Thursday, June 30, 2016

Forest City's rep on Rent Guidelines Board suggests tactics to help struggling tenants while not burdening landlords

When in March 2015 Forest City Ratner executive Scott Walsh was appointed by Mayor Bill de Blasio an owner representative to the Rent Guidelines Board (RGB), I noted that, given that the affordable housing in Atlantic Yards/Pacific Park will be subject to rent-stabilization increases, Greenland Forest City Partners surely has an interest in steady increases in annual rents.

I also noted that de Blasio might believe that an industry representative with close ties might be more amenable to negotiation and, at least, cordial talk.

Well, Walsh has been cordial, on the losing side opposing the rent freeze de Blasio achieved, and he has proposed other tactics--such as new city/state subsidies--that might assist struggling New Yorkers while not burdening landlords.

Such proposals surely will recur in future negotiations; after all, they could make a difference to the bottom line of the Pacific Park joint venture.

As I've noted, Atlantic Yards/Pacific Park units are billed as “rent-stabilized,” since all the units participating in the program see their annual rent increases determined by the RGB. But that does not mean “low-income.”

Indeed, some two-bedroom units, with rents over $3,000 (16 at the B2 tower, many more at the next two towers), have rents that well exceed the $2,700 threshold that more typically leads to units exiting rent-stabilization. Because of tax-exempt funding, Atlantic Yards/Pacific Park affordable rentals participate in rent stabilization.

Leading up to the vote

Covering the hearings that preceded this week's meeting of the Rent Guidelines Board, City Limits on 4/22/16 published Can NYC’s Landlords Afford Another Rent Freeze? Along with testimony from landlords, the article reported on Walsh's statement that, despite the lowered cost of oil, landlords' costs did go up.

"The program was designed to smooth out a very supply-constrained market. The program's initial mandate was not to provide affordable housing," stated Walsh. "The city has other mechanisms to do that through NYCHA and other programs."

A 5/4/16 Wall Street Journal article headlined New York City Rent Board Riles Landlords quoted Walsh:
A series of low rent increases or freezes also could undermine current models for underwriting affordable housing developments in New York, said J. Scott Walsh, an owner member of the Rent Guidelines Board. He said without rent increases to offset rising expenses, projects would need to funded with more cash and less debt, or cut services to pay debt service.
Trying to resist the freeze

Then the 6/28/16 New York Times article on the rent freeze for one-year leases noted:
J. Scott Walsh, a vice president with Forest City Ratner Companies who represents landlords on the board, proposed increases of 3 percent to 5 percent, along with the other owner representative, Mary Serafy.
In a written statement accompanying that proposal, Mr. Walsh praised the mayor for his efforts to address the need for affordable housing but suggested steps other than rent freezes to deal with the concerns that both tenants and landlords presented to the board in testimony...“This is just trying to look at this problem holistically from both points of view,” Mr. Walsh said in an interview.
Indeed, according to Walsh's proposal, as posted on the RGB's website, he not only cordially thanked de Blasio "for his ambitious housing plan to help address the city’s housing crisis," he suggested the following solutions:
  • $150 monthly rent credit for rent burdened tenants to be paid through direct city/state subsidy
  • $300 monthly rent credit for severely rent burdened tenants to be paid through direct city/state subsidy
  • Retroactive property tax assessment and tax rate freeze for all rent stabilized buildings to tax year 2014
  • Retroactive water rate freeze on all rent stabilized buildings to October 1, 2014
  • Expansion of the One Shot Deal Program to include funding to pay for tenant moving costs, right sizing of the units and assistance in locating quality affordable housing
  • Immediate expansion of the SCRIE/DRIE programs to an income limit of $72,500 for household of 2, $63,500 for household of 1. 100% of Area Median Income 
  • Immediate outreach to all DHCR registered apartments annually with information on eligibility and how to apply to SCRIE/DRIE programs
  • Immediate reinstatement of an enhanced 421A program to ensure housing construction levels to meet the needs of our aging housing stock and growing population 
  • Direct city subsidy for all rent stabilized units that are not financially self-sustaining, including unsold non-eviction plan co-op and condo units 
  • Voluntary tenant means testing to accurately access the needs within the housing stock
  • Conversion of the RGB to a year round board to better access/determine housing solutions 


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