A few days after Assembly member Zohran “Rent Freeze” Mamdani won the Democratic primary, which I called a crushing defeat for real estate, I wrote a column listing a few ways he could help the industry.
Among them were rezoning to add housing, weakening member deference in the City Council, supporting the City Charter revisions, adding rental vouchers and making them easier to use, increasing staff to ease bottlenecks at the Department of Housing Preservation and Development and persuading Albany to reform property taxes.
Mamdani hasn’t taken a position on charter reform, but he will probably have to soon because reporters will increasingly ask him about it as Election Day nears. But he has already endorsed the other five measures listed above.
The last of these, property taxes, is the most important.
The New York Apartment Association calculated that taxes this year will rise about $100 per apartment in rent-stabilized buildings because their tentative assessed values increased 2.75 percent.
That means tenants in these apartments will send almost $4,000 a year to the government, as the group’s CEO, Kenny Burgos, said in a podcast. Of course, it’s owners, not tenants, who pay the taxes, but the NYAA phrases it differently because it’s the only hope of getting the state legislature to reduce multifamily tax rates.
It will take a lot more than that to move Albany, though. Property tax reform will never happen without a hard push from a popular mayor.
The time for mayors to ask for big changes from the state is immediately after taking office, when they have political capital from winning (aka a mandate).
Unfortunately, Mamdani’s promise on property taxes is to propose comprehensive changes by the end of his second year. That would mean no action by Albany until at least 2028.
Not only is that a long time for bereft owners of rent-stabilized buildings to wait, but by then, who knows if Mamdani will have any political capital left? Two years is a lifetime in politics, as Eric Adams could tell you.
Both Adams and Bill de Blasio talked about the importance of property tax reform but made no real effort to achieve it because any change would involve raising taxes on someone.
However, that shouldn’t be an impediment to Mamdani, who has already called for higher taxes on the rich and said private homes in gentrified neighborhoods should be taxed more. Landlords generally agree.
Burgos said on his podcast that a $2,500-a-month apartment pays (indirectly) the same property taxes as a $1 million single-family home, and rental properties pay higher taxes than homes of the same size in the same neighborhood.
Burgos and Mamdani, who were classmates at Bronx High School of Science and Democratic colleagues in the Assembly, have already met once since the primary. Discussions were held last week for the NYAA to meet with Mamdani advisers, which may yet happen.
“Property tax reform is critical,” Burgos said on the podcast. “At the very least, rent-stabilized buildings shouldn’t be overtaxed while they are simultaneously being defunded by rent adjustments that don’t keep up with inflation.”
What we’re thinking about: Owners of buildings sometimes resist efforts to landmark them because it makes even the simplest of renovations more difficult and expensive. But now, under City of Yes, landmark status allows the owner to sell air rights to 10 times more sites than before, and the sale process takes only six to nine months instead of two or three years. Will any building owners seek landmark status in order to sell their air rights? Send thoughts to eengquist@therealdeal.com.
A thing we’ve learned: The senior prosecutor investigating Trumped-up mortgage fraud allegations against New York Attorney General Letitia James has told colleagues she will advise her new boss, interim U.S. attorney Lindsey Halligan, to drop the matter — against the president’s wishes — because there is no probable cause to file charges, MSNBC reported. Halligan’s predecessor, a Trump nominee, resigned rather than bring the case. My Sept. 23 column explains why the case is so weak.
Elsewhere…
If the bill passed by the City Council requiring gas appliances to be installed by a master plumber becomes law, will landlords simply buy electric stoves instead? That’s not an option in many older buildings, one landlord told me.
“The wiring in the majority of rent-stabilized apartments would not support [electric stoves],” he said. “And basically not in all pre-war rent-stabilized.”
After upgrading stoves in a certain number of apartments, the owner ends up having to upgrade the entire building’s incoming service and risers “because the old wiring would not support the increased load without dramatically increasing the risk of electrical fires.”
Closing time
Residential: The top residential deal recorded Tuesday was $15.5 million for two adjacent houses at 809-815 Avenue J in Midwood. The lots total 8,000 square feet.
Commercial: The top commercial deal recorded was $92 million for the Hilton Garden Inn at 30 West 46th Street in Times Square. The hotel is 21 stories and has 196 rooms.
New to the Market: The highest price for a residential property hitting the market was $25 million for a 9,308-square-foot townhouse at 7 East 80th Street on the Upper East Side. Serena Boardman of Sotheby’s International Realty has the listing.
— Matthew Elo
