I’m glad I don’t curate op-eds, as I did for my previous employer. No longer must I deal with sugar-coated submissions like one Gov. Kathy Hochul just placed in Crain’s.
Hochul’s piece touted the new Affordable Housing Retention Act as a “decisive step,” “powerful tool” and “such a victory — for renters, for neighborhoods, and for the future of New York City.”
Not everyone agrees — not even lawyers poised to earn fees from the law.
The AHRA allows some rental buildings to be converted to condos if at least 15 percent of the tenants agree to purchase their units, rather than the unreachable 51 percent demanded by the Housing Stability and Tenant Protection Act of 2019.
To use complicated programs like this, building owners must hire experts. That’s why real estate law firms immediately offer their services to owners. The pitches are typically optimistic, to inspire owners to give it a shot.
Not so with Holland & Knight’s synopsis on the Affordable Housing Retention Act. This was about the nicest thing the firm wrote about it:
“The AHRA enables a very limited group of landlords the ability to convert their buildings to condominiums in a very complex procedure requiring approval from multiple city and state agencies.”
The law firm’s tone was so different from the governor’s, I double-checked to make sure they were writing about the same law.
The firm later described just how incremental the “decisive, powerful victory” claimed by Hochul really was:
“The AHRA has such limited applicability and is so complex that it will do very little to increase homeownership or result in more housing. In fact, many of the very limited group of buildings it was intended to assist will not be able to do so.”
Holland & Knight also gave strikingly different reasons than Hochul did for why Albany passed the law.
The governor said a “wave of mixed-income buildings” was built with government incentives in the 1990s, but their affordability provisions are about to expire. The AHRA, Hochul wrote, allows the state to “step in” to prevent huge rent increases by allowing owners to convert the rentals to ownership units.
And tenants, rather than being forced out, will achieve the dream of homeownership. Everyone goes away happy!
Holland & Knight, however, called the AHRA a response to the flood of complaints about the 2019 rent reform’s killing conversions “for no apparent reason” other than “to punish the landlords by not allowing them to convert their buildings after the HSPTA made the buildings unprofitable.”
As an aside, the firm noted that if not for the 51 percent threshold, “hundreds of thousands of tenants would be homeowners today, and the landlords could have used the money to build or renovate more housing.”
But the AHRA was a pathetic response, according to the firm, because it applies to a tiny minority of buildings. Among the criteria: They must have been built after 1996 and have 100 or more units.
Deep in Hochul’s op-ed, she admitted that the law only applies to “a subset of buildings” but asserted that “the ripple effect is powerful.”
What ripples? Hochul didn’t say. And her statement that the AHRA allows the state to “step in” is misleading, because the state cannot force owners to participate and provides no subsidy for them to do so.
In fact, the law imposes new demands on participating owners. Notably, they must give up the chance to convert below-market rentals to market rate, keep or expand the number of affordable units, and make them permanently affordable.
Even if an owner were willing, it is unlikely that his mortgage lender would sign off.
Holland & Knight’s lengthy missive, which bears the unmistakable fingerprints of its condo and co-op maven Stuart Saft, went on to list a dizzying array of requirements, procedures and nuances in the new law. It will make your head spin.
Saft also slipped in various warnings, including an observation that the permanently affordable units’ common charges would be capped, meaning that the other unit owners will eventually have to pay more to subsidize them. He mentioned numerous potential downsides for the building sponsor, too.
The pitfalls that Saft detailed over 3,700 words are too numerous to list here. Suffice to say that it offered a stunning, real-world contrast to Hochul’s 659-word op-ed, which made everything sound simple and wonderful.
Almost every housing law has its critics. But it’s telling when a law firm poised to make money from a new law publishes an opus taking it down.
Read more
The Daily Dirt: RIP co-op conversions
The Daily Dirt: The great affordable housing debate
The Closing with Stuart Saft
