Recently, New York State passed rent reform legislation that would end high-rent/high-income deregulation.  The new law includes other clauses that limit rent increases due to building and apartment improvements, limits rent hikes, and affords new protections for mobile-home and apartment residents statewide. Governor Andrew Cuomo signed the law officially on June 14, 2019. 

Landlord groups are not happy about this new legislation, to say the least.  They have filed a lawsuit in federal court, arguing that the new laws are in violation of their constitutional rights.  The federal lawsuit alleges that the new rent laws approved in June violate the Fifth and Fourteenth Amendments of the Constitution, and therefore violate the constitutional rights of New York property owners.  
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Most relevant to our blog post, the landlords argue that the expanded rent-control laws violate the Fifth Amendment Takings Clause.  As you know, it’s that clause that states that private property cannot “be taken for public use, without just compensation."

Leading the fight are the Community Housing Improvement Program and the Rent Stabilization Association, along with seven landlords.  Named as defendants are the City of New York, its Rent Guidelines Board, and the State commissioner of Homes and Community Renewal (otherwise known as the DHCR).  The lawsuit claims that the State’s new Rent Stabilization Laws violate due process rights by depriving rent-controlled landlords of property “without any rational relationship between that deprivation and a legitimate government interest.” 

Landlord representatives argue that the new law will exacerbate a housing shortage and will not maintain diversity and solve part of the housing crisis.  They also argue that because market-rate apartments will be more expensive, property owners will be deterred from making building wide and individual apartment improvements.

Democratic leaders who passed this legislation disagree.  The Housing Stability and Tenant Protection Act of 2019 dramatically increased the price protections for the city’s stock of 1 million regulated apartments.  The legislation included a provision that that does away with a 20% vacancy increase landlords, which landlords could add to the legal regulated rent of a rent regulated apartment, in order to eventually get that legal regulated rent to the market rent at which the apartment could legally be deregulated.
The legislation also removed the process of luxury decontrol, which is when a rent-regulated apartment could be de-regulated, and thereby receive a market rent, if the tenant's income exceeded certain thresholds. 

This is a big blow to the real estate lobby, once a highly powerful group. Landlords are now asking for injunctive relief that would block the City and State from enforcing these new rent reform laws; and they argue that this a ruling barring enforcement of this law will help, rather than harm, tenants living in rent regulated buildings.

Declaratory and injunctive relief against future enforcement of the rent-stabilization scheme will not only halt the deprivation of the constitutional rights of property owners,” the lawsuit argues, “but will result in increased development of rental properties, better housing for a larger universe of renters, the amelioration of a constrained housing market, and will force New York City and state governments to adopt fairer and more efficient means of providing housing to those most in need.”

With all of the foreign investment in real estate and the dramatic changes reaching the boroughs, it will be interesting to see how this all turns out.

Possibly checking in to the former Park Savoy Hotel will be 140 homeless individuals.  The Mayor’s office has plans for a homeless shelter, and a state Appellate Division denied a motion by opponents to extend a temporary injunction that placed a roadblock on the shelter in May, according to The Wall Street Journal. 
 
The project is continuing as of mid-June when the state Appellate Division’s First Judicial Department vacated the temporary relief granted by the court last month.  A group of neighborhood residents, who have formed the West 58th Street Coalition, filed the lawsuit against the city last July.  The group plans to appeal the recent ruling.
 
The former Park Savoy Hotel, and soon to possibly be shelter, is located right behind the pricey One57 condo building, which was formerly known as Carnegie 57 and nicknamed "The Billionaire Building".  
 
According to the group’s lawsuit, the building goes against city fire and safety regulations because there is only one way to enter and exit. Currently, buildings need at least two means of egress. It looks like the group might need another legal track as that’s not a problem for buildings built before 1910.  The city has said that this building is not required to comply with the current regulation and the FDNY did approve the building’s Fire Protection Plan.
 
Suzanne Silverstein, president of the West 58th Street Coalition, told the WSJ that all city projects should be up to code. She said that “anything the city sponsors should be at a higher level of safety, because the people they’re putting in there are already at a disadvantage.” (That does make sense…)
 
“With yet another court affirming the City’s need for these crucial beds and determination that the shelter is safe, this is another victory for common sense and compassion,” Isaac McGinn, a spokesperson for the city’s Department of Homeless Services, told Curbed in a statement. “We look forward to opening our doors to hard-working neighbors in need at this location as soon as possible—and will continue to work with the community to ensure our clients are embraced and supported as neighbors.”
 
This project is part of Mayor Bill de Blasio’s Turning the Tide plan which hopes to be focused on supporting 140 homeless individuals who are currently employed or looking for employment.
 

Yup, you read the headline right.  Seniors will be moving into the new hot spot in NYC at a mega-development north of Hudson Yards. Leading the way are former New York Governor Eliot Spitzer and New York City-based Related Companies. 
 
The project is a mixed-use high-rise which will include a 44-story tower at 451 10th Avenue at 35th Street.  According to The Real Deal, who cited plans pre-filed last week with New York City’s Department of Buildings (DOB), the site would potentially include 126 long-term care facility dwelling units.  The filed documents do not reveal what levels of care would be provided in the senior housing units or identify any senior living operator involved.
 
Some can speculate that Louisville-based Atria Senior Living might be the operator, since they have a relationship with Related.  Atria also recently announced a joint venture to develop a $3 billion pipeline of urban senior housing, with a project in San Francisco topping the list.
 
Hudson Yards is an exciting place for eminent domain, real estate, and tourism, and is the largest private real estate development in the history of the United States.  (As they say in the Big Apple: GO BIG OR GO HOME!)
 
Hudson Yards opened to the public on March 15, 2019 and includes: a 1-million-square-foot retail center with shops and dining; public parks and gathering spaces; multifamily housing; offices; and hotels.  (Our own personal note is that if you haven’t been there yet, make sure you make time for a visit.  It is free to climb the Vessel, but make sure you get a timed ticket first.)
 
In addition to the senior housing units proposed for floors 5 through 12, the mixed-use site calls for Class A apartments on upper floors, with retail, food and drink establishments, and amenity spaces such as a yoga room listed for the lower floors. (Sign me up, grandma!)
 
This is not the first or only other senior living project.  Currently in NYC, real estate developer Hines and real estate investment trust Welltower (NYSE: WELL) are making plans.   Then we have Maplewood Senior Living and Omega Healthcare Investors (NYSE: OHI) who are partnered on an NYC high-rise called Inspir.   Move over hipsters, and even Brooklyn, because there is senior sizzle.  Kayne Anderson Real Estate Advisors (KAREA) and Watermark Retirement are revamping an existing building for senior living.
 
Why focus on seniors?  As the Atria CEO, John Moore, said at the Senior Housing News’ BUILD event in Chicago: the cooling of the residential real estate market and pent-up demand in areas that have long been underserved by senior housing are driving the development. 
 
Although there is lots of eminent domain happening in Hudson Yards (see our other posts) we are happy to see that Seniors will not be left out of the newest development boom.