Ex-DOF Chief Martha Stark Pans NYC Pied-à-Terre tax

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Hello, let’s get into today’s news at the intersection of policy and real estate:

• Former DOF Commissioner Martha Stark calls a pied-à-terre tax “hard to justify.”
• HPD is teaming up with state lawmakers on a bill to streamline fines for landlords who violate affordable housing requirements under zoning rules.
• Gov. Kathy Hochul escalates criticisms of the city’s housing voucher program.

In this edition we mention: Former Department of Finance Commissioner Martha Stark, State Sen. Brian Kavanagh, Assembly member Linda Rosenthal, and others.

We Heard

• Opinion of note: Former NYC Department of Finance Commissioner Martha Stark isn’t so hot to the idea of a pied-à-terre tax, calling it “hard to justify” in an interview with The Real Deal. “My concern about this tax is that it feels like it’s not based on benefits received,” said Stark, who served under Mayor Michael Bloomberg from 2002 to 2009. “The reason for it can’t just be because we can, and those people don’t vote.” She noted that owners of second homes already pay property taxes, though she said the system remains uneven due to the city’s broader assessment structure. “So I think this one’s harder to justify, except that other global cities have it and it’s easy for elected officials to say, we need money, let’s implement a tax on people who don’t vote here.” Stark, who serves as policy director for Tax Equity Now — a real estate-backed group suing the city over its property tax system — said there are some problems the city can fix on its own now, such as reworking how condos and co-ops are assessed so that the units are compared only to market-rate rentals, not rent-regulated apartments. 
• Enforcement shakeup: City housing officials want Albany to greenlight a new bill that would make it easier to fine landlords who flout Mandatory Inclusionary Housing and other affordability zoning rules — leaning on automatic penalties instead of blunt tools like yanking a building’s certificate of occupancy, HPD confirmed to TRD. State Sen. Brian Kavanagh and Assembly member Linda Rosenthal, who chair their chambers’ housing committees, introduced the HPD-backed bill that’s effectively a technical fix: when OATH finds an owner overcharged a tenant, the judgment that would result in fines would be automatically docketed in court — creating a mechanism to swiftly enforce penalties. “If you commit to building an affordable home, it needs to actually happen,” said Andrew Stern, a HPD spokesperson. “A proportionate financial penalty means we can match the enforcement to the violation and move faster, which is better for everyone.” The legislation follows the City Council’s 2024 passage of the City of Yes for Housing Opportunity amendments, which enacted sweeping zoning changes that expanded development opportunities in exchange for affordable housing. Kavanagh said he reads the bill as HPD “anticipating these kinds of affordability requirements becoming a bigger part of their business” due to the City of Yes. The bill is currently in committee, but with both housing chairs behind it, quick movement is likely. 
• Voucher wars: Hochul escalated her criticism of the city’s housing voucher program Tuesday, calling on the Mamdani administration to rein in what she described as “unsustainable” spending. Costs have more than tripled in three years for CityFHEPS — from $499 million in fiscal year 2023 to a projected $1.7 billion this year, according to analysis from fiscal watchdog Citizens Budget Commission. The city’s preliminary budget projects costs to climb to $2.2 billion next year and to continue creeping up in the intervening years. Asked if City Hall and the Council are on board with spending cuts, Hochul said the talks are ongoing. “No — we’re trying very hard to get them focused on a program that is growing 4 percent a month,” she said. “We’ve asked them to take a close look.” The pressure comes as Mayor Mamdani and Council Speaker Julie Menin delayed the city budget rollout to at least next Tuesday, while Albany also runs behind on its own spending plan. In March, facing a bleak fiscal outlook, Mamdani reversed a campaign pledge to expand the voucher program, despite a City Council-approved plan upheld in court. Matthew Rauschenbach, a spokesperson for the mayor’s office, said the administration is “committed to ensuring CityFHEPS is fiscally secure and sustainable long-term,” while also working to boost housing production. 

Have a tip or feedback? Reach me at caroline.spivack@therealdeal.com. 

Bill Tracker

The Catch-Up

Council member Lincoln Restler is using the Gotham Organization’s Monitor Point project, a plan for 1,150 homes, as leverage to demand that the city fully fund Bushwick Inlet Park and that 50 percent of the apartments be affordable, writes TRD columnist Erik Engquist.

New York lawmakers are facing a time crunch with the state budget more than a month late and the end of session fast approaching, leaving little time to take up other bills. The longer it takes to pass a budget, the more bills fall to the wayside with only 20 session days left on the legislative calendar, writes Newsday.

Meanwhile, budget negotiations are ongoing… Gov. Kathy Hochul and lawmakers are now considering a $1 billion utility rebate program as part of the final deal. Overall, legislative leaders say there’s been meaningful movement on some top policy items, including overhauling changes to the state’s climate law and overhauling car insurance regulations, and that a handshake deal on the budget is possible this week (with voting on the remaining budget bills expected next week, if that’s the case), reports Politico. 

The winning bid to redesign Penn Station is expected next month, selected from one of three teams: Grand Penn Partners, a team led by Macquarie Group; Penn Transformation Partners, led by Halmar; and Penn Forward, led by Fengate, reports Crain’s New York Business.

The Kicker

“What these pols seem to be saying is that the rich are evil or the enemy or the targets or maybe even just suckers,” said Vornado Realty Trust chairman Steve Roth, in a six-minute rant during a Tuesday earnings call. Roth’s comments came in response to a recent viral video outside of hedge fund billionaire Ken Griffin’s $238 million penthouse at 220 Central Park South, to promote Hochul’s proposed pied-à-terre tax.

Read more

For co-ops, pied-à-terre tax leaves more questions than answers

“Winners and losers”: What if Mamdani finally reforms NYC property taxes?

The Daily Dirt: City of Yes turns one