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November 29, 2017 by
Plan could dramatically slow down construction and rehab of affordable projects Rendering of the affordable-housing complex along Atlantic Avenue between Dismore Place and Chestnut Street (Credit: Dattner Architects) Affordable housing developments would not fare very well under the Republican tax plan currently winding its way through Congress. The House version of the tax bill, which passed earlier in November, would end the “private activity” bond tax exemption, commonly used by developers of affordable housing to finance projects, according to the Wall Street Journal. This could dramatically slow down both the construction and renovation of affordable housing units, with an analysis by accounting firm Novogradac & Co. finding that the bill would lower affordable housing production by about 700,000 units over the next 10 years. The Senate bill does not eliminate this tax exemption, but Republican supporters of the House bill say that several exemptions are necessary to finance tax cuts for personal and corporate rates. The Joint Committee on Taxation estimated that eliminating the private activity bond exemption would generate $38.9 billion worth of additional tax revenue over 10 years. Building and preserving affordable housing in New York has been a central component of Mayor Bill de Blasio’s agenda since he took office. The mayor initially pledged to build or preserve 200,000 affordable units by 2024 but recently upgraded his plan to build 300,000 units by 2026. The GOP tax plan could have massive impact on several sectors of the real estate market, with potential effects including an increase in homeownership costs and lower taxes on the profits of commercial property owners. [WSJ] – Eddie Small

November 30, 2017 by
The lawsuit represents tenants in over 200 apartment units 2201 Amsterdam Avenue via Google Maps Four class action lawsuits were filed today against three New York landlords—the Scharfman Organization, Chestnut Holdings, and KMR Amsterdam—believed to be among the biggest abusers of the J-51 tax program in the city. The suits were filed in New York County Supreme Court by the law firm Newman Ferrara after an investigation by the non-profit watchdog group, Housing Rights Initiative. The J-51 tax program offers developers an as-of-right tax exemption and abatement for rehabs or conversions of multi-family dwellings. Upon completion, the landlord has to rent stabilized all of the units for at least the duration of the tax benefit, and can only increase the rents in accordance with the rent guidelines board. Landlords get up to a 34-year exemption from increases in real estate taxes resulting from the work. In addition, existing real estate taxes receive an abatement of up to 12.5 percent. J-51 was in the spotlight back in 2009, when Tishman Speyer was held responsible for not keeping all the apartments in Stuyvesant Town rent regulated, despite utilizing the tax exemption. (Tishman Speyer is no longer an owner of the massive east side complex.) Despite the court ruling, according to Housing Rights Initiative, "the Department of Homes and Community Renewal, the state’s housing enforcement agency, has effectively disregarded the ruling through a failure to enforce it." Tens of thousands of units illegally destabilized under J-51 were never placed back on rent stabilization by landlords—which is bad news for a city struggling with an affordable housing crisis. In response, Governor Cuomo launched an initiative at the beginning of 2016 that sought to re-stabilize 50,000 illegally deregulated units by sending landlords voluntary compliance letters. For its part, HRI says Cuomo's J-51 initiative is "the same kind of hands-off-enforcement approach that caused this problem to go unabated for over nine years” after the Stuy Town case. This leads us to the current lawsuits, which are targeting landlords who are still allegedly abusing the J-51 tax exemption. All of the landlords named in the suit own buildings in upper Manhattan: Two class action suits were filed against Scharfman Organization, landlord of 55 Cooper Street in Inwood and 260 Convent Avenue in Hamilton Heights. The third suit was filed against Chestnut Holdings, landlord of 310 Convent Avenue in Hamilton Heights. A fourth suit was filed against KMR Amsterdam, landlord of Washington Height's 2201 Amsterdam Avenue. According to HRI, these firms have either disregarded Cuomo's voluntary compliance letter and failed to re-stabilize illegally deregulated units, or have "created the illusion of compliance" by re-stabilizing illegally deregulated units at illegal amounts. The suits have been filed on behalf of hundreds of former and current tenants in over 200 units across all the buildings. Aaron Carr, founder of Housing Rights Initiative, calls it "a historic opportunity to return tens of thousands of units back to the rent stabilization rolls amid an affordable housing crisis." He adds, "The only way this can be done is through transparency and mandatory compliance." Emily Nonko

November 30, 2017 by
The hallway outside Spector Hall, where the City Planning Commission held its hearing on the Jerome Avenue rezoning on Wednesday. With the hearing room filled to capacity, there was at one point about 40 people standing or sitting in the hallway, many waiting to testify. On Wednesday morning, the City Planning Commission heard five hours of testimony from the public on the Department of City Planning’s proposed Jerome Avenue rezoning. It’s the latest step in the seven-month process through which the rezoning—the fourth of de Blasio’s neighborhood rezonings to promote housing development, and the first for the Bronx—will be approved or disapproved. Among those who signed up to speak in favor of the rezoning were city representatives who detailed their agencies’ investments and initiatives in the area and a couple for-profit affordable housing developers. Multiple members of Community Boards 4 and 5, a representative from the Bronx Borough President’s office, a few non-profit affordable housing developers and others expressed support conditioned on a variety of additional initiatives and investments. But more than half of those who spoke—and others who had to leave for work before their name was called—opposed the plan and expressed deep concerns, mostly about the impact of the rezoning on residential and business displacement and the rent levels of the potential new housing. Local councilmembers Vanessa Gibson and Fernando Cabrera, who will have the ultimate say on the proposal, expressed optimism about the rezoning while saying there was more to be done. “This plan cannot and must not move forward without community support,” Gibson said, emphasizing that the plan had to benefit existing residents. Yet she also said she was unwilling to give up an opportunity for neighborhood investment and growth: “If we do nothing and sit back, we are not going to get the neighborhood that we rightfully deserve.” The CPC asked many questions, contributing to a vibrant discussion. Here are a few key takeaways. •The Poorest New Yorkers…and Poorest Americans— Of the neighborhood rezonings initiated under de Blasio, Jerome Avenue has the greatest share of extremely low-income residents. According to census data pulled by the Association for Neighborhood and Housing Development last year, 45 percent of households make less than $20,000 (or roughly below 30 percent Area Median Income). In 2010, this part of the Bronx was also the poorest of all congressional districts in the country. Advocates and residents point out that even the least expensive housing created through the city’s mandatory inclusionary housing policy would not yield units affordable to these residents. There’s evidence that the market is weak enough that developers in the near-term would need the support of city subsidy, and thus be required to abide by affordability termsheets that require at least 10 percent of apartments to be affordable to such families (and another 10 percent for formerly homeless families in most termsheets). At least that’s what a couple for-profit developers said at the hearing. But some advocates are concerned that there’s no telling how long developers will continue to rely on termsheets. Land prices are already rising, as William Bollinger of JCAL Development Group LLC confirmed. Several residents who said they made below $20,000 explicitly asked the commissioners to respect their dignity and local expertise. “A lot of us are struggling and a lot of us are disabled,” said Madeline Mendez, who identified herself as a disabled tenant relying on a Section 8 voucher. “You don’t think about us…because you can afford this ‘affordable housing.'” Michelle Genross, who makes $14,000 a year, told the commission, “We’re human too…we are all doing the very best we can and we need to be recognized. We don’t need to be thrown away like trash.” Some also spoke to the problem as a matter of racial discrimination and “ethnic cleansing.” The demand for housing for families in the lowest income bands is by far greater than the demand for moderate-income families making 80 percent Area Median Income ($68,720 for a family of three), according to Alexa Sewell of Settlement Housing Fund. Gibson and Highbridge CDC President Monsignor Donald Sakano, however, argued that having a mix of affordability levels was also important; Gibson mentioned the need for housing for those making between 40 percent and 60 percent AMI ($34,360 to $51,540 for a family of three). •Predatory Equity At Large – There’s already a major problem of landlords, including predatory equity companies, buying rent-stabilized buildings and trying to displace residents through harassment or through Major Capital Improvements (renovations for which landlords can apply for an increase in stabilized rents). Many residents are concerned a rezoning will only exacerbate this trend. While advocates lauded the soon-to-be-approved certificate of no harassment pilot program (which will require landlords to prove they have not harassed tenants before renovating or demolishing a building), they say further steps are needed to protect tenants. Sheila Garcia, director of the tenant organizing group CASA, called on the city to implement a “no net loss” policy that would involve tracking the number of affordable units that are “lost,” and commit to replacing each such unit at the same rent levels. Others said the new Neighborhood Pillars program, which will invest in nonprofits to buy rent-stabilized buildings, is the right direction for city policy. The need for better enforcement of the state’s rent-regulation laws came up repeatedly. Some commissioners shared advocates concerns that the city’s environmental review methods don’t take into account the displacement risk faced by tenants in rent-stabilized housing, and both agreed on the need for more analysis of the risk faced by such buildings. •School seat deficit – Councilmember Gibson, and both proponents and critics of the rezoning said the deficit of school seats was egregious. The rezoning covers two school districts, including many already over-crowded schools, with a predicted deficit of 4,653 seats by 2026 without a rezoning. Development ensuing from the rezoning is predicted to bring another 2,388 students by that year. Community Board District Manager Paul Philipps said that there are some large city-owned sites in the area on which schools could be built but that those sites are “tied up.” He said that without those properties available, it will be necessary to work with private developers; a couple have already offered or are exploring the possibility of siting a school. Community Board 5 District Manager Ken Brown said their board is researching the possibility of expanding existing schools. Of course, school seats were not the only kind of infrastructure in demand: stakeholders made a call for health services, community centers, increased transit and more. •Fate of Auto Sector Many advocates voiced concerns about the threats faced by the auto-industry along the Jerome Avenue corridor, which are a source of well-paying blue-collar jobs for many workers. Gibson called for the city to make investments in workers, in technology upgrades, and in incentives to landlords to engage in long-term leases. Others, including the Borough President’s office, the Municipal Art Society, and the Pratt Center for Community Development, spoke about the need to expand the “retention zones” where auto-industry zoning will remain in place. There were many calls for a more substantially developed and funded relocation plan for any displaced auto-workers. It’s also true that some residents would like to see more diversified retail along the corridor. But Conte said that, given the high wages of the auto-sector relative to the retail sector, it was necessary for the city to think more thoroughly about “what’s the balance we want and how we’re going to strike it—not just say, ‘oh we want a mix.'” •Development and Jobs – 32BJ signed up to speak in support of the rezoning and asked for guarantees that developers pay prevailing wages and hire locally. In contrast, a few construction workers and labor advocates signed up to speak against the rezoning and hammered home their concern that building contractors were relying on untrained workers, and that the city’s affordable housing projects too often relied on exploitative contractors. “Lives are made dispensable by the fact that you need to build these buildings as cheaply as possible,” said an advocate with the NYC Community Alliance for Workers Justice. A representative from JobsFirstNYC spoke about the ongoing efforts in the area to start a workforce referral network that will connect local residents to jobs. With her questions, Commissioner Michelle de La Uz suggested the importance of not only building a job referral network, but also providing more seats for workforce training and literacy. •Conditional support from nonprofit developers – The nonprofit developers Services for the Undeserved, Settlement Housing Fund and Highbridge CDC each testified in support of the rezoning, but also expressed their understanding of the displacement risks involved. Services for the Undeserved described in detail two affordable housing projects they would like to embark on, one located in the expanded version of the rezoning. Settlement Housing Fund’s Sewall emphasized the importance of investing in preservation and improved state enforcement of rent regulations, among other recommendations. “Markets rise and it’s inevitable with the rezoning or not that these units will come out of regulation,” she argued. She also called for outreach to current property owners—as well as brokers—to help them understand the city affordable housing programs available and prevent them from engaging in speculation, which could take land prices beyond the reach of nonprofit affordable housing developers. HIghbridge CDC’s Sakano also called for nonprofit ownership, enforcement of existing regulations, a more efficient approval process for housing development, and other measures. He also said he supported many of the Borough President’s recommendations. Later, commissioners asked a representative from the Department of Housing, Preservation and Development to discuss the proportion of non-profit to for-profit ownership in the area. The HPD representative said the agency had not yet determined the percentage of for-profit and non-profit ownership, but agree it was a “critical piece” in formulating an anti-displacement strategy. By Abigail Savitch-Lew

14 hours ago by
Under the banner of welfare reform, the administration is eyeing changes to health care, food stamps, housing and veterans programs. President Donald Trump is expected to sign the welfare executive order as soon as January, according to multiple administration officials. The Trump administration and Republicans in Congress are hoping to make the most sweeping changes to federal safety net programs in a generation, using legislation and executive actions to target recipients of food stamps, Medicaid and housing benefits. The White House is quietly preparing a sweeping executive order that would mandate a top-to-bottom review of the federal programs on which millions of poor Americans rely. And GOP lawmakers are in the early stages of crafting legislation that could make it more difficult to qualify for those programs. In the meantime, the Trump administration has already begun making policy shifts that could have major ramifications. Federal health officials are encouraging states to impose work requirements on able-bodied adults on Medicaid — a major philosophical shift that would treat the program as welfare, rather than health insurance. The Agriculture Department said last week that it would soon give states greater control over the food stamp program, potentially opening the door to drug testing or stricter work requirements on recipients of the $70 billion program long targeted by fiscal conservatives. Another initial move has already backfired — the Veterans Affairs Department announced it would redirect hundreds of millions of dollars from a program for homeless veterans to local VA centers, but it reversed course after fierce blowback from advocates. While candidate Donald Trump pledged to protect some safety net programs, conservatives have long wanted to devolve control of social programs to the states and impose stricter work and drug testing rules. Now that they control both ends of Pennsylvania Avenue, Republicans believe they have a once-in-a-generation opportunity to overhaul those programs, which they have long argued are wasteful, are too easily exploited and promote dependency. “People are taking advantage of the system and then other people aren't receiving what they really need to live, and we think it is very unfair to them,” Trump said in October. The president is expected to sign the welfare executive order as soon as January, according to multiple administration officials, with an eye toward making changes to health care, food stamps, housing and veterans programs, not just traditional welfare payments. To be sure, many of the changes are still in the talking stages, and it remains to be seen when and how they are actually implemented and at what political cost. And there remains internal debate in the administration over how to balance other priorities like an infrastructure bill. The White House's leading advocate for a welfare overhaul, Domestic Policy Council Deputy Director Paul Winfree, is slated to leave the administration on Friday, according to a person familiar with the move. But two administration officials said Winfree's departure won't hobble the welfare push, as the White House has already completed much of the groundwork on the issue. Defenders of the safety net programs, meanwhile, fear the effort could rob Americans — including many Trump voters — of a vital lifeline. “It would be a recipe for massively exacerbating poverty and inequality in America in violation of all of Trump’s campaign promises,” said Rebecca Vallas, managing director of the Center for American Progress’ poverty program. “The poor are under attack,” said National Community Reinvestment Coalition President John Taylor, who accused Republicans of “rigging the system” for the top 1 or 2 percent at the expense of the middle class and poor. “Most Americans, if they really understood what was going on, would not support it,” he said. Although the effort to reshape the country's welfare system is all but guaranteed to produce powerful political backlash, it appears to have broad backing from conservative congressional Republicans, who are already coordinating with the White House on a legislative agenda to complement expected executive actions. White House Domestic Policy Council staff, who are working closely with congressional Republicans on legislation, are slated to meet this week with House Ways and Means Committee and Senate Finance Committee staff. The exact provisions of the pending bill are unknown, but a conservative group closely aligned with lawmakers said Republicans intend to pass broadly focused legislation. “They’re thinking about welfare reform in a large, all-encompassing way, not a program way,” said Jason Turner, executive director of the Secretaries’ Innovation Group, a group of conservative officials who run state-level social programs and met with Ways and Means Committee Republicans on the Hill last week. Turner said he expects Republican leaders will seek to combine their ideas with House Speaker Paul Ryan’s vision in his “A Better Way” plan to create a “mega-idea” for reform with a focus on work. “In terms of scope, that is part of the discussions that we are having with the committees,” White House spokesman Raj Shah said. “We are still running options through the interagency process and consultations with Congress.” Ryan spokesman Doug Andres declined to offer more details, adding that Republicans would discuss the issue at their January retreat. In recent days, Ryan said he hopes to embark on entitlement and welfare reform next year. He has said entitlement reform — an overhaul of programs like Medicare and Medicaid that has been his priority since his days as Budget chairman — is essential for tackling the debt, which is set to surge by $1 trillion under the Republican tax reform bill, according to the Joint Committee on Taxation. “We have a welfare system that’s basically trapping people in poverty and effectively paying people not to work, and we’ve got to work on that,” he said in a recent radio interview. Democrats immediately pounced on Ryan’s comments. “Paul Ryan just admitted that after providing $1 trillion in tax breaks to the top 1% and large corporations, Republicans will try to cut Social Security, Medicare, Medicaid and help for the most vulnerable Americans,” Sen. Bernie Sanders (I-Vt.) wrote on Twitter. It is unclear whether Republicans will take aim at Medicare given Trump’s campaign promise not to touch it. Trump also promised not to cut Medicaid or Social Security, the latter of which is trickier for lawmakers to change because of procedural rules designed to protect the program. If Republicans steer clear of Medicare, they say they will need to cut deeper into programs like food stamps and Medicaid. Despite Trump’s campaign vow on Medicaid, the GOP already placed the health insurance program for the poor on the chopping block earlier this year as part of its failed push to repeal Obamacare, proposing to siphon nearly $800 billion from the program over a decade. With strong Democratic opposition a certainty, GOP leaders will need to rely on a budget tool that allows them to jam bills past their Democratic counterparts. That tactic, known as budget reconciliation, allowed Republicans to pursue their successful push on tax reform this year, as well as an unsuccessful one on health care. But unlocking reconciliation will require Republicans to almost unanimously agree to a budget blueprint — unity that took months of wrangling by GOP leaders this year even on their longtime priority of tax reform. That unity may be even more difficult to achieve in an election year. Ways and Means Chairman Kevin Brady (R-Texas) recently confirmed to a small group of D.C. conservatives that welfare reform would be the focus of the 2019 budget. But the reception wasn’t what he expected. Several people in attendance were shocked, according to one person familiar with the conversation — because they read it as Republicans abandoning their push for Obamacare repeal. “Not that we don't need welfare reform,” the person said. “But if you're looking to get something accomplished through 2018 and through the Senate, even on reconciliation, it’s hard to see how welfare is that policy.” But Rep. Rob Woodall (R-Ga.), a longtime Budget Committee member, told POLITICO last week that he’s leaning toward using the reconciliation process for welfare reform. “When we're using reconciliation instructions, we should deal with the hard stuff,” Woodall added. “The easy things, people have done already. What's left is hard, and it's hard when you're dealing with food stamp programs, for example.” On the executive side, the Trump administration is moving ahead on its own even before Republicans work out the details of their legislative push. Food stamp changes One of the biggest programs that could be in the administration’s cross hairs is food stamps, or the Supplemental Nutrition Assistance Program, a $70 billion program that helps one in eight Americans buy groceries each month. The Department of Agriculture has said it’s developing a policy that could make it easier for states to impose stricter work requirements or drug testing on recipients — things that states like Wisconsin and Florida have long tried to do, but have been blocked by either courts or USDA. On Tuesday, USDA issued a vague announcement highlighting the principles around encouraging self-sufficiency, pledging to give more flexibility and “local control” to states administering SNAP in the coming weeks. “SNAP was created to provide people with the help they need to feed themselves and their families, but it was not intended to be a permanent lifestyle,” said Agriculture Secretary Sonny Perdue. Many states already limit SNAP benefits to three months for able-bodied adults who don’t care for young children or an elderly parent, and who aren’t working or enrolled in a job training or volunteer program. Nearly half of all SNAP recipients are children. Handing over more control to states is loathed by Democrats and anti-hunger advocates who fear that Republicans will eventually try to block-grant SNAP, much like they did with the Temporary Assistance for Needy Families program during welfare reform in the 1990s — a change that led to a big drop in the rolls but, critics argue, didn’t actually reduce poverty. SNAP serves a vastly larger population than TANF and has been shown to reduce hunger and improve health outcomes. There’s also now renewed concern that more states could try to follow Wisconsin Gov. Scott Walker’s push to impose drug screening on all able-bodied adults who apply for SNAP, which critics argue stigmatizes the program and costs many times more than it will save taxpayers. Medicaid work requirements Work requirements are just one of several new coverage restrictions federal health officials are expected to grant to red states trying to reduce enrollment in a program that now covers one in five Americans. Other proposals include imposing higher costs on enrollees, and strict disenrollment penalties for not following certain rules. But work requirements have generated the most ire from Democrats and advocates for low-income people, who argue that they do nothing to advance Medicaid's core purpose of providing health coverage to the poor. Ten Republican-led states are seeking the Trump administration’s permission to require certain enrollees to work or participate in other job-related activities as a condition of receiving health coverage. The restrictions, which were repeatedly rejected by the Obama administration, are primarily targeted at low-income adults who gained coverage under Obamacare's expansion of Medicaid. Yet other red states that never implemented that expansion — including Kansas, Maine and Mississippi — are also interested. Top health officials have actively encouraged states to enact work rules, saying the proposals are designed to reduce government dependency as Medicaid has grown to cover able-bodied adults rather than primarily serving the disabled, pregnant women and children. "The thought that a program designed for our most vulnerable citizens should be used as a vehicle to serve working-age, able-bodied adults does not make sense," Centers for Medicare and Medicaid Services Administrator Seema Verma said in a November speech to state officials. Housing At the Department of Housing and Urban Development, Secretary Ben Carson has made clear his philosophy that welfare fosters dependency and has said government should be focused on the business of getting people out of public housing. HUD will be “significantly involved” in Trump’s welfare reform efforts, Carson told POLITICO. “Our objective is to empower people, to give people opportunity. “Housing and affordable housing is supposed to be something we provide for the elderly, the disabled and for work-able people. It should be a steppingstone toward self-sufficiency,” Carson said. “Obviously, that has not been the case for decades. We need to change that. But to change it, we need to be able to provide opportunities.” On Thursday, he launched his EnVision Center project, a multi-agency effort to create job training and educational opportunity hubs near public-assisted housing with the goal of self-sufficiency. HUD will track people using the center to see how many find long-term jobs, attain education and start a business. By ANDREW RESTUCCIA, SARAH FERRIS and HELENA BOTTEMILLER EVICH