SEQRA Reform Advances, Tax Fight Lingers

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

• SEQRA reform and a city pied-à-terre tax have made it into a state budget agreement.
• Housing wonks and the industry react.
• First there was COPA, then TOPA, now there’s CTOPA, or the Commercial Tenant Opportunity to Purchase Act.

In this edition we mention: Assembly Speaker Carl Heastie, Senate Deputy Majority Leader Michael Gianaris, Assembly member Steven Raga, and others.

We Heard

• Budget deal?: Gov. Kathy Hochul on Thursday morning announced what she called a “general agreement” on a $268 billion state budget. Minutes later, Assembly Speaker Carl Heastie told reporters “there is no deal,” a position echoed by Senate Deputy Majority Leader Michael Gianaris. So, the budget remains unsettled and key details are thin. Still, two major real estate issues are taking shape: SEQRA reforms aimed at speeding up housing production and a proposed pied-à-terre tax on second homes in New York City. On SEQRA, Hochul appears to have won support for the broad outlines of her proposal, which she pitched as a way to stop NIMBY opponents from using environmental reviews to trap housing in “regulatory hell.” Under the framework, developments in New York City would avoid environmental review if they include 500 units or fewer in medium- or high-density districts, or 250 units or fewer in low-density areas. New York public schools are included, but not childcare centers. Projects located in coastal flood zones are not exempt. The budget would also impose a two-year deadline for completing environmental impact statements. Those are the few specifics we know at the moment. We know even fewer details about the pied-à-terre tax. Hochul said state and city officials are still negotiating the structure of a tax to “help close the city’s budget gap without eroding its tax base or burdening hard working New Yorkers.” Pressed for specifics, Hochul pointed to the city’s “bizarre property tax system,” where some properties are assessed far below market value. “We’ve had some really good conversations with the city on how they will do this,” she added. Hochul said more details will land “within a week.”
• Early reaction: Even with limited details, housing advocates hailed Albany’s move to fold environmental review changes into the state budget. “With these reforms now advancing, New York will take a major step to build at the scale our affordability crisis demands,” said Annemarie Gray, executive director of pro-housing group Open New York. The industry response was more measured. James Whelan, president of the Real Estate Board of New York, said, “these are complex issues, and it is positive to see progress made through collaboration.” He is decidedly less pleased with the pied-à-terre, warning against a “poorly designed or hastily implemented” tax.
• CTOPA: First COPA, then TOPA, now there’s a new acronym to provoke agita from landlords: CTOPA, or the Commercial Tenant Opportunity to Purchase Act. Queens Assembly member Steven Raga this week introduced the Commercial Tenant Opportunity to Purchase Act, a bill that would give certain commercial tenants the right of first refusal to buy the buildings they occupy when owners decide to sell. Raga says his goal is simple: keep small businesses in place and prevent displacement. “I’m advancing this bill now because we’re at a breaking point — small businesses are being pushed out as buildings change hands and outside investors move in,” Raga told The Real Deal. The legislation builds on earlier tenant-purchase proposals, including the City Council’s Community Opportunity to Purchase Act and the State Senate’s Tenant Opportunity to Purchase Act, both of which sought to give tenants the first shot at buying certain multifamily properties. Raga’s bill extends that concept to commercial tenants. Under the measure, landlords would be required to present a bona fide sale offer to qualifying small-business tenants, defined as independently owned businesses with 100 or fewer employees. Tenants would then have up to 60 days to team up with other occupants or approved purchasers — to be designated by the Empire State Development Corporation — to acquire the property. The bill carves out several exemptions, including government-owned properties, hospitals, schools, charities, hotels and co-op and condo buildings. “This is about leveling the playing field,” added Raga, “so the local businesses that define our neighborhoods have a real opportunity to stay and grow.” Don’t expect much movement on the proposal this session — the bill lacks a companion bill in the State Senate.

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

Bill Tracker

The Catch-Up

HPD cited a $100 buyout in Queens as evidence of a landlord’s bad behavior, but there’s more to the story, writes TRD columnist Erik Enquist. 

The Mamdani administration’s push to freeze rents for nearly one million rent-stabilized city apartments will reach a crossroads Thursday night, when the panel that decides whether rents should go up casts its preliminary vote, writes The New York Times.

In the past two years, developers have filed permits for more than 150 residential buildings with 99 units. Why? Because at that size, savvy builders looking to take a major tax break for residential developments can avoid paying a higher minimum wage to construction workers — while minimizing the number of affordable apartments they must include, reports The City.

The Kicker

“The government doesn’t have the cash, capacity or capability to meet the current scale of distress,” said New York Apartment Association CEO Kenny Burgos ahead of tonight’s preliminary vote by the Rent Guidelines Board.

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