The number of units authorized by new building permits for construction increased for the first year since 1989. Units authorized rose 33% to 5170 from a post war low of 3880 in 1992.
The largest increase in construction activity came in Manhattan, where 1150 new units were authorized, triple last year's level of 370. Brooklyn also showed a dramatic increase in 1993, up to 1015 units from 645 in 1992. New units in Queens also increased to 530 from 350. The number of units authorized in the Bronx and Staten Island was virtually unchanged.
About 1700 units (30% of the total) authorized in 1993 were in structures containing five units or more. This includes all units authorized in Manhattan, a quarter of the units both in the Bronx and Queens, and 6% of Brooklyn units. All the units authorized in Staten Island were in one or two unit structures.
See chart Units Authorized for New Construction, 1988-93
Figures on the J-51 tax abatement and exemption program are a measure of the level of rehabilitation activities in existing buildings. Tax abatements are issued for major capital improvements, moderate rehabilitation requiring the replacement of at least one building system, and gut rehabilitation. In 1993, there were decreases in both the number of units receiving J-51 tax abatement benefits and the dollar amount of certified reasonable costs.
The number of units receiving J-51 tax abatement benefits decreased 15% in 1993 from 144,000 to 122,000 units. The dollar amount of certified reasonable cost for these J-51 units decreased from $224 million to $169 million. This decrease in benefits is probably related to the economic slowdown in the early nineties. Because buildings cannot apply for J-51 benefits until after construction and rehabilitation is complete, the amount of J-51 abatements usually lags several years behind the level of economic activity.
See chart Number of Units Receiving J-51 Tax Abatements, 1989-93
It should be noted that certified reasonable costs approved by HPD's Office of Development are approximations of the actual rehabilitation costs. In most cases, the tax abatement received is based on 90 percent of the total certified cost.
See chart Total Certified Reasonable Costs for J-51 Tax Abatement, 1989-93
Even though two-thirds of the units receiving J-51 tax abatements were located in Manhattan and Queens, the dollar amount in tax abatements from these two boroughs constituted only 50% of the total. The average tax abatement benefit is about $1300 per unit in Manhattan and $700 in Queens.
Assuming there is a direct relationship between the amount of tax abatement benefits received and the level of rehabilitation activity, units in the Bronx and Brooklyn saw greater improvements than units in Manhattan or Queens. The average tax abatement benefit received in the Bronx is about $2400 per unit, almost twice as high as the Manhattan average. Building improvements in Brooklyn ranked in between Manhattan and the Bronx at $1700 per unit.
One indicator of new multi-family units entering the housing market is the number of preliminary 421-a certificates issued by HPD's Office of Development. The number of units receiving 421-a certificates in 1993 fell 65% from 2650 to 910 units, the lowest number in recent years.
The number of units in the Bronx and Brooklyn receiving 421-a certificates accounted for 80% of the city total. The number of units in Queens constituted 17% of the city total while Manhattan had only 3% of all units receiving 421-a certificates. This is in marked contrast to last year when Manhattan constituted more than 50% of the city total.
See chart Units in Buildings Receiving Preliminary Certificates for 421-a Tax Abatements, 1987-93
The number of buildings in the city's Central Management in rem stock continued to decline in fiscal year 1994, falling from 5180 in 1993 to 5030.(1) Vacant buildings decreased from 2085 to 1945 during this period, accounting for most of the decline in city ownership. According to The Mayor's Management Report (September 1993), the city has reduced its in rem stock largely through sales or rehabilitations of vacant buildings. The number of occupied buildings in the in rem stock has remained relatively stable.
The total number of in rem units decreased by nearly 5% in fiscal 1994. Again most of the decrease in units was due to the reduction in vacant buildings. The number of units in habitable buildings declined by only half as much as the decline in units in vacant buildings, thus underscoring the focus placed on rehabilitating vacant buildings in the in rem stock.
See chart In Rem Central Property Management Units, Fiscal Years 1988-94
The city chartered an In Rem Tax Foreclosure Release Board in 1991 to approve redemption applications, a task formerly performed by the Board of Estimate. After a multiple dwelling falls in tax arrears for at least one year, the city is entitled to initiate foreclosure proceedings. While the city may be legally entitled to a judgment of foreclosure three months after the commencement of the proceedings, such judgments are typically sought about one year after proceedings are initiated. The judgment entitles the city to obtain title to the property. The owner may redeem the property as of right, by paying what is owed to the city within four months of the city obtaining title. However if the property owner wishes to redeem the property during the following 20 months, the owner has to apply for discretionary redemption with the new In Rem Foreclosure Release Board. The vesting statistics shown in the graph HPD Vestings of Multiple Dwellings, Fiscal Years 1985-94 are the actual number of buildings vested by the city.
More buildings were vested in fiscal 1993 (486) than in any year since 1986.(2) Through three quarters of this fiscal year, only 119 buildings have been vested, a drop of 75% from last fiscal year's total. The actual drop on the year may be slightly overstated since a large vesting in Brooklyn is soon expected. Since there is a considerable lag of at least 16 months between failure to pay taxes and vesting, the explanation for the decrease in vesting activity is unclear since vestings in 1994 would most probably reflect the downturn in the real estate market from a few years prior.
Recent vestings have targeted larger buildings than the previous few years. In fiscal 1991 and 92, the average number of units in buildings appropriated by HPD's Office of Property Management was 8, compared to 11 units in fiscal 1993 and 94.
The overall level of co-op and condo construction and conversion activities fell for the fifth straight year to a low of 58 plans accepted for filing in 1993. This represents a 55% decrease from 1992's level of 130 plans. Most of the decrease was due to a sharp drop in the number of HPD sponsored plans.
Of these 58 plans, 65% (37 plans) were for new construction, accounting for 775 units. Thirty of these new construction plans were for Brooklyn and Manhattan. Approximately one quarter (15) of the accepted plans were HPD sponsored conversions, a large decrease from last year when 87 accepted plans were HPD sponsored. Only 7% of all plans were private co-op and condominium conversions under a non-eviction plan. All of these were in Manhattan. There were two private conversions with evictions, both in Manhattan.
See chart Co-op and Condominium Plans Accepted for Filing, 1986-93