New York State Senate

'Good Cause' is the great cause of market renters in 2019 - so let's get it passed

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On June 15th, rent regulation laws are once again set to expire in New York, potentially impacting millions of renters. This happens every few years but, outside of a collection of tenant groups, politicians, and journalists, most New Yorkers don’t ever notice.

Why should they? More than half of the renters in NYC don’t have any type of rent protections at all — and NYC is by far the largest concentration of rent regulated apartments in the US, let alone in the state. If the rent laws only impact a small (getting smaller) group of renters, who cares? Honestly, in past years, there hasn’t been much reason for market-rate tenants to care.

That’s all changed this year. This year we’re fighting for Universal Rent Control. It means what it says — protection for all types of renters.

For the first time in living memory, if you’re a market-rate tenant, you have a big, big stake in this year’s fight — it’s called ‘Good Cause’. And we need your help to make sure it passes.

The purpose of the bill is simple but revolutionary. If you live in a building with more than 3 units anywhere in the state, you are guaranteed the right to a lease renewal with a limited increase in rent. 

It’s that simple. And it covers millions of market-rate renters. It is the single biggest expansion of rent protections in New York since rent stabilization was reformed in 1974.

That means you won’t have to worry about your landlord jacking up your rent if you live in a gentrifying neighborhood. That means you don’t have to worry about your landlord kicking you out because they don’t like your kids. That means you won’t have to worry about complaining to your landlord about fixing the stove because you’re afraid they might tell you to move. 

That means you will have a hell of a lot of leverage to renegotiate with your landlord because they can’t just assume they can get someone else to move in for more. It also means you have a say in your building along with all your neighbors.

That’s never been the case for market-rate tenants. You’ve never had any protections or any leverage. And you’ve never had any reason to fight for tenants rights.

Now you do. And trust me, we need your help.

First, the housing crisis demands that all renters work together right now. Over half of all renters in New York are considered rent-burdened, meaning you pay more than 30% of your income towards rent. That’s a big reason why there is a record 90,000 homeless New Yorkers across the state. Market-rate tenants are often times the most vulnerable to eviction and homelessness in the state.

Second, the real estate industry is the most powerful special interest in New York and will do everything it can to stop Good Cause and the rest of the Universal Rent Control package. It has spent untold millions of dollars over decades to elect supportive politicians and block tenant protections. They spent millions in last year’s election and lost big for the first time. (A lot of the same developers also spent $80 million last year in California on TV ads confusing people about a rent control ballot vote that was popular with voters but lost). We can expect them to spend a lot of money and exert a lot of pressure from now until June.

Third, there are a lot of politicians, even allegedly progressive Democrats — check up on your rep, trust me — who don’t support tenants. That might be because they are dependent on real estate money to win re-election or it might be because they are landlords themselves. But in a lot of cases, politicians simply don’t know much about housing policy (it’s confusing for everyone) and they don’t hear enough from stressed renters in their district.

This year and this fight is different, though. There is a real chance to transform our housing market across the state for all renters. It’s also a real chance to shake up our political system that runs on real estate money. Those interests find and elect Republicans and conservative Democrats that end up blocking a lot of other progressive policies that most of us want.

The good news is that we’ve already seen some big wins. The same people fighting for Good Cause right now — and the rest of the Universal Rent Control platform — are the same people who helped unseat real estate-backed Democrats and Republicans in last year’s election that gave the Democrats the biggest majority in the State Senate in a century. In their place, we got a number of new pro-tenant progressives elected to fight for all renters.

One of those progressives is Julia Salazar, who introduced the Good Cause bill in the Senate.

We’ve done a lot so far, but we have a long way to go until June. The real estate industry is bloodied, but looking to rebound. Some Democrats who supported tenants’ rights when Republicans were in charge don’t seem so sure now that Democrats are. And Governor Cuomo thinks he can bully everyone away from pro-tenant policies that scare his developer friends.

You don’t need to know anything about rent regulations or housing policy to know that you’re paying too much money in rent. You don’t need to follow politics to know that the real estate industry has had too much power in this state. And you don’t need to be on the street protesting to make a real difference.

If you’re a market-rate tenant, find your state senator or state assembly member. Call them. Write them an email. Send them a tweet. Make it known that maybe you haven’t been involved in tenants’ rights before, but you’re a market-rate tenant and you’re tired of paying so much and having so little protection. Good cause is your cause. Let’s make it happen.

5 Reasons to Support Universal Rent Control

(stoprebnybullies)

(stoprebnybullies)

Election Day is here and, depending on your perspective and persuasion, our country will be saved or doomed. Maybe both, maybe neither. On a personal note, I’m proud of playing a small part in a cycle that has seen the emergence of a progressive left as a growing electoral force.

In the spring, I started hearing about a young woman running for Congress in the Bronx, and it was a single tweet from her talking about housing as a right that hooked me. It was something I believed, but never thought would become an actual rallying cry in American politics.

Since then, over the last 6 months, I’ve knocked on countless doors across 4 of the 5 boroughs (sorry Staten Island) for Alex Ocasio-Cortez, Julia Salazar, and for many other progressive candidates that believe the same thing.

I’ve met amazing, committed activists of all ages and backgrounds that have come together to talk about important issues, promote great ideas, and elect amazing candidates. For a housing nerd like me, I’ve especially been inspired by the community of housing organizers that I’ve come to know.

There were a lot of important issues that got people fired up this cycle. However, universal rent control is one of the most exciting movements that has started to come into focus. It is an opportunity to radically change the political landscape in Albany, but has a long way to go, even if things go right on Election Day.

I wanted to make one final pitch to voters about what universal rent control means, why its so important, and why supporting the candidates who believe in it is so important. Here are 5 reasons to support universal rent control:

1. It’s the first step in breaking the rigged the political system

Everybody complains about how corrupt Albany is, but it really is, and real estate is the reason why. REBNY (The Real Estate Board of New York), one of the major political arms of big real estate developers, spends like crazy every election cycle on politicians from both parties and gets its members to spend even more.

It’s money well spent. It gets its members generous tax incentives, weak tenant protections, and a stable, predictable political landscape that favors developers. Then they take advantage of extreme gerrymandering, lax campaign finance laws, and voter suppression measures to keep their preferred candidates in power and to keep voters out of the process. (Many of the candidates they back also block other progressive issues in Albany.)

This means that renters, the homeless, small landlords, and low-income communities across the state are blocked from expressing meaningful political power. There are just enough politicians speaking for these groups to give the appearance of a fighting chance, but the supremacy of the status quo is undeniable.

This election cycle is challenging the status quo. During the Democratic primary in September, pro-tenant progressive candidates beat a slate of establishment Democrats, including 6 out of the 8 state senators of the now defunct Independent Democratic Conference (IDC).

These candidates (and even candidates from other parties) all ran on a platform that rejected real estate money and most embraced universal rent control. These candidates are pro-tenant, but as importantly they are pro-democracy. By taking rightful power from a tiny group of wealthy developers and giving it back to the broader population of New Yorkers, we can start to solve the deeper political crisis in our state that is fueling the housing crisis.

URC is the first and biggest opportunity to turn this momentum into law, just as our current rent regulation laws are set to expire in 2019.

2. It’s the only immediate way to slow down rents

Universal rent control will apply to every renter in New York state and is designed to block extreme rent increases, prevent unfair evictions, and eliminate perverse incentives to kick out tenants. This is the only way, right now, to protect tenants from increasing rent pressure. When half of all rentersare already burdened, help is needed fast.

URC will improve on the existing rent regulation protections in two critical ways. First, it will apply to all renters. Current laws apply to less than half of all renters in NYC and a tiny fraction outside of the city, so the benefits are not widely shared and understood. Second, it will remove the many loopholesthat allow landlords to raise rents in regulated units and to remove units from regulations altogether.

By closing loopholes and spreading protection to all renters, the housing market in New York will change dramatically. Every renter will gain meaningful protections against the type of stress and abuse that have become typical for too many.

It is a blunt tool for sure, and it must be part of other large reforms in land use policy, property tax law, and occupancy requirements, among others. But on its own, right now, it will help protect tenants from the onslaught of the housing crisis and show them that political change is possible if they remain united.

3. It’s the best way to stop the homelessness crisis from getting worse

There are a record 89,000 homeless New Yorkers across the state, 62,000 of them are in NYC. A large portion of them are families. Many of them are veterans. Lots of these adults are working. This is happening while our economy has been “booming” for ten years.

This is a moral failure. If that’s not enough for you, then it’s also a policy failure. The number one reason for the spike of homelessness is a lack of affordable housing. People can’t afford to stay in their homes and can’t afford to move and/or secure new housing.

New York spends millions of dollars trying to fill the gap with shelters and supportive housing, but we should be working on keeping people in their homes to begin with. Eviction prevention is a proven method to improve outcomes for housing insecure individuals and is a substantially more cost effective policy for taxpayers.

URC includes the expansion of eviction protections currently underway in NYC like right-to-counsel and anti-harassment measures, but it can also include a streamlined system for short-term rental assistance before eviction proceedings start. Many of the existing rental assistance programs at the state level are difficult to navigate and apply to a narrow pool of applicants. Federal programs are even worse.

Simplifying and expanding these programs under a URC platform will be a net benefit for these New Yorkers and for the state. Ending homelessness is a choice and one that we can do with a relatively small operational lift.

4. It will spur competition and innovation in housing construction

URC is a drastic intervention in the housing market and flies in the face of every 101 econ class lesson, but it is also necessary and justified because the housing market in New York, and especially NYC, has always been broken. It might be counterintuitive, but URC can actually fix this.

In a classic market simulation, perfect competition between rational actors creates an equilibrium between supply and demand cancelling out profits. No capitalist actually wants that and, historically, capitalists have worked very hard to prevent that from happening. Our current form of late capitalism has perfected this.

This is especially true in the housing market. Simply put, the market doesn’t build enough quality affordable housing because it isn’t interested in doing so. It only does so with expensive public subsidies. Every activist agrees that we need a greater supply of housing, but our reliance on this method has produced few affordable units relative to need at truly astronomical per unit costs. The only winners here are developers.

As much as developers complain about it, the cost and complexity of building in NYC benefits them because it prevents new developers (big or small) from entering and competing. A restricted supply and complex regulatory landscape raises profits and limits competition, leaving a small, wealthy community with a lot of power and incentive to maintain the status quo, which is what REBNY does well.

This hardly makes for a healthy market. Tenants don’t have corresponding market power because they don’t have the power to “vote with their feet” to change this status quo. Without a “pure” market (never gonna happen) to even the playing field for tenants, the argument for URC becomes obvious.

URC would remove the worst predatory actors from the market by restricting rents, but if it includes complimentary reforms that create more competition, (things like reforming occupancy laws, zoning restrictions, property tax law, but there are many ideas to pull from) it could spur a renaissance in construction practices and productivity that have been slow to materialize under the current status quo.

We need to encourage more innovation and competition within the development community to add housing more responsive to the public’s changing needs. This includes more use-specific options for seniors, special needs individuals, families, and young singles, as well as incorporating more sustainable construction and energy-use methods.

URC is a rejection of the current structure of the housing market, but that doesn’t mean it can’t be a vehicle for innovation. By establishing Housing for All as the goal of the housing market, URC is challenging who gets to compete and what ideas get to compete.

5. It will stop displacement and encourage local ownership

The post-recession emergence of foreign and institutional investors at the high-end and the growth of house flipping platforms at the low-end have created unprecedented competition for real estate in many corners of the state. These forces have particularly targeted low-income communities of color, triggering levels of displacement that we are only just starting to understand.

It’s no surprise that large scale investors have turned to single-family properties and small multi-family portfolios in cities like NYC. They are safe, highly privileged assets in American tax law and are the benefactor of the larger trend of people preferring to live in urban environments. High debt levels and stagnant wages have further increased the demand of rental housing for younger and older Americans. The prospect of weakening already leaky rent regulation laws only creates more interest in these buildings.

URC will obviously change the calculation on rising rents. This will in turn have a potential impact on the attractiveness of housing as an investment asset overall. Removing the speculative value of housing will lower the costs not only for renters, but for local landlords and community groups to take on ownership.

If URC gets passed, making it easier for these types of local actors to own the land and buildings in their community will prevent displacement and retain prosperity within these communities. The same coalition could support alternative equity models like community land trusts to further empower community-led ownership.

The fight is just beginning

I am too burned from 2016 to want to hear, let alone, make predictions about Election Day. But at the local level in New York, there is a real chance that progressive change can take hold in Albany after the election. If the Senate flips, there is a credible chance to enact universal rent control.

But the fight will be brutal. REBNY, RSA, and high-influence developers were clearly caught off guard by the rebellion in the primaries, but they have considerable structural advantages in Albany. Governor Cuomo will be a particularly vexing wild card.

Whatever happens on Election Day (I may update this as needed) I hope that voters, long-time or first-time, continue to stay involved with other activist groups. The coalition for universal rent control is still in its early stages, but the housing rights and tenants rights communities have been around for a long time. Channeling the experience of these groups with the energy of newly engaged local voters could produce some truly remarkable change in 2019. Here’s hoping.


Why New York Should Have a Constitutional Convention, But Still Needs the Feds

Not exactly what we had in mind (newamsterdamny.org)

Not exactly what we had in mind (newamsterdamny.org)

Since the election of Donald Trump, a lot has been made about the need for more localism.  With the federal government either locked in partisan paralysis or actively cutting back on services, there is a compelling argument for letting states run their own affairs – after all, states are the great laboratories of democracy.  However, we can look at the recent talk of holding a Constitutional Convention in New York to see why this argument is ultimately flawed.

There are two main reasons that localism can’t help improve how our cities/states are governed. First, our society has evolved into a highly complex, integrated national and global environment where the actions of distant players have local consequences.  We need a strong, active federal government to manage the needs of loosely connected people and places.  Despite what many would argue as too many onerous regulations from the federal government (on things like environmental policy), the larger trend over the last 40 years is the retreat of federal policy (on financial policy as one example), which has produced some of the greatest inequality in our country’s history.

Second, this assumes that states are functional enough to handle more responsibility, which is, sadly, not at all clear.  Part of this goes back to the first reason. Our economy and society are too complex and integrated for state-level governments to be able to address all of their citizens’ concerns. Even well run states can be left behind as the economy and demographics shift. But part of it is bad governance.  New York State is a prime example.

I’ve written a lot about the flaws within New York State’s governance (and though I’ve been highly critical of Governor Cuomo, most of those flaws are structural and not his fault per se.)  The quirks of history and geography have put a mostly rural state together with the country’s greatest city.  It has also separated commuters across three states that have more in common with each other than their other fellow citizens.  These issues are beyond the reach of a (state) Constitutional Convention, but show the limits to what a state can address.

However, here is a brief list of what could and should be fixed in New York.  These changes, along with many others certainly, could improve on the quality of governance in the state, but the larger point is to demonstrate that they still couldn’t address the larger trends that pose current and future problems for the state.

1.     One Full-Time Legislature

Many states have a two-body legislative system with part-time legislators based on logic from the US Constitution intended to spread out political power across regions and classes. The idea of the citizen-legislator has romantic undertones, but in practice it means you get an unprofessional class of elected officials who are ripe with conflicts of interest.  

The increasing nationalization of all politics and flooding of out-of-state money into local elections further undermines this quaint notion.  Post-election, lobbyist groups like ALEC often write legislation word-for-word in many states and provide funds and perks for many elected officials all to eager to lighten their load.

The "Three Men in A Room" Era of New York politics has been the opposite. Not only have two of those three people ended up in jail, but also the system made a mockery of both bodies of representation.  The dynamics of New York politics dictate that downstate voting power dominates the Democrat-led Assembly and downstate financial power dominates the Republican-led Senate. This unholy alliance works because we have too many weak legislators.

Paying professional politicians and staff to govern our state through one representative house would produce better outcomes with more transparency.  Singapore has shown how paying comparable private-sector salaries can improve the efficiency and efficacy of government.  We get what we pay for, and I’d rather pay fewer people more to do a better job. 

2.     Home Rule

Localism as it is described in many circles calls for cities to control more of their destinies in the Trump Age. That belies the fact that they can’t.  The US Constitution does not mention cities at all and empowers states exclusively outside of the federal level.  This means that a city like NYC doesn’t control its own transportation, taxation, or even education. 

The honest truth is that NYC is special (obviously I have fully embraced my NYC-centric worldview) and needs to run its own affairs.  It’s one of the world’s premiere cities and needs to have autonomy to run its own affairs to complete with global cities like London or Hong Kong.  That it can’t manage its sprawling obligations and opportunities as easily as Paris or London can costs NYC, New York, and the US. 

Some ideas have been floated for the Convention about returning limited home rule to NYC or as radical as creating autonomous regions (see the picture above) or even succession.  If there was some compromise that cut out a special designation for the 5 boroughs given its unique nature, but would still guarantee some upstate financial exchange - that might just work. But if such a scenario that could benefit both the city and the rest of the state (and the rest of its cities) even exists remains to be seen. And I for one don't want to create a scenario where one region suffers because the other separates.

Furthermore, it’s unlikely that upstate communities would want to surrender access to NYC tax dollars. More importantly, it’s unlikely that upstate politicians would want to surrender access to downstate political money, which would evaporate if upstate influence wasn’t needed.  And no governor, certainly not the current one, would want to surrender the power, and access to the spotlight, that NYC provides. 

3.     Debt Service

Technically, this is more about transparency, but how the state borrows money is in need of a major overhaul.  Right now the Constitution says that voters must approve any state borrowing over a certain amount but that hasn’t happened in decades.  This is because most state borrowing comes through sub-state authorities and agencies that are explicitly exempt from voter referendums. 

Many elected officials, including at one time Governor Cuomo, have criticized this “back-door” borrowing but when push comes to shove, it is a very convenient tool to get projects funded, so the practice continues.   At $300b, New York has the second highest state debt in the country (although, it has been on sound footing for several years.) 

It should be said that debt is not a bad thing for a state to have, especially when it is borrowing for infrastructure and public services that have long-term benefits. The problem is less the outright number or the state’s current ability to fund its debt service and more the ability to determine priorities. The assumption is that most voters won’t know enough or care enough about the state borrowing for a new bridge and might vote it down with enough protest.  This is unfortunately true in some cases. 

However, this is myopic.  The larger truth is that New York, like most states, gives money away for terrible projects all the time without facing voters’ wrath.  The city and state gave close to $500m to Yankee Stadium, without a “yes” from voters.  The Governor gave billions of dollars to upstate, without a “yes” from voters.  Just two weeks ago, it was announced that Aetna, the publicly traded insurance giant, will receive $34m in city/state money to move 250 jobs to Chelsea. Without having to justify expenses to voters, the state has wasted billions and will continue to. 

This all while expansion of public education, transportation, and pension funding all suffer.  It’s always the big-ticket items that get political pushback, but too many little things get through the cracks. This happens because the state thinks voters are ignorant and lazy when in reality they are ignored and misinformed.  Only by changing the way we control our taxes will that change.

There are a lot of other issues that could be addressed in a Convention and there are risks that silly ideas or even bad ones will get traction or distract the process.  These potential issues don’t outweigh the need to reboot the state of New York.  It is entirely healthy for citizens to revisit the organizing documents of its government. I hope that we do this fall. But it’s clear to me that without stronger federal action, cities and states can’t fend for themselves no matter how well run they are.

Budget Process Continues to Expose Governor Cuomo

Different story this time around (cnn)

Different story this time around (cnn)

New York State is still without a budget and will likely remain so for the immediate future.  The Senate has left for its Easter Break, though the Assembly remains (unpaid) in Albany for now. They have collectively passed an emergency extender for two months, but there is a lot of bad blood circulating in Albany over why a budget agreement hasn't been struck.  As I laid out in last week's blog, the problem can largely be placed at Governor Cuomo's door.  Despite attempts to blame the uncertainty of the federal budget or the major differences between priorities in the legislature, the Governor can't distract anyone from his lack of leadership in a changing political landscape.  Housing shows why.

Given the affordable housing crisis gripping New York (primarily in NYC but not exclusively) major state action has been needed for a long time. Over the last few years, Governor Cuomo has happily stepped up to the microphone with grand proposals for addressing the crisis head on.  He has talked about turning JP Morgan settlement money over to homeless programs.  He has talked about reforming the controversial 421a tax program. And most famously, he has outlined an ambitious 20-year, $20 billion affordable housing plan. These grand promises were met with a lot of support, particularly from wary housing advocates.

However, almost none of these promises have been kept or even outlined in detail. Instead, we've seen the Governor feud with Mayor de Blasio by withholding state funds for housing. We've seen him spike a deal at the last minute on a revamped 421a plan the Governor himself proposed called Affordable New York. And we've seen almost none of the billions of dollars of funding called for in his plan allocated to affordable housing projects.

All of this posturing could be viewed as the Governor wielding considerable power over the political mechanics of the state, in a presumed ramp up to a 2020 presidential run. In reality, it has revealed a politician weakened in a new landscape, mired in his own contradictory impulses, and exposed for lacking a strong political base. Who is the Governor's core constituency?

The Governor has tried to please the strong downstate progressive element of his party in the Assembly while also trying to please the powerful, more conservative, developer interests aligned with upstate Republicans in the Senate. This balancing act works when the stakes are lower or when the issues are unrelated. 

The Governor can come out in favor of issues like gay marriage or anti-fracking because they don't impact developers' bottom line.  He can come out in favor of 421a reform, over the objections of many housing advocates, because it can be framed as an affordable housing mechanism even though it is largely a tax giveaway for large developers.

It doesn't work when those two worlds collide, which is what is happening over housing in budget negotiations. This budget requires some hard compromises on housing that simply can't match the Governor's promises to progressives and conservatives.  It doesn’t appear that the Governor anticipated the political environment he was entering, or at the very least, how this new environment would force him to make choices that he could previously avoid.

As of Wednesday, these negotiations have collapsed and state legislatures have walked away from the process without a deal. I don't want to suggest that housing is the only issue holding up the budget, but the issue shows how the Governor's leadership style has led us to this moment. 

Building housing in New York is difficult. Building affordable housing in New York is really difficult. These realities are partly structural - there are so many local variables, policies, and market forces that clash with each other that its nearly impossible to streamline a single affordable housing initiative. But these realities are also political. It's not impossible to pass a cohesive plan that addresses these structural issues, but it means pissing off somebody. Or lots of somebodies. 

Some politicians thrive under those partisan circumstances and some political systems even incentivize that type of style. Governor Cuomo is not that politician and New York State is not that system.  

That is the worst thing in the world necessarily.  There is something to be said for being a steely-eyed dealmaker and there is something to be said for a system that operates through old-fashioned power brokering rather than ideological extremism. Indeed, the previous six budgets during the Governor's reign have been passed on time and without going over major fiscal cliffs. 

However, over the years this has meant the “Three Men in A Room” style of governance involving the Governor and now disgraced Senate majority leader Dean Skelos and Assembly Speaker Sheldon Silver.  Both men were removed from office and convicted of federal corruption charges, radically altering the political landscape. Albany has always had the stink of corruption, but these developments, some of which have creeped into the Governor’s orbit, have undermined much of the Governor’s standing and power.

This ethical gray zone is largely why Governor Cuomo has maintained considerable control over Albany over two terms, with a hoped for third term on the way in 2018.  He has been able to strike deals in the legislature that have avoided big flair ups between parties by relying on his ability to maneuver in back rooms. But that is not the case anymore. (Although ethics reform has taken a back seat in this budget process.)

Without his fellow leaders to keep reigns on the political process, the Governor doesn’t have the type of cover he once relied on and it shows.  It is now up to him to make tough policy trade-offs in a much broader political arena than he is used to.  He has lost the initiative in crafting the budget process and can no longer control each chamber as he once could.

This isn’t lost on the Governor. His comments on the 421a negotiations show an almost child-like surprise that there are other motivations in politics than triangulation: “What we’re down to is truly ideological issues. 421a is an ideological, philosophical issue.”  Evidently, this is the first budget season where the Governor has had to consider actual political theory.

This openness has led to some truly bad ideas coming out of the negotiations, including linking 421a to rent regulation laws (which come up for renewal again in 2019.)  The Governor has come out against this line of thinking and it seems unlikely that a deal like this would be struck, but it shows that whatever deal does get done, Governor Cuomo will likely face the unpleasant realty of owning a divisive budget that he ultimately had less control over than his previous budgets.

How this will impact the Governor’s fortunes in 2018 let alone 2020 are unknown at this stage. But what is clear, and dispiriting, is that the housing crisis will continue, and many struggling New Yorkers will not get the help promised by the Governor so many times before. 

Cuomo In a Tantalizing Bind Over Housing

Working hard or hardly working, Andy? (ngn)

Working hard or hardly working, Andy? (ngn)

Tonight is the deadline for New York State’s elected officials to pass the next budget before the new fiscal year starts tomorrow. By all accounts it won’t happen. New York is not alone in struggling to pass a budget in the absence of clarity at the federal level.  President Trump has proposed severe cuts, which could imperil the $150b New York budget, making any proposals fraught with doubt.  But the president isn’t the only actor harming the process. Governor Cuomo has placed his ambitions and calculations ahead of the immediate needs of the state, particularly on housing.

I generally don’t care much for the horse race stuff about Governor Cuomo looking towards 2020 for a presidential run, but it is clearly a big part of his calculations right now. Unfortunately, this has a big immediate impact on affordable housing, so I’ll play along.  Though the presidential calendar has gotten shorter and shorter, it’s still too early for any candidate to be discussed seriously.  (For what it’s worth, I predict son following father and ultimately getting cold feet anyway.)

Before the governor can dream about 2020, he must get re-elected in 2018.  That’s likely, but not guaranteed.  That’s why this budget season is so crucial for him.  It will signal what kind of Democrat he will position himself as on the national level.  President Trump indirectly offers the Governor two radically opposed, equally fraught, options in my opinion.

Before I get to those two options, let’s remember a couple of important facts.  First, last year Governor Cuomo announced a huge five year $20b affordable housing plan that would build 100,000 units and outlined a longer-term plan for 20,000 supportive housing units.  Though light on details - it was through a Memorandum of Understanding (MOU) which isn’t handled like a normal budget allocation process and serves more as a wish list -  it was a major policy shift that scored political points from housing advocates across the state.

Second, Governor Cuomo also announced a (slightly) revamped plan called Affordable New York to replace the controversial 421a tax policy that expired last year when the governor blocked a compromised proposal over union wage labor.  The new plan would largely continue the existing framework of 421a, which would create dubiously affordable units at considerable cost to the city and state. Many advocates hate 421a, but developers love it.

In both cases, little has come to show for those initiatives. Of the initial $2b allotted in the 5-year plan, only $150m has been dispersed, while the rest remains frozen.  There is no deal yet on the new 421a/ANY plan either.

This lack of progress is because Governor Cuomo, relying on his love of MOUs, directly linked both proposals and one can’t happen without the other.  Because Democrats dominate the State Assembly and Republicans control the State Senate, the Governor seemingly made a political calculation that he could appease both chambers (or, more aptly their leadership) and deliver on his promises by using both proposals as balancing weights.  That has not panned out, despite the fact that both parties have agreed to allocate the frozen funding.

Governor Cuomo has had a history of making grand promises on affordable housing, attempting to deliver them through MOUs, and failing to do so. In addition to the current mess, has attempted to use settlement money from JP Morgan to combat homelessness to no avail, he has withheld funds for NYC over petty squabbling with Mayor de Blasio, and even his handling of the 421a expiration appeared to have been in bad faith.  It’s almost as if, even as a former HUD Secretary in the Clinton Administration, he isn’t that interested in housing policy.

Now we can return to the two democrats Governor Cuomo could portray himself as if he were serious about a 2020 run.  The first is the pragmatic power broker who gets things built while working with the other side.  This candidate is a more accurate representation of the Governor and could conceivably appeal to the donor class of the Democratic Party as well as moderate Republicans further alienated by the Trump Era. 

The second is the liberal firebrand championing infrastructure spending, gay marriage, and environmental protection that can rally the progressive wing of the Democratic Party without totally alienating centrists. Despite some notable achievements on some ‘liberal’ policies, this is not a natural position for the Governor to hold, even if that’s likely where the electorate will be.

This is why housing has proven to be such a challenge for Governor Cuomo to follow through on, despite his background in it. Right now, today, the issue is forcing him to pick one version of himself to commit to and it’s not clear which he should choose.

If he could deliver on affordable housing, it would further his narrative of being an effective progressive at the national level.  But to do this would alienate much of his bi-partisan bonhomie in the Senate and with wealthy developers whom he needs for his re-election in 2018.  Progressive affordable housing reform is deeply unpopular with these stakeholders and disappointing them poses an immense risk.

If he doesn’t deliver on affordable housing, it would leave him open to attacks from progressives at the state level. The need for affordable housing is so obvious and so urgent that failing to deliver on it could absolutely summon a credible challenger in a primary. This might not ultimately cost him the election in 2018, but it would solidify enough resistance that would damage his campaign and undermine his already flimsy progressive narrative on the national level.

Housing isn’t getting much of the focus in today’s last minute budget negotiations and there are certainly other issues holding up the process.  But that won’t let the Governor off the hook.  Housing looms over everything.

Though the state budget proposal does not spend much time addressing the potential cuts the state faces from the federal government, the Governor and elected officials from either party are rightfully concerned about them.  No one knows exactly how much of a gap this proposed budget will face if federal support dramatically changes over the next few years.

What is entirely left unsaid is that the state will be on the hook for the federal cuts expected to hit HUD and housing programs in general.  Given that NYCHA gets over 2/3 of its $3b budget from HUD, and HPD gets hundreds of millions, among other city-level programs, this leaves a potentially crippling whole that cities, even NYC, can’t possibly fill.  The fact that Governor Cuomo is dodging genuine leadership on housing even before these cuts should be alarming.  What happens if they do come? Will the Governor be there to help?

It’s possible that the budget will get worked out, housing funds will flow as promised, and these federal cuts won’t materialize.  Governor Cuomo could waltz along to re-election and to the national stage and New Yorkers would perhaps finally have some relief from the housing crisis.

But it is also possible that federal cuts will come, that their impact will effectively kill the current housing proposals, and potentially let the Governor off the hook for not delivering, while still appearing to champion affordable housing.  It would be deeply cynical to build a political strategy on this dire outcome, but politicians have done worse.

There are over 88,000 homeless in the New York State and nearly half of NYC renters are rent burdened.  The affordable housing crisis is too large to be viewed through a narrow political lens and it’s unacceptable that Governor Cuomo has chosen to do so.  Even without impending cuts from the federal level, the Governor has not delivered on his promises so far.  History will judge his next actions long after the voters in 2018 or 2020 get their say.

Albany Blows it On Housing (and In General)

Is Albany upside down or just being itself? (ny mag)

Is Albany upside down or just being itself? (ny mag)

Last week, New York's State Legislature, acting more like an embattled frat house cramming for finals, passed a series of largely unremarkable bills in the final hours of its 2016 session.  Although we can all rejoice about now getting Bloody Mary's at 10:01 AM on Sundays, it's impossible not to deem the session a massive failure given what wasn't resolved.  Despite a desperate need for action on housing and a number of key bills and initiatives on the docket, no housing laws were passed.  There is plenty of blame to go around, notably the bitter feud between the Governor and the Mayor, but the bottom line is that the housing market right now is crippled by uncertainty and a lack of vision at a time when the future of affordability, particularly in NYC, hangs in the balance. I will highlight three areas where the Legislature has undermined, skipped, or out right blocked the chance for sweeping housing reform and give my take as to why.

Cuomo's Failed 'Memorandum of Understanding'

When Governor Cuomo announced his massive $20b 5-year housing plan back in April, he included $2b for 2017 to be spent on affordable housing and fighting homelessness.  In place of details, he outlined a Memorandum of Understanding (MOU) that was to be worked out among the "Big Three" (the Governor, the Senate Leader, and the Assembly Leader) at a later time.  This type of action, which excludes rank and file legislators from debate and negotiations, is notorious in Albany and decried by many taxpayer advocates and policy watchers because it is the source of so many shady deals in other areas of government. It has never been used in a housing bill, let alone one of such scale.  The Governor's decision to use this tool is even more stunning when you consider that two former members of the Big Three have been sentenced to prison on corruption charges (more on this later.) 

Back when I wrote about the growing feud between Governor Cuomo and Mayor de Blasio, I pointed to this plan as a signal to see if the Governor was serious about housing policy or simply trying to embarrass and impede the Mayor's own housing plan. If the Governor could reach a sweeping agreement to fund affordable housing, it could be seen as a generational shift in housing policy and in how business gets done in Albany.  Well, here we are in June and there is no MOU and no policy.

Our tax dollars at work (newyork.com)

Our tax dollars at work (newyork.com)

Clearly the biggest unfinished item is 421a, the controversial tax incentive given to developers for including a certain number of affordable housing units per building.  The bill sunsets every 4 years and Governor Cuomo allowed it to expire in January when negotiations over union construction wages broke down. This has left plans for thousands of housing units up in the air and threatens to kill Mayor de Blasio's housing plan in the cradle. Though a compromise is still possible, the fact that one hasn't been found yet shows a shocking lack of leadership and/or a childish level of personal animosity.

I've written a lot about how flawed 421a is as an affordable housing tool.  At best, it is a wildly expensive way to create a tiny fraction of the needed affordable housing units and, at worst, it is a market-warping give-away for developers that prevents more affordable housing units from entering the market. Certainly some advocates welcome the delay on 421a and would like to see it scrapped altogether. Others think that affordable housing can not happen in any form without it.  I certainly believe it should be reformed significantly to create better targets and measurements for affordable housing, but scrapping it abruptly leaves existing projects in chaos. 

The frustrating thing about this session however, is that there was never any serious talk about reforming the policy, nor was there any ability to given the ambiguity of the MOU.  The initial breakdown came when the carpenter's union rejected the wage floor suggested by the Real Estate Board of NY, which was more or less the same language in the current Republican-controlled State Senate proposal.  That is where the negotiation stood six months ago, and where it stands now.  We are left with a maddening binary decision between extending it as is or letting it die. Neither one makes any sense given the political landscape.

A compromise on this particular element is probably a few horse-trades away and you can argue one way or the other over the union's current position, but the fact that there was no larger review of the policy should anger every voter and taxpayer.   421a is not a short-term or long-term solution for creating affordable housing.  Perhaps, if properly designed and part of a larger effort, it could be an effective tool, but there was no ability for the legislature to debate this. Additionally, the Democrat-held Assembly attempted to expand the nature of the MOU by tying any reform of 421a to additional state funding commitments to NYCHA, but the Governor has not shown any interest in this effort and no deal has been struck.  This appears to be dead on arrival.

Despite the ambitious scale of the Governor's suggested housing plan, we have seen no details or policy discussions, no deal within the existing MOU framework, no sense of what it would take to accomplish one, no sense of how and where billions of dollars would be allocated in housing across the state, and no ability for our elected officials to properly debate these issues.  Is it any wonder that a deal wasn't struck?

Ethics Reform

This question brings us to the other major inter-related failure of this legislative session: ethics reform.  As I mentioned earlier, this past year we have seen two of the Big Three in state government sentenced to a combined 17 years in prison on multiple corruption charges. This is on top of more than 30 state elected officials meeting the same fate over the past decade.  Assembly Speaker Sheldon Silver and Senate Leader Dean Skelos, along with Governor Cuomo (who has been accused of blocking a commission on ethics), effectively ran the state between the three of them for years, during which New York has been seen as the most corrupt state in the Union.  The calls for reform have been deafening, but action has been slow and punchless.

The legislative session did pass one important ethics reform when it agreed to ban public officers convicted of office-related crimes from receiving pensions (it still has to be voted on next year to become part of the State Constitution.) This is a positive step for sure, but fails to address the types of crime that has gotten leaders into trouble in the past.  Specifically, there was no action taken to limit outside income for state legislators, to limit 'housekeeping' donations to political parties, or to close the so-called "LLC loop-hole" that allows unlimited donations from these corporate structures despite the ease with which individuals or corporations can hide behind them. 

2 out of 3 of these guys are going up the river, but stopping before Albany (ny post)

2 out of 3 of these guys are going up the river, but stopping before Albany (ny post)

All in all, here again we see a shocking failure of leadership across all parts of Albany. The fact is that the current system, as corrupt and ineffective as it is to the larger population, works well for both parties.  The unique nature of power in New York State allows for both parties to control just enough to keep the peace (and their seats) while blocking bolder policy initiatives and reforms.  Until ethics reforms pass on a larger scale, the status quo will remain in Albany to the determent of all New Yorkers - and truly sweeping housing policy won't see the light of day.

Airbnb Crackdown

A potential major blow to Airbnb is the final piece of legislation that I'll touch on because it could have an impact on housing in certain neighborhoods in NYC.  The bill, which has passed the Senate, bans any advertising of apartment rentals under 30 days, which is already illegal in NY state, and creates a series of fines for an owner caught listing them.  Whether this represents a true crackdown on the service remains to be seen (it also must pass through the Governor's Office before becoming law.)

It might seem like a surprise for me to include cracking down on Airbnb as a blow against housing, given how controversial the company and the practice are.  In addition to being illegal in NYC, there is no doubt that it has an adverse affect on housing costs in certain, trendy neighborhoods and has negative impacts both on potential renters blocked from finding units and on existing tenants or neighbors surrounded by strangers. (I also have a philosophical problem with a company that is fundamentally based on exploiting peoples' income insecurity around housing, but I'll have more on that at another time.)

I feel better already (weandthecolor)

I feel better already (weandthecolor)

The problem is how to separate the good actors from the bad actors, which this bill (and NY's general dwelling laws) does not do.  A couple going out of town for a long weekend once a year that wants to rent out their apartment, with the consent of their landlord or neighbors, is simply not a problem.  However, despite Airbnb's claims, there are a lot of renters that amass a large portfolio of apartment leases or building owners that opt to focus exclusively on short-term tenants (they also have a huge problem with racial discrimination by renters on the site, which they are are trying to combat). Airbnb doesn't release much data, but when it does, it appears that these types of actors are the majority of its listings.  Airbnb won't be completely honest about this for the simple reason that they make the majority of their money on 'professional' Airbnb renters. They can't justify their model to investors if they do rely on that couple going out of town once a year.

I think there could be a responsible way of allowing landlords/tenants/neighbors to make short-term rental agreements, but no doubt pressure from the hotel industry simply won't allow that discussion right now - and that's really where this bill came from.  This is less a win for tenant advocates as it is for hotel developers.  What could have been a chance to force Airbnb to evolve and become a stakeholder in NYC has instead likely inspired the company to double down on aggressive lobbying to fight the existing laws rather than improve its practices. Housing in NYC will continue to suffer in any event.

I have advocated for a broad reinvention of our housing and dwelling laws before and I absolutely think we should include short-term rentals in the discussion.  The toothpaste is out of the bottle with Airbnb and bad actors will still find ways around even this law. Rather than try to force it back in, we should...find more toothbrushes to put it on? (I'm tired and need to publish this before the Mets game, sorry.) At any rate, this bill doesn't come close to considering how best to handle Airbnb and similar technology-driven companies. (A bill to allow Uber and Lyft to expand upstate was blocked in the Assembly.)

The Airbnb law is the perfect example of rhetoric masking reality in state politics. New York isn't alone in this, but it is certainly more naked about it (not lease because of how many people seem to fail at balancing the act and get busted.) Special interests have a right to lobby their elected officials, but unfortunately that comes increasingly at the expense of the common good, which is never as well organized or funded. Albany is evidently trapped in a particularly vile cycle of sacrificing the public good whether out of greed or flawed ideology or both.  This could have been a significant legislative session given the public demand for action, the amount of ideas on the table, and the amount of actors across all spectrums who were engaged in the debate, but it wasn't.  The more the state government fails to take advantage of these circumstances, the harder it will be for them to materialize again.