Moya to decide on the fate of the remaining 17 acres of the site, which included 225 auto shops before the city began demolishing them a few years ago. So far, the city has spent $287 million buying land, acquiring it through eminent domain, removing toxic chemicals from the ground and relocating businesses, according to The Times

It’s been a long road for the cluster of immigrant-owned auto shops, which is often called the Iron Triangle. In 2012, Related and the Wilpons’ Sterling Equities agreed to remove toxic materials from the site and build a mall with 200 stores, a theater and a hotel. They also pledged to build 2,500 apartments, including 875 for low- and moderate-income residents, but not until 2025.

The new version of the deal does not include the mall, which was slated to be built on parkland just west of Citi Field. The parkland was a piece of asphalt used for parking during Mets games, but it was still technically a city-owned piece of Flushing Meadows Park. Consequently, a State Court of Appeals ruled last June that the mall development would need approval from the legislature, which has to sign off on parkland being converted to new uses.

Source: commercial

5 Reasons Why Outer-Borough Multifamily Properties Should Dominate Demand In 2018

The New York City investment sales market appears to be rebounding in the first quarter of 2018 in terms of volume and the number of transactions. Prime outer-borough locations will likely capture more demand from institutional and international investors in 2018 compared to previous years as an array of factors, both fundamental and technical, heighten their appeal.

During 2017, dollar volume in the multifamily market slowed considerably, falling 48% year-over-year, according to our company’s newly released report: “Multifamily Year In Review.” To view, click on: http://arielpa.com/report/report-MFYIR-2017

We believe the outer-boroughs will garner greater attention in 2018, driven by the following five key factors:

Strong Rent Fundamentals In Outer-Boroughs

Rent affordability and easy commutes to Manhattan have made neighborhoods in the outer-boroughs, such as Williamsburg, Long Island City, and the South Bronx, hotbeds for tenant migration and rental growth. To that end, the average monthly rent for an apartment in Manhattan was $4,158 as of December 2017, according to Douglas Elliman. That is substantially higher than the median rent in Brooklyn and Queens, where apartments fetched $3,001 and $2,831, respectively,

During 2017 rent concessions have been reported at 36.2% for Core Manhattan, while outer-borough neighborhoods, such as Flushing, experienced increases in rents, rising 2.9% in 2017. While we are not concerned about the long-term viability of Core Manhattan’s rents, investors are finding the short-term fundamentals challenging.

Scant Institutional Capital Opportunities 

Institutional investors’ appetite for Manhattan properties, has been voracious. For investors, Core Manhattan presents “gateway city” status, large-scale opportunities, and rental upside. However, rent concessions create uncertainty about rent growth, and increased competition from foreigners has left investors with fewer opportunities.

However, the outer-boroughs, specifically Brooklyn, present unique opportunities that were once exclusive to Core Manhattan. Invesco’s involvement with Kushner in DUMBO made plenty of headlines, but they are far from alone. Between 2016 and 2017, TIAA-CREF, World Wide Holdings and Bentall Kennedy (U.S.) LP have collectively invested more than $425 million in the borough.

Relative Price Per Foot Cost

The valuation metrics used for the multifamily asset class include: Capitalization Rate (Cap), Gross Rent Multiple (GRM), Price Per Unit (PPU) and Price Per Square Foot (PPSF). When comparing Cap and GRM for Core Manhattan versus outer-boroughs the difference is 27%, according to our “Multifamily Year In Review.” This means investors expect to receive a higher current yield in the outer-boroughs.

On a PPSF basis, the average difference is much wider. The average multifamily building in the outer-boroughs sells for $334 PSF, representing approximately 1/3 of the cost of the $945 PSF for the same assets in Core Manhattan. Lower price per square foot provides a big advantage when discussing replacement cost and suggests that this wide pricing gap could allow for significant room for growth in the outer-boroughs.

Uberization Of Outer-Boroughs & Local Economic Growth

Access to mass transportation has always been a factor when buying real estate, but two main factors have lowered this need. First, the ability to travel economically and second, that all of the boroughs have been experiencing local economic growth, with less reliance on Core Manhattan and commutes. Uber and Lyft, for example, have made inconveniently located areas, such as Industry City in Brooklyn and Cornell Tech in Queens, more desirable. Less reliance on subways and buses has also benefited Northern Manhattan, where Columbia University has attracted many new businesses.

Rezoning Poses Significant Upside

Mayor Bill de Blasio’s administration has rabidly rezoned large swaths of New York City, with their sights squarely set on outer-borough regions. East Harlem, East New York, and Far Rockaway have recently been approved for rezoning, while Inwood, The Bronx’s Jerome Avenue and Gowanus are in the pipeline. In Inwood, for example, proposed rezoning is expected to spur the creation of 4,348 new apartments by the year 2032. The building of thousands of apartments should lure a large inflow of tenants, landlords and developers, posing significant upside for owning a multifamily asset in these areas.

In conclusion, based on the five points stated above – whether it be relative affordability or the massive influx of institutional capital – we believe outer-borough multifamily assets are positioned to perform extremely well versus Core Manhattan in 2018, and investors are already taking heed.

Source: commercial

Mayor Unveils Funding for Tenant Programs, Basement Apartments in 2019 Budget

Amid a heated debate this week about reforming New York City’s archaic property tax system, Mayor Bill de Blasio unveiled an $87 billion budget for 2019 that included additional funding for public housing, a new basement legalization initiative and extra money for a new New York City Department of Buildings program meant to protect tenants from harassment.

In documents released yesterday, the city revealed that it would increase spending by $2.6 billion over this year’s budget, which was adopted by the city in June 2017. The mayor’s office declared that President Donald Trump’s federal tax legislation—which was passed in December 2017 and spelled trouble for high-tax Democratic states like New York—was the “most draconian tax law in recent history.”

“While the city is still analyzing the budgetary impacts, the facts are clear: middle- and lower-class New Yorkers will pay,” de Blasio said in a press release. “This budget continues to provide the services New Yorkers rely on, while preparing for potential hits to New York City.”

Cuts in federal funding and the decline of corporate tax rates pose a $700 million financial risk to New York City, the mayor’s press release continues. The city faces an estimated loss of $100 million annually because it lost the ability to refinance with tax-exempt bonds this Jan.1. And the Trump administration’s decision to slash corporate tax rates has hurt the value of Low Income Housing Tax Credits, which help finance hundreds of millions in affordable housing development in the city every year.

Despite the cuts, the city is launching a handful of pro-tenant initiatives. The new budget includes $5.7 million for a pilot program to help homeowners legalize basement apartments in East New York, Brooklyn. The Department of Housing Preservation & Development will offer low-cost financing to help subsidize basement conversions as part of the program, which will begin next month and require landlords to keep the newly legalized units rent stabilized. During a press conference yesterday, the mayor predicted that the program could unlock up to 5,000 basement apartments citywide. 

Chhaya Community Development Corporation, a nonprofit that advocates for South Asian communities in Brooklyn, Queens and the Bronx, has pushed for a basement legalization program since 2008.

“We’ve always viewed this as kind of a straightforward, cost effective way of bringing over 100,000 units into the affordable market,” Chhaya CDC’s director, Annetta Seecharran, told Commercial Observer in a recent interview, “without investing hundreds and hundreds of millions in building new units, when you already have these new units like this that can be legalized with some administrative and code fixes in the city. Many of them are elderly homeowners who are banking on the income of basement apartments to keep their homes. It’s of tremendous benefit for keeping folks in communities they want to be in.”

The city is also injecting $7 million into the DOB budget so that inspectors can enforce a new package of anti-tenant harassment laws that protect renters from hazardous or illegal construction.

And after 15,000 public housing tenants lost heat in their apartments during a winter storm last month, the mayor made a public commitment as part of the budget to upgrade boilers in New York City Housing Authority buildings. The plan promises $200 million to replace and repair heating systems at 20 NYCHA developments, and an additional $9 million in capital funding for rapid response teams to handle boiler failures in public housing. The administration also pledged an additional $300 million in capital funding for NYCHA over the next nine years.

Source: commercial

Optimism Abounded at REBNY’s 2018 Prom

Despite a tumultuous year for real estate—with investment sales falling off a cliff, retail suffering due to technology and banks tightening their lending—it was a night full of spendor, high spirits and big names at the Real Estate Board of New York’s gala yesterday.  

The 122nd annual REBNY banquet at the New York Hilton Midtown at 1335 Avenue of the Americas featured a power-packed list of politicians, developers, brokers, bankers and other professionals. Many in the room expressed optimism for 2018 to Commercial Observer.

“It’s a great time to celebrate the industry,” REBNY President John Banks told CO, without giving further explanation.

However, Bruce Mosler, the chairman of global brokerage of Cushman & Wakefield, later expounded that economic factors are positive and things seem to be looking up for 2018.

“I’m not worried about macroeconomic risk, I’m more concerned about geopolitical risk,” Mosler said.

While nearly 2,000 partygoers hobnobbed at the cocktail hour before the award presentation, members from the Campaign to Stop REBNY Bullies rallied in front the hotel against the trade organization.

Top pols that graced the event included Mayor Bill De Blasio, recently minted for his second term, Attorney General Eric Schneiderman, New York City Comptroller Scott Stringer, Bronx Borough President Rubén Díaz Jr. and Brooklyn Borough President Eric Adams. Meanwhile, some of the real estate community’s brightest stars in attendance included RXR Realty’s Scott Rechler, Extell Development Company’s Gary Barnett, Durst Organization’s Douglas Durst, C&W’s John Santora, CBRE’s Mary Ann Tighe (a former REBNY chairman), L&L MAG’s MaryAnne Gilmartin and Robert Lapidus (also of L&L Holding Company), Avison Young’s A. Mitti Liebersohn, Newmark Knight Frank’s Barry Gosin, former REBNY President Steven Spinola; and new REBNY Chairman William Rudin, the CEO and co-chairman of Rudin Management Company.

United States Senator of New York Senator Chuck Schumer, the only politician being honored with the award last night, was busy in Washington, D.C., with Congress trying to pass a spending bill to avoid a government shutdown. (He earned the John E. Zuccotti Public Service Award.)

Tishman Speyer President and Chief Executive Officer Rob Speyer, REBNY chairman until December 2017, was the recipient of the Harry B. Helmsley Distinguished New York Award. LeFrak Organization CEO and Chairman Richard LeFrak was presented the Kenneth R. Gerrety Humanitarian Award.

Joanne Podell, an executive vice chairman at C&W, earned the Louis Smadbeck Memorial Broker Recognition Award. Rudin Management Company Senior Vice President Gene Boniberger was honored with the George M. Brooker Management Executive of the Year Award. Ron Lo Russo, the president of C&W’s agency consulting group, won the Young Real Estate Professional of the Year Award.  

And Elizabeth Stribling, chairman of Stribling & Associates, received The Bernad H. Mendik Lifetime Leadership in Real Estate Award. In her speech, Stribling recalled having known Mendik and what it was like attending the REBNY banquet for the first time.

“It was exactly 50 years ago tonight that I first attended my first REBNY gala as a 21-year-old rookie broker,” she said. “I was starstruck. And I still am.”

Source: commercial

On the Home Front: The Mayor and REBNY’s Unlikely Alliance on Affordable Housing

Anyone running for higher office in New York must invoke the three pillars of city governance to earn the job: One, plan to keep crime down; two, improve public school performance; and three, create more affordable housing. And a sitting mayor must administer concrete plans addressing them.

Moreover, he or she must do all three while avoiding any self-inflicted stumbles—or corruption inquiries—and your legacy is secure as a civic leader. 

A month into his second term, Mayor Bill de Blasio has overseen a steady 27-year dip in crime returning the city to levels comparable to the 1950s.

His most widely touted achievement has been a universal pre-K program that will improve the lives of New York’s youngsters for generations. More students are attending college than ever before. And academic achievement in public schools has slightly improved.

Housing has been more complicated.

Creating new housing is a goal that progressive politicians and the city’s profit-minded developers share.

“Housing is all about supply and demand,” said Real Estate Board of New York President John Banks. “We don’t have enough housing in New York, and we need to build more housing for all segments of the market—affordable, moderate and market rate.” 

New construction and property acquisitions are dependent on New York’s trillion-dollar real estate market, state and federal tax breaks and individual property owners. 

But mayors have many tools to spur development generally, and on parcels of city-owned land.

The late-Mayor Ed Koch is still celebrated for generating 100,000 units of affordable housing—a promise he made in his 1985 State of the City address and kept.

Former Mayor Michael Bloomberg used Koch’s plan as a model. By the end of his administration, the city created or saved 165,000 units of below-market housing.  

De Blasio has upped the game: When he took office in 2014, he set a goal to build and protect 200,000 affordable units by 2024, and the city invested $41 billion to make it happen. 

Thanks to a booming economy, tax revenues rose from 2012 to 2016, although they dipped slightly over the last year. 

Construction also surged early in the mayor’s first term with the city approving permits for 20,329 units in 2014, more than three times as many as in 2009. And permits continued to be issued at a frantic pace—an average of 19,826 each year from 2010 to 2017, according to records analyzed by REBNY. That’s a 14 percent decline from the previous decade’s annual average of 23,123 but 182 percent higher than the 1990s when the yearly average was 7,020 permits, the records show.

The renewal of a crucial tax break last April also likely spurred developers to build luxury projects with a portion of units reserved for lower- and middle-income residents.

The housing tax abatement, known as 421a, expired in January 2016 after state lawmakers failed to reach a deal with REBNY and the Building and Construction Trades Council of Greater New York over prevailing wages for construction workers. Negotiations over the measure took a year and a half before it was tucked into the state budget as “Affordable New York.”  

Developers have been waiting for the abatement’s renewal, causing a slight lag in development projects, Banks said.

“We have every expectation the new Affordable New York program will return us to the time frame of the past decade of 20,000 units per year in production,” Banks said.

160801 aerial view1 On the Home Front: The Mayor and REBNYs Unlikely Alliance on Affordable Housing
Rendering of the Bedford Union Armory redevelopment in Crown Heights. Photo: BFC Partners

The de Blasio administration was able to finance 87,557 affordable homes over the last four years, including 24,536 units in 2017 alone, according to an announcement from the mayor this week. As of July 2017, the Bronx had seen the most affordable preservation and development, with 24,014 units between 2014 and 2017. Manhattan had the second-highest amount over that period with 23,862 units, followed by Brooklyn (21,494), Queens (6,226) and Staten Island (2,055), records show.

Affordable housing developers have embraced the mayor’s housing efforts.

“The mayor doubled down and they put a lot of resources, human and financial into the plan. They seem to be doing very well and on track,” said L+M Development Partners CEO Ron Moelis. “The mayor has done a good job reigning in costs to make programs more efficient.”

But de Blasio has had difficulty selling his plan to the very constituents he hopes will live in these units.

City Hall wanted to rezone 15 neighborhoods in his first term. Only three—East New York, Brooklyn, Far Rockaway, Queens and East Harlem—passed the City Council and one was withdrawn entirely. 

The East Harlem hearings were incredibly contentious; activists chanted, “East Harlem is not for sale!” and disrupted a council meeting, arguing the rezoning would allow luxury development that would price out longtime residents. 

Other large redevelopment projects on the mayor’s agenda, such as the Bedford Armory site in Crown Heights, Brooklyn or Sunnyside Yards in western Queens, have been significantly altered or delayed in the wake of community opposition. 

And public housing residents blasted his proposal to build private housing on open space in their complexes, concerned the plan would create “two cities”—a backhanded reference to de Blasio’s campaign promises to reduce income inequality. 

Such criticism is steeped in “NIMBYism”—“Not In My Backyard”—where residents want more affordable housing, just not in their own neighborhoods, Banks said.

“It is understandable that people would try to protect their communities, but you can’t ask for more housing and prevent the production of housing because of concerns about density and fear of gentrification,” he said. “They don’t like tall buildings, but the de Blasio administration recognizes, in order to meet prices demand, he has to upzone and have more density.”

Developers must continue to provide housing units at a range of incomes, Banks asserted, even if some of the units at the moderate end stay on the market longer because they are the units paying for most of the project.

“In order for building to be economically viable, you have to get a certain amount of rent and you need that upper income level to make the building financially viable,” he said. “Otherwise, it throws the financing off.”

Housing advocates say their primary concern has less to do with density than with affordability. 

“The plan should focus more on targeting the limited resources the city has on housing that’s affordable to the very low-income households in the city— that’s 50 percent of area median income and below,” said Oksana Mironova, a housing policy analyst at Community Service Society of New York, which is a nonprofit that fights poverty. “That’s where the greatest rent burdens are, and that’s the demographic of people suffering the most amount of displacement as a result of everything happening in the city.”

Jonathan Westin, the executive director of New York Communities for Change, a housing and workforce advocacy group, attributed a surge in homeless New Yorkers—up 39 percent over the past year—to a lack of housing options for the city’s poorest residents. About 60,000 New Yorkers, including 40,000 families with children, are currently living in city shelters.

“In order to make a dent in the homeless numbers, they need to build and preserve housing for people on the verge of homelessness—working families with, in some cases, minimum-wage jobs,” he said. “The mayor’s housing program isn’t meeting their needs.”

Instead that plan largely follows the Bloomberg blueprint of rezoning swaths of neighborhoods and working with private sector developers to build new housing, Westin said.

“The rezonings serve to accelerate gentrification in some ways worse than what Bloomberg [did],” he said. “They’re going into neighborhoods and gentrifying them, and that leads to more displacement. It’s disrupting the community and pushing out families.”

8311752360 1b55d0bf90 o On the Home Front: The Mayor and REBNYs Unlikely Alliance on Affordable Housing
Construction work at Sunnyside Yards in western Queens. Photo: Patrick Cashin/Metropolitan Transportation Authority

The city’s booming economy has allowed the mayor to revise his housing projections upward. In October, the de Blasio administration pledged to construct and preserve 300,000 units by 2026.

“We’ve kept our promises to New Yorkers, and now it’s time to go farther and faster,” de Blasio said at an Oct. 24, 2017, press conference. “Like Mayor Koch before us, we are building an engine that will keep families in safe, decent and affordable homes for decades to come. We will keep this a city for seniors, veterans, working families and the middle class.”

But that engine may stall thanks to factors beyond the mayor’s control.

The city’s economy may be slowing down as both private sector job growth and tax revenues over the past year have not kept pace with previous years since 2012. Meanwhile, construction costs and property values continue to rise, making it more expensive for the city to finance new housing projects. 

Real estate industry leaders have been clamoring for the revision of the scaffold law, which makes property owners and contractors liable for injuries on the job. But any reform faces an uphill battle in the legislature.

“New York is the only state in the nation whose law continues to dramatically increase the cost of general liability insurance,” said Banks. “Unless we do something about the Scaffold Law, we’ll remain at a competitive disadvantage to other states.” 

The federal tax overhaul will likely benefit real estate investors, and the plan kept subsidies for private activity bonds that pay for large development projects, but the long-term effect of the tax plan on the market remains unclear.

And the Trump administration itself is a wild card that could cut federal spending on affordable housing and development programs, eliminate a visa program that enabled investment in development projects, or simply shut the government down repeatedly. 

City Hall officials acknowledge the uncertainty of the tax plan and budget cuts on their housing plans. 

“We have been actively working to form coalitions with national affordable housing advocacy groups and other cities and states to fight threats and elevate the importance of housing, which isn’t just a crisis in New York City,” said de Blasio spokeswoman Melissa Grace.

Whether the mayor ultimately succeeds at keeping the city affordable may hinge more on the city’s ability to preserve large tracts of housing than create new units.

“The real threat to affordability is the naturally occurring moderately priced rent-stabilized multifamily buildings in weaker parts of strong markets and strong parts of weaker markets,” said Community Preservation Corporation Vice President Robert Riggs, a housing lender who works with nonprofit developers. “There’s a lot of new construction in these neighborhoods, but it does not compare to the amount of units that are just there.”

Preservation takes up about 60 percent of the mayor’s 300,000-unit plan, a City Hall spokeswoman said. And two-thirds of the 77,000 affordable units were existing homes the city financed and kept under rent regulation.

City housing officials have been scouring properties in emerging residential markets, such as Crown Heights and Bushwick, both in Brooklyn, and Washington Heights, to keep residents in their homes. 

The prices of units in those markets across the city will continue to rise as property values increase if the city doesn’t get there first, housing lenders say.

“They’re small buildings, no inclusionary component, not happening with tax credits,” Riggs said. “It’s going to be building by building with owners getting comfortable with the city’s housing program.”

Update: This story has been edited from the print version to reflect more current data on the de Blasio administration’s financing of affordable housing.

Source: commercial

Labor vs Lobbyists: A Look at the ‘Campaign to Stop REBNY Bullies’

The emails first began circulating last summer and intensified during the fall as the November elections approached. They were scathing in their criticism of the top industry body in New York real estate, labeling the organization as a “plague” on New York City and calling its leaders “a bunch of billionaire bullies and racketeers.”

One featured more than 30 political candidates running for various city offices—including mayor, public advocate, comptroller, borough president and City Council—holding up signs saying to “beware” of the “real estate bullies” in question. Others spread the word of public protests at City Hall and echoed calls for the state to investigate Mayor Bill de Blasio and his administration for operating pay-to-play schemes benefitting developers.

They were, and continue to be, the work of the Campaign to Stop REBNY Bullies, a protest initiative laying a wide variety of issues—from the city’s affordable housing shortage and homeless crisis to the displacement of small businesses and the influx of construction worker fatalities in recent years—squarely at the feet of the Real Estate Board of New York.

The campaign is led by Ray Rogers, a 73-year-old labor activist and organizer renowned in labor circles for his anti-corporate initiatives against the likes of Coca-Cola and textile manufacturer J.P. Stevens & Co. (the latter was dramatized in the Academy Award-winning 1979 film Norma Rae). Having made a career challenging the perceived greed of corporate entities and political institutions—often working on behalf of and alongside labor unions—Rogers and his organization Corporate Campaign have now set their sights on REBNY.

“My objective is to greatly diminish the political power of REBNY and to make REBNY something that you would not recognize today,” Rogers told Commercial Observer. “What REBNY should be in the business of is working with the vast majority of their membership, which is real estate agents and brokers, to help them buy and rent and sell properties. They should not have their dirty hands and their dirty money in politics, trying to undermine labor protections for construction workers and undermine every kind of rent control and rent stabilization.”

Upon launching last May, the Campaign to Stop REBNY Bullies produced and released a five-minute animated film entitled “Bullies,” which screened at the annual Workers Unite Film Festival. The animated short blames REBNY-backed policies for exacerbating high commercial rents that price out small businesses and for fostering unsafe working conditions on construction sites (in addition to drawing a curious, if unclear, connection between REBNY and real estate industry investment in the tobacco industry).

In the months since, the campaign has staged and participated in a handful of protests around the city designed to criticize the real estate industry’s influence over New York politics and public policy, and sought to get its message out by lobbying the support of dozens of political candidates vying for city positions—many of whom appeared in the aforementioned photos on email blasts and the campaign’s site, holding up signs labeling REBNY as “bullies.”

And this week, the campaign will stage its highest-profile protest to date outside of REBNY’s 122nd Annual Banquet at the New York Hilton Midtown—an occasion that will see U.S. Senate Minority Leader Chuck Schumer receive an award honoring his public service. Rogers announced the protest with an open letter to Schumer voicing “displeasure” at the senator’s acceptance of the award—citing REBNY’s support of the Independent Democratic Conference (IDC), a group of eight Democratic New York state senators who align themselves with senate Republicans, enabling the GOP “to maintain control of the New York State Senate particularly as it relates to the interests of the heavyweights in the real estate industry,” the letter says.

photo by stoprebnybullies org 3 Labor vs Lobbyists: A Look at the Campaign to Stop REBNY Bullies
Labor activist Ray Rogers hands out literature at a Campaign to Stop REBNY Bullies protest last year. Photo: Campaign to Stop REBNY Bullies

REBNY discounts Rogers’ efforts as a union-backed initiative that’s part and parcel of the building trades unions’ ongoing battle for relevance in a construction sector that’s increasingly veering in the favor of nonunion contractors. In particular, the trade association pointed to Metallic Lathers and Reinforcing Ironworkers Local 46 as the driving force behind the Campaign to Stop REBNY Bullies and as Rogers’ primary financial backers.

“We respect Local 46’s right to free expression,” a REBNY spokesman said in a statement. “We wish them well as they seek to more effectively market their services to address the needs of a 21st century construction site.”

Rogers acknowledged that Local 46 supports the Campaign to Stop REBNY Bullies but disputed the notion that any union had hired him with the express goal of lodging an anti-REBNY smear campaign. Rather, he said his interest in the real estate industry group dated back several years and was initially motivated by the issue of construction safety and hazardous working conditions on construction sites. He added that he had had conversations with numerous union leaders about the prospect of taking a stand against REBNY, only for those parties to eventually back out.

“I tried to get [other] labor unions involved but couldn’t get anyone to really do it with me,” Rogers said. “There are a lot of labor leaders out there that have shown great fear, but the labor union was not built because people were scared to fight. Labor leaders have got to start realizing that [unions were] built on activism and courage. I’m so sick of hearing about how ‘REBNY is destroying us’—well, you have an opportunity to turn the tables.” (Local 46 did not return multiple requests for comment.)

While the matter of organized labor plays an undoubtedly significant role in the Campaign to Stop REBNY Bullies’ platform (among the campaign’s goals is for at least 90 percent of New York City construction workers to be working under union contracts), the initiative has gained support from political candidates and social justice advocates passionate about issues ranging from the future viability of the city’s small businesses to the influence that corporate-backed industry groups like REBNY have over the political system.

“I’m not anti-real estate; real estate is important to New York City. But, I do believe REBNY wields tremendous clout over our political system, and I don’t think any one entity should have that,” Sal Albanese, the former city councilman who challenged Mayor de Blasio in last year’s Democratic mayoral primary (and ran in the general election as the Reform Party candidate), told CO.

Albanese described REBNY has having “disproportionately outsized influence over our politics” at the city and state level, citing the role that real estate interests had in the corruption trials of former state politicians Sheldon Silver and Dean Skelos.

“These guys have deep pockets, and they know how to manipulate the political process to their benefit—our campaign finance laws make that possible,” he said. “Chuck Schumer isn’t alone; Bill de Blasio, a so-called progressive, is in the pocket of big real estate. There’s no single entity in the city or state of New York that wields more influence.”

sal albanese d mayor Labor vs Lobbyists: A Look at the Campaign to Stop REBNY Bullies
Sal Albanese is among the New York City political candidates to have supported the Campaign to Stop REBNY Bullies. Photo: Campaign to Stop REBNY Bullies

Albanese also criticized the industry group for its role in stunting the progress of the controversial Small Business Jobs Survival Act (SBJSA), which would make it easier for commercial tenants to renew their leases while hindering landlords’ abilities to raise rents at their own discretion. REBNY President John Banks has labeled the proposed law “unconstitutional.”

That issue, in particular, has drawn support for the Campaign to Stop REBNY Bullies from activists like Marni Halasa, who unsuccessfully challenged new City Council Speaker Corey Johnson for his seat representing the Third District on Manhattan’s West Side. Halasa said Rogers’ campaign “highlights an important issue that the average layperson is unaware of: how big real estate actively works against the public.”

“I think Ray has really galvanized small business activists from all over the city to come together, and that’s often difficult,” she noted, pointing to the issue of “hyper-gentrification” that negatively impacts neighborhoods and small businesses as the primary reason she supports the campaign. “A bill that would provide small business owners with leasehold rights and the right to renew their leases—if that can get not just a public hearing but support and passage—would be huge. But does REBNY want that? I’m sure they don’t.”

Albanese agreed that passage of the SBJSA would be “one of the barometers” of the campaign’s success—“If they could pass significant legislation that REBNY opposes, that would be a major win for [Rogers] and the movement,” he said—as would campaign finance reform “that would limit [REBNY’s] influence.”

Albanese—who along with Halasa is among the candidates who had their picture taken holding Stop REBNY Bullies slogans—also contested the notion that Rogers is merely doing the unions’ bidding under the guise of a collectivist, anti-corporate campaign. “Ray Rogers is not somebody you can put up to anything,” he said. “He’s got a history of being an activist and an organizer around the country, and he takes on causes because he believes in them.”

Of course, Rogers’ campaign still has a long way to go in terms of getting anywhere near the traction it would need to attain its lofty goals; the “Bullies” animated short has only just over 1,000 views on YouTube, and sources with knowledge of REBNY’s thinking told CO that the organization has been far from intimidated by the relatively tepid turnout at some of the campaign’s protests to date.

Rogers himself is under no illusions about the task that he has set for himself and the work that lies ahead should he wish to realize his campaign’s goals.

“I say to people all the time that, when you confront powerful institutions, you cannot expect to gain any meaningful concessions or justice unless you’re backed by a significant force or power yourself—it’s not just one demonstration after another,” he noted. “I need to raise money, just like political leaders. We’re taking on the most powerful industry—the most powerful lobby and institution—in the state.”

Source: commercial

Friend of the Court: REBNY Is Not Afraid to Dip Its Toes in Legal Matters

While it may not be a litigious body, the Real Estate Board of New York is willing to get down and dirty in the legal system when needed.

The 122-year-old trade association doesn’t jump into the ring on every real estate-related legal case; it picks ones that have potentially serious impact on REBNY’s 17,000-plus members.

“In terms of examining the cases, [they] range from tenant behavior to smoking to construction,” explained Carl Hum, the general counsel for REBNY. “We have to be vigilant about all of these different areas of law. They touch upon the industry. They touch upon our membership and they touch upon how buildings are managed and constructed.”

In 2017, REBNY was involved in six legal cases—one as a plaintiff and the rest as a nonlitigant. In those five cases, REBNY filed amicus curiae, or “friend of the court” briefs (from someone who is not a party to the case), to convey its members’ strong opinions on the matter. In two of the cases, REBNY came out victorious, and the other four are ongoing. Commercial Observer takes a brief look at the six.

Keeping New Construction Decisions With City Agencies

A group of Upper West Siders had a beef with the New Jewish Home (previously called Jewish Home Life Care) and its plans to erect a 20-story nursing home and rehabilitation center at 125 West 97th Street between Amsterdam and Columbus Avenues.

Called the Living Center of Manhattan, the new building is slated to be the first nursing facility in New York City based on the Green House elder care model and will replace the nonprofit’s current outdated nursing home at 120 West 106th Street.

Parents from the adjacent Public School 163 and residents of three neighboring buildings were upset about the environmental impact the construction would have on them and filed a lawsuit in 2015. They wanted the New Jewish Home to redo its environmental review of the project to reduce dust and noise, according to a DNAinfo story at the time.

The plaintiffs “challenged the issuance of a certificate of need” by the state health department, “which constituted authorization to construct a proposed nursing facility,” according to REBNY’s Sept. 20, 2017, friend-of-the-court brief on behalf of the nursing home. Before giving permission to New Jewish Home, the New York State Department of Health conducted a Final Environmental Impact Statement, or FEIS. The lower court annulled the agency’s authorization, claiming it “failed to take the requisite ‘hard look’…for potentially significant adverse construction impacts,” REBNY’s filing states. The Supreme Court Appellate Division’s First Department (which covers Manhattan and the Bronx) reversed the decision, emphasizing “that it is not the province of the courts to second-guess the thoughtful deliberations of agencies and that those decisions must stand unless arbitrary, capricious or unsupported by the evidence,” the brief notes.

REBNY took a stand out of fear the case “would undermine the integrity of the [New York State Environmental Quality Review Act] environmental review process,” the brief says.

Hum said that REBNY “felt that this was important to weigh in on the city’s land use procedures and [to reaffirm that the] EIS was done properly. We wanted to uphold the EIS.”

The Court of Appeals made its determination on Dec. 13, 2017, according to Richard Leland, a partner at Akerman and REBNY’s attorney in the case. The court upheld the validity and appropriateness of the EIS, a coup for REBNY.

Following the decision, REBNY President John Banks said in a statement, “This ruling reaffirms the consistent approach to environmental review in New York City’s land use procedures. The board filed a friend-of-the-court brief in this case because we thought it was important to uphold this approach.”

As for REBNY’s involvement, Bruce Nathanson, the senior vice president of the New Jewish Home, said in a statement provided to CO, “REBNY was extremely helpful in conveying to New York’s highest court the need for established and predictable environmental review procedures to ensure that both developers and nonprofit institutions like ours know what is expected in an EIS. REBNY made the point, from a practical development perspective, of how important it is to know that compliance with the detailed procedures set out in New York City’s CEQR [or City Environmental Quality Review] Technical Manual should be sufficient to establish that an EIS complied with law.”

A spokesman for New Jewish Home said that while the EIS matter was settled, the nonprofit organization is awaiting a decision on an unrelated case.

“Once that’s been adjudicated a construction schedule will be determined,” he said.

Responsibility for Compensation When Construction Workers Injure Themselves Off-Site

Another case where REBNY flexed its muscles involved an accident in connection with the construction of a Tribeca high-rise condominium.

In 2012, ironworker Robert Gerrish tripped and fell at a work site in the Bronx.

“He was bending and cutting steel rebar to be used for the construction of a new building located at 56 Leonard [Street in Manhattan],” court documents read. Since Alexico Group owns 56 Leonard Street and Lendlease was the construction manager, Gerrish sought to hold the landlord and Lendlease liable under New York’s Scaffold Law, a labor law.

Lendlease subcontracted with Collavino Structures (one of the defendants), which subcontracted with Gerrish’s company, Navillus Tile (nonparty), for the Bronx work. Collavino leased space in the Bronx Yard from Harlem River Yard Ventures (nonparty) for the construction work. Alexico and Lendlease were being charged with not “providing reasonable and adequate protection and safety” at the yard.

Gerrish sued Alexico and Lendlease for labor law violations. In April 2015, the New York County Supreme Court dismissed the plaintiff’s labor law claim. Last February, the Supreme Court Appellate division, first department, reversed that decision.

In October, REBNY filed a brief with the New York State Court of Appeals, contending that “the Appellate Division erred in concluding that the trade contract between Lendlease and Collavino provided a nexus to impose liability on appellants for an alleged violation of labor law that occurred on property that 56 Leonard did not own and where Lendlease did not supervise or control the work side.”

The organization further said the ruling would have a “detrimental effect on the real estate, construction and insurance industries by expanding their liability to an uncontrollable, limitless degree and driving up the cost of construction and insurance in New York to the state’s detriment.”

This case awaits an outcome.

A spokesman for Lendlease said the company does not comment on pending litigation. A spokeswoman for Alexico Group didn’t respond with a comment.

screen shot 2018 01 16 at 12 56 02 pm Friend of the Court: REBNY Is Not Afraid to Dip Its Toes in Legal Matters
LEGAL EAGLES: REBNY has flexed its muscles in legal cases involving construction of an Upper West Side nursing home at 125 West 97th Street, top left, a construction injury at a site affiliated with the building of 56 Leonard Street, right, and a rent-regulation issue stemming from a tenant at 285 West Fourth Street, bottom left.

Let the Conversions Recommence!

Last June, REBNY appealed a 2016 ruling that upheld the city’s moratorium on hotel conversions into condominiums.

The issue relates to a bill that Mayor Bill de Blasio signed into law in June 2015 banning the conversion of more than 20 percent of the space in Manhattan hotels with at least 150 keys into other uses. Its intention? To try to cap the number of hotel owners turning their properties into residential condos.

Having 29 hotel owners as members, REBNY filed papers with the Appellate Division in June 2017.

“For those 29 REBNY members, Local Law 50 limits their right to use their property to realize its full-market value,” the appeal indicates.

The board also claimed that the law shouldn’t have been passed as it was a land-use matter It should have been under the purview of the City Planning Commission rather than the City Council, REBNY said.

“We believe the trial court’s findings were in error,” Banks said in a statement provided to CO. “We are confident the appeals court will find this restriction on hotels unconstitutional, circumvents city land use procedures, constitutes an unlawful taking and is without legitimate public purpose.”

The case is ongoing, according to Hum.

Whether a Minority Partner Can Dissolve a Partnership

REBNY gave voice to a case that it fears could alter the nature of partnership agreements, which are commonplace for holding and operating real estate (particularly because of the tax advantages they offer).

In a case against Marc A. Malfitano, the majority partners of Poughkeepsie Galleria Partnership in Upstate New York said that Malfitano didn’t have the right to terminate their partnership agreement.

While a lower court sided with the majority owners, the Court of Appeals decided to take up the case.

This past June, REBNY, and other real estate organizations, filed a brief with the Court of Appeals, saying, “Allowing a minority partner to deviate from the express terms of the partnership agreement in his dealings with the partnerships poses a significant threat to the stability and viability of real estate partnerships across the entire real estate industry throughout New York State—and the country.”

The case is scheduled for oral arguments on Feb. 13, according to a REBNY spokesman.

Rent-Regulation Redux

This March, the Court of Appeals will determine if over 100,000 homes may return to rent-regulated status.

That is something that REBNY is fighting, landing squarely in the corner of landlord Alan Wasserman, the owner of 285 West Fourth Street, who faces a lawsuit from tenant Richard Altman over alleged rent overcharges. Altman claimed his unit was subject to rent stabilization and the landlord said otherwise.

In April 2015, the Appellate Division of the Supreme Court’s First Judicial Department decided in favor of the landlord and dismissed the case, but on appeal, the tenant won with the court “eliminat[ing] post-vacancy deregulation (deregulating an apartment after it became vacant by lawfully raising the rent above the deregulation threshold),” according to New York Law Journal. In the first part of last year, REBNY filed a brief to support Wasserman.

On March 22, the Court of Appeals will issue a decision, REBNY’s spokesman said.

primaryphoto6 Friend of the Court: REBNY Is Not Afraid to Dip Its Toes in Legal Matters
UP IN SMOKE: REBNY supported the co-op board at 300 East 54th Street in a secondhand smoke case filed against the board by a tenant. Photo: CoStar Group

Can a Co-op Board Be Responsible for Secondhand Smoke From Another Unit?

In January 2017, REBNY got involved in a secondhand smoke case in Sutton Place.

A shareholder at Connaught Tower at 300 East 54th Street, Susan Reinhard, claimed in a 2013 lawsuit that she was entitled to a 100 percent, eight-year maintenance abatement to exceed $120,000, plus reimbursement of legal fees, because secondhand smoke from another apartment was seeping into her pad, and the co-op board didn’t remediate the situation.

A Manhattan Supreme Court judge ruled in her favor in 2016. The court held that “building owners are capable, and tenants are incapable, of providing smoke-free apartments by imposing strict no-smoking policies or by constructing or rehabilitating buildings so that smoke cannot travel between apartments,” as per REBNY’s amicus curiae.

REBNY took issue with this premise, saying that the decision did not reflect the fact that “cooperative boards are not legally empowered to ‘impos[e] strict no-smoking policies,’ ” according to its amicus curiae. It also disagreed with awarding the maintenance abatement to Reinhard as habitability damages as she “had no intention of using the apartment as a primary residence but rather only as a pied-a-terre.” The warranty of habitability policy, REBNY said, “guarantee[s] adequate shelter in one’s home, i.e., the place where one resides.”

Regarding wider implications, REBNY argued that if the lower court’s decision was upheld, it would “require all residential buildings—including cooperatives and condominiums which…can only act by a supermajority vote of apartment owners—to guarantee that its residents will not smell smoke (or any unpleasant odor which is allegedly attributable to smoke) in their apartments.”

Finding that Reinhard did not produce sufficient evidence that the odor made her apartment uninhabitable, REBNY scored a victory when the Appellate Division reversed the lower court’s decision last May.

Source: commercial