Don't Believe the Budget Updates!

Brokerage 101: A deal isn't real until it's in writing

The Real Deal broke the news on Monday (4/15) that "lawmakers reach[ed] [a] sweeping housing deal" and Governor Kathy Hochul announced that "parameters of a conceptual agreement" were achieved in New York. However, it's crucial to note that such language is opaque, leaving owners in a state of uncertainty. The measures being considered are yet to pass, and their final forms are still unknown. For instance, some sources suggest a housing deal will include changes to the Individual Apartment Improvement rules, while others present a different view. The news is evolving, but the future remains uncertain.

The only sure thing is that the housing policies that have been loosely agreed upon by the "Three Men in a Room" are not finalized. In an interview with Politico, state Senator Julia Salazar said, "Conversations [on housing] are still happening." Senator Salazar is the quarterback of the Good Cause movement and the sponsor of the original Good Cause eviction bill, and many progressives share her viewpoint on good causes. Also, Assembly Speaker Carl Heastie, the most powerful member of the State Assembly and one of the three leaders who brokered the alleged housing deal, expressed doubts about reaching a consensus when he said, "The pencils weren't fully down" about the budget negotiations he was involved in. To have these two crucial figures speak out like this, representing both the senate and the state assembly, doesn't inspire faith or trust in the alleged agreement that Governor Hochul, who may be motivated for a housing win this year after failing to deliver one last year, is claiming.

The lack of consensus is problematic because the housing deal will not improve if it gets renegotiated, and there is still time on the clock for that to happen. The rumored housing policy changes are less punitive to landlords than anticipated, and that's good. But the actual budget bills have yet to be printed and it's unclear if both houses of the legislature agree on language, which would allow the bills to go for printing and become real. At that point, the bills go up for debate – debate in name only because the bills that make it to this stage almost always get approved – on the assembly and senate floors, and once voted yes, the budget is finalized. The last stage before the housing policies become law is for Governor Hochul to sign them. She usually treats bill signings as ceremonious events done throughout the state. The governor has to sign the bills into law by the end of the legislative session in 

My advice for investors seeking to brace themselves and prepare for the upcoming changes:

• General guidance

  Stay vigilant and focus on the top-level headlines, not the details. For example, Good Cause will likely pass, but the conditions may not align with the leaked information on 4/12. The details can change, which can have significant implications for your strategy. Being well-informed is key to being prepared.

• Lease preparations

  Speak to attorneys about how to structure leases expiring before June, when the legislative session ends. This marks the last point in time for Hochul to sign housing bills into law this year. Also, consider whether to give leases to tenants who don't have any.

• Consider a sale or a refinance.

  For investors who already considered re-capping their assets, doing so before Good Cause becomes law may be prudent. However, it's unclear how this change will affect the lending markets.

• Call me

  Though I can’t predict what is coming around the bend, I may be able to use my experience to advise yo

I am bullish on NYC multifamily. Call me to discuss at 212 658 1471

Originally published on 4/17/2024