All eyes on Kingston NY
All eyes on Kingston NY
Key decision on the governance of NYC housing go down this week
This week
Announcements
Federal fair market rents jump
Kingston, NY will do a city wide up zoning
Local Law 97 recaps
Announcements
1- An info session on the proposed DHCR amendments that would ban Frankenstein apartment conversions and tighten / constrict the ability for owners to perform substantial rehabilitation is being hosted tomorrow.
Location: U.S. Custom House auditorium, One Bowling Green, New York, NY, 10004
Time: 10AM-430PM, Tuesday November 15th, 2022
Written testimony can be submitted in advance Michael Berrios, DHCR (718) 262-4816, 2022RentRegulationComments@hcr.ny.gov.
*This is a very big deal*
2- The Department of Buildings will be hosting a public hearing on the proposed Local Law 97 regulations.
Time: Today, November 14th at 11AM
Location Zoom meeting. Link here
3- Democrat Kathy Hochul won her election and will stay on as NY’s governor until at least end of 2026. You probably knew this.
Standardized fair market rents for affordable housing creep up
When the U.S Department of Housing and Urban Development (HUD) set new fair market rents (FMR) for fiscal year 2023, the rent numbers in NY jumped by 21% year over year from 2022. FMRs determine who (i.e., what income levels are allowed) can live in subsidized housing and what rents those tenants will pay. In the New York Metro area, which includes parts of Pennsylvania, New Jersey suburbs and Long Island, the allowable rent increases approached 3x the year over year annual U.S inflation, and were just about 4x the NY metro annual inflation rates. This steep increase will be a boon to developers of government subsidized housing.
Example: a 2-bedroom rented to section 8 in the Bronx can now rent for $2,451, as opposed to just $2,026 in 2022. Critics of this move say this puts extremely low-income tenants in an even worse position than last year. That’s not great because there was already a dearth of affordable units and an affordability crisis going on in 2022.
So why would the top housing agency do this? Some say this broadens the pool of apartments for tenants in the middle. If the government can support tenants in more expensive apartments, then that will come with a commensurate increase in standard of living that was previously outside a person’s budget. Tenants will have access to nicer apartments. On the other hand, some critics say this just makes affordable housing less affordable. But, this rent hike could also be an incentive mechanism. The reason there isn’t enough affordable housing is because there haven’t been good incentives to build enough of it. This yearly rent bump may offer a carrot to traditional affordable housing players and encourage fair market developers to make more affordable multifamily housing as well. In a time of rising interest rates and plateauing fair market rates, this could be just the strategy to pursue.
The little city that could: Kingston, NY
Kingston, NY is taking its housing policy by the horns. In May of this year, Kingston became the 3rd region in NY, after Westchester and the NYC five boroughs, to add rent stabilization to its housing stock. Now, the city of 25,000 is looking to revamp its zoning code to allow for more apartments to be built. The proposed changes would allow up to 6-unit apartment buildings where most single-family homes now exist, and it would do away with parking requirements. The plan would also require “mid-sized buildings” to make 10% of their units income-restricted to preserve affordability. NY suburbs have been complicit to the high cost of renting in NYC for a long time due to their lack of housing production. This will be a welcome relief.
Kingston will be an interesting experiment. Kingston’s progressive views have led officials to implement rent restrictions, but those same values have also pushed them toward higher density development. Up-zoning and tenant protections are usually contrasted to one another, but here they will work as complements. That’s innovative. Real estate investors who own multifamily may find this zoning amendment to be an exciting opportunity. The bill will make its way to the Kingston Common Council and is expected to pass early next year.
Local Law 97
Buildings will be fined $268 for each ton of carbon emissions that is over the allowed limit for the building type. Initial regulations released in October of this year, spelled out how much carbon emissions were allowed and how much weren’t. Some quick facts, as a recap:
Carbon emissions from buildings account for 70% of total CO2 emissions in NY.
The bulk of the carbon emissions come from apartment buildings.
‘Worst offenders,’ or the buildings that produce the most CO2 have until 2024 to rectify their emissions. The rest of the buildings have until 2030.
Renewable energy credits (RECs) can help buildings that have electricity as their number one power source.
Gina Bocra, Chief Sustainability Officer for the Department of Buildings of NYC offers real estate owners the following guidance.
Sources: NYC Gov, Novogradac, New York Focus, and The Real Deal