Andrew Cuomo’s housing plan, the Rent Guidelines Board & composting

This is your New York Apartment Association weekly update with CEO Kenny Burgos.

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On The Agenda

1:05: NYU Furman Center testimony: stabilized buildings in distress

2:47: What’s next for the Rent Guidelines Board

3:56: Update: Composting fines 

→ A group of NYC councilmembers push to end composting mandate 

4:44: The mayor’s race: Andrew Cuomo’s housing plan is light on details

5:36: Political notebook

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Transcript

This week on Housing New York. The Bronx could burn. We aren't the only ones saying it. We tell you about the new data suggesting that 200,000 stabilized apartments are in deep trouble. Plus, Andrew Cuomo has a plan for 500,000 new homes. We break it down. And we have an update on the current state of politics. 

Let's start housing in New York. 

[THEME]
“We need 800,000 units to meet the demand today. What we have right now in the United States and what we have right now in New York City is almost a crisis of absurdity.”

[INTRO]

Hello listeners. Welcome to Housing New York. It's a busy time. We still don't have a state budget. The Rent Guidelines Board has begun meeting. The Mayor's race is heating up. 

I'm your host, Kenny Burgos, and we're taping this on Monday, April 14th. 

We’ve got a lot to get to, so we're gonna dive right into the news.

[01:05] [NYU Furman Center RGB testimony]

The top story this week is the Rent Guidelines Board. We heard very interesting testimony at last week's meeting from the NYU Furman Center. 

The crux of their report was to detail the clear trend that they're seeing with 100% stabilized buildings – or close to 100% stabilized. The data they pull suggest that these buildings saw net operating income steadily decline from 2018 to 2023.

Their main argument was that this was not sustainable and that this housing stock, which makes up about half of all rent-stabilized apartments, is at severe risk. 

Here's Mark Willis from the Furman Center. 

[Mark Willis]

“So we estimate about 200,000 privately owned rent units are already in significant stress and likely to be much more so the scale is immense. Preserving this stock is the reason I'm here. For better or worse, a new unit costs $500- to $700,000 units – I’m sorry, dollars.”

[Kenny]

The data presented by Willis in the Furman Center also found that in places where net operating loss was smaller, the only reason was because investment in maintenance had picked up.

[Mark Willis]

“We as policy makers are facing a very important set of choices here. And the city – unless we vastly increase the amount of budget for subsidized housing – almost all of us are gonna have to be rescuing these buildings. So we won't be building any new ones in the future either. That would be the risk.”

[Kenny]

Their assessment that at least 200,000 apartments are in severe risk tracks with what we are also seeing. And we agree with Willis, that this is not a problem for just the RGB. Elected officials need to make policy adjustments to help these buildings survive. 

[02:47] [What’s next for the Rent Guidelines Board]

So what's next for the RGB? 

Later this week, they're going to release the price index of operating costs – or PIOC. 

In it, they have what is called a ‘commensurate adjustment.’ Basically, the amount rents have to be moved in order for 100% stabilized buildings to be properly funded. A better way to put it would be to say that this is the rent adjustment needed to make sure things don't get even worse for the 200,000 apartments already in severe distress. 

We don't know what that number will be, but we anticipate it being slightly higher than inflation – so around 4% for a one-year lease.

Traditionally, the press jumps on this number and says the RGB is suggesting a rent increase, but the reality is this is just math. It's a data collection of costs and rent adjustments needed to keep up with these costs. 

Politicians will do their performative press conferences about how it's too high, and the final number must be lower. But every time the RGB comes in lower than the commensurate, they're dooming the buildings to distress and disrepair. 

We hope the reporters pick up on this as we continue to see bankruptcy and short sales of buildings throughout the city. 

[03:56] [Compost update]

We have an update on composting to tell you about. 

Early last week, the Department of Sanitation reported that nearly 2,000 fines were handed out.

They also said that the amount of compost they collected had roughly tripled from the same time last year. The city is touting this as a success, but we still have an issue with one part of this process – where building owners are fine because their tenants failed to compost. 

We aren't alone. Several members of the City Council have put forth a bill that would end the fine structure for failing to compost.

It's unlikely to pass. So we are gonna continue to pressure the Department of Sanitation to be lenient with fines and be better about providing materials to inform tenants of composting – instead of their current campaign, which encourages tenants to call 311 if an owner fails to compost.

[04:44] [The mayor’s race]

On to politics now. The leading candidate for New York City Mayor is now pledging to build 500,000 new homes in the next 10 years. 

Former Gov. Andrew Cuomo rolled out his plan over the weekend. As the Daily News said, it is light on the details. It doesn't include any new gimmicks or schemes, just the double-down on his experience as the former head of the Department of Housing and Urban Development.

In the plan, he pledges that half of the new units would be affordable, but it doesn't define ‘affordable.’ His team says they're hopeful that closer to two-thirds of the units would be affordable. 

To his credit, they aren't promising something that is pure fantasy. Like many other candidates in the field, his team realizes that housing has costs and it's very hard to predict these costs in this chaotic environment.

One thing that was very concerning from the governor was that his team said this plan, quote, “Meets the scale of the crisis.” On this point, we wholeheartedly disagree. Half a million new homes in the next 10 years is the equivalent of treading water. 

[05:36] [Political notebook]

We want to end a podcast with some thoughts about the current political scene.

The race for mayor has become more complicated and it's dominating the whole political landscape right now. 

Here's what we mean: Former Gov. Andrew Cuomo continues to rack up endorsements and remains the favorite in the polls. 

Two of his current challengers are involved in crafting the New York City budget. The current mayor, Eric Adams, who is running as an independent now, and City Council Speaker Adrian Adams, who is challenging Cuomo in the Democratic primary. What we have already seen is Speaker Adams punishing some of her colleagues for endorsing Cuomo, stripping two members of their leadership roles in the budget negotiations.

This was the most visible impact of the mayor's race on the current political power structure, but you can be assured that any union trade group or elected official is balancing an endorsement of Cuomo against the short-term backlash they might face. 

The city has a lot of problems that need to be addressed right now, so we worry that these political fights will become distractions.

[OUTRO]

That's gonna do it for the podcast. When we reconvene next week, we hope we'll have a budget bill and we hope that more politicians have been alerted to the massive distress in rent-stabilized buildings and have started to formulate a plan for saving them. But that's a lot to hope for. 

You can follow us on social media @housingny, and on Blue Sky, we are just @housing.

The Housing New York podcast is a proud product of the New York Apartment Association. We appreciate your feedback and you can leave us a comment on Substack, or wherever you listen to this podcast. 

You've been listening to Housing New York with Kenny Burgos, and I'll see you all next week. 

And remember, good housing policy starts with good conversation.