The answer, it seems, is not well. Two City Council members pulled their wards out of the law’s coverage area. One told Crain’s Chicago Business that the law is burdening apartment building sales with red tape for the sake of tenants who are completely unprepared to buy their buildings.
Alderman Felix Cardona Jr. commended the idea of the law, but said it doesn’t even teach tenants how to get a mortgage, let alone manage a co-op or condo.
“The success of this initiative heavily depends on the preparedness of prospective buyers, particularly tenants who may not have experience navigating the homebuying process,” he said at a council meeting, according to Crain’s.
The Real Deal explained in a magazine story: “The backlash against the program follows landlord complaints that it kills deals to sell or refinance their buildings, and get title insurance, by delaying closings and injecting uncertainty into the process.”
Studies of such laws, often called the Tenant Opportunity to Purchase Act, or TOPA, have found that they only work for tenants if the government also provides funding, in part to prepare tenants to become homeowners and collectively run an apartment building.
The HDFC co-op program might be New York’s most successful effort of this sort, but it does not affect private building sales like TOPA and COPA would. And the opportunities to create HDFCs are now exceedingly rare.
Most of the approximately 1,300 HDFCs were created decades ago from buildings acquired by the city through tax foreclosures, which don’t happen anymore. (Lenders usually foreclose first, and the city now sells tax and water/sewer liens rather than become a landlord.) Tenants did not have to come up with down payments and mortgages because the city typically sold the building for what they were paying in rent.
HDFCs, to be sure, have had their share of problems (33 in Manhattan made the “worst landlords” list in 2016), but guardrails have been put in place over the years to prevent mismanagement or exploitation of the buildings by shareholders. Hundreds of HDFCs have regulatory agreements with HPD, which contracts with nonprofits such as UHAB to provide oversight and technical assistance.
“For the most part, HDFCs run well and people who live in HDFCs are honest,” said UHAB’s Oscar McDonald. “In a few buildings where there are bad actors, that is not an indictment of all HDFCs.”
HDFCs were fairly successful because the buildings were basically free. TOPA bills imagine tenants quickly organizing to buy valuable buildings, which they are typically not ready, willing or able to do.
What we’re thinking about: I decided to look up the property records of 535 First Street, a 6,500-square-foot, renovated Park Slope limestone that just sold for $13.9 million, a neighborhood record for single-family homes.
It was the home of a childhood friend of mine, Nicky Gussoff. His parents, Bernard and Judith Gussoff, bought it in 1966 from Mary D. Tully. (The neighborhood had a lot of Irish in those days; my parents bought the Loughlin family’s house two blocks away in 1967.)
The exact price the Gussoffs paid is not in city records, but their mortgage is. Tully, the seller, provided it to the buyers: $9,500. She gave the Gussoffs 15 years to pay it back, which they did in 1981. Their monthly payment began at $46.
What has become of your childhood home? Send thoughts to eengquist@therealdeal.com.
A thing we’ve learned: The Related Companies denied a Daily News report that it was contemplating offering Mayor Eric Adams a job to stop him from campaigning for re-election. The firm said it has no intention of doing so. That makes sense, because a prosecutor might see it as bribery.
Offering something of value to a public official to do something that would benefit the offerer is illegal. In this case, the benefit to a real estate firm would be a better chance for Andrew Cuomo to defeat Zohran Mamdani in the November election.
Elsewhere…
— An upcoming City Council vote will put member deference to the test. The Council will soon vote on whether to build a development for formerly incarcerated people on a Bronx hospital campus. But, Gothamist reports, despite earlier support, Mayor Eric Adams has pulled away from the proposal amid opposition from local Council member Kristy Marmorato. Several other Council members, however, say they will still vote yes, meaning the project may still be greenlit.
— Democratic officials were arrested in lower Manhattan on Thursday night after trying to gain access to an area containing ICE detainees, the New York Times reports. The 11 Democrats, including Comptroller Brad Lander, were trying to inspect the 10th floor of 26 Federal Plaza, which has been subject to allegations of unsanitary conditions. When ICE denied the group entry, the officials reportedly sat on the floor, started chanting and unfurled a banner that said “NYers against ICE.”
— New York State Democratic Party Chairman Jay Jacobs said he will not endorse Zohran Mamdani, citing disagreements over Israel and democratic socialism, per the New York Times. Gov. Kathy Hochul publicly backed Mamdani earlier this week.
— Quinn Waller
Closing time
Residential: The top residential deal recorded Thursday was $13.9 million for a 6,500-square-foot at 535 First Street in Park Slope. Tim Malone of Compass had the listing.
Commercial: The top commercial deal recorded was $13.5 million for a 6,865-square-foot apartment building at 280 West 11th Street in the West Village.
New to the Market: The highest price for a residential property hitting the market was $40 million for a 12,400-square-foot house at 2 East 82nd Street on the Upper East Side. The property last traded for $19 million in 2023. Adam Modlin has the listing.
Breaking Ground: The largest new building permit filed was for a proposed 87,279-square-foot, 14-story, mixed-use project at 19 Clay Street in Greenpoint. Murat Mutlu of INOA Architecture filed the permit on behalf of Idan Shitrit of Investmates.
— Matthew Elo
