New York Passes Rent Rules to Blunt Gentrification

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The New York City Council passed sweeping changes to the zoning code on Tuesday, compelling private developers to build low-cost rental units and handing Mayor Bill de Blasio a victory on the centerpiece of his efforts to blunt neighborhood gentrification.

The passage of the proposals capped more than two years of behind-the-scenes planning and organizing by the de Blasio administration, which developed a coalition of unions, business organizations, developers and groups representing older residents while wooing skeptical members of the Council.

In the end, the mayor’s plan, which changes zoning requirements across the city, survived opposition from community boards and building trades unions, as well as from New Yorkers concerned that the changes would encourage the very transformation of low-income areas they were meant to head off.

The vote was halted soon after it began, by a group of protesters on the balcony of the Council Chambers.

“City Council, vote no; M.I.H. has got to go,” they chanted, referring to one of the two proposals, known as mandatory inclusionary housing. As a few were guided out, others joined hands — possibly stuck together with Super Glue, Council officials said — and remained seated before being removed by police. At least two were carried away; the police said there were no arrests.

One man who was suffering from “back spasms,” according to Council officials, was taken to a nearby hospital.

The roughly 20-minute interruption did nothing to derail the voting. Each passed with at least 40 votes of the 51-member body.

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Mayor Bill de Blasio was expected to hold a rally on Wednesday in Lower Manhattan.CreditHiroko Masuike/The New York Times

In the days leading up to the vote, Mr. de Blasio, a Democrat, took to the airwaves to frame the proposals as a robust attempt by city government to counter escalating rents that would leave a lasting, decades-long imprint on the city.

“Our plan mandates the creation of affordable housing,” Mr. de Blasio said on Monday. “It’s what is so powerful about it.” He is expected to hold a rally on Wednesday in Lower Manhattan.

Negotiations with the Council on the major points of the plan, which was made final last week, ensured the inclusion of units affordable to more lower-income residents — including those making 40 percent of the area median income or less — in new developments that benefit from zoning changes, a major concern in poor communities where the mayor’s plan is likely to spur development. The deal, which also includes neighborhood-specific changes to the zoning codes and the creation of housing for older adults, assured the plan’s passage on Tuesday.

City officials compared the adopted proposals to those in other cities, noting that New York’s plan went further by including mandatory creation of below-market rental units that are permanent and reach residents making well under the area median income of $86,300 for a family of four. The Council speaker, Melissa Mark-Viverito, called it a “landmark plan.”

Under New York’s plan, developers benefiting from rezonings for either residential growth or greater height and density are, for the first time, required to include units for those with earnings below the median income. The decision about what level of affordability to apply to a given development — between 40 percent and 80 percent of the median income — is to be determined by the local council member. The plan also provides for the creation of units for those making 115 percent of the median income, provided a portion be for those earning much less. The set-asides range from 20 percent to 30 percent of all of the new units.

Though the ultimate effect on the city will most likely not be seen for years, the de Blasio administration has already identified seven areas planned for rezonings that would fall under the new rules, including East New York, Brooklyn; Bay Street on Staten Island; parts of Flushing and Long Island City in Queens; Jerome Avenue in the Bronx; and East Harlem and Inwood in Manhattan.

It may be hampered by a lack of a property tax abatement, known as 421-a, that lapsed this year and can be replaced only by the State Legislature. Mr. de Blasio’s broader housing plan, aimed at creating 80,000 new rental units below the market rate, was conceived based on the existence of the exemption. Roughly 12,000 units are expected to directly come from the new zoning mandates approved by the Council through 2024, City Hall officials have said.

“While in the absence of an overall tax abatement program its effectiveness is diminished, it’s still a valuable tool in the belt of the mayor,” John Banks, president of the Real Estate Board of New York, said.

NYC passes Sweeping Plan to Create More Affordable Housing

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Many of New York City’s residential neighborhoods will feature denser and taller development as part of a sweeping housing plan that will mandate the construction of more affordable housing and rewrite the city’s decades-old zoning to enable more residential development.

The plan, a major political victory for first-term Mayor Bill de Blasio, was passed Tuesday by the City Council and intends to fundamentally reshape the way housing is developed in the nation’s largest city. It will link approval for increased development to the creation of more affordable apartments, and officials hope it will dramatically slow the tide of residents being priced out of their longtime neighborhoods.

“Anytime there is a rezoning of a neighborhood or of a single building site, affordable housing will be required as part of whatever new is built,” said de Blasio, a Democrat. “For the first time, the rules of the game have been changed to really benefit the people and not just the real estate developers.”

The plan’s Mandatory Inclusionary Housing component – touted by administration officials as the most robust in the nation – presents developers with choices for construction in rezoned neighborhoods.

It works on a sliding scale, starting with an option for developers to reserve 20 percent of the units for families of three making $31,000 a year or less, which amounts to $600 for a studio or $775 for a two-bedroom apartment. Other options require that portions of buildings be set aside for families with slightly higher income levels, including some for those that make $90,000.

In exchange, developers can be allowed to build taller structures and obtain low-interest financing and tax advantages.

The program is more stringent than those in other U.S. cities facing similar affordability crises.

Some cities, like Boston and Chicago, feature voluntary inclusionary housing programs while some that have mandatory programs – like San Francisco and Washington – require developers to set aside much fewer units for low-income residents. Housing experts are uncertain if the program in New York – a city with far greater density that most other U.S. municipalities – could be replicated elsewhere.

The plan initially faced opposition from those who felt it didn’t do enough for the city’s poorest.

In November, nearly all the city’s 59 community boards opposed the rezoning proposal, which de Blasio had made a lynchpin of his call to preserve or build 200,000 units of below-market-rate housing by 2025.

But senior de Blasio aides reached out to community groups and won the support of key institutions like the AARP. The administration also hired an outside political group to help coordinate its plan and won the support of some real estate groups and labor unions. The mayor’s aides felt the tide turn after the City Planning Commission approved the plan in February.

Negotiations then began in earnest with the City Council, which had many members push for more apartments set aside for the city’s poorest. The mayor’s office agreed.

“The plan addresses the magnitude of our affordability crisis,” said City Council Speaker Melissa Mark-Viverito. “It will minimize displacement and protect character of our neighborhoods.”

The deal didn’t satisfy everyone.

Rents have skyrocketed in New York, climbing over 15 percent in the last decade while the median per capita income of renters has increased 2 percent, according to a recent study by New York University’s center for housing and urban policy. Some residents voiced concern that gentrification, even if slowed, would alter their communities.

“We are talking about the makeup of our neighborhoods. Where are these people going to go?” asked Anna Burnham, who works at a Bronx-based housing group. “This plan has gone through without buy-in from the people and without talking to the people about their needs.”

The deal is a key win for de Blasio, who has seen his approval ratings steadily rise in recent months. His team now aims to make the housing plan, as well as the new coalition formed to push for it, key components of his 2017 re-election campaign.

Source: http://abc7ny.com/realestate/new-york-city-passes-sweeping-plan-to-create-more-affordable-housing/1258848/

City Hall encouraging negotiations on Brooklyn hospital development

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Fearing a loss of potential below-market housing at a Brooklyn location that was central to his 2013 election, Mayor Bill de Blasio has dispatched top aides to strike a compromise for the future of the Long Island College Hospital site.

The administration is directly involved in negotiations among local politicians, the developer who owns the site — Fortis Property Group— and the Cobble Hill Association, a community organization that has continually spoken out against Fortis’ plans for a luxury condo tower.

“I would be irresponsible if I wasn’t trying to help come to a solution that would include affordable housing on a site that currently would be developed purely as market rate unless we intervened,” deputy mayor Alicia Glen said in an interview in December.

The mayor has previously voiced his preference for allowing Fortis to rezone the property, which would enable a series of community amenities and low- to middle-income apartments. Without the rezoning, which needs City Council approval, Fortis would build only luxury condos.

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The administration hosted a meeting several days before Christmas inside City Hall to work out a deal for the site, which de Blasio represented when he was in the City Council and later visited as a mayoral candidate to protest the hospital closing. (The hospital has since shut its doors; only an emergency department remains.)

Among those who attended the meeting were Fortis executives Joel Kestenbaum and Terrence Storey; the developer’s lobbyist, George Fontas; administration officials Michael DeLoach and Peter Wertheim; three members of the Cobble Hill Association and elected officials who represent the area, including Councilman Brad Lander, state Senator Daniel Squadron and state Assemblywoman Jo Anne Simon, according to multiple sources involved in the talks.

“Thanks to the good organizing of the Cobble Hill Association, the voice of the people I think was heard at City Hall and by Fortis and the mayor’s team then reached out and people are sitting down again to try to develop a proposal that everyone can live with,” Lander said in an interview this week. “We’re not there yet, but it’s a good development to have people sitting down and trying. And the idea would be to have a proposal that reflects some of the benefits that were associated with the rezoning proposal … but without such a massive increase in density.”

He said the developer “indicated an openness to talking about an alternative that was less massively dense,” but cautioned that “this is not easy and I’m not at all sure we’ll get there.”

The sides were at a stalemate after Lander announced in November that he would oppose the developer’s plans to apply for a rezoning of the land because the Cobble Hill Association opposed it so vigorously.

Residents have expressed numerous concerns, with the height of the proposed buildings topping the list.

With the rezoning, Fortis would build a 37-floor residential tower, low- to moderate-income apartments, a public school, more parking space and other neighborhood perks. Without it, the company would just build the condos in a 35-floor building and forego the rent-regulated apartments or other amenities.

Both plans include a new medical facility operated by NYU Langone.

Some Cobble Hill residents have complained recently that Fortis’ plans for a public school, which the de Blasio administration and other residents support, would add crowds and traffic, according to several sources.

Fortis has said it is willing to continue negotiating because it would prefer to get the land rezoned, a process that would allow additional residential space to be created and, therefore, more revenue for the developer.

“We continue to work with the community, local elected officials and City Hall to craft the best possible redevelopment plan for the former LICH site — one that includes important community benefits like a new public school, affordable housing and increased park space,” Fortis spokesman James Yolles said.

Buzz Doherty, a leader in the Cobble Hill Association, said members of the organization made clear at the December meeting they need further information on the proposed redevelopment.

Source: http://www.capitalnewyork.com/article/city-hall/2016/01/8586987/city-hall-encouraging-negotiations-brooklyn-hospital-development

2016 Forecast: Insiders predict boom and bust in varying degrees

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Depending on who you ask, residential real estate in 2015 was either the apex of a continuous rise — or the start of a downward slide.
The headlines were devoted to some of the biggest deals in the city, such as the penthouses in Extell’s One57 tower and the $30 million condos scattered along Park Avenue.

However, with it came worries over the supposed thinning ranks of $10 million-and-above condo buyers.
There were also external worries from the strength of the US dollar, which experts say makes New York real estate less attractive to foreign buyers, and the Federal Reserve’s recent 25-basis point rate increase, which pushes up mortgage rates.
The outlook is similarly mixed for the next year.
We spoke to some of the city’s top real estate executives, and the prevailing tone is that of cautious optimism.
There was confidence over the strength of the New York City market, particularly based on the performance of the outer boroughs, matched by fears over the weakening appeal of the luxury real estate market. We’ll see who’s right over the next 12 months.

Dottie Herman, President & CEO,
Douglas Elliman

“It will be a repeat of this year: healthy, strong (and with) sustainable growth.

“Because of all the wars and things that are happening all over the world, when things like that happen, people tend to find refuge in their home and then their neighborhood. And theyʼre more likely to travel inside the States than outside.

Dottie Herman

“I think that second homes are going to continue to rise because I think people are going to feel like they want their family around them.

“I kind of saw this after 9/11, when people would call me and say, ‘You know what, I have this home, can you get me another place. I want to build a home that my family can come too.ʼ Many people want to have their kids and their grandkids visit them, so they tend to go to places where their kids would want to come to, so New York City, Vermont, Miami, things of that nature. It’s always been the American dream.

Ian Bruce Eichner, Founder & Chairman,
Continuum Company

“I think you’re going to see more demand for products in the middle market, $1,800 to $2,500 per s/f, as

Ian Bruce Eichner

opposed to only super-luxury. And I think you’re going to see an adjustment of the product that’s coming

to the market to match that demand. I think you’re going to see a stable stream of purchases, but not a frantic rush like we saw in certain parts of 2015.

“I believe thereʼs a certain number of buyers that will stay in the (high-end) market. But I think in the New York area, every developer wanted to develop ultra-luxury. And so I think that there’s a bit of oversupply of product in that super-luxury market. Thereʼs strong fundamental support in the New York market, but I think weʼre overbuilt in super-luxury.ˮ

Jonathan Miller,
President & CEO,
Miller Samuel, Inc.

“New development entering the market will likely match the volume we saw in 2015, so expect a more

Jonathan Miller

polarized environment, with more developers negotiating to keep sales moving while a smaller subset will continue to sell without discounts. Existing inventory will continue to remain low as mortgage

lending conditions will largely remain unchanged (tight).

“I would expect the continued sales expansion of the suburbs as the emerging alternative to those challenged by the city’s shrinking affordability. Look for continued growth in Queens and a lot more rental development in the Bronx.ˮ

Sherry Tobak, Senior Vice President,
Related Companies

“Due to the continued strength of the US economy, there will certainly be more and more foreign investors seeking a safe haven for their money.

Sherry Tobak

“We are seeing a more diverse, cross generational and sophisticated population of buyers than we have in recent years, but these buyers now have more options than ever before.

“Whereas traditionally prices are driven by a shortage of supply, the tremendous influx of super luxury developments in New York is pushing prices to new levels causing some concern for 2016.
“However, I agree with the optimistic economists and predict a robust and very energetic market in 2016.”

Aleksandra Scepanovic, Founder & Managing Director, Ideal Properties Group

Aleksandra Scepanovic Headshot

“In the residential market, I think the market is picking up steam. What I think is going to happen is that prices will definitely continue to increase. and we’re going to see the pace that we have seen over the last few years, especially the last two years. So we’re probably talking about a smaller rate, but still, we’re going to be seeing an increase in price.

“The only thing that I would exclude from this is the high-end [and] single-family townhouse market, because that market is so specific and there is such a shortage of supply. If it’s a really nice renovated townhouse that happens to be a single-family townhouse hits the market, it’s going to command a real high price. I’m thinking that’s where we’re going to be seeing a lot of aggressive brokers.

“I expect Brooklyn to continue to become steep. Again, not as steep as the last few years we have seen. But we would still be seeing high prices, lots of transactions.

“Williamsburg and Park Slope will continue to have a very high number of transactions happen compared to the other markets around them.

“In terms of the residential development, there is this really strong push, with people having already bought their homes in Brooklyn, for that to be complemented by commercial development. So I think we’re going to be seeing an increased demand for a lot of new offices, a lot of commercial spaces.ˮ

Robert Nelson, President, Nelson Management Group

“I think that it’s going to be a little bit more tepid than it has been over the last 12 months.

Robert Nelson

“We’re already starting to see signs of that. These multi-million dollar apartment sales seem to not be faring so well, and rent seems to be slowing in terms of growth.

“If you look at some of the reports that have come out recently, rents are not moving as much as they were over the last 12 months. It seems that things are slowing down.

“ And interest rates that are going to go up, as far as that is concerned, certainly seems to suggest that we’re going to have a more tepid market.ˮ

Larry Link, President, Level Group

“2016 is sure to be an exciting year for the residential real estate market.  Of course rising interest rates are on the top of everyone’s mind right now and this will play a major factor in the upcoming year.  Interest rates have been either flat or dropping for most of the last decade, so I expect an environment of increasing interest rates will begin to change the dynamics of residential transactions by limiting slightly what buyers can afford.  This will lead to a psychological impact on the market as sellers begin to feel less confident about the relatively high asking prices which have been the norm for the last several years.  The impact of this psychological shift will be most prominent for luxury properties where pricing has seemed to know no bounds.Larry Link

Another trend in 2016 will be the continued rise of the “Wellness Building”. Traditional amenities like doormen, gyms, elevators and outdoor space will continue to be in demand, but buyers will also be expecting systems that contribute to their wellness in unique ways.  These systems may include water and air purification systems, more robust soundproofing of walls and windows, and lighting systems within apartments that consider the impact of circadian rhythms.  Advances in technology and materials also offer the promise of safer living environments.  For example, expect certain buyer to demand their entire apartment to be constructed of materials with zero VOC’s with no off-gassing, which is possible now, or at least much closer to reality than it was previously.
Technology will continue to have an impact on residential real estate and brokerage companies in particular will have to keep up.  Firms that continue to do things in the same way, offering the same model for marketing property to both their agents and their customers will fall by the wayside. Since so much property information is available directly to customers now, the search for a new home has become a “tag-team” effort; agents and buyers searching together for the right property and sharing information across multiple platforms and communication methods.  This trend will continue and agents will naturally migrate to more forward thinking companies that offer more flexible ways of working and higher payouts for those efforts. “

Source: http://rew-online.com/2016/01/01/2016-forecast-insiders-predict-boom-and-bust-in-varying-degrees/

Despite warning signs, city’s economy will keep humming

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This column should be forecasting a slowdown in the city economy, in line with most of the experts who track New York.

After all, the now seven-year economic expansion would normally be coming to an end—it is unprecedented in duration and strength, as the Independent Budget Office said in late December. Wall Street firms from Morgan Stanley to Citigroup announced year-end layoffs. And signs of trouble are emerging in the real estate markets: Apartment rents have weakened in recent months, and residential developer Toll Brothers is lowering prices and reconfiguring one of its ultraluxury towers, a sign that this small but high-profile sector is headed for problems. Retail rents have softened as well.

Even tourism faces trouble, with a strong dollar making New York more expensive by anywhere from 20% (for Europeans) to more than 50% (for Brazilians).

But I’m going to go against the conventional wisdom and predict another year of record or near-record growth. Here’s why.

Wall Street is highly resilient. As of November, the financial sector had added a surprising 8,000 jobs in the previous 12 months. Although the cutbacks at the big-name firms get all the attention, expansion is the order of the day at hedge funds, ­private-equity shops and M&A boutiques. Pay is rising again, too. A comprehensive October report from the state comptroller showed that average annual Wall Street compensation topped $400,000 in 2014 for only the second time ever.

It’s a new world because of technology. To understand that the city’s economy has fundamentally changed, look at the very strong job gains in advertising, which is booming because it is at the center of the tech revolution in marketing. That is only one example of the multiplier effect from the robust activity in Silicon Valley.

Construction is still gaining momentum. “Duh,” will say anyone who has walked the city’s streets. Whether it is the mixed-use buildings going up at Hudson Yards or the 50,000 apartments permitted last year (to beat the potential expiration of the 421-a tax break) or the work from the newly financed Metropolitan Transportation Authority capital plan, this crucial sector isguaranteed to grow for the next two or three years.

Tourism may be immune to the dollar’s rise. Despite the decline in foreign currencies, the city set a record for visitors last year. International tourists keep coming because so many hotel rooms have been added that the industry cuts rates to fill them, and that makes the city affordable. Domestic visitors benefit from those discounts as well. Airbnb may just make this state of affairs permanent. This isn’t good for hotel owners but is great for tourists and the city as a whole.

We’ve seen this story before. Cautious economists have spent the past several Decembers suggesting a slowdown was inevitable. At some point they will be right. But not in 2016.

Source: http://www.crainsnewyork.com/article/20160103/BLOGS01/151239991/despite-warning-signs-city-s-economy-will-keep-humming

NYC solar project provides renewable energy bridge from Queens to Manhattan

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EnterSolar, a leading New York City-based provider of solar solutions to commercial enterprises, recently announced the launch of a landmark project in the New York City solar landscape.

The Bloomberg–JFK Airport Park Solar Project, a state-of-the-art large-scale solar photovoltaic (PV) project, will enable Bloomberg L.P.’s global headquarters in midtown Manhattan and its downtown data center to partially convert to clean solar energy.

“This marquee solar initiative is a tangible demonstration of the power of partnership,” Peyton Boswell, managing director for EnterSolar, said in a press release.

In addition to being the largest remote net metered project in New York City, the project is the first to use remote net metering to power a midtown Manhattan skyscraper with a remotely-sited solar PV system.

While New York has been a pioneer in its support of using renewable energy, the JFK Airport Park project is a particularly innovative for New York due to its use of remote net metering (RNM), which allows sites with poor solar characteristics but significant onsite load to benefit from solar systems installed on an alternative site with excellent solar characteristics.

The project is comprised of a 1,500 kilowatt solar installation across three adjacent logistics facilities at the JFK Airport Park in Springfield Gardens, Queens. The multi-building system, with more than 5,500 solar panels, is the largest rooftop solar array in Queens and is among the largest rooftop solar projects in New York state. The power generated will be converted to energy credits and applied to Bloomberg’s offices in New York City.

On an annual basis, the project will generate 1.8 million kilowatt hours, enough clean renewable electricity to power more than 244 typical homes. The solar PV systems will provide significant environmental benefits to both Bloomberg and the NYC community, including the avoidance of almost 1.1 million pounds of carbon dioxide per year.

Source: http://www.proudgreenbuilding.com/news/nyc-solar-project-provides-renewable-energy-bridge-from-queens-to-manhattan/