Showing posts with label HPD. Show all posts
Showing posts with label HPD. Show all posts

Dec 20, 2016

Future of HDFC Coops? Now May Be the Time to Sell.

Why sell your HDFC coop now? 

As an industry recognized expert in HDFC coop sales, I've been asked by buyers, sellers and HDFC coop board members about the proposed changes. At this point the changes have only been proposed to community boards by HPD and a "taskforce" working with HPD of so-called "interested stakeholders" aka affordable housing activists, community organizers, law firms and management companies with their own political and monetary agendas before taking this proposal to the City Council for a vote sometime in 2017. The City Council must vote to approve a new tax break for HDFCs before this program can go into effect. Tax break is fine the rest of the proposal is not.

The proposed changes may put the future of your investment and equity in jeopardy. Because of this uncertainty NOW may be the most advantageous time to sell.

Many shareholders that I sold HDFC units to have reached out to me with concerns about the price they paid for their unit and the new proposed resale caps. My understanding is HPD’s proposal exempts units that have already sold above the proposed price caps by excluding those units from price restriction, and allowing a higher income cap of 165% of AMI for the resale of those specific units. While such an accommodation sounds great in theory and intention it's not based in reality. 

Whether an apartment is "affordable" or "market" the market (supply and demand) determines what a buyer will pay regardless of income but not the government. The government can not guarantee to shareholders who bought their apartments at prices above the proposed price caps that they will not lose any equity when they sell.

All units in a building need to be priced accordingly. Why would one buyer pay a higher price for a comparable unit in the same building when other comparable units are being sold for less? 

Proposed Changes and New Regulatory Agreement: 

According to advocates for the proposed changes and new regulatory agreement, the proposed change aims to preserve true affordability: maintaining income restrictions, while introducing asset restrictions and caps on sales prices (in buildings that vote to sign the Agreement)

HPD’s current avenues to help are limited under Article XI of the Private Housing Finance Law (PHFL). HPD has authority over formation, dissolution, and changes to certificate of incorporation

The "taskforce" of "interested stakeholders" expects that introducing this Regulatory Agreement will create more clarity for buildings about the affordability intentions of Article. In my opinion these "Interested stakeholders" want to change the "P" in (PHFL) from Private Housing Finance Law to Public Housing Finance Law eliminating shareholders and self-sustaining coops their property rights.

 Provisions of Proposed New Regulatory Agreement 

• 40-year Agreement with corresponding tax exemption that will be more generous than the current tax exemption for properties sold through DAMP (The Division of Alternative Management) cap which expires in 2029) 
 • A deeper exemption to account for added requirements in the Regulatory Agreement
 • Every eligible HDFC Coop – even high-value coops – would receive a tax benefit
 • The lowest value coops, which experience high rates of financial distress, would pay no property taxes on the residential part of their building, and could use the savings to pay down delinquent tax bills or making building improvements
 • To improve a building’s overall financial health, the new Agreement will require a 30% flip tax. When units are sold, 30% of the profit from that sale will go to the building’s reserve fund

Sales Restrictions

 • Eligibility for becoming a shareholder in an HDFC:
• Household income at or below 120% of AMI ($108,750 for a family of 4 in 2016)
• Household assets at or below 175% of AMI
 • Household must make the HDFC unit its primary residence
• Shareholders cannot sublet their apartments for more than 18 months cumulative out of a five year period, and they must obtain Board and Monitor approval if they choose to sublet their units
• Shareholders cannot own property within 100 miles of New York City
• Sales of units at prices affordable to 110% of AMI or below

While the proposed changes add more restrictions, and burdens for both buyers and sellers it does not address the problem of coop boards lack of accountability to its shareholders and potential buyers.

The city council has never voted to make coops in NYC accountable even though bills have been proposed numerous times. A coop does not have to give a reason why they reject a purchaser, they do not have to follow any standard application process or procedures nor are they required to conduct the application/purchase approval process in a timely manner. No special training or knowledge of real estate or Fair Housing is required to be a director on a coop board. The city council, the mayor and HPD should be concerned about housing discrimination rather than punishing low and moderate income New Yorkers that were fortunate enough to be here 20-30 years ago and take the on abandoned buildings in deteriorating neighborhoods. The original intent and spirit of the HDFC.

Contact your city council member and let them know you're an HDFC shareholder that wants to sell your unit to a low or moderate income New Yorker but you don't want the government punishing you by mandating the price you can sell it for. The income restriction already in place naturally limits the price you can get and it's still significantly below market. A portion of your profit is going back to the HDFC housing corporation in the form of flip tax already limiting your equity.

If you have been considering selling your HDFC coop, please contact me for a complimentary market evaluation and consultation.

Oct 13, 2014

"Affordable Housing" in NYC - For Whom?

There are rich doors and poor doors - Are moderate and middle income New Yorkers being left out?
When mayor Bloomberg first introduced the New Housing Marketplace plan in 2002, more than 40 percent of New Yorkers spent more than 35 percent of their incomes on housing, a position that the U.S. Department of Housing and Urban Development considers cost-burdened.

The original goal was to create or preserve 65,000 units of affordable housing by subsidizing or incentivizing new construction and rehabilitating existing affordable housing. In 2005, Bloomberg optimistically reset the goal, stating the city would create or preserve 165,000 affordable units by the end of 2014 with a $7.5 billion investment from the city.

One notable aspect of mayor Bloomberg's plan was its focus on creating more housing for moderate and middle income families, something few past programs have addressed. This category includes, but is not limited to, people living on $58,000 a year as individuals, or up to $145,000 a year for a family of four.

During the Bloomberg administration: "We want to retain a large and varied workforce in the city,” said Ruth Anne Visnauskas, a deputy commissioner for the Department of Housing Preservation and Development (HPD). “Having affordable housing for the firefighters, the teachers, the nurses — people who might not be at the lowest income levels but are still priced out of the market — is important."

A 2009 study by the Center for an Urban Future looked at the strain that housing costs were putting on middle class New Yorkers and argued that it was imperative for New York City to maintain a strong middle class.
432 units of middle-income housing on West 45th Street in Hell's Kitchen
"Middle class people are the ones who start small businesses, which employ many New Yorkers". 

The Bloomberg administration originally projected that 32 percent of the 165,000 units would be set aside for middle class New Yorkers. According to the IBO’s report, of the 124,400 that have been started so far, only 15 percent have been set aside for these groups. That amounts to about 18,600 units of affordable housing to date.
Mayor De Blasio’s Housing Plan—Housing New York: A Five Borough, Ten Year Plan

Mayor Bill De Blasio's plan: Housing New York:  A Five Borough, Ten Year Plan, is an ambitious plan to build and preserve 200,000 housing units, including 50,000 new affordable housing units.

For Whom? 

De Blasio's plan reduces the percent of units set aside for middle class New Yorkers by 10%

The plan is guided by eight principles, such as revamping the city’s planning and land use policies, establishing economic diversity as the cornerstone of housing development and strategically protect past investments in housing affordability.

These guiding principles will redefine many of the city’s housing programs and policies and can be seen in the more than the fifty initiatives in the plan

Here are a few highlights from the plan:
  • Propose the creation of a Task Force to explore legislative and administrative changes to simplify and rationalize the city’s tax programs while increasing their effectiveness in creating affordable housing.
  • Change zoning and land use regulations to promote housing creation through conversion of obsolete non-residential buildings and identification of opportunities for using Transferable Development Rights.
  • Create new incentives for properties that are not served by existing programs but are in danger of converting to condos or exiting rent regulations.
  • Define affordable housing as follows: Extremely Low Income (0-30% of AMI); Very Low Income (31-50% of AMI); Low Income (51-80% of AMI); Moderate Income (81-120% of AMI); Middle Income (121-165% of AMI).
  • Overall production goals of the plan: 60 percent preservation; 40 percent new construction.
  • Share of housing units preserved or created by income group:  Extremely Low income (8 percent); Very Low Income (12 percent); Low Income (58 percent); Moderate Income (11 percent); Middle Income (11 percent). 
A 2009 study by the Center for an Urban Future looked at the strain that housing costs were putting on middle class New Yorkers and argued that it was imperative for New York City to maintain a strong middle class

Mitchell-Lama buildings that were originally created for Middle Class New Yorkers are at the end of their regulatory agreements. They have been a big source of affordable housing in many neighborhoods.
While preserving the Mitchell -Lama stock helps with overall affordability goals, it doesn't create new options for moderate or middle class families and many Mitchell-Lama buildings have chosen to go market rate at the end of their term. 

The HPD has since revised its goals and plans to devote 22 percent of the housing to moderate and middle income New Yorkers. The IBO predicts that there will need to be a serious shift for the HPD to meet even these numbers.

Even meeting this reduced target will require a fairly significant change in the income mix of units started and in the next few years with a large uptick in the number of moderate units according to the report.

One programs that currently offers home ownership for middle and moderate income New Yorkers are HDFC coops  primarily re-sales that will allow maximum incomes of 120%- 165% of (AMI) Area Median Income.

Area Median Incomes:

According to the NY Times USA Map June 26, 2014 

The median income in Manhattan (New York, NY) is $68,370. 
In Brooklyn (Kings County) the median income is $45,215. 
In Queens the median income is  $56,789. 
In Staten Island (Richmond County) the median income is $73,496. 
In the Bronx the median income is $34,300. 
In Westchester County the median income is $81,093.
In Nassau County the median income is $97,049.
In  Suffolk County the median income is $87,778.

Oct 9, 2014

NYC Landlord Watch List

482 Central Park West
Mayor Bill de Blasio recently signed a bill that will require the Department of Housing Preservation and Development (HPD) to post a list of  the names of landlords found in housing court to have harassed tenants on its website, hoping the public shaming will be a deterrent.

The measure also increases the maximum penalty for such landlords to $10,000 per residential unit. The measure expands a 2008 city law prohibiting tactics, such as interrupting utilities, that are commonly used in an effort to force tenants to vacate an apartment or waive their tenancy rights.

The NYC “landlord watchlist” compiled by Public Advocate Letitia James from violation reports is publically listing on it's website buildings with serious violations. 
This list is based on Department of Housing Preservation and Development (“HPD”) violations, as well as info from constituents and other sources.
The list of buildings include the owners, head officers and number of violations. For a landlord to be added to the Watch List, they must own a building with fewer than 35 units with an average of at least three open, serious violations (B and C violations) per unit. Larger buildings must have an average of at least two open, serious violations (B and C violations) per unit.

You can see the full list of 100 worst landlords in New York City at:

Jan 15, 2010


City Will Use Funds to Assist Homebuyers, Purchase and Renovate Foreclosed Units and Develop Vacant Sites

U.S. Department of Housing and Urban Development (HUD) has awarded more than $20 million in Recovery Act funding to the New York City Department of Housing Preservation and Development under HUD's Neighborhood Stabilization Program 2.

The grants were awarded competitively to applicants who developed the most innovative ideas to address the impact of the foreclosure crisis on local communities while demonstrating they have the capacity to be responsible stewards of taxpayer dollars. The City will use the funds to buy, renovate and resell foreclosed properties in the most-affected neighborhoods to low- and moderate-income families.

In addition to the award to HPD, two other New York City housing agencies received NSP funding in Round 2: Habitat for Humanity New York was awarded $10.5 million and Community Builders received an award of $5.5 million.

Feb 13, 2009

Mayor Appoints New HPD Commissioner

Mayor Bloomberg named Rafael Cestero to serve as Commissioner of the Department of Housing Preservation and Development (HPD).

Cestero will replace Shaun Donovan, who was chosen by President Obama to be Secretary of the U.S. Department of Housing and Urban Development after serving as HPD Commissioner since 2004. Cestero is expected to begin in the position on March 16.

The New York City Department of Housing Preservation and Development is responsible for developing and preserving affordable housing through a variety of programs in areas like new construction, foreclosure prevention, housing code enforcement and emergency repair of privately owned occupied buildings.

As the largest municipal developer of affordable housing in the nation, HPD supports the repair, rehabilitation and new construction of hundreds of thousands of units of housing.

HPD is responsible for implementing Mayor Bloomberg’s $7.5 billion New Housing Marketplace Plan to create and preserve more than 165,000 homes and apartments in neighborhoods.

From July 2004 through December 2008, HPD, along with its for-profit and not-for-profit partners, has begun construction or renovation of 84,651 affordable housing units, 25,913 of which are homeownership units.

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