REBNY Comments to NYC Department of Housing Preservation and Development on the Proposed Title 28 Chapter 51 Affordable New York Housing Program Rules and Eligibility Requirements

The Real Estate Board of New York is a trade association comprised of 17,000 owners, builders, residential and commercial brokers and managers and other professionals active in New York. 

Below are our comments and concerns raised by our members with the proposed draft Affordable New York Housing Program (formerly 421a) rules. Some of our members have also submitted comments separately which may provide more detail to the comments summarized here.

Common Area – defined as areas accessible to two or more rental units without a usage fee. This may be fine as Common Area is what must be accessible to all. There needs to be a clarification that there is no problem with having other areas in a rental building/component that have a fee for usage, such as gym or a party room. 

Marketing Monitor – section (ii) requires pre approval by Agency of each lease. This can be a barrier to a timely lease up, especially for the many large projects that are in the pipeline and under construction. HPD should be required to comply with a very defined and short timeline for approval, not more than a few days. What would the process be for getting HPD approval to use an in-house department? Can a Marketing Agent also serve as a Marketing Monitor?

Notice of Intent – why is this prohibited from starting marketing more than 7 months prior to TCO? And in section 51-02(d)(2) it says that when, after completion, you apply, you need to show proof that you filed Notice of Intent no more than 9 months from completion. These two things seem contradictory and problematic. Also, for projects that want to opt in and are already complete, the rules need to be clear that this requirement would be waived.

On the issue of Permitted Rent the rules should:

  • Consider clarification language that it is 30% of the applicable “%” of AMI (to be clear that it is not 30% of AMI)
  • Need to address/allow Section 8 rents. Language to register rents at Section 8 (higher) rents would need to be written into the regulatory agreement.
  • Under Monitoring Contract (i) it requires the fee owner to provide a monthly rent roll. This requirement should be limited to the affordable units and those market rate units because of the initial rent is are rent regulated.
  • Regarding rules on the timing of when benefits commence, HPD and DOF will need to devise a clear process to repay excess property taxes paid during the construction period.

 

The rules state that no change to unit distribution after Notice of Intent. This should relate to Affordable Housing Units only and should allow for HPD to approve changes.

Under the application requirements in Section 51-02, it says the application must include proof that prior to the Completion Date the Agency has approved the unit mix requirements. When does the HPD review of the unit mix occur?

Restrictive declaration must be recorded prior to the submission of the application of benefits.

There should be obligation on Agency to provide a contingent letter of eligibility prior to prep of restrictive declaration, marketing, etc.  Also, if benefits are denied or the rental project chooses to proceed as a condo and forego benefits, there should be an ability to rescind the restrictive declaration. Are condominium projects with no affordability required to file a restrictive declaration?

As to units set aside for persons with disabilities per Section 504; it should be deleted since there is no federal funding with this tax exemption benefit. 

The rules should make clear that an all market rate building is permitted for a multi-building project. Further the rules should make clear that an all affordable building, which satisfies the affordability requirements for the multi-building project, does not have to have a minimum of 30% market rate units on a floor. Similarly it should be made clearer that every building segment in an Eligible Multiple Dwelling must contain one or more Affordable units. It should be made clear that a segment is a part of the building and provide an example.

Regarding the leasing to proceed per Agency marketing guidelines, is there an assumption that these guidelines will include a requirement that 20% of the move-ins will be “homeless”? The rules should make clear the different requirements for projects that have proceeded under the pre-2015 law and those proceeding under the law in effect post 2015.

Rules state that no lease for an Affordable Housing Unit can be executed until the Agency verifies the eligibility of the proposed tenants. This could be very problematic during the initial lease up of a large building. This requirement should be removed or a time limit for HPD approval should be added.

Section 51-06(c) is unclear. It mentions “deadline by which to file a Notice of Intent”—is this the deadline of 9 months prior to completion mentioned in section 51-02(d)(2)?  This seems in conflict with definition of Notice of Intent which restricts filing of notice until 7 month prior to construction. 

There are issues raised with the marketing requirements for middle income units: asset test for middle income tenants is too low; combining middle income applicants with low income applicants in the lottery impair leasing to middle income tenants; advertise for multiple income bands.

The marketing bands are too narrow and this makes it challenging to find qualifying households, especially at 120% and 130% of AMI.  

The Rules should permit rounding up when the percentage of affordable units for an individual income band is fractionally below the percentage but the number of total affordable units still meets the total percentage of affordable required.

The rules should clearly state that market rate units whose initial rent is above the deregulation threshold do not have to file rent regulation registration. It appears only in the statement and purpose of the rules.

The rules should clearly state that 421a projects which commenced under the 2015 rules and did not receive benefits before the June 2015 date in the statute, but did receive benefits after June 2015 are permitted to opt-in to the new program.

HPD should relax its household asset limitation which is currently too low and disqualifies many otherwise eligible households.

HPD should waive or reduce its filing fee for projects that opt-in and have already paid an extremely high processing fee.

The Wage Rules should also confirm that the penalty for a deficiency of fifteen percent (15%) or more of the Construction Wage is calculated as twenty-five percent (25%) of the deficiency and not 25% of the Construction Wage amount.

Our members have been concerned with the administration of the rent regulations provisions. We have worked with Rosenberg & Estis throughout the development of the new 421a program, particularly on rent regulation. Below are the comments they have submitted separately on this issue which we include in our comments as well.

Proposed new section 51-07 of the ANYHP Rules is necessary because the high rent deregulation provision set forth in subdivision (16)(f)(xi) which permits Market Units to be deregulated from Rent Stabilization as otherwise permitted by the Rent Stabilization Law and Emergency Tenant Protection Act based on the high rent threshold, is not provided for in the ANYHP Rules. The ANYHP Rules should implement subdivision (16)(f)(xi) by including a section 51-07 which explicitly provides for high rent deregulation of Market Units.

Moreover, section 6-02(g)(2) of the existing 421-a Rules in Title 28 should be amended to be consistent with the proposed section 51-07. The existing 421-a Rules require that rent stabilization jurisdiction apply to all apartments in buildings receiving section 421-a tax benefits, except those units in buildings owned as cooperatives or condominiums. Rental building apartments are subject to deregulation pursuant to subparagraphs (i) and (ii) of 6-02 (g)(2).  A third subparagraph (iii) should be added to include high rent deregulation in the same manner as provided for in section 51-07 and subdivision (16)(f)(xi). This amendment to the existing 421-a Rules to explicitly provide for high rent deregulation of Market Units would avoid inconsistencies within the 421-a Rules, and clarify that high rent deregulation applies to subdivision (16) Market Units.

51-07 Rent Stabilization for Market Units

Market Units, as defined by subdivision (16), may be deregulated from Rent Stabilizations as defined Subdivision (16) when the Legal Rent for such Market Unit exceeds the deregulation rent threshold as defined by Rent Stabilization.

Amendment of the Existing 421-a Rules in Chapter 6 of Title 28

(§)6-02(g)(2) is amended to add: “(iii) with respect to Market Units as defined by Subdivision (16), where the legal rent for such Market Unit exceeds the deregulation rent threshold as defined by local law or the Act.”

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