GATEWAY PERSPECTIVES: A Mixed Bag

The New York State legislative session came to an end in June, and it was certainly a session like no other in recent history. With the Democrats in control of both the Senate and the Assembly, bills and initiatives that had been stuck in limbo for years were acted upon with new energy. In total, the State Legislature passed 935 bills during the session, though as I write this article not all have been signed by Gov. Andrew Cuomo.

From a real estate perspective, I’d have to characterize the session as a mixed bag. In terms of big wins, the governor signed into law the property tax cap, making it permanent. Given that our market area has some of the highest property taxes in the country, this was particularly positive for the lower Hudson Valley, New York City and its surrounding suburbs.

Another important win was on the education front. The legislature passed a bill that requires the inclusion of an additional two-and-a-half hours of ethical business practices and one hour of legal updates as part of the core real estate continuing education requirements. The bill also removes the grandfathering exemption for licensees with 15 years of experience who received their broker or associate broker’s license prior to 2008. As someone who believes that we as an industry have to raise the professional bar, this change to CE requirements helps us down that path.  At press time, the governor has not signed the bill into law.

We had mixed results with efforts in opposition to the enactment of increases in transfer taxes for community preservation funds, with a bill allowing the Town of Chester in Orange County to impose such a tax passing the legislature, pending a voter referendum. A similar bill, which would have allowed communities in all of Orange County to enact transfer taxes for community preservation funds, failed to advance out of the Senate. To be clear, neither NYSAR nor HGAR is opposed to community preservation, we simply do not believe they should be funded on the backs of sellers and buyers via transfer taxes when the entire community benefits.

We certainly took a blow in New York City in the budget process with significant increases to both the transfer tax and mansion tax to fund improvements to mass transit. Again, from my perspective, why should buyers and sellers be targeted to fund vital investment in mass transit when it benefits all New York City and suburban residents? I say this as someone who lives in Manhattan and takes mass transit every day.

Perhaps the biggest blow came in the form of changes to rent control and landlord tenant laws. The changes are too numerous and nuanced to recount here, but changes to the laws significantly cap the ability of landlords to invest in improvements to the rental property and recover those costs through increased rents. The extension of the rent control law also allows for the expansion of rent control beyond New York City and the suburban area. If a city, town or village is considering adopting rent control, their vacancy rate must be at or near 5%. The city, town or village must also vote to opt in to rent control only after holding a public hearing and soliciting public comment.

Other changes affect all rentals, not just those covered by rent control EPTA guidelines. They include prohibiting landlords from collecting application fees, capping the fees charged for credit and background checks to the actual cost or $20, whichever is lower, and capping security deposits at no more than one month’s rent. There are also changes to the eviction process.

So, this last legislative session was indeed a mixed bag. However, it illustrates to me that we must be even more engaged with our legislators. We also must be more engaged when it comes to participating in RPAC, which makes a tremendous difference. We cannot expect others to always to do the heavy lifting—we have to do it collectively—and in doing so our collective voice will be that much stronger.

Richard Haggerty
HGAR CEO