The Real Estate Board of New York to The Committee on Housing and Buildings of the New York City Council Concerning Oversight of Land Banks and Land Trusts, Intros 118, 1977, and 2044

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The Real Estate Board of New York (REBNY) is the City’s leading real estate trade association representing commercial, residential, and institutional property owners, builders, managers, investors, brokers, salespeople, and other organizations and individuals active in New York City real estate. REBNY thanks the Committee on Housing and Buildings for the opportunity to provide feedback at today’s hearing. REBNY appreciates and supports the use of land banks and community land trusts as stabilization tools, such as the successful use of land banks in Kingston and Albany to deal with swaths of vacant properties that were foreclosed on during the last recession with the help of public-private partnerships. It is for this reason that REBNY opposes both Intro 118 and Intro 1977. Both bills prohibit public-private partnerships as a preference category for the former and the expulsion of private developers as qualified entities in the latter – both bills will result in less housing and cost the city more money for the housing that is produced.

Private developers individually and in partnership with not for profits have developed and built thousands of affordable apartments during this administration and with approval by this body. REBNY members are deeply committed to providing well-maintained safe buildings for their tenants, to the preservation and creation of affordable housing, high quality construction and design, and efficient operations. An examination of the City’s own land use applications show a history of the City having to re-negotiate city stipulations and in some cases re-acquire, and re-sell formerly city owned properties for not for profits who did not manage their buildings well, who had historical issues with maintaining reserves for capital improvements, and have multitudes of code violations. Before precluding or elevating one type of owner over another, the Council would be well served to do a real comparison, including on eviction filings and code enforcement.

Affordable units are challenging to maintain regardless of ownership given the City’s tax system that penalizes multifamily rental buildings, exacerbated by the exponential assessment growth under this administration for those same buildings, and the math that it takes to build and operate affordable housing that is income restricted to the varying neighborhood AMI band needs. The rents do not cover operation costs. Coupled with inconsistent contracting practices by the city, which controls the disposition process, term sheets, and regulatory agreements, expertise in navigating these challenges is built over time.

The private sector has the consistent capital, capabilities, and technical expertise to bring online a development with hundreds of units, and deal with complicated on site conditions such as brownfields. The most successful projects have been partnerships, with for profit developers leveraging their strengths and not for profits leveraging theirs to have a growth opportunity in financing and construction management expertise. So the preference categories in Intro 118 run at cross-purposes if the goal is to both maximize the number of affordable units per site and build not for profit capacity.

Moreover, this limitation would not align with how many of the successful land banks throughout New York State currently do business. Other land banks look for qualified not for profit and private developers, and do not limit the universe of qualified partners in spite of their housing goals. Such a limitation would be counter-intuitive to the end goal of increasing affordable housing. Finally, Intro 1977 raises a number of legal concerns, including the arbitrary and capriciousness of exclusion of all private entities, broad scope of properties included, and the relationship to the Martin Act.

REBNY thanks the Committee on Housing and Buildings for consideration of these points and would welcome the opportunity to work with City Council to improve the legislation to address these concerns.

To read the full testimony with bill-specific feedback, please click here.