The Paradox Of The U.S. Black Home Ownership Rate


In a recent article here on the Biden housing plan, I mentioned the Paradox of the Black Home Ownership Rate – in the 30 years from 1940 to 1970 when housing discrimination against Blacks was legal and horrific, the U.S. Black home ownership rate nearly doubled going from 23% to 42%, but 50 years after the 1968 Fair Housing Act became law, the U.S. Black home ownership rate was essentially the same as in 1968. It was 41% in 2018. That paradox seems impossible but it’s true. 

Another hidden truth is that from 1940 to 1970, the Black home ownership rate increased more in the South than in the North. For example, from 1940 to 1970 the Black home ownership rate in Mississippi increased 31 percentage points (from 18% in 1940 to 49% in 1970) but in New York state the Black home ownership rate only increased 14 percentage points (from 6% in 1940 to 20% in 1970). The economic mystery is why did Black home ownership increase more in the South, despite the South being far more segregated?

A third hidden truth is about redlining. Many mechanisms segregated housing and redlining wasn’t the most common or most violent but redlining is the mechanism most often mentioned in the media. You can see the FDR administration’s 239 redlining maps here. You’ll notice redlining was concentrated in the North, not the South. Massachusetts had 27 redlining maps but Georgia only had five. New York state had 17 redlining maps but Mississippi only had one. The South in the 1930s was already extremely segregated. Redlining wasn’t a Southern-based policy that spread up into the North. The demand for redlining segregation seems to have been strongest in the North.

The shocking truth is that today, the Black home ownership rate in the South is higher than in the North. The Black home ownership rate in Massachusetts is 35% but in Georgia it’s 47%. The Black home ownership rate in New York state is 31% but in Mississippi it’s 54%.

Clearly, we don’t understand what drives home ownership, otherwise, we wouldn’t have failed so spectacularly over the last 50 years – under both Democratic and Republican administrations – to reduce the Black-White gap in home ownership rates.

I doubt the lack of improvement was caused by overt racism. Take, for instance, the famously liberal state of Minnesota. The 1950 census showed the Black home ownership rate in Minnesota was 45% which was very high. Minnesota’s Senator Walter Mondale was one of the two major sponsors of the Fair Housing Act of 1968. Another Minnesotan, Vice President Mondale’s long-time associate and his campaign manager in Mondale’s 1984 presidential campaign, later ran the largest mortgage company in the country, Fannie Mae, and was likely the most powerful person in the U.S. housing industry for several years. 

Nevertheless, despite what I assume were good intentions from Minnesotans, the Black home ownership rate in Minnesota plummeted to 24% by 2018. The White home ownership rate was 77%. Similarly, for metropolitan Minneapolis, the gap between the Black and White home ownership rates was 51 percentage points, the largest gap for any metro area in the U.S. with more than 1 million residents.

Minnesota and the U.S. clearly don’t understand how to increase Black home ownership.

Our problem might be worse than having policies that just don’t work. Some of our housing policies in the decades after the Fair Housing Act could be partly to blame for the problem. A few economic misconceptions could have blinded us to bad policies – bad policies that have totally offset the benefits of the good policies enacted. Economics might be like medicine where sometimes “the cure is the cause”? 

After 50 years, the Black home ownership rate should be similar to, or at least converging on, the White rate. We would have a far better chance of increasing the Black rate to where it should be if, first, we could explain the Paradox of the Black Home Ownership Rate – why did the Black home ownership rate nearly double from 1940 to 1970 when housing discrimination was legal but today the rate is essentially the same as when the 1968 Fair Housing Act made housing discrimination illegal?

Did something else happen around the same time as the 1968 Fair Housing Act that unintentionally stopped the previous trend of increasing Black home ownership?

We need to know what caused the paradox before we’ll know how to fix our home ownership problem. Clearly, after five decades of failure, any housing market misconceptions we have are so entrenched they’re invisible to us. But perhaps new solutions are hiding in plain sight.

I have some theories.

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Three Ways To Tackle Commercial Re-Occupancy In The New Normal


Tim Curran is the CEO of Building Engines, the modern building operations platform for commercial real estate.

After months of being closed or at extremely low capacity, office buildings are cautiously moving towards re-occupancy. However, getting people back into buildings is a complex matter, and it’s made even more so given the severity of Covid-19. Coupled with the fluidity of reopening timelines and safety guidelines across states, re-occupancy is entering a new normal.

While there is certainly no one-size-fits-all approach to re-occupancy plans, there are three critical considerations office building owners and operators need to take into account. Especially if they want their properties to not only survive this vulnerable phase but thrive in its aftermath and the new normal of the workplace.

Reimagine office spaces’ potential.

The pandemic has proven that some remote work is possible, but there is still no denying that office spaces facilitate a number of activities integral to business and personal success. As evidenced by how quickly professionals have flocked to videoconferencing while remote, colleagues depend on face-to-face communications to be productive. Offices are natural arenas for that.

That being said, how office spaces are occupied will naturally change following the pandemic. Building owners and operators who want to retain business prospects will need to operate with a heightened level of flexibility. For example, employers have now had ample time to reevaluate how their spaces can be used more efficiently; do they want more square footage to accommodate a socially distanced workforce, or do they want less space, permanently keeping part of their staff remote?

Cushman & Wakefield’s report on the future of the workplace smartly outlines how cutting-edge office building operators can help tenants reimagine what is possible for their new needs, such as rethinking space requirements, reconfiguring spaces and realigning on safety standards. To facilitate these moves from a distance, savvy management and leasing teams can employ technology including videoconferencing and 3D visualization to help existing and prospective occupants better conceptualize the spaces they are considering. This enables owners to sooner process or renegotiate leases and help prevent slowdowns that affect business.

Prioritize safety and sanitation.

Concerns around the spread of Covid-19 are omnipresent these days, meaning that sanitation needs to be top of mind for every operator as they navigate re-occupancy. This dedication extends beyond increased cleaning — management teams need to execute ongoing, direct communication with tenants and maintenance teams to ensure everyone understands the advancement and handling of the situation. Given the patchwork of reopening protocols spread across the country, existing and prospective occupants want a clear idea of how their individual building is planning to approach re-occupancy to confirm they’re doing it safely.

To instill confidence in occupants, management teams can draft comprehensive digital guides detailing their unique action plans. In digital or written form, these guides can articulate all practices from how they’ll sanitize in the occurrence of an outbreak, to any processes occupants will have to complete when they enter the building each day. Having this information in writing will also work to eliminate unnecessary back-and-forth communications, in which detailed protocols can quickly become misunderstood or contradictory. However, even with a comprehensive guide available, operators do still need to establish and make known the most effective way for occupants to contact them, whether that be by phone, text, email or a building’s management portal.

Be strategic about downtime.

Despite management teams’ best efforts to ready their spaces for re-occupancy, it may be a while before the public again realizes the full potential of office buildings. That’s no reason for operations functions to stall in the meantime. While cutting back on utility and janitorial expenses to save money sounds like an attractive solution for properties still experiencing lower-than-normal occupancy, trimming too severely can present challenges down the road. When regular maintenance activities are ignored for long stretches of time, systems can break down and grime can build up, so that even more time and resources are eventually needed to get facilities back in working order.

To coordinate these maintenance activities, teams can use a hub through which all information — schedules, project status, tasks and instructions for completion — is exchanged. This may look like one of the many accessible project management apps available or a more sophisticated platform built with building maintenance in mind. With safety and security measures ramped up, operators need to ensure all employees have clarity around what’s expected of them so that they can correctly execute those responsibilities. Therefore, a centralized platform that’s updated in real-time can be helpful for aligning all parties. Further, since crew sizes may need to be decreased during this period, having this level of clarity and directness maximizes everyone’s time and resources.

Putting re-occupancy plans into action.

Re-occupancy is a nuanced and sometimes daunting process. When executed thoughtfully, it presents property owners and operators the opportunity to set up their buildings for lasting success. In the midst of coronavirus, the modern office building needs to deliver on a new set of criteria, focusing dually on near-term re-occupancy needs and the long-term changes that will result from the pandemic. As spaces move to be more flexible, responsive and secure, there’s more opportunity for leveraging technology to manage and even drive those changes. Especially within an industry that has historically been slow to adopt such innovations. A new era of office buildings is upon us. Are your properties ready?


Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?




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How San Francisco’s Tenant Protection Policy Is Stabilizing Low-Income Communities


The words San Francisco and affordable typically aren’t used in the same sentence, at least when it comes to the housing market. But a program called Community Opportunity to Purchase Act (COPA) changes the way in which multifamily rental projects and certain vacant lots can be sold in San Francisco. 

Since its launch in 2019, COPA has been providing certain nonprofit organizations with first dibs on purchasing multifamily residential buildings and the right to match a private buyer’s offer. 

The idea behind this built-in advantage for nonprofits was that it would prevent rampant speculation, preserve existing affordable housing in gentrifying neighborhoods and ensure community stability.

The San Francisco Housing Accelerator Fund (SFHAF), a public-private partnership, provides flexible loans to nonprofit community partners so they can compete with market-rate development corporations to purchase buildings for low-income residents vulnerable to displacement. 

With financial assistance from SFHAF, the nonprofits buy the buildings, complete extensive repair work and operate them as permanently affordable housing.

“The Housing Accelerator Fund aims to preserve or develop 1,500 affordable housing units in its first five years,” said Rebecca Foster, chief executive of SFHAF. “We help keep low-income renters who are at risk of displacement in their homes, enable working families to live in the city, and stabilize — and ultimately revitalize — economically distressed areas.”  

Currently, eight qualified nonprofits are on the San Francisco Mayor’s Office of Housing and Community Development’s list to exercise rights of first offer and refusal as allowed under the program. SFHAF’s partner, Mission Economic Development Agency (MEDA), has been successful at responding to building owners’ notifications that their buildings are up for sale, as COPA requires. 

During the pandemic, MEDA has bought six small residential buildings serving tenants at risk of displacement through COPA transactions. SFHAF provided bridge financing for all of the transactions, ensuring that MEDA had access to resources to make attractive offers to sellers and then quickly close the deals.

The Housing Accelerator Fund explains that those seeking to protect affordable housing in San Francisco must maneuver through three challenges: a fast-moving market that requires a transactional speed for which the nonprofits initially weren’t set up well to handle, lack of funding and the small number of nonprofits pursuing these acquisitions.

The Accelerator Fund’s focus on providing bridge loans to nonprofits in a critical window of opportunity helped them make offers at the speed of the market. 

“The nonprofits responded accordingly by becoming skilled at putting in offers on buildings quickly and efficiently,” explained Foster. “What COPA has really done is slow down the market, which allows a very limited number of participating nonprofits to be more selective in applying the limited resources they have. Even with these obstacles cleared, the availability of long-term funding remains a constraint in nonprofits’ ability to acquire sites in the private market without disadvantage.”

Victoria Joseph, senior vice president at Citi Community Investing and Development, said the Housing Accelerator Fund is at the forefront of implementing COPA by helping provide resources – financial and otherwise – to nonprofits trying to capitalize on this new advantage. 

 “Citi has provided funding and expertise to SFHAF, committing $60 million in loans to date,” said Joseph. “Since 2017, SFHAF has closed on 21 building loans, three loans for development on underutilized land and has an outstanding lending portfolio totaling over $100 million.” 

The Housing Accelerator’s programs have helped to preserve over 300 existing affordable homes and are assisting with an additional 600 new affordable homes through construction. More than 1,000 San Francisco residents are served through these investments.

Sandra Lee Fewer, District 1 representative of the San Francisco Board of Supervisors, proposed the COPA legislation in December 2018 as a means of stabilizing communities by preventing tenant displacement and preserving affordable housing. 

Fewer’s bill was based on successful precedents in other cities, most notably in Washington D.C., which has had a first-right of refusal ordinance for over 30 years. Similar policies are in force in various forms in Boston, Chicago, and Seattle.

Rent-controlled apartments have become a prime target for speculation in San Francisco. Until recent years, when long-term landlords sold their buildings, their primary market was to other investors seeking ongoing rental income.

Lately, however, speculators and cash buyers have been swooping in to buy these rent-controlled buildings by using common tactics such as evicting tenants under the Ellis Act, owner move-ins, harassment tactics or buying the properties with the intention of flipping them, renting them at market rates or converting them to TICs (tenancy in common housing), condos or tech dorms.

Prior to the COPA initiative, a clear pathway didn’t exist to allow nonprofits to buy such buildings, even if they had the means to match the seller’s price. A speculator or cash buyer was able to out-maneuver a community entity wishing to buy the building in the tenants’ interest.

The COPA law addresses the need to balance the playing field so the nonprofit community can adequately compete, without disadvantage, on the open market in acquiring rental buildings when they are put up for sale.

Elizabeth Bell, 74, has lived in the Mission District of San Francisco since 1986. “When I learned my building was for sale, my mind immediately flashed to location, location, location,” she said. “I’m two blocks from the Bay Area Rapid Transit system, so I knew the developers would be all over this building. As a senior, it’s important for me to be close to transportation. I’m also part of the Mission community. I raised my daughter here.” 

Bell contacted the Mayor’s Office of Housing and Community Development and MEDA when she found out her building was for sale.  

“I’m so happy that I reached out, which was on the advice of housing activists I knew from the neighborhood, and that MEDA responded,” said Bell during a conversation in March, a few weeks after MEDA succeeded in purchasing her building.

Over the years, she noticed that many of the neighborhood’s longtime dwellers, such as artists, poets and residents from Latin America, were leaving the Mission District, seeking cheaper housing alternatives in other locations.

 “I stopped seeing them around,” said Bell. “I’d run into them at an event and they’d tell me, ‘I had to move to Berkeley,’ ‘I had to move to LA.’ It has been scary to see the businesses and the arts spaces vanish little by little. The cafe scene has greatly dwindled. Still, the bilingual schools my daughter went to are still here with a new crop of students. The cultural center still has exhibits and performances. There are still rumbas almost every Sunday in different places, poetry readings are still happening. That’s my community, and I want to stay here. I want it to stay alive.”



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Stripe Is Offering $20,000 Bonus To Employees Who Relocate To Less Expensive Cities, But It Comes With A Pay Reduction


Topline

Stripe is offering a $20,000 bonus to employees who move away from San Francisco, New York City or Seattle but it comes with a 10% pay reduction, spokesman Mike Manning told Forbes, making the e-commerce and mobile payment processor the latest tech company to implement pay cuts for workers who chose to relocate to less expensive cities as remote work policies are extended because of the pandemic. 

Key Facts

Stripe, which has more than 2,800 employees, has relied on remote work for years and in May announced it would hire at least 100 remote engineers, saying remote workers have helped the company stay close to customers so they can tailor Stripe’s products accordingly. 

Stripe joins other technology companies that have said they’ll cut the pay of employees who move to less expensive cities, including the social media companies Facebook and Twitter and enterprise software companies VMware and ServiceNow, according to Bloomberg, which first reported the news.

Further Background

Just as many white-collar Americans are reconsidering the cost of living in expensive cities if remote work policies continue, many companies are also reconsidering expensive office costs. Some companies have had market-based salary policies in place for years, meaning pay is adjusted based on the cost of living or cost of labor in the area. 

Tangent

The job search marketplace Hired surveyed 2,300 tech workers and found that 55% said they would not be willing to accept a reduced salary if their employer made work from home permanent. An overwhelming 90% said the same job should receive the same pay, regardless of if the person works remotely, but 40% said they support location adjustments. More than half, 53%, said they would be “likely” or “very likely” to move to a city with a lower cost of living if allowed to work from home permanently. 

Further Reading

Stripe Workers Who Relocate Get $20,000 Bonus and a Pay Cut (Bloomberg)

Why Silicon Valley workers who relocate for remote work face pay cuts (Fox Business)

2020 State of Salaries Report: Salary benchmarks and talent preferences (Hired)



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Ex-NFL Players Look To Tackle Inner-City Challenges By Transforming Abandoned Properties


Former NFL athletes Garry Gilliam and Karlos Dansby have joined forces in a national effort to revitalize underserved neighborhoods by transforming abandoned properties such as schools, shopping centers and warehouses into sustainable, mixed-use eco-villages with housing, retail, co-working, urban agriculture, education centers and entertainment facilities. 

For example, a high school in Harrisburg, Pennsylvania, that has been vacant since 2013, will ultimately foster constructive collaboration.

The sprawling 115,000-square foot building is set to undergo a major transformation into an eco-village with housing, retail, co-working spaces, aquaponics farms, and medical and entertainment facilities. 

The Bridge, a startup cofounded last year by CEO Gilliam and chief operations officer Corey Dupree, has leased the building and will advance plans for a co-working office space that is part of the broader eco-village plan. A groundbreaking ceremony is set for October.

The Ultimate Fan, founded in 2016 by Dansby and chairman and CEO Theodore Holloway, shares a similar mission of giving back to communities in need by empowering and uplifting those held back by poverty.

It deploys athletes, entertainers and developers with a “build and fill” business model, encouraging those stakeholders to design, build, own and operate business and land development projects. Both organizations hope to spark a movement for entrepreneurs to develop thriving, sustainable communities globally.

Gilliam said The Bridge initiative has been long in the making. “The Bridge is something that we have been working on and building for about a year and a half now, before the magnified issues of Covid and the Black Lives Matter movement,” he said. 

“Issues like systematic racism or systematic oppression are issues that have been in place for hundreds of years in this country,” Gilliam explained. “There have been attempts to try and deconstruct that system, and some elements have changed, but there are also things that have gotten worse such as redlining and food deserts in a lot of school districts that don’t have funding coming to them due to their property values and homeownership levels. The Bridge is an observation of the past and an answer to solve issues that have been occurring for a while, as well as issues that Covid and the Black Lives Matter movement have magnified.” 

Gilliam pointed out that The Bridge believes the way to combat systemic oppression is to counter it with a range of initiatives.

“We aren’t just putting a Band-Aid on the systematic issues that are present in our society,” said Gilliam. “We are really getting down to the root of these issues and creating solutions for them. The Bridge has five branches known as WELLP: Work, Eat, Live, Learn and Play. Each of these branches attacks the issues many inner cities face by providing valuable resources to the community.”

The organization seeks to acquire 5 to 30 acres in Harrisburg for sustainable eco-village campuses that will produce healthy fresh food, clean water and renewable energy. Development plans include co-working space, housing units, commercial, retail, entertainment and indoor urban agriculture as part of an agro-food tech innovation center. 

Dupree believes the vacant high school is the obvious place to start. “Harrisburg is our home,” he said. “It’s the epitome of where The Bridge pilot location should be. In saying this, I mean it is a food desert, has a low rate of homeownership and has a disturbingly low state ranking in the education system, even though it is a capital city.”

Gilliam said Harrisburg has a legacy of systemic oppression. “There’s clear evidence of redlining,” he said. “There is one grocery store within the city limits, the school system is ranked in the bottom five of the state, and homeownership levels are extremely low. Building The Bridge in Harrisburg will produce quantifiable results. We know since we lived there that it will progress the city, and eventually other cities as well.”  

The Bridge has a bold vision for economic renewal. Gilliam explained, “We are providing quality adult education that often is not provided in inner-city public schools due to lack of resources, transforming food deserts into food oases by growing food on site and providing groceries for the community, offering different types of housing from affordable to upper class with a heavy focus on workforce housing, offering a co-working space for entrepreneurs in the area and providing entertainment for the community with our arcade, which will feature a lot of virtual reality.”  

Through incubator spaces and community partnerships, The Bridge seeks to provide workforce preparedness for the community.  

“We plan on working with local contractors to hopefully take on apprentices, in some regard, to help them become more skilled in their crafts,” said Dupree. “This creates not only jobs, but more importantly, bosses and business owners.” 

Gilliam added, “The Bridge will focus on workforce preparedness in our Learn branch which will lean heavily into workforce development, job training, sustainable business practices, financial literacy courses and more. The Bridge will lay the foundation for people to create jobs and businesses, not just having a job within the community.”



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NAR: 31% of Realtors say they feel unsafe at open houses


Real estate agent safety has been a concern for years, as the job requires showing empty homes or homes occupied by others, and meeting new people, often alone.

As September is Realtor Safety Month, the National Association of Realtors has released its 2020 Member Safety Report.

According to the report, 31% of Realtors said they feel unsafe during an open house or showings, and 27% said they feel unsafe when meeting a new client for the first time at a scheduled location or property.

Those fears are not unfounded. Just this week, NAR reported that a real estate agent in Draper, Utah, was showing what she thought was a vacant house for sale to a potential buyer. Behind one locked bedroom door in the basement, however, they found a man holding a rifle, according to police reports. The man allegedly told the agent and potential buyer to get off the property.

Realtors also have to contend with the people they allow into house. While conducting an open house, 3% reported theft of prescription drugs and 32% reported theft of opioids. While giving a home tour, 2% reported theft of prescription drugs and 16% reported theft of opioids.

Thirty-five percent reported they encountered a crime after receiving a threatening or inappropriate email, text message, phone call, or voicemail, and 17% said they encountered a crime during an open house.

Fear for their personal safety or safety of their personal information was a common concern, with 35% of female Realtors in suburban or metro/urban areas saying they had this fear.

This year, more female Realtors are carrying self-defense weapons or tools than last year – in 2020, 50% of women are carrying a self-defense weapon or tool while 46% of male Realtors do the same. In 2019, it was 49% of female Realtors and 45% of male Realtors.

Seventy-two percent of Realtors said that they have personal safety protocols in place that they follow with every client.

More agents are sharing their whereabouts with others than last year in total – 58% of members said they use a smartphone safety app to track where they are and share their location with colleagues. Most commonly, 36% used the Find My iPhone feature. The report said that 64% of women are more likely to use an app or safety notification procedure, compared to 47% of men.

NAR offers a Realtor safety course, which 29% of the Realtors said they have participated in. Women were more likely to take the course, at 33%, while 21% of men took it. Of those who have taken the course, 79% said they feel more prepared for unknown situations after taking it.



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New York Sees Its Last Rental Conversions After Passage Of Tenant Protection Law


It’s a common situation for New York City renters – their rental building is going condo (or, as was the case a couple of decades ago, co-op). But after the passage of the Housing Stability and Tenant Protection Act of 2019 last summer, that scenario has been likely been relegated to the city’s history books. 

One of the extensive law’s provisions increases the required percentage of existing tenants willing to buy their apartments from 15% to 51% before a non-eviction conversion can move forward. Previously, the percentage could also include non-tenants who were purchasing the apartment to use as their primary residence. The new 51% requirement includes current tenants only.

Some developers were able to squeak their conversions in under the wire, including The Broad Exchange Building, which filed its plans before the regulations went into effect last June. This past July, the developers announced that they had met the 15% threshold to achieve declaration of effectiveness for the condominium conversion in Manhattan’s Financial District. 

Angela Ferrara, executive vice president of The Marketing Directors, which is heading up sales at The Broad Exchange Building, built in 1902, said it was likely one of the last conversions to go forward. 

Of the building’s 308 units, 56 sold as primary homes and 12 of those purchasers were already residents, according to Ferrara. 

Ferrara and others contend that the regulations will have the opposite effect of its intentions to provide affordable housing and encourage homeownership. 

“The regulations had the right intentions – to make properties more affordable,” Ferrara says. “But this particular aspect of the law has done the opposite, allowing less people to be able to buy in Manhattan.”

The Avant, located in The East Village, also converted from a rental into 26 condominium residences, submitting the plan ahead of the deadline.

“Given that this is a conversion, the team was able to completely gut the interiors and recreate larger-than-average units at still very attainable price points,” says Candice Milano, an agent with Brown Harris Stevens representing the property. “Due to Manhattan’s lack of affordable, new units, The Avant is able to meet this demand in a prime downtown neighborhood with starting prices below $1 million.”

The change is a larger issue because of the lack of developable land.

“Right now, a very good course of action would be for the developer to convert and let renters be homeowners,” Ferrara says. “This is really the only play that a developer has. New developments are not really attainable for a lot of New Yorkers. I would love the regulations to change because there will be a glut of new construction, but there won’t be something in the middle range.”

Jonathan Canter, a partner with real estate law firm Kramer Levin, said conversions are effectively dead.

“The threshold is so high,” Canter says. “It’s nearly impossible to do it on any economic terms.”

Additionally, developers received less than a week’s notice as the law went into effect immediately. 

“I think it was a knee-jerk response that condominiums are bad because people are making money off them, and because conversions would take away rental units,” Canter says. 

State Assemblyman Harvey Epstein, co-author of the tenant protection law, says the reasoning behind raising the threshold for conversions was to allow tenants to have more say in how their building is run. Financing also becomes more difficult for buildings that are not majority owner occupied.

“The goal was to help people who want to become homeowners so they have a voice on the board,” said Epstein, who’s lived in a co-op on Manhattan’s Lower East Side for more than 20 years. “If the majority of the building is owned by the sponsor, the sponsor maintains total control and tenants have no say in how the building is run.”

Epstein disagrees that the law has killed conversions.

“It makes more appropriate conversions,” Epstein says. “I don’t think a conversion at 15% is an appropriate conversion. If they can’t get 51%, maybe they shouldn’t have a conversion at all.”

Francis Greenburger, chairman and chief executive officer of developer Time Equities, says he has an idea to amend the current conversion law that would still provide support for affordable housing, allowing developers to convert a rental building under the previous terms if they contribute to an affordable housing fund.

“The specific amounts would need to be determined but our initial thought was that a contribution of 3% of the purchase price would be split equally by both the sponsor and purchasers, and that upon resale purchasers would also pay 1.5% of the purchase price at closing,” Greenburger says. “I believe this is an inherently just and equitable way to generate funding from sponsors/developers in the private sector for-profit housing market and those purchasers fortunate enough to be able to afford to buy a condominium, while targeting the funds to specifically benefit those who have demonstrated the need for affordable housing.”



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Actor Anthony Edwards Of ‘Top Gun’ And ‘ER’ Fame Lists Manhattan Penthouse


Actor Anthony Edwards, best known for roles in the movie Top Gun and TV series ER, is selling his prewar penthouse on Manhattan’s Upper East Side.

Edwards, who played Goose to Tom Cruise’s Maverick in the 1986 Air Force movie and Dr. Mark Greene on the first eight seasons of the NBC medical drama, recently listed the three-bedroom, 3 ½-bathroom unit at Philip House for $7.65 million. 

The duplex features interiors by AD100 designer Victoria Hagan, with a 32-foot-long living and dining area with 16-foot ceilings and a wood-burning fireplace. It also has three terraces, including one with an outdoor grilling area.

The eat-in kitchen features custom high-gloss lacquer cabinets, Belgian Bluestone countertops, a Sub-Zero fridge and wine fridge, six-burner Wolf range and two wood-paneled Miele dishwashers.

Philip House was built in 1927 and designed by Sugarman & Berger. It was converted to a condominium in 2013, with ARCT Architecture P.C. designing the conversion.

Building amenities include a rooftop lounge and landscaped rooftop terrace, fitness center, game room, children’s playroom and music practice room.

Elizabeth Van Hiel and Aaron Allen of Elegran have the listing.



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A Pied-A-Terre Tax On New York City Real Estate Would Likely Erase Any Of Its Potential Rewards


The New York State Senate has once again placed New York City real estate directly in its sights. Last year the Senate considered a “pied-a-terre” tax bill, but the proposal was ultimately dropped in favor of an increased mansion tax, a far easier pill for buyers, sellers, developers, and real estate agents to swallow. The pied-a-terre tax got shelved for a variety of reasons, one of which was the enormous complications of its implementation in co-ops. In brief, the proposed tax would require all homeowners whose legal residence is outside the five boroughs to pay an annual tax on maintaining a second (or third, or fourth) residence within the city. This tax would be leveled not only on new purchasers, but on anyone whose legal residence lies outside city limits. 

Administered on a sliding scale, the tax would charge between 0.5% and 4% to owners whose one to three family houses have a value of $5 million or more, and 10% to 13.5% to owners whose apartments have an assessed value of $300,000 or more. Since assessed values of New York properties vary widely, no one seems exactly sure at what value the tax would begin; some have hypothesized that the proposed law could affect owners of apartments worth as little as $1.5 million, which buys a one or at best a two-bedroom flat in Manhattan. In addition, the tax still suffers from huge administrative problems around co-ops, where the assessed values are assigned by building rather than apartment, thus muddying the waters regarding who might owe what. 

Senator Brad Hoylman, the bill’s original sponsor, and other members of the State Senate like to use recent purchases by Jeff Bezos (for $96 million) and Ken Griffin (for $238 million) as the poster children for the reasonableness of their idea. For guys like these, they say, any pied-a-terre tax would simply be a rounding error. Perhaps this is true, but it fails to consider several important issues.

First, purchases of this scale remain completely outside the mainstream, and to use such anomalies as cases in point lacks real transparency. Second and more important, the issue doesn’t center around what people can afford; it’s about what they are willing to pay. The wealthy who are establishing primary residences in Florida can afford to pay New York City and State taxes—they simply would prefer not to. The pied-a-terre tax will have a similar effect on buying behavior. 

Scott Fitzgerald famously said, “The rich are different from you and me.” But not in every way. Like the rest of us, they prefer not to spend money they don’t have to, and especially today, with so many tourist attractions involving sports and the arts unavailable in person here, the desire to buy an extra home in New York probably lies at its lowest ebb in recent decades. Add a new annual tax to that mix and you almost certainly continue to drive away those frequent visitors who have historically both spent big and lived big when they are here. And that in turn costs the city construction projects and restaurant visits and a host of other job and revenue-generating activities that virtually nullify the financial benefit gained from the tax.

The city and the state both badly need money. The federal government, at least up until now, does not seem likely to provide it, especially to a reliably Democratic state. An incremental tax on on the uber-wealthy makes sense; many of them live in New York, still pay taxes here, and enjoy its benefits. This particular tax, however, seems like poor policy. It’s unlikely to raise enough revenue to justify both the administrative time necessary to implement it and the attendant losses from the likely departure of pied-a-terre owners. 

The pandemic has economically ravaged communities throughout the United States. Our governments, at the state and local levels, need to be smart and analytical about how they attempt to generate revenue. Real estate is always an easy target for legislators. In the case of the pied-a-terre tax, however, the drawbacks seem likely to erase any possible rewards.



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