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Tag: housing affordability crisis

  • City Council weighs new legislation on nonprofit home ownership that could end up delaying real estate closing | amNewYork

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    The New York City Council is considering legislation designed to give nonprofits greater access to residential and commercial real estate that goes on the market — but with a potentially costly catch.

    Sources with the real estate industry say the bill, if enacted, could increase costs and add significant delays and complicate borrowing, which could affect property sales.

    The Community Opportunity to Purchase Act or COPA, also known as Intro 902, would require owners of buildings with three or more residential units to notify the Department of Housing Preservation and Development and a list of “qualified entities” when their buildings will be listed for sale, giving these nonprofits a first right of refusal to purchase a residential property. 

    These nonprofits would then be allowed to submit the first offer and match any competing offers for the property. However, one unintended consequence of the bill could be that it extends the closing process for sales by 180 days or more, thereby limiting an owner’s ability to sell a property in a timely manner. 

    Small apartment buildings in Williamsburg, Brooklyn.Photo via Getty Images

    Nonprofits and affordable housing advocates such as the New York Community Land Initiative say the legislation, modeled after regulations in Washington, D.C., and San Francisco, would help “nonprofits to expand the supply of permanently affordable housing.”

    Lead sponsor Council Member Sandy Nurse, who represents Bushwick, Brownsville, Cypress Hills, and other parts of east Brooklyn, said it would “level the playing field so we can have a fighting chance to preserve at-risk affordable housing.”

    Many others in the real estate industry, including thousands of small building owners, however, worry this will add months to selling buildings, increase uncertainty and add burdens to owners.

    Ann Korchak, board president of Small Property Owners of NY (SPONY) in testimony said this would add steps, slow transactions, reduce buyer competition, depress sale prices and lower tax revenue for the city, if nonprofits acquire properties.

    “We view this effort as a deeply unfair burden on small property owners that risks putting us in even greater financial risk,” Korchak said.

    The HPD, in testimony at hearings, indicated that approximately 90,000 buildings citywide could be affected, including approximately 25,000 rental buildings that are sold annually. 

    “That’s a significant number of transactions that could be delayed, derailed, or devalued, harming both small property owners and the city’s fiscal health,” Korchak added, noting SPONY members own 5,700 units of housing—primarily in small, rent-stabilized buildings and one- to four-family homes.

    Hurry up and wait?

    She said delays could prove expensive if nonprofits decide they are interested and then are given only half a year to move forward.

    “It’s going to devalue the buildings,” Korchak said. “It’s not just the owners. It’s everyone involved, the transactional attorneys, title insurance companies, appraisers, insurance, brokers, and banks.”

    A six-month waiting period, she said, could freeze thousands of transactions and lead to many deals that fall apart if nonprofits fail to close.

    “We’re looking at nearly six months. And if the deal falls apart, we’re back to square one, going to the open market,” Korchak continued. “They can drag out the process. During that time, especially for a distressed owner, they have to continue to pay their taxes or fall behind on their taxes.”

    SPONY Board Member Valentina Gojcaj, owner of a rent-stabilized residential building in the Bronx, said it would create a 180-day waiting period if any group is interested in possibly buying. 

    “It’s a complete bottleneck,” Gojcaj added. “It will be yet another bureaucratic nightmare.”

    The Hudson Gateway Association of Realtors noted that “this proposal slows the housing market, limits fair transactions and hurts New York City homeowners.”

    And Holland & Knight, a law firm with a large real estate practice, said this process could deter other would-be buyers.

    The regulation also would let the HPD Commissioner “extend any time limit upon application for good cause.”

    “This type of legislation further complicates a very highly regulated business environment,” said Flushing Bank Senior Executive Vice President Francis Korzekwinski. “Thousands of buildings would have to wait for a limited number of organizations to decide on their potential interest to purchase a property without committing to an agreed upon price.”

    He said many of these institutions “may not even have the financial capacity to purchase the building,” which means they will need to raise capital, potentially further delaying the process.

    HPD already has been struggling to fulfill its responsibilities regarding housing, and some worry that expanding its responsibilities could lead to new problems. 

    “The agency is already significantly understaffed and overburdened,” Korchak said.

    There are also concerns regarding sales due to the deaths of family members when estate taxes need to be settled within nine months.

    While the bill includes exemptions following death, Korchak said those only apply to property not held in a corporate structure. 

    “Most properties are held in corporations or LLCs because of the liability protections they provide,” she said, noting fines for non-compliance are “substantial and do not distinguish between a 4-unit building and a 500-unit building.”

    Korzekwinski also said settling estates is “complicated,” and this regulation could lead to delays at an emotional time.

    He added that owners need to pay off loans by certain times, with key windows to avoid prepayment penalties. Missing this window of opportunity could be costly for borrowers.

    And Holand & Knight said it could cause difficulties in meeting deadlines imposed on 1031 exchanges with tax implications.

    A chance to ‘improve New Yorkers’ lives’

    Housing groups, however, say that nonprofit community purchases have worked elsewhere and can work on a larger scale across New York in addressing the ongoing housing affordability crisis. 

    The East New York Community Land Trust recently organized residents and donors to buy a building that they say was neglected by its former owner. 

    “Through COPA, the city can support acquisitions like these,” said East New York Community Land Trust Board Member Brianna Soleyn. “These acquisitions are proven to work and directly improve New Yorkers’ lives.”

    And Sandra Lobo, Executive Director of the Northwest Bronx Community & Clergy Coalition, said it would “strengthen the infrastructure that would support New Yorkers to remain in the neighborhoods they’ve helped build.”

    “New York City is facing a critical shortage of deeply affordable housing, small business and cultural spaces, and public green spaces,” said Jenny Dubnau, co-chair of the Western Queens CLT. “COPA would help Western Queens CLT to transform existing housing in Queens so it’s permanently affordable.”

    Whatever the intentions, many in real estate said small property owners could easily get caught in the middle of a bureaucratic process that adds time and money often without benefiting anyone.

    “This is particularly concerning for small property owners operating on tight margins,” Korchak said of the bill, which, she added, would prohibit owners from buying out partners without first offering the property to approved groups. 

    Korzekwinski said this could decrease interest among banks in lending in the New York City market, as borrowers and banks that acquire properties would have to comply. Bank lenders might reevaluate their lending strategies, which could lead to higher-cost loans from non-bank lenders.

    “If we’re required to take back a property, we have to go through those same procedures,” he said.

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    By Claude Solnik

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  • Contributor: Let’s Los Angelize L.A.

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    Almost since the first suburbs were built in Los Angeles, there have been worries that adding density would “Manhattanize” L.A., rendering it so crowded with new vertical development as to be unrecognizable to longtime residents. In the 1980s, as battles over growth heated up, one local slow-growth group dubbed itself Not Yet New York.

    But Los Angeles has always been a city with a knack for reshaping itself by looking to its own architectural past. In particular, medium-density designs such as bungalow courts and dingbat apartments have welcomed waves of newcomers for more than a century while becoming architectural emblems of upward mobility and a particularly Southern Californian design sensibility — informal and optimistic.

    We have never needed a return to that kind of development more than now, in the wake of the Eaton and Palisades fires, even as public discussion has focused mostly on rebuilding exactly what was lost. With affordability pressures as intense as ever, now is the time not to Manhattanize but, once again, to Los Angelize L.A.

    As longtime advocates for design excellence and policies to boost housing production, we believe there is nothing more Angeleno than the reinvention of the so-called R1 neighborhood, the single-family zone that first emerged in L.A. with the Residential District Ordinance of 1908. R1 zoning shifted into overdrive in 1941 when tract houses emerged to replace the bean fields of Westchester, near what is now Los Angeles International Airport.

    It wasn’t until 2016, with the appearance of a new state law allowing accessory dwelling units, or ADUs, that the R1 neighborhood evolved in any meaningful way. Even the most ardent champions of ADUs — aka granny flats or casitas — couldn’t have foreseen how widely popular they’d become. Today, about one-fifth of new housing permits in California and a whopping one-third in the city of L.A. are ADUs.

    Still, the granny flat is no silver bullet. The housing affordability crisis in Los Angeles demands a more ambitious approach than adding new residential development one small unit at a time. State laws allowing as many as 10 apartments on a single-family lot have been on the books for several years now. But homeowners and developers have been slow to take advantage of them, and many California cities have dragged their feet in making them truly usable.

    The result has been a stalemate, with Los Angeles among the cities struggling to take the important step past the ADU to begin producing additional missing-middle housing in real volume, even as rents and home prices continue to climb. The city‘s Low-Rise LA design challenge was organized in 2020 to help break this logjam. Many of the winners incorporated design lessons clarified by the COVID-19 pandemic, when we learned that second, third and fourth units in R1 zones might offer not just rental income or an extra bedroom but the flexibility to quarantine or work from home while building stronger ties with extended family and neighbors.

    A new initiative — Small Lots, Big Impacts — organized by cityLAB-UCLA, the Los Angeles Housing Department and the office of Mayor Karen Bass builds on Low-Rise LA with a focus on developing small, often overlooked vacant lots, of which there are more than 25,000 across the city, according to cityLAB’s research. The goal is straightforward: to demonstrate a range of ways that Los Angeles can grow not by aping the urbanism of other cities but by producing more of itself.

    Rendering of Shared Step with a small gathering in the front yard


    Different views of the “Mini Towers Collective” and the “Shared Steps” proposals. Both favor shared outdoor space balanced with individual architectural identity.     (courtesy of cityLAB UCLA)

    Winners of this design competition, announced at the end of May, placed six or more housing units on a single site, sometimes dividing it into separate lots. One proposal created rowhouses, slightly cracked apart to identify individual homes and entrances as they cascade along an irregular site. A communal yard opens to the street in another project, with roof gardens between separated, two-story homes atop ADUs that can be rented or joined back to each of several main houses on the site. Other designs show that vertical architecture, in the form of handsome new residential towers from three to seven stories, can comfortably coexist with L.A.’s low-rise housing stock when the design is thoughtful enough.

    A key goal of the competition was to produce new models for homeownership. When land costs are subdivided and parcels built out with a collection of compact homes, including units that can produce rental income or be sold off as condos, a different approach to housing affordability comes into focus. Those who have been shut out of the housing market can begin to build wealth and contribute to neighborhood stability.

    The traditional R1 paradigm, in addition to limiting housing volume, suffers from a rigid, gate-keeping sort of logic: If you can’t afford to buy or rent an entire single-family home in an R-1 L.A. neighborhood, that part of town is inaccessible to you. Many of the winning designs, by contrast, create compounds flexible enough to accommodate a range of phases in a resident’s life. In one development, there may be units perfect for single occupants (a junior ADU), young families (a ground-level unit with a private yard), and empty-nesters (a home with a rooftop garden). As with the granny flat model, construction can proceed in phases, with units added over time as circumstances dictate.

    Having served on the Small Lots, Big Impacts jury, we see signs of hope in its rendering of L.A.’s future. The real proof lies in the initiative’s second phase, set for later this year, when the city’s Housing Department will issue an open call, based on the design competition, to developer-architect teams who will build housing on a dozen small, city-owned vacant parcels, with tens of thousands of privately owned infill lots ready to follow suit. If the winning schemes are built, Los Angeles will once again demonstrate the appeal and resiliency of its architectural DNA. Manhattan: Eat your heart out.

    Dana Cuff is a professor of architecture, director of cityLAB-UCLA and co-author of the 2016 California law that launched ADU construction. Christopher Hawthorne, former architecture critic for The Times, is senior critic at the Yale School of Architecture. He served under Mayor Eric Garcetti as the first chief design officer for Los Angeles.

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    Dana Cuff and Christopher Hawthorne

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