A new report by the Community Housing Improvement Program (CHIP) released today highlights the steep costs of owning and operating rent-stabilized units in New York City.
In recent years, a combination of rising operating costs, supply chain issues, and regulatory changes has made maintaining rent-stabilized properties in New York City nearly impossible and brought the system to the brink. When long-term tenants leave rent-stabilized apartments – the vast majority of which were built before 1974 – property owners are routinely left with upwards of $75,000 in necessary renovations. But current regulations make it financially infeasible to make these upgrades, leading to the current situation in which tens of thousands of units are vacant and unavailable for rent.
The report includes an actual proposed invoice from a contractor for the renovation of one of these apartments, which requires close to $120,000 in work following the departure of a long-term tenant. The analysis builds on CHIP’s survey of its members who own or operate 50,000 rent-stabilized apartments across the city. Four out of five of respondents to that survey stated that their operating costs have risen at least 15% over the past four years.
The report also details addressing the vacancy issue through legislation, which could help New York City and State meet economic, environmental, and housing goals. CHIP projects that if these vacant apartments were able to be renovated, New York City and State would see economic benefits over the next two years that include:
- $900 million in wage activity;
- $1.3 billion in taxable building supply sales;
- $80 million in permit fees; and
- $84 million in increased annual tax collection.
CHIP is backing a proposal called the Local Regulated Housing Restoration Adjustment (LRHRA), which would allow property owners to fix up vacant units to code and then rent them out at affordable rates comparable to nearby apartments. The units would stay affordable and rent-stabilized, be safe and energy-efficient, and available to voucher holders in the majority of cases.
In addition, the proposal would allow these older units to be retrofitted to meet new energy efficiency and lead standards, helping New York meet its climate and environmental goals.
“We have been engaging in a conversation about this problem for the past 12 months, educating elected leaders, housing advocates, stakeholders, and local and statewide partners to craft a solution,” said Jay Martin, Executive Director of CHIP. “We’ve built an incredibly diverse coalition who all agree a solution is necessary. Together, we believe we have a policy that the State Legislature will be able to pursue this session.”
The full report can be found here.
