NYC Freezes Rents | BofA and Citigroup to Fund Affordable Housing

Photo credit: Hiroko Masuike/The New York Times

1. New York City Board Votes to Freeze Regulated Rents on One-Year Leases “The board that regulates rents for more than one million rent-stabilized apartments in New York City voted on Monday night for a freeze on one-year leases, an unprecedented move in its 46-year history. The 7-to-2 vote by the city’s Rent Guidelines Board was an acknowledgment of the precarious situation of many tenants whose incomes have not kept pace with housing costs. It also was the first decision on rent levels by a nine-member board appointed in its entirety by Mayor Bill de Blasio. The board, one of the few tools the mayor has to directly influence the cost of housing in the city, also voted to increase rents on two-year leases by 2 percent, a historic low.” [New York Times – 06/29/15]
2. BofA, Citigroup to Fund Affordable Housing in N.Y. Settlements “New York City’s affordable housing stock will get a boost from Bank of America Corp. and Citigroup Inc. as part of settlements resolving mortgage-bond practices that led to the 2008 financial crisis. New York Attorney General Eric Schneiderman will announce a deal Wednesday under which the banks will provide $75 million to build or rehabilitate 2,200 rental units in the city and 1,500 elsewhere in the state. The money, which would be used to fund low-interest loans, will count as ‘consumer relief’ that the banks pledged to provide under multibillion-dollar national settlements last year.” [Bloomberg Business – 06/30/15]
3. Average Home Price in Manhattan Reaches $1.87 Million, a New High “After flirting with records for more than a year, the average sales price of a Manhattan apartment hit a new high in the second quarter, according to at least two reports to be released on Wednesday by major real estate brokerage firms. A strong local economy, combined with high demand and not enough listings, pushed the average sales price up 11 percent, to $1.87 million, compared with the same period in 2014, surpassing the previous peak of $1.77 million reached in the first quarter of last year, according to Jonathan J. Miller, the president of the appraisal firm Miller Samuel and the author of a report for Douglas Elliman Real Estate.” [New York Times – 07/01/15]
4. Doomed Bronx School Will Become Affordable Housing Instead “For about two years now, debate has raged over the future of P.S. 31, a landmarked former elementary school on the Bronx’s Grand Concourse that has been abandoned since 1997. (And, yes, it’s super eerie inside.) Many of the city’s abandoned landmarks wait in limbo for their next life, but for P.S. 31 the waiting game seemed to be over—and the wrecking ball was going to win. And it did, in a way. P.S. 31 was demolished this year due to safety concerns, but its 30,000-square-foot site will take on a new purpose with some vestiges of the old. New York YIMBY reports that the city’s Housing, Preservation & Development (HPD) department just issued a request for proposals, asking developers to submit plans to turn it into affordable housing.” [Curbed NY – 06/30/15]
5. New York Bans ‘Poor Doors’ in Win for Low Income Tenants “New York City is banning ‘poor doors’ in a move one city official on Monday called a ‘big win for dignity’. Thanks to a little talked about provision in New York’s rent-stabilization law, builders who receive a tax break for offering some units to low-income tenants will no longer be allowed to build separate entrances for the rich and the poor. The controversial two-door rule came to an end after New York City mayor Bill de Blasio inserted a provision into a tax bill that was approved by the New York state senate late last week.” [The Guardian – 06/29/15]
6. Developers Score $725 Million Loan to Build Another Super-Tall Tower on Billionaires’ Row “A new super-tall tower will rise along midtown’s so-called Billionaires’ Row now that the project’s developers have secured a $725 million construction loan for the $1 billion spire. A partnership between JDS Development and Property Markets Group has received financing from AIG and Apollo Global Management to build 111 W. 57th St., a 1,438-foot-tall tower that will be the tallest residential building in the Western Hemisphere when it is completed in 2018.” [Crain’s New York Business – 06/30/15]
7. Mayor de Blasio Disappointed Albany Lawmakers Passed on ‘Mansion Tax’ “Mayor de Blasio got most of what he wanted from an Albany overhaul of a controversial tax break for housing developers, but is disappointed lawmakers wouldn’t slap a ‘mansion tax’ on pricey pads, he said Sunday. ‘421-a is substantially as we originally proposed it - minus the mansion tax, which I think would have made it better,’ de Blasio told reporters Sunday, in his first comments since the state legislature passed the ‘big ugly’ end of session bill late Thursday, including several programs key to the mayor’s affordable housing agenda.” [NY Daily News – 06/28/15]
8. 421-a Deal Brings More Anxiety for Real Estate Developers “For months, real estate developers across New York City have been on edge, growing more anxious as the weeks ticked past. The source of their unease? Renewal of the 421-a tax incentives—a program that provides the underpinning for virtually all rental housing production in the five boroughs—was caught in Albany gridlock. That dynamic might have ended last week with a last-minute accord between lawmakers, an all-smiles press conference and, on Friday, a signature from Governor Andrew Cuomo. But developers are still worried—some, perhaps, moreso now. The 421-a law Cuomo enacted gives rental developers a lot to like, including considerably longer periods without taxes. But it comes with a giant caveat: If representatives for real estate developers and construction unions do not come to an agreement on wages by the end of the year, the program will end altogether.” [Capital New York – 06/30/15]
9. Homes Are Selling Like It’s 2006, NAR Says “For the fifth consecutive month, the number of houses under contract are up—and it’s the most activity we’ve seen since the height of the housing boom, the National Association of Realtors reported. NAR’s Pending Home Sales Index for May, an indicator based on contract signings for existing single-family homes, condos, and co-ops, increased 0.9% over April to 112.6. That’s 10% higher than last year, and the highest level of activity since April 2006, when the index was 113.7. ‘That is an enormous increase in activity year over year,’ says Jonathan Smoke, our chief economist, adding that May’s index ‘puts an exclamation point on all home sales data points for the month.’” [realtor.com – 06/29/15]
10. JPMorgan Builds up Apartment-Loan Leader from WaMu Rubble “In September 2008, JPMorgan Chase & Co executives sifted through the rubble of Washington Mutual, the failed home loan bank that they had just won in a U.S. government auction. They found something unexpectedly good: about $30 billion of mortgages on apartment buildings, which earned strong returns whether the economy was performing well or not. ‘It was an unexpected bonus,’ JPMorgan Chief Executive Jamie Dimon told Reuters in an interview, adding that the apartment lending business is the single most valuable asset that JPMorgan acquired in the auction. Washington Mutual’s apartment lending business was the biggest of its kind in the United States and Dimon has made it even bigger. JPMorgan now holds some 20 percent of the U.S. bank loans on apartment buildings.” [Reuters – 07/01/15]