Here are the details of Albany's potential three-way housing deal

With the budget now 12 days late, details of a potential housing deal have started to trickle out of the Capitol. They include deep concessions on so-called “good cause” eviction protections that have tenant advocates ringing the alarm bells, changes to the cap on individual apartment improvements and wage standards for construction workers who are working on projects that benefit from a new tax incentive program.

“Good cause” eviction protections

According to three sources with knowledge of current negotiations, tenant protections included in a housing deal would include a number of carve outs to the “good cause” eviction legislation that many lawmakers and tenant advocates have been pushing for. Under the current potential language, the law would only apply to municipalities who proactively opt-in to it. New construction would be exempt from the tenant protections for 30 years, as would owner-occupied buildings with eight units or less. Landlords with a portfolio of 10 units or fewer would also receive exemption, along with apartments that are priced at 200% or more of the federally-determined fair-market rent. 

Two of the sources also confirmed that landlords of non-rent-stabilized buildings would be able to raise rent by either 10% or 5% plus the consumer price index, a measure of inflation. If they raised the rent higher than that without explanation, it would constitute an unreasonable rent increase that a tenant could use to defend against an eviction. 

The proposed language includes significantly more exemptions and carve-outs than the “good cause” eviction bill introduced by state Sen. Julia Salazar and Assembly Member Pamela Hunter in 2019, which has so far failed to pass either house. That bill effectively would cap annual rent increases at 3% or 1.5 times the consumer price index, whichever is higher. It would only exempt owner-occupied buildings with fewer than four units and would apply statewide, without requiring municipalities to opt-in. No version of the law would apply to units already subject to existing rent regulations.

As of Friday morning, some 50 state lawmakers – including state Senate Deputy Majority Leader Michael Gianaris, Senate Finance Committee Chair Liz Krueger and both chambers’ housing chairs – had pledged to reject a housing deal that gutted “good cause” eviction protections. That number has grown even compared to Thursday. New York City Comptroller Brad Lander, Public Advocate Jumaane Williams and 19 City Council members have also called on state legislators not to weaken the “good cause” eviction bill.

The potential compromise was met with swift backlash from progressives and tenant advocates. Cea Weaver, coalition director of Housing Justice for All, said that the deal would result in the weakest “good cause” law in the entire country. She called it “a total disaster for New York state, and an embarrassment.” She said that tenant advocates will not accept the deal as “good cause” and urged lawmakers to vote down a budget that includes these concessions. Others quickly pointed out that determining portfolio sizes can be incredibly difficult thanks to the use of LLCs and the like to obfuscate the identity of property owners, making enforcement of the exemptions difficult.

Others took to social media to denounce the potential compromise. “A deal like this would prioritize the profits of wealthy landlords over the needs of working class tenants,” the Working Families Party wrote in a post on X. “It’s a big-time no.” Citizen Action of New York posted on X that the deal framework was “Outrageous. Enraging. Unacceptable.”

Tenant advocates weren’t the only ones angry. Some landlord groups also weren’t pleased with the potential deal on “good cause” eviction. “The housing policy disaster being reported out of Albany has done the seemingly impossible: united everyone in outrage,” a spokesperson for the Homeowners for an Affordable New York coalition said in a statement. “It is a breathtaking failure to address vital and pressing issues, not a situation where 'every stakeholder is unhappy, so it must be a good compromise.’”

The Real Estate Board of New York has strongly opposed “good cause” eviction, but the powerful real estate lobbying group did not weigh in on the potential compromise or other parts of the emerging housing deal, Friday afternoon. “For the last several years, we have pushed to address New York City’s supply driven housing crisis through policies to create more homes for New Yorkers and ensure existing homes stay in good repair,” REBNY President James Whelan said in a statement. “We will review the details of a potential housing package.”

Individual Apartment Improvements

In addition to the “good cause” compromise, the housing deal would also include an increase to the amounts that landlords of rent-stabilized units can increase rents by after performing individual apartment improvements. The 2019 Housing Stability and Tenant Protection Act limited landlords to raising the monthly rent by either $83 or $89, depending on building size, in order to recoup up to $15,000 of repairs. Increases made for individual apartment improvements are currently temporary and must be removed after 30 years.

The potential housing deal would raise that cap. According to three sources, landlords would be able to recoup up to $30,000 of the costs of renovations through rent increases. That would increase to $50,0000 for apartments vacated by tenants of 25 years or more. Two sources said that apartments that became vacant within the past few years would also be eligible for the higher repair cost cap.

According to details shared with City & State, the individual apartment improvement changes will come in three tiers. The lowest tier, which would apply to any apartment, would allow landlords to recoup up to $30,000 by raising the monthly rent by up to $167. Tiers 2 and 3 – which would only apply to units that were either vacated between in the past few years or that are vacated by tenants who had lived there for at least 25 years – would allow landlords to recoup up to $50,000 of the cost of improvements. Buildings with fewer than 35 units would qualify for Tier 2, allowing them to raise monthly rents by up to $347. Buildings with 35 or more units would qualify for Tier 3, allowing them to raise monthly rents by up to $320. The rent increases in each case would be permanent, even after the landlord has recouped the full cost of the improvements.

Tenant advocates have strongly opposed significant changes to the individual apartment improvement cap that would undo the 2019 reforms. They argue that the old system was rife with fraud and incentivized landlords to harass tenants out of their homes in order to raise the rent higher than normally allowed. 

Groups representing landlords have said that limiting allowable rent increases has made it difficult to afford necessary repairs. The Community Housing Improvement Group, which represents landlords of rent-stabilized buildings, has been vocal that tweaks to the individual apartment improvement cap would not do enough to help landlords finance needed improvements to get vacant units back on the market. The group instead has been pushing for the inclusion of legislation that would allow landlords of rent-stabilized units to raise rents to local voucher payments standards after a tenant of 10 years or more vacates the apartment. The proposed housing deal does not appear to include that provision.

“This deal will not get any permanently vacant apartments back online,” CHIP Executive Director Jay Martin said in a statement. “It does nothing to improve the financial stability of older rent-stabilized buildings providing the majority of affordable housing in New York City.”

421-a replacement

In addition to tenant protections and increased caps for rent-stabilized apartment improvements, new details on 485-x, a potential replacement for the 421-a tax incentive program, have also emerged. Although many specifics remain unknown, three sources told City & State that unions, developers and state leaders have reached an agreement on wage standards for workers on affordable housing projects eligible for the new 485-x tax incentive. The specifics for different trades are not yet clear, but two sources suggested that the deal will be close to what the Building and Construction Trades Council of Greater New York had asked for in negotiations with the Real Estate Board of New York. One source said that the Mason Tenders District Council, which had struck their own wage deal with REBNY and have since tried to get it codified, will see their $40 minimum wage agreement for all construction workers as part of the deal.

State leaders had left wage requirements in the hands of labor and developers, but negotiations between the two players seemed to stagnate last month ahead of the budget deadline. Several of the unions that make up the Building Trades Council asked lawmakers to step in to write strong labor standards themselves if necessary.

Other details like affordability requirements and the specifics of development zones for projects were still unclear as of Friday night, but the New York Post reported that at least 20-25% of units in projects receiving the tax benefit would need to be affordable at 80% of the area median income.