Unfair Housing Rents
Fact: The city will pay a developer, hotel or motel owner more for an apartment than a private homeowner. This process of unfair housing rents stretches from Bloomberg to De Blasio.
Case in point: Condo Conversion on East New York Ave
I had an owner who had renovated a three-bedroom apartment and wanted to rent to Section 8.
At the same time, a condo development around the corner was also renting apartments to Section 8. This because they could not fill the condo units. And the owner was in threat of losing the building.
My client wanted 1600.00 at the time. Section 8 told him he could not get that much for the apartment. He would have to come down on the rent. But the city agreed to pay the developer more than that for his apartments.
The owner found out about this as well as the news publications. The owner removed his apartment from consideration with Section 8. He then sought out and found a tenant that could pay his requested amount.
The deal the city made with the owner
The city believed that deals in the dark will never see the light of day. But as I explained earlier owners have a way of finding out about rents paid in their area. And once they do they act on it. In the case of the condo, it also became public news.
Read the news article on this true-life event: NYC Luxury Buildings Converted into Homeless Shelters
Penny Wise Dollar Foolish
There is an old saying that says “He who has the gold makes the rules.”
Clearly the city has the gold and the developer does not. So why does the developer set the rental amount? And more to the point. Why did the city agree to pay so much when it could have negotiated a lower rent?
Here’s Why
During the Bloomberg Administration developers built condos believing “If you build it they will come.” Well, they didn’t. That’s because the housing bubble was deflating. Now the developer is left with units that are not revenue-producing. And their Return On Investment is below expectations. What is the poor developer to do?
Mayor Bloomberg to the rescue
In comes Mayor Bloomberg the developer’s best friend. Under the Bloomberg Administration developers are encouraged to rent their units to the city. The city in return places homeless people into these units. Now to make this work the city and the developer come to an agreement.
Part of that agreement relaxed and probably in some cases removed the inspection. But more importantly, the rent paid is more than the city guidelines.
It seems to me that when someone approaches you with hat in hand asking you to bail him or her out of a financial situation you are in the position to set the terms not the other way around.
When the city foots the bill
But this is not the case when the city rents apartments in failed condos and other places. The city has two choices when dealing with failed condos. The first is to pay rents according to its own guidelines. The second is to offer rents lower than the guidelines. Saving the city money while placing the homeless.
But that doesn’t happen. The Bloomberg Administration made deals with developers that no private homeowner could get. Newspapers reported on these bad rental practices but quietly stopped following up.
The situation today
Today the present administration is saddled with agreements already in place which results in two big problems. The first, paying too much for rents in condos or other places because of past agreements. The second, alienating private homeowners who know that the city will not pay them the same high rents.
With this being the new normal, it’s no wonder that the availability of program apartments continues to dwindle.
You just read: Unfair Housing Rents from Bloomberg to De Blasio
Next: It’s okay to discriminate when it comes to broker’s fees
Disclaimer: I am not a lawyer and nothing stated here is legal advice. This article applies to the five boroughs of New York. All information deemed accurate but not guaranteed. Always check the real estate laws in your part of the country.
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