ALBANY, N.Y. (AP) - With Albany still reeling from corruption scandals and time running out on the legislative session, it’s looking less likely state lawmakers will overhaul New York City’s longstanding rent regulations or a tax break for real estate developers.
Changes have been proposed for both laws, which expire next month, but many lawmakers say the most practical option may be to simply renew the laws essentially as-is, with only minor tweaks.
“We’re probably just going to have an extension,” Assemblyman Michael Fitzpatrick, R-Long Island, said this past week during debate on rent control.
That reflects an emerging consensus among lawmakers interviewed by The Associated Press and comments made by Gov. Andrew Cuomo, who said “at a minimum” both laws must be extended.
“Albany has a lot going on right now,” the Democratic governor said late last month. “To have these finer negotiations on these delicate points is going to be problematic this year.”
Rent control and the tax break have huge impacts on the New York City housing market, and they’re touchy for lawmakers in any year because the real estate industry is one of the biggest political donors in Albany. On the other side, tenant advocates and liberal groups have organized big rallies in New York and Albany to denounce the tax break and urge lawmakers to strengthen rent control.
The tax break was created decades ago during a much different real estate climate in New York City as a way to spur redevelopment. In exchange for the incentive, developers building in certain areas must incorporate affordable units.
Critics say the tax break, which cost New York City more than $1 billion last year, is no longer needed. The real estate industry argues the tax break is essential to efforts to keep New York affordable.
The rent rules regulate the rents paid by more than 2 million New York City residents. Landlords chafe under the rules, but supporters say they ensure that low- and middle-income residents can afford to live in the city.
Keeping both measures essentially the same started to become an appealing option following the arrest of former Senate Leader Dean Skelos this month. Skelos, a Long Island Republican, is fighting charges that he extorted payments for his son from an environmental technology company and a major real estate firm in New York City.
In January, former Assembly Speaker Sheldon Silver, a Manhattan Democrat, was arrested on charges that he accepted nearly $4 million in bribes. Both men say they’re innocent, but the charges forced them to step down from leadership at a critical time.
New York City Mayor Bill de Blasio has called for stronger rent control laws and the extension of the tax break - though he wants to require that any developer receiving the incentive set aside 25 percent to 30 percent of a project for affordable units - compared with the current requirement of 20 percent, which only applies in certain areas.
“No more tax breaks without building affordable housing in return - period,” de Blasio said.
The mayor’s proposal has the support of some top lawmakers and, notably, the Real Estate Board of New York.
“There is an enormous opportunity in the next month for state lawmakers to put a plan into action that will create more affordable housing … in every borough,” REBNY President Steven Spinola said.
Critics who want the tax break abolished said the mayor’s changes don’t go far enough.
“It’s a tax break that benefits billionaire real estate developers who don’t need the help,” said Karen Scharff, executive director of Citizen Action of New York.
The tax break on new construction can last as long as 25 years. Last year, about 150,000 apartments in the city were under the tax break. One57, a luxury high-rise near Central Park most often cited as an example by critics of the policy, saved an estimated $35 million thanks to the incentive. The building’s penthouse recently sold for $100 million.
Scharff said Albany’s corruption problem shows the need to repeal the tax break to rein in the political influence of the real estate industry.
Millions of dollars in contributions by New York City real estate interests have been cited in the cases against Silver and Skelos, who received large contributions from Glenwood Management, a New York City real estate firm headed by Leonard Litwin, Cuomo’s top donor.
Both the tax break and rent control are likely to become a part of a grand bargain worked out by lawmakers in the closing days of the session. The Senate’s Republican majority would add a third issue to the mix: It wants to make a cap on local property taxes permanent.
The Democrat-led Assembly passed its rent control bill on Tuesday, voting to extend the rules another four years and make changes to the policy to prevent certain apartments from becoming deregulated when they become vacant. Assembly Speaker Carl Heastie, D-Bronx, said there’s still time for lawmakers to carefully consider changes to each issue and no reason they need to be tied together.
“I don’t like things being attached,” he said.
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