A few days after Assemblymember Zohran “Rent Freeze” Mamdani won the Democratic primary, which I called a crushing defeat for the real estate industry, I wrote a column outlining some of the ways he could help the industry.
Among them were rezoning to add housing, weakening of the members’ respect on the City Council, supporting revisions to the city charter, adding rental vouchers and making them easier to use, expanding staff to eliminate bottlenecks at the Department of Housing Preservation and Development, and convincing Albany to reform property taxes.
Mamdani has not yet taken a position on charter reform, but he likely will have to do so soon as reporters will increasingly ask him about it as Election Day approaches. But he has already endorsed the other five measures mentioned above.
The last of these, property taxes, is the most important.
The New York Apartment Association calculated that taxes will rise by about $100 per apartment in rent-stabilized buildings this year because their preliminary assessed values have risen 2.75 percent.
That means tenants of these apartments will send nearly $4,000 a year to the government, as the group’s CEO Kenny Burgos said in a podcast. Of course, it is the owners, not renters, who pay the taxes, but the NYAA puts it differently because this is the only hope of getting the state legislature to lower multifamily tax rates.
However, it will take much more to move Albany. Property tax reform will never happen without a strong push from a popular mayor.
The time for mayors to demand major changes from the state is immediately after taking office, when they have political capital from winning (also called a mandate).
Unfortunately, Mamdani’s promise on property taxes is that he will propose comprehensive changes by the end of his second year. That would mean no action will be taken by Albany until at least 2028.
Not only is that a long time for cash-strapped owners of rent-stabilized buildings to wait, but who knows if Mamdani will have any political capital left by then? Two years is a lifetime in politics, as Eric Adams will tell you.
Both Adams and Bill de Blasio talked about the importance of property tax reform, but made no real effort to make it happen because any change would result in someone raising taxes.
However, that should not be an obstacle for Mamdani, who has already called for higher taxes for the wealthy and said private homes in gentrified neighborhoods should be taxed more. Landlords broadly agree.
Burgos said on his podcast that a $2,500 per month apartment pays (indirectly) the same property taxes as a $1 million single-family home, and that rental properties pay higher taxes than houses of the same size in the same neighborhood.
Burgos and Mamdani, classmates at the Bronx High School of Science and Democratic colleagues in the Assembly, have met once since the primaries. Talks were held last week for a meeting between the NYAA and Mamdani advisors, which may yet happen.
“Property tax reform is critical,” Burgos said in the podcast. “At a minimum, rent-stabilized buildings should not be overburdened while at the same time being stripped of funding by rent adjustments that do not keep up with inflation.”
What we’re thinking about: Building owners sometimes resist efforts to mark them because it makes even the simplest renovations more difficult and expensive. But now, under the City of Yes, the owner is offering the opportunity to sell air rights in ten times more locations than before, and the sales process takes just six to nine months instead of two or three years. Will building owners seek landmark status to sell their air rights? Send your thoughts to eengquist@therealdeal.com.
Something we learnedThe lead prosecutor investigating trumped-up mortgage fraud allegations against New York Attorney General Letitia James has told colleagues she will advise her new boss, interim U.S. Attorney Lindsey Halligan, to drop the case — against the president’s wishes — because there is no probable cause to file charges, MSNBC reported. Halligan’s predecessor, a Trump nominee, resigned rather than take the case to court. My column of September 23 explains why the case is so weak.
Elsewhere…
If the bill is adopted by the municipal council, there must be gas appliances installed by a master plumber If it becomes law, will landlords simply buy electric heaters? In many older buildings that is not an option, a landlord told me.
“The wiring in most rent-stabilized apartments would not support this [electric stoves]he said. ‘And actually rent prices were not stabilized before the war at all.’
After upgrading the heaters in a certain number of apartments, the owner will eventually have to upgrade the incoming pipes and risers of the entire building “because the old wiring would not be able to support the increased load without dramatically increasing the risk of electrical fires.”
Closing time
Residential: The highest housing deal recorded on Tuesday was $15.5 million for two adjacent homes at 809-815 Avenue J in Midwood. The plots total 8,000 square meters.
Commercial: The best recorded commercial deal was $92 million in front of the Hilton Garden Inn at 30 West 46th Street in Times Square. The hotel has 21 floors and 196 rooms.
New on the market: The highest price for a home to hit the market was $25 million for a 9,308-square-foot townhouse at 7 East 80th Street on the Upper East Side. Serena Boardman of Sotheby’s International Realty did just that the entry.
– Matthew Elo
#Daily #Dirt #Mamdanis #Crucial #Issue