Uncertain future after the end of 421-a-POLITICO

Welcome to the weekly edition of the New York Real Estate Newsletter. We’re taking a look at what’s coming up this week and a look back at what you might have missed last week.

The controversial 421-a tax break elapsed last week after a rush in recent months to start projects ahead of the deadline to qualify for the now expired program.

The real estate industry and other advocates have warned that the end of the tax exemption will halt rental housing construction in New York City amid a severe housing crisis. They have indicated they will push to revive the program during next year’s legislature, but the political momentum that doomed efforts this year may linger.

The end of tax relief initially raises the question: For developers who haven’t laid their groundwork before June 15, they will pause their plans in hopes that the Legislature will approve a new version of the program next year, or will change course on the assumption that the program is finally gone?

Daniel Bernstein, a real estate attorney at Rosenberg & Estis, said that in the future, developers may well build condos instead of rentals, or not build homes at all, if the zoning of a particular lot allows it.

“Mainly, [they are] do not go to build rental projects due to the uncertainty about the timing of this program and what’s next,” said Bernstein, who focuses on affordable housing and tax incentives.

Elected officials and advocates who opposed the continuation of the tax break – on the grounds that it was a developer giveaway – celebrated their demise last Thursday, joining city auditor Brad Lander in calling for sweeping property tax reform as an alternative .

“421-a has to stay dead,” said Ellen Davidson, a tenant attorney with the Legal Aid Society, on Thursday. “I’ve seen it die before and I’ve seen it come back to life.”

State Senator Brian Kavanagh (D-Manhattan), Chairman of The body’s housing committee echoed Davidson about the demise of the program, saying he “hopes it stays that way.”

Lander has argued that the end of 421-a — which helps offset a disproportionate tax burden on rental housing — presents an opportunity to reform the property tax system as a whole, including overtaxing rents. He hopes to make progress on the issue this year, but it will also be a heavy political upswing.

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NUMBER OF THE DAY: 3,439 — the number of vulnerable homeless people in New York City, according to the annual HOPE census (although proponents have long argued that number is a gross undercount).

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RECESSION COULD RISE OFFICE BUILDINGS, SAYS ROSS — Bloomberg’s Natalie Wong: “Real estate billionaire Stephen Ross says companies struggling to get workers to return to offices could see a flood of workers returning when a recession hits the US. “Employers have been a little hesitant because they didn’t want to lose their employees, but I think if you go into a recession and people worry they won’t have a job, that’s going to bring people back into the office,” Ross said in a phone interview . “Staff will realize when we hit a recession or when things get a little tighter that they need to do whatever it takes to keep their jobs and make a living.”…

“Ross’s Related Cos., the developer behind Hudson Yards in New York City, owns office buildings and other developments in the United States. New York landlords, politicians and businesspeople have been vocal about the importance of getting people back into the office. Banks like Goldman Sachs Group Inc. have been pioneers in winning back employees. Despite pressure from certain employers, office attendance is below pre-pandemic norms. According to security data company Kastle Systems, as of June 8, 41% of workers in the New York metro area were back at their desks.”

CITY RELEASES UNPROTECTED HOMELESS COUNT – POLITICO’s Janaki Chadha: A census of the city’s vulnerable homeless in early 2022 found 3,439 people sleeping on streets and subways. The census showed a significant increase — about 1,000 people — from the 2021 census, which the Department of Homeless Services attributed to changes caused by the pandemic. in particular the nightly closure of subways. The city conducts the survey — called the Homeless Outreach Population Estimate — annually to estimate the number of homeless people who are not in the city’s shelter system. This year’s census was conducted by service providers and employees over four nights in January, according to DHS.

FLIGHT CANCELLATION WEEKEND – Vera Chinese from Newsday: “Thousands of flights were delayed or canceled at metro airports over the weekend, with the slowdown continuing on Sunday amid a nationwide surge in travel demand, staffing concerns and weather concerns. According to website FlightAware, there were 285 delays and 78 cancellations at Kennedy Airport, 201 delays and 73 cancellations at LaGuardia Airport, and 208 delays and 103 cancellations at Newark Liberty International Airport as of 8:45 p.m. Sunday. Shortly after 9:40 p.m. Sunday, Long Island MacArthur Airport in Ronkonkoma experienced five delays and a single cancellation. As of 8:50 p.m. Sunday, there were 4,920 delays and 896 cancellations for flights to, from or within the United States nationwide. according to FlightAware. According to the website, there were 6,454 delays and 860 cancellations nationwide as of Saturday.”

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EICHNER CALLS IT IN CROWN HEIGHTS — Joe Lovinger of The Real Deal: A Crown Heights spice importer has submitted plans for a housing development on the same lot near the Brooklyn Botanic Garden where Bruce Eichner’s Continuum Company spent years trying to build a much larger one. Zev Golombeck’s new submission for 960 Franklin Avenue calls for six stories and 293 apartments. It’s a fifth as many homes as the 1,500 that Continuum and Lincoln Equities submitted for construction in 2020 in two 39-story towers covering 1.4 million square feet. The cut will spare the project the rezoning drama that doomed Eichner’s plans.”

RUSSIAN OLIGARCH CAUSES REAL ESTATE REALIZATION — Kathianne Boniello of the New York Post: A sanctioned Russian oligarch is attempting to blow up three Manhattan development projects in which it had invested through shell companies, according to a lawsuit. Nine days before Russia invaded Ukraine, Mikhail Klyukin – a board member of Sovcombank, Russia’s ninth-largest bank – sent letters to the financial institutions, lenders and lawyers backing the three projects, demanding that developer Gary Vinbaytel be removed, without saying why. The Manhattan Supreme Court papers show it.”

TENANTS threatening L+M RESIDENCE — Joe Lovinger from The Real Deal: “A developer’s fresh idea to renovate aging Manhattan apartments could be spoiled by some of their tenants. This winter, L+M Development Partners entered into an agreement to purchase Knickerbocker Village, an 88-year-old affordable housing complex in Two Bridges. Ron Moelis’ firm, one of New York’s largest affordable housing developers, pledged to raise new federal funds through Section 8 to pay for repairs and keep rents low for existing tenants.

The tenants’ union came put up with L+M, but some knickers don’t play along. In a lawsuit filed last week, the dissenting tenants aim to block the sale, arguing it would go against the little-known program that has kept rents low at the development’s 12 buildings for decades. The newly formed affected tenants of Knickerbocker Village are suing the state Department of Homes and Community Regeneration, which signed the contract with L+M and the official Knickerbocker Village Tenants Association in February.”

— The three-month closure Sitterly Road Bridge raises concerns about congestion among locals.

– Manhattan District Attorney Alvin Bragg carries out a plan to combat shoplifting and robberies.

— Landlord from New Jersey have filed more than 40,000 eviction notices in the first five months of the year after the state lifted its two-year moratorium on deportations.

— A labor dispute forced New Jersey Transit to cancel several rail lines in the midst of Friday night’s rush.

— A June 16 commemoration in Central Park told the story of Seneca Village, a predominantly black community on land that became the park.

— A supportive housing development opened in the Mott Haven neighborhood of the South Bronx.

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