The Albany Times Union has reported local governments in Hudson, Newburgh and New Paltz are backing a statewide “Good Cause” eviction bill and expansion of the Emergency Tenant Protection Act of 1974 (ETPA) in upstate NY. Furthermore, it is likely at least six more municipalities will also back these measures. Including the city of Albany.
Obviously, this will have major ramifications on the commercial real estate (CRE) industry.
As a result, this legislation should be followed closely by CRE landlords, investors, developers, brokers, and bankers. Fortunately, it will likely take time to make its way to Governor Cuomo’s desk. Even so, keep a watchful eye on Senator Julia Salazar’s “Good Cause” legislation.
Key Aspects of the Legislation
Her bill looks to accomplish two primary things.
- Guarantee lease renewal
- Prohibit landlords from seeking eviction for causes. Including non-payment of rent.
CRE stakeholders should be ready and willing to lobby their elected officials. Obviously, this legislation will have an immense impact on property valuations. Also, there is an increased risk for tenants not paying their rent.
This will have two immediate consequences. First, it will negatively affect property values for those trying to sell. Second, it will change how bankers underwrite a property for a mortgage.
In contrast, Sen. Salazar’s bill seeks to prohibit landlords attempting to drive out tenants using hefty rate increases. While there’s a fine line between too much government regulation on private property and looking out for constituents, there is merit in eliminating this shortcut for landlords.
Additionally, the ETPA provides municipalities with rent stabilization, primarily downstate, on an opt-in basis. The Senator’s bill would apply to all units not covered by ETPA across the entire state.
There is a problem with catch-all legislation like this.
New York State is made up of a wide array of rental markets – from very low rural market rents to very expensive rentals in NYC. We are also seeing a lot of newer construction in the Albany metropolitan statistical area. One size doesn’t fit all.
There needs to be a LOT more input from those most affected before an expansion of the EPTA covers rental units across the state.
Why Legislators Want This
Multi-family developers, landlords, and banks have enjoyed a boom in new apartment construction over the past decade. Critics and legislators alike complain over the cost of rent. Unfortunately, they fail to look inward to see what NYS can do to lessen the hefty tax burden placed on landlords.
This has a significant effect on rental rates.
CRE investment property brokers regularly see financials showing property taxes accounting for 2 and sometimes 3 months’ worth of rent per unit. Furthermore, the cost of land and construction is always increasing. Consequently, these issues increase rent and have negative effects on the region’s economy. For example, these factors make it very challenging to develop the needed workforce housing in resort communities like Lake George and Saratoga Springs.
Let’s Strive for the Win-Win Scencario
Legislators and Multifamily landlords have a vested interest in a Win-Win scenario versus seeking to pass a statewide Win-Lose bill that will undoubtedly have landlords and attorneys looking for loopholes to avoid an erosion of their property value. Certainly, this will only create more problems.
Our qualified and experienced CRE Brokers at NAI Platform work hard to stay on top of all areas that affect our industry. This allows us to educate and advise our clients, ultimately providing a higher level of value.
For more information and expert guidance on your commercial real estate needs, please give us a call or send us an email.