Tag Archives: housing plan

Airbnb in NYC

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Airbnb latte

New York Communities for Change/Real Affordability for All have issued a housing report, Airbnb in NYC. This is an advocacy piece that raises important questions about how Airbnb is changing the nature of housing markets in a hot destinations. The report states that

A new independent analysis of Airbnb’s website by www.InsideAirbnb.com shows that nearly 16,000 or just under 60% of Airbnb listings are entire homes or apartments for rent (in violation of state law and/or NYC zoning laws), and that they are available for rent an average of 247 days a year. To put that in perspective, those 16,000 Airbnb listings that are not available for everyday New Yorkers would be the equivalent of a loss of approximately one full year of Mayor de Blasio’s ten-year plan to build and preserve 200,000 affordable housing units, negating nearly all of the affordable apartments the administration has financed in the past year.

Despite Airbnb’s claims that the nearly 90 percent of their listings are from regular New Yorkers renting out spare rooms to make extra cash, the InsideAirbnb.com data show that nearly one-third of Airbnb listings come from hosts with multiple units, such as commercial landlords. (3)

While Airbnb has criticized the methodology of this report, it does appear to undercut Airbnb’s characterization of its hosts.

Opponents of the sharing economy will find a lot in this report that confirms their concerns. For instance, in the top 20 Airbnb zip codes in NYC, “housing units are rented on Airbnb for rates equivalent to more than 300% of the neighborhood’s average rent.” (5)

But supporters of the sharing economy will also find much to confirm their own views: “In 20 different zip codes in Manhattan, Brooklyn and Queens, entire/home/apartment Airbnb listings comprise at least 10% of total rentals.” (5) Supporters will say that the people have spoken with their pocketbooks — the sharing economy is here to stay, notwithstanding what the law says.

The sharing economy continues to shake up the old economy. The fact that so many Airbnb listings in NYC appear to violate the law means that the controversy over its appropriate role will probably come to a head sooner rather than later. The outcome of that controversy will then spill over and permeate the hottest residential neighborhoods in the hottest cities in the U.S.

Reiss on the Poor Door

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Law360 quoted me in ‘Poor Door’ A Symptom Of Tough Balancing Act In Housing (behind a paywall). It opens,

Extell Development Co.’s so-called “poor door” — a separate entrance for affordable housing tenants at a development on Riverside Drive — made headlines last week after receiving official approval, but experts say the controversy clouds the reality of balancing private and public housing interests in a city like New York.

The building and its “poor door” first caught the world’s attention last year, when the developer released renderings for the project that showed separate doors for condominium buyers and affordable rental tenants.

It wasn’t the first setup of its kind, particularly not in New York City, but with news of growing inequality around the country and especially in large urban areas, many criticized the separate door as classist and suggested that affordable housing tenants were being treated as “second-class citizens.”

The controversy erupted again last week when the Department of Housing Preservation and Development confirmed that it had approved Extell’s application for the department’s inclusionary housing program, which gives the developer access to certain incentives in exchange for adding to the city’s affordable housing inventory.

Many have argued that the trade-off may not be worth it: If developers that qualify for such programs end up relegating lower-income tenants to a separate entrance, are those tenants benefiting fully from the city’s efforts to house them?

“One reason that the ‘poor door’ issue touches a nerve is that real estate and class are so closely linked in New York City,” said David Reiss, a professor at Brooklyn Law School who focuses on real estate finance and community development. “Affordable housing units are seen as a great equalizer. The notion that someone living in an affordable housing unit must be constantly reminded of their status is repugnant to many.”

This has led to headlines around the world proclaiming Extell’s design and the city’s approval a “disgrace.” But experts say the question of what to do about such practices is not that simple.

Inclusionary housing has been a major tenet of Mayor Bill de Blasio’s plan to add or maintain 200,000 affordable housing units over the next decade. In a city with such high land prices and rents, it has become clear that developers need some kind of incentive to include affordable housing in their projects, and the mayor and city council have made a series of adjustments and concessions to get such housing into projects like the new Domino Sugar Factory development and under-construction buildings at Hudson Yards.

But just how affordable and market-rate housing should be built together in these developments has not been as closely considered, and experts say the “poor door” controversy may just be the first of many unanticipated issues in need of creative solutions.

To get around the issue of affordable units having different entrances or looking different and having different amenities from market-rate units, some have suggested making the units indistinguishable, but Reiss warns that this might cause additional problems.

“For instance, given a particular amount of funding for affordable housing, is it better to build fewer units of affordable housing that are indistinguishable from market-rate units in a Manhattan building, or is it better to build more units of affordable housing in an outer-borough — and therefore cheaper — building?” he said. “There is no right answer to that question. Each reflects a policy preference. But it is most important to realize that a trade-off between cost and number of units exists.”

Rent Regulation and Housing Affordability

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NYU’s Furman Center issued a fact brief, Profile of Rent-Stabilized Units and Tenants in New York City, that provides context for the deliberations of the Rent Guidelines Board as it considers a rent freeze for NYC apartments subject to rent stabilization.

Rent regulated (rent stabilized and rent controlled) apartments clearly serve households that have lower incomes than households in market rate apartments. Median household income (fifty percent are below and fifty percent are above this number) is $37,600 for rent regulated and $52,260 for market rate households.Thus, market rate households have median incomes that are nearly 40% higher than rent regulated ones.

The median rent is $1,155 for rent regulated and $1,510 for market rate households.Thus, median rents are about 30% higher for market rate tenants.

Despite these differences, the number of households that are rent burdened (where rent is greater than 30% of income) is similar for the two groups: 58% for rent regulated and about 56% for market rate households. (4, Table D)

The Furman Center brief provides a useful context in which to consider NYC’s rental housing stock as well as the households that live in it. Given the nature of NYC households, however, I would have wished for a more finely detailed presentation of household incomes and rents.

NYC’s distribution of income is skewed toward the extremes — more low-income and high-income households and therefore fewer middle-income ones than the rest of the nation. Given this, it would have been helpful to have seen the range and distribution of incomes and rents, perhaps by deciles. The Furman Center brief indicates that updated data will be available next year, so that may provide an opportunity to give a more granular sense of dynamics of the NYC rental market.

Mayor de Blasio’s housing plan outlines his commitment to preserving affordable housing. One element of that commitment is to preserve rent regulated housing. Understanding that market sector and the households it serves is essential to meeting that commitment.

Affordable Housing Preservation in NYC

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Leaders of Brooklyn Legal Services Corporation A have released a white paper, Mayor de Blasio’s Housing Plan:  The Most Important Housing Plan in NYC History? Just to get the suspense out of the way, they pretty much feel that it is. But they do push the Mayor to pay more attention to the preservation aspect of his Housing Plan. They write,

Based upon our experience, representing the low-income tenants we serve, we have observed that rent decontrol is often brought about by predatory actions from landlords to push protected tenants out of their apartments in order to reach decontrol status. In 2013, over 30,000 New York City families were displaced from their homes. Without access to free legal services, many of these families had to represent themselves in Housing Court and were unable to fight the predatory and often illegal actions that made them lose their homes. The most recent reports from the Task Force to Expand Access to Civil Legal Services commissioned by the Chief Judge of the State of New York stated that 99% of tenants are unrepresented in eviction cases in New York City. The need for legal services is very real, and without increasing the very limited resources available for such services the fight for preserving affordable housing will almost certainly not be successful.

Brooklyn A’s attorneys are constantly witnessing how this perfect storm of rising housing values and limited supply of affordable housing can impact low-income communities. In many neighborhoods landlords are more incentivized than ever to try and push out rent protected tenants by any means necessary, so that they can void the rent protections and bring in new tenants willing to pay the inflated market price. We are currently representing tenants from a building whose main waterline, boiler and gas meters were destroyed in the middle of the night, only a short time after the tenants refused offers by their landlords to get bought out of their apartments. In another recent case the landlord shut off all heat, hot water, and sewage in the building to provoke a vacate order to force the rent-stabilized tenants out. The tenants had to live in emergency Red Cross shelters for a period of time because they lost their home; including one who had lived at the building for thirty years. Unfortunately, these are just a couple of examples of increasingly common practices by landlords to violate and then deregulate those apartments. (2, footnotes omitted)

During earlier run ups in real estate prices, landlords seeking to make a quick profit were known to send in thugs with baseball bats and pit bulls to frighten tenants, particularly elderly tenants, so that they would move and make the apartments available for tenants who would paid higher rents. The predatory equity that has been documented in NYC in the last decade has used less obviously threatening behaviors such as “repairs” that lead to long term loss of utilities and frivolous filings in housing court. But the goal is the same — get rid of tenants paying low rent-regulated rents.  Brooklyn Legal Services Corporation A is right to focus on the role that legal services attorneys can play in protecting existing affordable housing in a cost-effective way.