Testimony of The Real Estate Board of New York to the Committee on Housing & Buildings and the Committee on Consumer Affairs & Business Licensing of the New York City Council on Intro No. 1912 and Intro No. 1936, as Part of the Covid-19 Package

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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 strongly supports policies that expand the local economy, grow and improve the City’s housing stock, and create greater opportunities for all New Yorkers. Thank you to the City Council for the opportunity to provide REBNY’s perspective regarding COVID-19 related legislation.

New York is facing an unprecedented crisis. New Yorkers are worried about their health and safety, and too many are worrying about how they will provide for themselves and their families.

REBNY and its members are committed to ensuring our fellow New Yorkers withstand this crisis safely in their homes. That is why before government or the courts acted, REBNY members representing over 150,000 rental units voluntarily pledged to not execute warrants of eviction for three months. With so much physical, emotional, and financial suffering going on now, no one should have to worry about losing their place to live during this crisis.

During this time of crisis, property owners are doing all they can to meet their responsibility of providing quality and safe housing for their tenants. However, as is the case with most businesses in this crisis, it has become increasingly difficult financially to find ways to cover the costs for utilities and maintenance, COVID-19 related cleaning and safety precautions, and the other already burdensome financial obligations they have including property taxes.

Very few industries or sectors have been shielded from the economic downtown brought by COVID-19, and the real estate industry is no exception. As we look for ways to encourage a robust but safe economic recovery, it is critical that policymakers recognize that one well-intentioned bill can have harmful consequences on other actors in ways that will hinder our ability to recover. Unfortunately, it does not appear that the bills being proposed in the package takes that into account.

Below please find more detailed comments on the bills under consideration today.

BILL: Intro No. 1912-2020

SUBJECT: Ceasing the taking and restitution of property and the execution of money judgments by the city sheriff and marshals due to the impacts of COVID-19.

SPONSORS: Speaker Johnson and Council Members Kallos, Van Bramer, Lander, Chin and Ayala

Intro 1912 prohibits the marshals and the City’s sheriffs from the taking and restitution of property or the execution of money judgments until the later of the end of the state of emergency or September. For New Yorkers impacted by COVID-19, marshals and sheriffs would be barred from the taking and restitution of property or the execution of money judgments.

REBNY is opposed to Intro 1912 for numerous policy, practical, and legal reasons. REBNY understands the Council’s concern for eviction proceedings and shares its pursuit for fairness and justice in the process, notably during the COVID-19 pandemic. It is why REBNY was the first group to announce that its members voluntarily instituted a 90-day eviction moratorium for their tenants to provide relief. Additionally, as the pandemic has continued, REBNY members have been proactive with their tenants to best address their specific needs as we weather this crisis together.

The powers and duties of marshals and sheriffs are embedded within New York State law, not local law. The Council attempts to limit these duties through a local law. It is misguided and conceivably, unlawful basis by the Council to usurp State authority.

Notwithstanding the above, from a practical perspective, property owners rely on the ability to collect rent to meet their expenses. According to data collected by the City of New York, nearly 30% of a tenant’s rent goes to property taxes. In the past year, Class 2 properties experienced a 7.6% increase in property tax levy, a faster pace than that of the City as a whole, as the Rent Guidelines Board PIOC Report notes. Additionally, assessments rose 7.8% and the Class 2 levy share increased 0.4%. Rent also pays for utilities, insurance, maintenance, and other operating costs. As a result, not all property owners are able to forgo rental payments and simultaneously operate their properties at the same level for the next year.

Noticeably since Intro 1912 provides no contingency regarding a time period, an eviction moratorium could last indefinitely. There should be widespread concern on the impression that this legislation gives to tenants, particularly those who have the means to pay rent and will choose not to do so. The economic consequences of this misimpression could lead to widespread mortgage default, decreased property tax collection, and a subsequent decline in necessary city services for quality of life for tenants across the city.

Additionally, while this bill does allow for actions to be taken in connection with a matter under the jurisdiction of the family court, at a minimum, the bill also needs to allow for marshal action if an action is in connection with a matter under the jurisdiction of criminal court. For example, Safe Horizon, New York City’s domestic violence hotline, has received a surge of 3,000 calls in April, after a decline in March. The family court system does not deal with the issuance of permanent and temporary orders of protection, often granted in criminal matters, which require the removal of an individual. We need sensible legislation that allows owners to maintain the warranty of habitability that protects the welfare of their tenants.

BILL: Intro No. 1936-2020

SUBJECT: Amending the definition of harassment to include threats based on a person having been impacted by COVID-19.

SPONSORS: Council Members Torres, Kallos, Van Bramer, Chin, Powers and Speaker Johnson

Intro 1936 amends the definition of harassment in the Housing Maintenance Code to include threats against an individual based on their status as a COVID-19 impacted person, their status as an essential employee, or their receipt of a rental concession or forbearance. Harassment would be punishable by a civil penalty of $2,000 to $10,000.

REBNY agrees wholeheartedly with the Council that protecting tenants from harassment of bad actors, notably during the COVID-19 crisis, should be a priority. However, it is important to clearly define what harassment means when most of the normal ways our society interacts with each other has changed.

With that said, REBNY has concerns surrounding how Intro 1936 will affect the conversations that are already happening between tenants and owners that could lead to solutions on rent relief. Notably, if either side of those conversations are now fearful that such conversations could be misconstrued as harassment, needed relief for tenants could be lost. Is one knock on the door to ask if the building notices have been received, which have been emailed at some points daily to alert tenants to changing executive orders, CDC guidance, and protocols on elevator usage, considered harassment? What about reminders to pick up packages?

Additionally, REBNY has concerns that surround the idea of creating a temporary protected class, and how a building owner understands what constitutes a protected class. As written, there does not seem to be a contingency on for how long a tenant could claim protected status relative to the COVID-19 disaster declaration, theoretically allowing for the protected class to be claimed well after the end of the current pandemic.

Additionally, extending the protected class to also cover individuals who have received a rent concession or forbearance for any rent owed also raises questions and concerns. As written, there is no clarity on what would occur if a tenant who has claimed protected status, for example, does not pay rent on a future unit under a different lease.

Finally, in our social distancing society, REBNY has concerns on if the bill addresses what could be misconstrued as harassment. For example, limitations on elevator usage are important but certainly will provide inconveniences for tenants. We encourage the Council to take these scenarios into consideration to best provide more clarity for building owners and tenants alike.

CONCLUSION

As we work to address reopening our economy while prioritizing the health and safety of all New Yorkers, we need to support proposals and actions that embrace collaboration. Additionally, we need to understand the reality that most small businesses and industries across our City need real and immediate relief.

Unfortunately, many of the proposals fall short on understanding that reality. REBNY is ready and willing to work with the Council and appropriate City agencies to find solutions that balances relief for both small businesses and workers, the obligations of owners, and the needs of tenants.

Thank you for the time and consideration of these points.