When Brian Kavanagh’s reign as chair of the state Senate’s housing committee ends this yr, the true property business will have a good time — his departure, that’s. Not his accomplishments.
Kavanagh, who’s not seeking re-election, may not be fairly as reviled by house owners of rent-stabilized buildings as his militant Meeting counterpart, Linda Rosenthal. However his report from the business’s perspective was poor, and he’ll depart workplace with the housing affordability disaster nonetheless raging.
To say the senator received off on the unsuitable foot with actual property can be an understatement. Just before being tapped in December 2018 to chair the housing committee, Kavanagh warned, “Everybody can anticipate that we’ll have a really sturdy effort to strengthen the lease legal guidelines to guard tenants.”
Sadly, quite than air out the problems and craft a balanced, efficient coverage, he and different legislative leaders waited till mid June 2019, when lease stabilization was as a result of expire. Then, behind closed doorways over two days, they threw seven of the 9 payments on tenant activists’ want listing right into a pot and cooked up the Housing Stability and Tenant Safety Act of 2019.
By overcorrecting for previous abuses, the regulation has triggered a wave of bankruptcies and an inexorable deterioration of the town’s rent-stabilized housing inventory.
It has additionally devastated regional banks, unleashing a scourge of toxic mortgages that ripped via their mortgage books like most cancers. Signature Financial institution collapsed in 2023 and New York Community Bank was nearly wiped out in 2024. Main lenders now keep away from the sector completely.
Tenants, the supposed winners, haven’t precisely thrived underneath the brand new regulation. Violations and vacant models have piled up of their buildings and they’re skipping lease funds extra usually than earlier than the HSTPA. Assortment charges have fallen by about 5 proportion factors and present no indicators of enhancing.
Plague of vacant models
As the failings within the rapidly written regulation grew to become obvious, Kavanagh did nearly nothing to repair them. It took the legislature 5 years simply to boost the utmost lease improve for particular person condominium enhancements from a preposterous $15,000 to a nonetheless meager $30,000, or $50,000 for a small subset of units.
As a result of renovations usually value excess of that, about 5 p.c of rent-stabilized housing — some 50,000 models — now sit vacant yr after yr.
The revision in 2024 did make lease will increase for enhancements everlasting, however given the extreme provide scarcity and income disaster for rent-stabilized buildings, the empty residences are a travesty on two ranges. Though the issue was wholly created by the federal government, nothing suggests Kavanagh will even attempt to repair it in his closing yr.
To make sure, among the points punishing housing suppliers, equivalent to rising rates of interest and insurance coverage premiums, have been past Kavanagh’s scope.
But he appeared oblivious to them in failing to handle considerations inside the state’s purview, equivalent to backlogged housing courts and excessive property taxes on leases. The consequence was an ideal storm for house owners of totally rent-stabilized and different regulated housing.
“He usually appeared afraid of rankling folks quite than main,” one observer mentioned. “He appeared afraid of [organized] labor, he appeared afraid of NIMBYs. Individuals who cope with him say, ‘He’s not going to stay his neck out.’”
Minimal progress
Throughout Kavanagh’s tenure Albany has handed some optimistic measures for actual property, equivalent to anti-squatter legislation, a rise within the most floor-area ratio in New York Metropolis, an extension of the 421a development deadline and the 467m program for office-to-residential conversions. (Lengthy-overdue reform of the state’s environmental review act will seemingly observe this yr.) However these have been all championed by Kavanagh’s colleagues and Gov. Kathy Hochul.
“As housing chair, he created obstacles on all of that stuff within the years prior,” mentioned one supporter of the reforms. “It took [the bill on] conversions years to get completed as a result of he mentioned, ‘I don’t assume you want a tax incentive.’”
Lawmakers, after making clear they wouldn’t exchange the 421a multifamily tax break with out settlement from development unions, handed 485x with wage provisions which have successfully capped initiatives at 99 models. Somewhat than defy the unions, Kavanagh blamed the Actual Property Board of New York for making that concession, as if REBNY had a alternative.
In the meantime, Kavanagh-backed payments favored by the business haven’t come near turning into regulation, as he has did not construct help for them.
One such invoice, for instance, would assist tenants get one-shot offers to pay lease arrears with out landlords’ having to slog via New York’s tediously sluggish and dysfunctional housing courtroom. Though this could assist tenants and landlords alike, it hasn’t handed.
The identical is true for a serious growth of state rental vouchers and proposed diversion programs to resolve nonpayment instances earlier than they get to courtroom. Legislators settled final yr for a $50 million voucher pilot program.
Kavanagh additionally agreed with landlords that one-shots shouldn’t be a revolving door — that tenants who search them repeatedly ought to be steered towards another sort of help, equivalent to a rental voucher.
“He mentioned he had all these payments to assist try this, and so they didn’t transfer,” mentioned one one that has adopted Kavanagh’s profession. The Senate’s Eviction Prevention Updates web page seems to not have been up to date since 2021.
As an alternative, “He appeared actually enthusiastic about making use of provisions of HSTPA retroactively,” the supply mentioned. Kavanagh framed this as closing loopholes. But it surely has tremendously sophisticated the sale of rent-stabilized buildings, a lot of which have been in a dying spiral already.
“The due diligence is impossible,” one funding gross sales dealer mentioned.
One other dealer, Bob Knakal, has mentioned he now focuses on air rights as a result of promoting buildings has turn out to be promoting “packing containers of paperwork.”
Housing disaster persists
Kavanagh was acutely aware of the large points plaguing New York’s housing market, notably a demand-and-supply imbalance that has made it the costliest within the nation.
However that imbalance continued as Kavanagh nibbled across the edges and sought affordability mandates that blunt the affect of incentives to spur housing manufacturing. One critic mentioned he kills payments by “questioning issues to dying” or insisting they “meet these 10 coverage objectives” — a recipe for paralysis.
Even a invoice Kavanagh helps to permit spiritual establishments to build affordable housing on their very own property has did not cross, regardless of a powerful push from YIMBY teams.
“There’s an argument that he didn’t make issues worse,” the critic mentioned. “However he definitely didn’t make issues higher.”
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