Housing Roundup: State Budget, Property Taxes, 'Squatters'

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Brian Lehrer: Brian Lehrer on WNYC. With us now, WNYC housing reporter, David Brand, and we'll touch on three things he's reporting on. One, the most bizarre and probably the smallest is a moral panic, I might call it, that's sitting in among some New Yorkers over a purported epidemic of squatters taking over homes from unwitting landlords and refusing to leave. Only problem is the squatting epidemic appears to be fake. Squatting happens, but is rare as ever, according to David's reporting.

What's not rare is that the public perception of something being worse than it is being driven by some TikTok videos that are making the rounds. We'll discuss. Then there's the emerging deal that could be a big deal coming out of Albany any day now, we will hear about agreement on a bill that could make it easier to build below market rate housing, easier for landlords to raise the rent when they do actual legit renovations, and offer new rent and eviction protections to current tenants, even in apartments that are not in the rent stabilization system.

This could all be huge, but the devil will be in the details of the legislation. Third, now in court, a less hot button, but very real issue for many New York City property owners, the city's property tax system is really biased towards some homeowners and against others, many believe, and may be causing lower income property owners to pay more than their fair share of property taxes, and that would even trickle down to lower income renters. We'll explain that problem, the fix that may be in the works, the court ruling that may be in the works, and take your calls. Again, David Brand covers housing for WNYC and Gothamist, and he joins us now. Hi, David, welcome back to the show. Is there enough housing policy news going on right now?

David Brand: Yes, I think there might be. I think we have some topics to discuss here, so thanks for having me on, Brian.

Brian Lehrer: Listeners, we're going to open the phones for this segment on the issue of New York City's property taxes. If you're a co-op, condo, or a single or multiple family homeowner of any kind in the city, do you think your property tax rates are fair or unfair, too high, too low, I know nobody says their tax rates are too low, or just about right? 212-433-WNYC. Again, we're opening up the phones for you on New York City property taxes, which are currently in court for allegedly violating the Fair Housing Act and being racially discriminatory, among other things.

What's your piece of this story? 212-433-WNYC. We talk so much about property taxes in the suburbs where these are really significant issues in both the New York and New Jersey suburbs, but the city issues are different. If you are involved in New York City property tax payments, and you have an issue, 212-433-WNYC, we will get to that. David, while those calls are coming in, let's do the viral videos on TikTok about squatters first, because why not? I haven't personally seen one. What's in these videos?

David Brand: Well, these are really making the rounds on TikTok, on social media. I have friends in Missouri and Pennsylvania message me, "What's going on in New York City with squatters?" There is a lot of content, and it's been all over the New York Post all in right-wing media, on TV news, playing up these stories of supposed squatters taking over people's homes. This is happening to some number of people. We don't want to diminish what's happening to people who are going through this.

It could be a nightmare to try to get somebody out of your home, but it's a lot of cases, it's more complicated. In the videos, it's a lot of cut up TV news segments. There's one in particular, which is an immigrant "influencer" who was supposedly giving instructions on how to take over people's homes. That fueled this round of media coverage and even more fear that this is going to be happening at a large scale, but squatter, it's a narrowly defined term generally.

It's someone who goes into an abandoned or vacant home and just stays there without the permission or knowledge of the owner, but we're seeing that term morph into anyone who's staying in an apartment either past their lease or owes rent and the landlord is struggling to get them out because of a deeper issue. That's just how slow the housing court process can be.

Brian Lehrer: Oh, but that's more of a real issue. Landlords say they're facing a too cumbersome eviction process for actual tenants, not squatters, in that first sense, that classic sense that you just described, just people showing up at a vacant place, but people who are tenants but are actually not paying their rent for long periods of time. What can you tell us about that?

David Brand: That's been a complaint for a long time among landlords, and it got worse during the COVID eviction freeze that the state had in place for close to two years where a backlog of cases were mounting, rent arrears for a huge number of people were mounting, and that could take its toll, especially on smaller property owners who can count on that income to pay their own expenses, like you mentioned, property taxes, mortgage payments.

That has been a very real complaint, and things do take a very long time. I think what has become very effective is to lump all of that into the squatter idea. That is really driving a lot of attention to this issue, and people are taking notice. I think it's been an effective way to highlight the real slow processes in housing court.

Brian Lehrer: Your story on Gothamist is headlined Is New York City Really Facing a Squatter Problem? Lawyers On Both Sides Say No. Again, I guess that's the classic kind of squatting, but lawyers on both sides, do you mean tenant lawyers and landlord lawyers?

David Brand: I talked to a number of tenant lawyers, a number of landlord lawyers in Queens housing court, and Queens has become the epicenter of the squatter fears, and also spoke to a number of lawyers representing small homeowners. These are low or moderate income homeowners who really do depend on rental income and are more vulnerable to things like deed theft or foreclosure.

Those attorneys working with those small homeowners are really on the ground hearing the complaints of homeowners. They told me they accepted one case, have not heard about squatting as a major concern. A bigger concern is these more traditional eviction cases or struggling to pay mortgages and property taxes coming out of the pandemic.

Brian Lehrer: Any sense of who's making these squatter videos, who's sharing and spotlighting them, and if this is being driven by anyone with an agenda? I see you counted 36 New York Post stories and Joe Rogan hyping it on his show. Is this catnip for the right-wing echo chamber because it vilifies some of their favorite villains, like homeless people and maybe migrants?

David Brand: I think so, for sure, and definitely with migrants. I think making that link to migrants has just driven the fear and the outrage even further. You see on the cover, the New York Post yesterday talked about catnip. It was migrant squatters found with drugs and guns freed with no bail. Right there you have three of the biggest problems in New York City according to the New York Post.

Brian Lehrer: But not as big a problem as the percentage of print ink spent on it if they still print physical copies, of course they do, of the New York Post would indicate. All right. Story number two, and those of you calling about the property tax issue, be a little patient, we'll get to you, we'll stretch out on that one once we get to story number three, but story number two, the possibility of a major housing policy package emerging from Albany [unintelligible 00:08:39].

The news organization in the city reports this morning, citing sources who don't want their names used yet, that the package is likely to provide a larger increase in rents for landlords who renovate apartments, lift the limits on density in residential buildings in many areas of the city, and provide rent or protections, also a new tax break for rental buildings. I assume that means for building new affordable housing. Do you have any of this yet yourself? They've been so paralyzed on revising housing policy for the state. We've been talking about it for two years.

David Brand: A lot of this was compiling some previous reporting, and so definitely have heard similar state of negotiations, but I think we don't really know. This stuff is always in flux, and the leadership can keep it pretty close to the vest, and there's a lot of parties involved here. I guess to talk about some of the specific things mentioned and what maybe is realistic, the allowable increase on rent stabilized apartments after a landlord does renovations, which are called individual apartment improvements or IAS, that seems legitimate raising the cap that landlords can raise rents based on those renovations.

I think that's something that a lot of tenant groups acknowledge could be changed and also elected officials, who are usually pro-tenant, tenant sided, are also acknowledging that. The tenant protections, that would be what we call good cause eviction, or what the legislation is called, good cause eviction, which would limit evictions on tenants living in non-rent stabilized apartments who, at this point, if their lease expires, the landlord wants them out, they don't really have a right to that place anymore. This legislation would extend that right to them. We'll see.

The initial proposal for that was to allow tenants to challenge a rent increase in court of more than 3%, and then the landlord would also have to offer a lease renewal in most cases, if they're following the rules of their lease and they're paying their rent. The proposals to counter that are way more watered down, a higher allowable rent increase that the tenant can't challenge, more carve outs for what types of buildings are excluded, if it's owner-occupied or fewer than four units, and that could be expanded to even larger buildings. I think that's still in flux.

Then you mentioned the cap on density. That's the floor area ratio cap, or the FAR cap. Right now, in New York City, you're only allowed to build up to 12 times the square footage of the property lot size in the highest case. In parts of midtown Manhattan, for example, the city really wants to lift that. That would also help ease these office building conversions where those buildings are allowed to be larger than the lot size, but to add residential in there, you could only do part of it. It's complicated. It's wonky. That seems not so offensive to a lot of people, but one of the things you mentioned there.

Brian Lehrer: Briefly, the perennial question over tax breaks for developers who build new housing that's below market rate. I think the old system known as 421-a was criticized for letting developers get the subsidy with too little affordable housing actually created. We'll see what the new version might be if a new version does come out of the legislature, but my question for today on this is an underlying one. You wrote an article recently about the city currently creating many new affordable apartments, but for whom, as you put it. What did you find?

David Brand: Since the Adams administration began, since Mayor Adams took office, so the beginning of 2022, the city has added around 24,000 new "affordable" apartments or income-restricted apartments where rents are capped at a percentage of the tenant's income. We wanted to analyze that data as part of this series we've been doing, my colleague Jaclyn Jeffrey-Wilensky and I. We found that about a third of the units that have been added or financed, so they're in the pipeline, were for extremely or very low-income New Yorkers, and that's earning praise.

Those are people earning between $0 and $50,000, but then another third are for people earning around $130,000 or families earning into the $200,000s based on family size. Those aren't city financed apartments. The city is not really putting much subsidy into that, but those are apartments in buildings that are created under this expired tax break, 421-a that you mentioned. There's the perennial issue. Will that be renewed, and if so, what will it look like? I think our reporting was a reminder of how most of the apartments that got created with that program are for people making pretty decent incomes that the vast majority of New Yorkers can't touch.

Brian Lehrer: Would the new tax break rules coming out of Albany draw a line or grade on a curve for how much of a tax break depending on if the buildings are really for lower-income people, not the middle class as you described it?

David Brand: Yes, I think there's pretty broad understanding that there needs to be a lower ceiling on the income cap there or on the maximum incomes for those affordable apartments. Two years ago, Governor Hochul had a proposal 485-w to keep with the kind of wonky whatever. The other one that she [unintelligible 00:14:37].

Brian Lehrer: I suggest if you start with 421-a, and then a few years of inflation, you get 485-w.

David Brand: Yes, I like that. That proposal was for 90% area median income ceiling on the affordable units. In today's terms, that's about $90,000 for an individual hire for families. That didn't make it into the final budget, and it was never voted on up in Albany. I think some people might look at that now and say, oh, that actually would've been a pretty good deal. We're going to see what comes out of it.

The city has a proposal that they're supporting that would be the average income ceiling would be like $60,000 to $80,000 for the affordable units, but we're going to see. The real estate industry wants higher. They say it really doesn't pencil out to do much affordable housing, and they also have the interest in trying to make as much money as they can and limiting a number of affordable units they have to include in the final development. Still in flux, so we're going to see.

Brian Lehrer: As we continue on three housing-related stories with our housing reporter, David Brand, and getting now to topic number three, our last one, and this is the one we'll take calls on, the New York City property tax system. This is actually being challenged in court right now. What's the issue?

David Brand: It's not fair. That's what I'm excited to hear callers weigh in on this because the way the current system works is that homeowners in low or moderate-income areas where home values have risen steadily but haven't skyrocketed like we see in other parts of the city end up paying a higher tax rate than a brownstone in a place like Park Slope where home values have risen dramatically, but because of caps on how much their property taxes go up, they're paying a lower effective tax rate than someone who owns a brownstone in Park Slope paying less than a homeowner in a place like Laurelton, Queens or Brownsville, Brooklyn.

The second big problem is that condo and co-op owners are paying a lower rate than apartment building owners. A lot of times the landlords will pass those high taxes onto tenants in the form of higher rents, and when they can't in rent stabilized buildings, then that's less money than they have to spend on improvements and renovations in the apartments.

Brian Lehrer: Interesting that you just did a contrast between Park Slope and Laurelton, Queens as your examples because we have this text from a listener who writes, "Can you please ask your guest about the disparity between property taxes in Brooklyn and Queens? I have been a homeowner in both boroughs, and taxes in Queens are between two and three times higher, even though homes are generally much less expensive. Why?" First of all, does that listener speak for a lot of people? Does that frame an issue accurately in borough-specific terms?

David Brand: Yes, but also I think depends on what part of Brooklyn or Queens. Depending where that listener comes from, maybe it's eastern portion of the borough, Southeast Queens, Northeast Queens, parts of Central Queens where home values have risen but haven't risen as dramatically as we've seen in other parts of Queens, like Long Island City, Astoria, versus Brooklyn, where there's a lot of thoroughly gentrified neighborhoods, hot neighborhoods where home values have surged, and they've reached the cap on how much their property taxes can increase in relation to that.

Brian Lehrer: Rocco in Brooklyn, you're on WNYC. Hi, Rocco. Thanks for calling in.

Rocco: Yes, hi. Good morning, Brian. Listen to you every day. Love you.

Brian Lehrer: Thank you.

Rocco: We recently sold a house in Carroll Gardens, and we bought it in 1994, and made a ton of money on it. Then we bought a condo in Prospect Heights, 1200 square feet. We have one parking garage and the taxes are $16,540 a year. That's an exorbitant amount of money, over $1,600 a month just for the taxes. Luckily, we did save money. We do still work, but it's a lot. It's a lot. My friend has a brownstone, three blocks away, four stories, paying $5,600 a year approximately.

Brian Lehrer: Are you drawing a distinction here, a systemic distinction between two kinds of housing that are not taxed at the proportional rates that they should be?

Rocco: Exactly. I think they have a great deal. Why do I have such a bad deal?

Brian Lehrer: Rocco, thank you very much. Does his call exemplify something in this controversy?

David Brand: I think so. I don't know the specifics and really the details of the two properties. That's high. That's a lot. I think what it illustrates is that there's winners and losers in the current system. If there's changes to how the city administers property taxes, then there's going to be people who are getting good deals now who are going to have to be paying more, and there's people who are paying more now who are going to be paying less.

That's why this has been such a controversial issue for so many years. Not controversial in that people don't acknowledge it's unfair, but then in actually doing something, and having elected officials who come into office pledging to reform property tax system, then actually, when rubber meets the road, you're going to have to alienate a lot of people, a lot of homeowners, a lot of politically active people who are going to lose by any reform. I think that definitely illustrates the big gaps we have here in the property tax system.

Brian Lehrer: Another story. Marvin in Park Slope, you're on WNYC. Hi, Marvin.

Marvin: Hi. Thanks for taking my call. Can you hear me?

Brian Lehrer: Yes, we got you.

Marvin: Yes. There's no question that the property tax system is unfair and unequal. One of the things that isn't spoken about is any change towards basing taxes on valuation of houses would disproportionately harm older adults, including members of minority groups that might have inherited family homes, because the property has appreciated, but that doesn't mean that people who own those houses or apartments have any more money to be paying in taxes. Trying to equalize things by going to assess values, it just creates other problems and the attacks on older adults who often have limited income and can't pay more money.

Brian Lehrer: Yes. Marvin, thank you for pointing that out. David, as I'm sure you know, this is a problem in the suburbs too. I think New Jersey has had a specific senior-oriented property tax break. Maybe on the New York side, there have been some things like this, too, that I'm not aware of, but the idea is just as Marvin explains it. Now you're retired, you don't have your income from your job anymore, but your home that you own has valued over the years. Since property taxes are based on valuation, your property tax bills keep going up while you're not having any more income, and that puts the squeeze on seniors. Is that part of the lawsuit or in the policy discussion?

David Brand: Definitely in the policy discussion. I think that's a really, really important point that Marvin raises, that people who are on fixed incomes if they're going to get hit, all of a sudden, with a significant property tax increase, that's going to be painful. That's going to be, in a lot of cases, probably impossible. That is going to be part of policy negotiation discussions when they do end up reforming the system. If the plaintiffs in this lawsuit prevail or the state assembly and state senate come up with a new tax system here for the city, that's going to be a major consideration. What do you do for older homeowners, people on fixed incomes?

Brian Lehrer: On the lawsuit challenging the city's property tax system, you have a key quote from the bench. It's Judge Jenny Rivera, who wrote for the majority in this interim decision. "While these officials bemoan the situation, the city fails to act. According to the complaint, the numbers tell the story of a taxation scheme that requires lower-income property owners and renters in minority--" Sorry, I'm going to read that again, and I'm going to read it right. "The numbers tell the story of a taxation scheme that requires lower-income property owners and renters in minority New York City neighborhoods to pay more than their fair share of the tax burden in violation of the law." I guess that would be in violation of the federal Fair Housing Act from 1968, which is supposed to prevent racial discrimination in housing, right?

David Brand: That's correct. That was one of the arguments that the plaintiffs suing the state to overturn the taxes in the city and the state had made that this is a violation of the Fair Housing Act. That got dismissed in lower courts. The state Court of Appeals, the highest court in New York, ruled that, "No, they can make that argument." Now it's getting kicked back to lower courts for continuing litigation here.

I think what she said, "While these officials bemoan the situation, the city fails to act," people in leadership have been talking about this for years about changing the tax system. I mentioned people campaigning on property tax reform. Mayor Adams said he would come into office and create a commission to make real change. Didn't happen. Mayor de Blasio talked about it as he was campaigning and during his administration. He ended up putting out a commission report two days before he left office pointing to, "People understand there's a problem, but people in office aren't doing anything."

Brian Lehrer: In fact, wasn't de Blasio himself a target of the critics that they said the place he owns in Brooklyn has unfairly low taxes? Am I remembering that right?

David Brand: Yes. That became the textbook example that his home in Park Slope, or I think he actually has two, they were taxed at a lower effective rate than I mentioned Laurelton and Brownsville because people who are part of this lawsuit are from those neighborhoods that they were paying a higher rate of taxes than Mayor de Blasio was paying in Park Slope.

Brian Lehrer: A listener writes, "We have a loft for 30 years on the Lower East Side, and the taxes have more than doubled in the last 10 years. It's almost $17,000. There have been some units in our building that have sold for $2 million and more in the last several years. The tax system seems to be set to push long-term owners out, and then force us to have to move and sell. This is what happened to some people I know who lived in SoHo since the '70s," writes one listener. We'll take one more call. Richard who owns property in Brooklyn and the Bronx. Richard, you're on WNYC. Hello.

Richard: Hi, Brian. A huge fan.

Brian Lehrer: Thank you. What you got?

Richard: Yes. I'm calling to tell you what I'm experiencing as a landlord. I own a brownstone in Bed-Stuy, and the annual tax bill is $4,000. That brownstone is worth $2.3 million. I also own a small two-family two-story frame house in the South Bronx that's worth $850, $900 on a good day. The tax bill is $6,000 a year. Do you see the discrepancy? Also, our co-op in Yorkville, it's a very simple five-story walk-up. The property tax bill per year is $127,000.

Brian Lehrer: What?

Richard: We're a no-frill building, 15 apartments, very small, no elevator, walk up five storey, $126,000.

Brian Lehrer: Oh, that's not the whole building.

Richard: For the whole building, yes. That's where we're standing right now. I guess it evens out for me because I'm spread out, but I guess something has to be done.

Brian Lehrer: What would be right, in your view?

Richard: I think the property tax should be pegged to the actual market value of the property.

Brian Lehrer: Consistently across all classes?

Richard: Yes. Maybe for certain types of owners, vets, and retirees on a limited budget, a limited income, there has to be some carve-out, but throughout, in general, the property tax should be pegged to the market value of the property. Oh, and by the way, the property value that's assessed by the city, these guys are way-- they're like 5, 10 years behind. Meaning the property value that they tell me that my house is worth, it's actually my house is worth way more. That's throughout all the properties I own. The city does not do a good job listing the correct market value of the house at present day. That's another thing.

Brian Lehrer: Thank you. Thank you for calling us, Richard. Call us again. As we run out of time, David, and of course, there is a system I guess for some senior homeowners in New York that's called the STAR system, STAR property tax, credit, or rebate system. Where does this go from here? Are we waiting for a court ruling that's going to drastically transform property taxes in New York?

David Brand: Yes. There could be a ruling, there could be a settlement. State lawmakers could take up the issue and actually make the changes before that happens. I guess we shall see what happens next, but I thought Richard was such an amazing final call there to really illustrate the wild fluctuations in property tax. He said $2.3 million home in Brooklyn with a $4,000 tax bill. Less than a two-family home in the South Bronx that's valued at a third of the price, and he's paying more property taxes on that. Compared to the apartment building in Yorkville, he's paying $126,000. Yes, that I think illustrates the inequities and just weird fluctuations here. That was a great call.

Brian Lehrer: Our housing reporter, David Brand, until his next radio spot, you can read his reporting on Gothamist. David, thanks a lot.

David Brand: Thanks a lot, Brian.

 

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