In New York City, millions of New Yorkers apply to Housing Preservation and Development for the slim chance of finding an affordable apartment.
But those odds are still better than those for rent-stabilized buildings that apply to HPD for financial assistance. In November, HPD postponed any application for an Article XI property tax exemption under its Housing Preservation Opportunity program until February, citing project capacity, according to an email exchange shared with The real deal. The agency said in the email exchange that it received more than 75 registrations in the fall and will select a limited number of projects in February.
HPD’s program website states that it has “limited staffing capacity and a significant backlog of projects. As a result, the appointment of a project manager may take up to a year.”
An HPD spokesperson said the agency has not seen a significant increase in applicants in recent years.
The program provides need-based waivers of up to 40 years for rent-stabilized portfolios with declining cash flows. Applicants must jump through a number of bureaucratic hoops, such as establishing a housing trust, and HPD evaluates projects based on factors such as their financial situation, their level of affordability and vacancy, and potential repairs.
Buildings also meet other conditions, such as keeping the rents of all units stabilized, limiting rents and incomes and accepting a homeless set-aside that is filled by vacancies. “It’s a serious conservation tool, not a light tax break,” says David Shamshovich of Belkin Burden Goldman.
Applicants walk a difficult line. If an operation is too robust, HPD will likely direct its resources toward those in need; but show a portfolio on the brink of foreclosure, and HPD might resist throwing good money after bad.
In the case of the most recent wave of applications, none of these considerations seemed to matter as they were all stymied by what seemed like yet another understaffed city organization.
Shamshovich has submitted several applications for the autumn term, all of which will now be considered next year. One involved a 400-unit portfolio with all rents below the 50 percent median income, which is in distress due to rising debt service.
His team submitted a slew of paperwork, including a line-item capital budget, that showed the building needed about $1.7 million in the short term to bring the building up to code.
He summarized the state of affairs this way: “It’s a good deal for the city, and it saves these buildings and preserves them, but if you don’t have bodies to process them, then they’re essentially useless.”
And despite the building diligently filing all the paperwork, the decision has been delayed while the building’s finances continue to suffer.
The backlog comes during what has been a nightmarish period for rent-stabilized building owners, who have already had many of the levers to manage their balance sheets taken from them with the Housing Stability and Tenant Protection Act of 2019.
With the rising costs of insurance, utilities, and interest rates in addition to a new mayor likely pushing for a freeze on rents for rent-stabilized buildings, it wouldn’t be surprising to see Article XI applications only increase in the future.
Those owners might as well start checking their Powerball numbers.
What we think about: After reporting that billionaire Larry Ellison bought two condos from Shari Redstone on the Pierre, The real deal discovered that the cooperative sale was part of the broader merger between Skydance Media and Paramount. Now that we have another huge media merger between Netflix and Warner Bros. Discovery, I wonder if we’ll see any other home swaps as part of the deal. Do you know of any houses that are used as a sweetener? Email me at jacob.indursky@therealdeal.com.
Something we learned: I always assumed that avoiding taxes in New York was as easy as spending your 183 days somewhere else (most likely in Florida). But this Article from the New York Times shed some light on the extent to which tax inspectors will arrest city skippers. Auditors caught a fishing enthusiast who said he was a New York resident trying to get a $25 discount on his state fishing license (he ultimately won his case, but paid more in legal fees than he saved on the license).
Elsewhere…
– There will be stricter safety regulations for cranes, Gothamist reported. City officials said they will require diesel-powered tower cranes to have fire suppression and detection systems after determining that the 2023 Midtown crane collapse was caused by a fire that started on the crane’s deck. Crane operators will also have to meet higher qualification requirements.
– Newly elected mayor Zohran Mamdani said he will end clearing of homeless encampments, The City reported. The city has spent $6.4 million on the cleanup since 2024; of the 3,500 people moved from the camps, 114 (3 percent) were placed in shelters.
Closing time
Residential: The highest residential deals recorded on Friday were 1010 East Eighth Street at Ocean Parkway and 1289 Lexington Avenue, 19B in Carnegie Hill, both for $8 million. The Ocean Parkway single-family home is 2,600 square feet. The Carnegie Hill apartment is 3,500 square feet of new construction. Brown Harris Stevens Jill Bernard has the listing for the apartment.
Commercial: The best recorded commercial deal was $38.1 million for 26 Bleeckerstraat. The Manhattan Health Center in NoHo is seven floors and 43,365 square meters. Planned Parenthood sold the building to Izaki Group Investments, per property records.
New on the market: The highest price for a property to come onto the market was $5.8 million for 15 Renwick Street, Unit TH3. The Hudson Square condo triplex is 3,500 square feet. Serhant has the entry.
Groundbreaking: The largest new building permit submitted was for a proposed 14,970-square-foot, 14-story, mixed-use development at 54 Sullivan Place in Prospect Lefferts Gardens. Kao-Hwa Lee Architects is the registered applicant.
— Joseph Jungerman
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