In response to my column “Educating Zohran: What nonprofit housing actually costs,” about a Broome Street project costing $921,000 per unit, a reader pointed out that it would cost a lot less to rehabilitate homes mothballed by politics.
“Existing rent-stabilized apartments in New York are the cheapest solution,” the reader emailed me. “Incentives to landlords for these rentals is the way to go. Rents for these units would be a fraction of what the real cost of a $921K new build is.”
He added, “Of course, you don’t get a shiny new building for a photo-op.”
Point taken. But it’s not simply the lack of ribbon-cutting opportunities that keep lawmakers from doing something. It’s also because they fear being attacked by the advocacy community for doing anything that benefits landlords.
You might say, “But nonprofits that build affordable housing are also landlords.”
Indeed they are, but advocates depict them as benevolent, mission-driven angels. (Even the leanest nonprofits still pay themselves: The Catholic Charities affiliate developing 145 Broome Street, which operates 600 units in three Lower East Side buildings, reported $600,000 in salaries, $550,000 in management fees and $200,000 in employee benefits for 2022.)
In contrast, for-profit landlords are stereotyped as greedy, money-sucking schemers who keep units vacant out of spite. Jewish landlords see more than a little antisemitism in this portrayal.
Whatever the cause, the level of distrust has made this an intractable political problem. Both landlords and tenants are victims of the impasse, which exacerbates the housing shortage.
Vacant, rent-stabilized units have been a hot topic since the Housing Stability and Tenant Protection Act of 2019 limited rent increases for individual apartment improvements to $15,000. The New York Apartment Association now says more than 50,000 such units are vacant and off the market.
How many of those are empty because the cost of bringing them up to code is far in excess of the legal rent? No one knows for sure. The NYAA believes it’s tens of thousands. Defenders of the HSTPA say it’s just over 3,000 — not enough to justify allowing higher rent increases to pay for rehabs.
The legislature has raised the maximum recovery to $30,000 but attached conditions that limited participation by landlords. The NYAA and the Real Estate Board of New York continue to lobby state lawmakers for a solution that will get more units back on the market.
The candidates for mayor all know about this problem, but none has articulated a specific solution. Landlords are not too hopeful that Zohran Mamdani, should he become mayor, would push Albany to do anything helpful.
But owners are also aware that rival candidates Mayor Eric Adams and former Gov. Andrew Cuomo have already failed at this task. Cuomo was the man who created the problem in the first place by signing the HSTPA into law.
For now, owners are tapping other programs, such as Article XI, that are not designed for this particular issue. A more surgical approach is needed.
Lawmakers who cannot get past the rhetoric about “people before profit” and “warehousing” should remember our reader’s point about the cost of rehab versus new construction. Private owners can gut-renovate six or eight units for the same price as nonprofits’ building one from scratch — and can do it in months instead of years.
No ribbon-cutting. Just housing.
Read more
Why affordable housing sits empty
The Daily Dirt: State bills take another crack at helping rent-stabilized owners
NYCHA vacant unit count worse than realized
