Landlords who benefit from big tax breaks in exchange for agreeing to provide affordable housing units and then fail to offer cheaper apartments will come under new scrutiny if a bill passed by the City Council is signed into law by Mayor Bill de Blasio.
The legislation is designed to crack down on building owners who cheat the system, advocates said.
On Tuesday, the Council approved Intro 1015-A, a bill sponsored by Councilmembers Ben Kallos and Jumaane Williams, with input from Manhattan Borough President Gail Brewer, to hold building owners who receive tax abatements accountable to the city.
Starting in 2020, landlords who aren’t providing affordable apartments after they have received financial windfalls in the form of city financing or tax breaks will be required to register their units with the city.
Under the legislation, the landlords will also have to offer at least some of their apartments in tax-abated buildings for rent at affordable prices. If they fail to follow the rules, they will be hit with escalating fines that start at $100 per unit per month and go up to $2,000 per unit per month.
Williams (D-Flatbush), chairman of the Council’s Housing Committee, said the legislation is aimed at righting a wrong.
“Landlords cannot be permitted to make promises of affordable housing, collect taxpayer money, and then shirk their responsibility to uphold that promise of delivering affordable units,” Williams said in a statement. “This bill helps to create the transparency that is badly needed in this process, by listing all registered units online and keeping landlords accountable.”
The bill was drafted in response to a report by ProPublica in which it was estimated that real estate developers have received $100 million in tax breaks and other amenities while at the same time 50,000 housing units that were supposed to be affordable might not be affordable after all.
“New York City is in desperate need of affordable housing. It is a crisis, and we cannot allow landlords to hide even a single unit of it from the public,” Kallos said. “We need a full accounting of every affordable unit of housing in the city, and we need regular monitoring and strict enforcement.
In 1993, New York state eliminated penalties for failing to register affordable units, a move that opened the door to building owners flouting the law and charging high rents, according to Kallos (D-Upper East Side).
Some landlords benefit from direct financing from the city, tax abatements lasting decades or being allowed to add density to their buildings.
The de Blasio administration combed through city records and found 37,141 apartments in tax abated buildings where the owners failed to comply with affordable housing rules, costing the city an estimated $304 million in property taxes, Kallos said.
The legislation would also give tenants the chance to learn if the rent they are being charged by their landlords is legal under Department of Housing Preservation and Development (HPD) regulations.
In addition, a listing of all affordable housing units listed by street, apartment size and the affordable housing subsidy would be available for the public.
“This legislation is an important step in the right direction; improving the lives of those in need of housing and protecting the financial interests of New York City taxpayers,” said Stephen Werner, an HPD analyst who first called attention to the issue.
Harvey Epstein, director of Community Development Project at the Urban Justice Center, called the bill a major step toward transparency in the affordable housing market.
“This will provide an additional check to ensure owners are registering their affordable housing and give tenants the information they need to make well informed decisions their housing needs,” Epstein stated.