A noteworthy legislative amendment was the exclusion of “squatters” from the definition of “tenant” under the current tenancy laws.
It is important to note that while the new Good Cause Eviction Law went into effect in New York City immediately, other municipalities throughout New York State will need to opt-in by enacting this legislation if they so choose.
The panelists blamed a host of problems on the passage of the Housing Stability and Tenant Protection Act (HSTPA) by New York State in 2019.
WHITE PLAINS—The Hudson Gateway Association of Realtors Commercial Investment Division recently held a vibrant and well-attended roundtable discussion on multifamily ownership best practices that offered a frank and sometimes brutal assessment of how rising costs and compliance to New York City and New York State’s rent regulations are impacting landlord’s bottom lines.
The panel, moderated by Jac Zadrima, CEO & Founder of Genesis Realty Group, LLC, featured: Matt Engel, President, Langsam Property Services; Danielle Noak, Vice President, Sandra Erickson Real Estate; Brian McCarthy, Executive Vice President, Samson Management, LLC and Alana Ciuffetelli, Broker/Owner, 3C Realty Inc. and Chair of the Apartment Owners Advisory Committee of the Building and Realty Institute.
Engel, whose firm manages approximately 10,000 apartment units in the city, noted that in the past while multifamily insurance costs rose every year, the increases were somewhat manageable. However, that has changed of late for the worse, he noted.
“Over the last few years, we have seen a dramatic increase in insurance costs in the affordable housing/rent-regulated housing industry,” Engel said. “Some of this comes from a significant loss history, both from liability, as well as from property damage claims. But, the result has been that most carriers have removed themselves from a willingness to write (policies) in the Bronx, Upper Manhattan and other areas with rent-regulated affordable housing.”
He added that some carriers even ask if the property accepts Section 8 vouchers. Engel said that his firm and others have argued that this practice is illegal in New York State since it is a protected class.
He said the result has been “a redline, which has removed these neighborhoods from areas that carriers will write in, drastically reducing the number of carriers and spiking the rates.”
Engel said his firm has recently seen a 45% increase in insurance costs in an industry that has a flat revenue line and a soaring expense line. He said the insurance increases of late are simply “not sustainable.”
The panel also discussed other issues that impact insurance costs, including climate change and flooding. McCarthy related that his firm has experienced annual insurance premium increases of more than 30% each year.
“Carriers are trying to limit coverage any way they can,” he said. “I think as business owners we have to be prudent and be more proactive in how we are dealing with them,” McCarthy said his firm has hired an insurance consultant to help navigate how to deal with its insurance expenses.
Another significant issue for the multifamily industry is managing a property’s expenses and repairs on tight budgets. Zadrima began the discussion by noting that while rent control has been in effect for some time in New York City, recently Hudson Valley cities such as Kingston, Poughkeepsie and Newburgh have either passed some form of rent control or are in the process of doing so. He added that rent control and other measures such as “Good Cause Eviction” are coming and will be felt in communities throughout Westchester and New York State.
The panelists blamed a host of problems on the passage of the Housing Stability and Tenant Protection Act (HSTPA) by New York State in 2019, which strengthened regulations on rent-controlled apartments, limited rent increases on vacant units, and capped incentives for capital improvements that helped property owners fund the replacement of boilers, roofs, etc.
Engel said that after the passage of HSTPA, most of the incentives “were eradicated in a way that the financial incentive for investing in your housing did not make sense anymore.”
Because of these tighter regulations and limits on capital improvement funding eligibilities, Engel estimated there are probably about 40,000 rent-regulated apartments over the past three years where the owner “has locked the door,” after a unit had become vacant.
He continued, that the “disincentivizing of investment” has created a major issue, not simply just lower rent rolls, but prompting many property owners to do limited or no capital improvements to their properties.
“If the market was healthier, people would be selling their buildings left and right,” he concluded.
The program concluded with presentations by CID Vic Chair MacKenzie Forsberg and legislative updates by HGAR Eliezer Rodriguez, Esq. HGAR Regional Director of Government Affairs, and Tim Foley, CEO and Executive Vice President of the Building and Realty Institute, who discussed a host of housing-related issues currently before lawmakers in Albany this legislative session, including HGAR’s and BRI’s opposition to Good Cause Eviction legislation.
HGAR will be participating in NYSAR’s Annual Lobby Day in Albany on March 27 to inform state lawmakers of the association’s legislative priorities. For more information on Lobby Day go to: https://www.hgar.com/event/nysar-lobby-day-in-albany-20240327
The sponsors of the CID program were: NYSCAR Hudson Valley, Slattery Energy Consulting Group and Start Elevator.
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