rent regulation reform discussion · 2019. 4. 25. · source: rgb, 2018 income and expense study,...
TRANSCRIPT
RENT REGULATION REFORM DISCUSSION
APRIL 2019
CITY’S RENT STABILIZED UNITS ARE OLDER AND PRIMARILY LOCATED OUTSIDE MANHATTAN
BREAKDOWN OF CITY’S RENT STABILIZED UNITS
Year Built/Building Size
Pre -1947 1947-1974 1974-
Borough TOTAL< 11
Units11-19 Units
20-99 Units
100+ Units
TOTAL< 11
Units11-19 Units
20-99 Units
100+ Units
TOTAL< 11
Units11-19 Units
20-99 Units
100+ Units
Bronx162,488 8,597 9,421 130,989 13,481 22,115 361 175 12,000 9,579 60,376 4,015 434 11,067 7,104
Brooklyn173,902 46,735 16,753 101,105 9,309 35,948 445 233 15,007 20,263 45,842 7,312 1,141 9,537 10,250
Manhattan176,433 25,248 22,844 101,610 26,731 25,917 922 156 4,780 20,059 91,700 1,498 763 7,138 38,967
Queens73,107 17,371 6,762 39,823 9,151 62,551 1,409 659 20,329 40,154 24,386 6,814 1,046 3,877 4,648
Staten Island1,660 327 247 447 639 4,467 111 141 1,708 2,507 2,104 62 67 561 423
TOTAL587,590 98,278 56,027 373,974 59,311 150,998 3,248 1,364 53,824 92,562 224,408 19,701 3,451 32,180 61,392
Prototype 1: Pre-1947 building in the Bronx with 20-99 units. (Represents 64% of stabilized units in the Bronx, and 15% of stabilized units overall).
Prototype 2: Pre-1947 building in Brooklyn with less than 11 units. (Represents roughly 42% of all of the small-building units in the City and roughly 20% of units in Brooklyn).
Prototype 3: 1947-1974 building in Queens with more than 100 units. (Represents 27% of all units in Queens, and a similar portion of all units built citywide from 1947-1974).
71% OF RENT STABILIZED UNITS ARE BUILT PRIOR TO 1947
THE REAL ESTATE BOARD OF NEW YORK 2019 | 2
PROFORMAS REPRESENT DIVERSITY IN BUILDING AGE, SIZE, AND GEOGRAPHY
• Built: Pre-1947
• Borough: Brooklyn
• Units: 11 or Less
• Built: 1947-1974
• Borough: Queens
• Units: Over 150
Prototype 1
Prototype 2
Prototype 3
Sources: Brooklyn: https://streeteasy.com/property/8325651-1190-dean-street-3. Bronx: https://www.flickr.com/photos/98503046@N08/20274386385. Queens: https://streeteasy.com/property/9042045-69_10-108-street-4k.
• Built: Pre-1947
• Borough: Bronx
• Units: 20-99
This prototype represents 64% of
stabilized units in the Bronx and
15% of overall stabilized units.
This prototype represents 42% of
all the small-building units in the City
and 20% of units in Brooklyn.
This prototype represents 27% of all
units in Queens and a similar portion
of all units built citywide from 1947-1974.
THE REAL ESTATE BOARD OF NEW YORK 2019 | 3
Source: RGB, 2018 Income and Expense Study, 2016 RPIE filings
QUEENS, 1947 - 1974, 150 UNITS OR MORE
1. Repayment of mortgage or finance costs,
2. Reinvestment in the property; and,
3. Profit.
NOI is devoted to three broad uses:
Queens Building NOI per Unit per Month
NET OPERATING INCOME (NOI) IS THE REMAINING REVENUE AFTER BASELINE RGB-CONSIDERED
EXPENSES ARE PAID
THE REAL ESTATE BOARD OF NEW YORK 2019 | 4
ASSUMING LOAN PAYMENTS ON A $50K /UNIT MORTGAGE, THE REMAINING NET INCOME OF $17
DOLLARS PER UNIT/MONTH CAN BE DEVOTED TO REINVESTMENT AND PROFIT
QUEENS, 1947 - 1974, 150 UNITS OR MORE
Queens Building NOI per Unit per Month
$ 17 NOI
$279Mortgage
Payment/Unit $50K Loan
$ 17 NOI
$ 17 per unit/month for reinvestment in the
property and profit
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Source: DHCR Fact Sheets #33, Useful Life Schedule of Major Capital Improvements
10 15 20 30 35
10 YearsRoofs: 2-Ply (asphalt) Single-ply Modified Bitumen Waste Compactors Air Conditioners: Individual Units/SleevesCourtyards/Walkways/Driveways: AsphaltHot Water Heater (Domestic)Television Security
15 YearsWindows – Vinyl Roofs: 3-4 Ply (asphalt)Pointing Intercom System Plumbing/Repiping: Brass cold waterLobby Doors RefrigeratorsAir Conditioners: Central System, Branch Circuitry FixturesCourtyards/Walkways/Driveways: CementVinyl Siding
20 YearsBoilers and Burners: Burners Aluminum WindowsStorm Windows Roof Shingles Quarry Tiles Toilets & ValvesBathroom and Sinks Vanity Metal/Wood Kitchen Cabinets
25 YearsPackage BoilerSteel Boiler Windows (Wood, Steel)Rewiring Mailboxes Plumbing/Repiping (Steel, Fixtures)Elevator (Major Upgrade, Controllers & Selectors)Apartment Entrance Doors
30 YearsTP Copper
35 YearsCast Iron Boiler
Kitchen Ranges Kitchen Sinks Water Tanks (Wood) Fuel Oil Tanks (Underground)Hot Water/Central Heating
Metal Water Tanks Aluminum Siding Catwalk Chimney (Steel, Brick) Fire Escapes Fuel Oil Tanks in Vaults Brick Parapets Resurfacing Exterior Walls Solar Heating System Structural Steel
25
ROOFS, BOILERS, WINDOWS, AND ELECTRICAL SYSTEMS NEED TO BE REPLACED ON A REGULAR
BASIS TO MAINTAIN HOUSING QUALITY
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23,336
25,561
19,006
11,458
13,806
11,701
5,858
9,679
4,411
1993 1996 1999 2002 2005 2008 2011 2014 2017
Number of Dilapidated Units: 1993-2017
AS A RESULT OF BUILDING INVESTMENT, ONLY 0.2% OF NYC PRIVATE SECTOR HOUSING STOCK IS
DILAPIDATED – A HISTORIC LOW
Source: 2017 Housing and Vacancy SurveyTHE REAL ESTATE BOARD OF NEW YORK 2019 | 7
RGB RENT INCREASES OVER 20 YEARS DON’T MEET ½ OF EXPENSE INCREASES
Source: RGB, Income and Expense Study
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Co
mp
ou
nd
ed In
tere
st O
ver
Tim
e
Year
Expenses Revenues
RGB Increases2.68%
Expenses 5.49%
RGB ALSO DOESN’T ACCOUNT FOR CAPITAL IMPROVEMENTS/DEBT IN ITS CALCULATIONS
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CHANGES TO EXISTING POLICIES CONSIDERED IN THIS ANALYSIS
• Elimination of the Decontrol Threshold
• Elimination of the Vacancy Bonus (Allowance)
• Elimination of Major Capital Improvements (MCI)
• Elimination of Individual Apartment Improvements (IAI)
• Make Preferential Rent the Legal Rent
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ECONOMIC ANALYSIS OF PROFORMA 1
BRONX, PRE- 1947, 20-99 UNITS
Bronx Building NOI per Unit per Year
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ECONOMIC ANALYSIS OF PROFORMA 2
Brooklyn Building NOI per Unit per Year
BROOKLYN, PRE- 1947, 11 UNITS OR LESS
THE REAL ESTATE BOARD OF NEW YORK 2019 | 11
ECONOMIC ANALYSIS OF PROFORMA 3
Queens Building NOI per Unit per Year
QUEENS, 1947 - 1974, 150 UNITS OR MORE
THE REAL ESTATE BOARD OF NEW YORK 2019 | 12
DECREASES IN NOI RESULT IN FISCAL IMPACT TO PROPERTY TAXES
• For every 1% drop in NOI, rent regulated buildings will generate $67.3 million less in property taxes.
• Potential NOI reduction between 20-30% for pre-1947 buildings and between 10-20% for post-1947
buildings by year 5.
• As a result, the property tax revenue generated by the City’s rent regulated stock could fall $1.3 - $2
billion on an annual basis.
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Source: Citizens Budget Commission, “Facts about NYC Employee Compensation” (2017) for average per capita salaries, overtime and other pay information for City workers, for the Fiscal Year 2016.
NEW YORK CITY EMPLOYEE COMPENSATION EQUIVALENTS
FISCAL IMPACTS COULD REDUCE CITY SERVICES
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PROPOSED CHANGES DO NOT INCREASE AFFORDABILITY OR SUPPLY
• Restricting rent increases will not change the limited supply of housing available for low and very low-
income households (e.g., 0% vacancy rate for units renting for less than $500).
• Eliminating multiple funding streams used to maintain buildings will put over 414,000 units at risk
within 5 years for heating outages, vermin infestations, mold and other housing quality issues.
• While portions of the City’s housing market are characterized by very low vacancy rates serving
households who pay too much income toward rent, the citywide vacancy rate for units renting for
more than $2,775 per month is 7.4%. Higher income, six figure households in NYC have choices.
• Other reforms and tools are needed to address rent burden at lower rents and to increase the supply
of housing overall.
Source: 2017 Housing and Vacancy Survey.THE REAL ESTATE BOARD OF NEW YORK 2019 | 15