The Rent Stabilization Law calls upon the Rent Guidelines Board to consider the current vacancy rate in New York City in its deliberations. According to the 1993 Housing and Vacancy Survey (the latest year for which vacancy data is available), the vacancy rate for stabilized housing is identical to the vacancy rate of the overall New York City housing stock (3.4%). Since there has been little movement in the housing market in terms of new housing units available and no large influx of new residents searching for housing, the vacancy rate most likely has not changed much since 1993.
The number of new units authorized for construction by building permits declined by 38% to reach 3210 in 1994. This year's figure represents a new post-war low which was previously attained in 1992 with the issuance of 3880 permits.
The largest decrease in construction activity came in Brooklyn, where the number of new units authorized was 111 compared with 1015 units the previous year, a decrease of 89%. There was also a large drop in construction activity in Manhattan where building permits declined from 1148 to 428. New units in the Bronx decreased approximately 35% to 846 from 1293. The number of units authorized in Queens and Staten Island remained virtually unchanged in 1994, 560 and 1265, respectively.
Last year we reported that approximately 30% of the units authorized in 1993 were in structures containing five or more units. Unfortunately, we are not able to determine the proportion for this year, because the U.S. Census Bureau will not have this information available until June.
See Housing Permits Reach a New Post-War Low
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 1994, there were decreases in both the number of buildings receiving new J-51 tax abatement benefits and the dollar amount of certified reasonable costs.
The number of units receiving new J-51 tax abatement benefits decreased 50% in 1994 from 122,000 to 61,000 units. The dollar amount of certified reasonable cost for these J-51 units decreased 26% from $169 million to $125 million. 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 Number of Apartments Qualifying for New J-51 Tax Abatements Drops 50%
See Certified Reasonable Costs for New J-51 Tax Abatements Declines 25%
This decrease in benefits is probably related to the economic slowdown in the early 1990s. Because buildings cannot apply for J-51 benefits until construction and rehabilitation is complete, the amount of J-51 abatements usually lags several years behind the actual housing improvement activity.
The number of units in each borough receiving J-51 tax abatements was evenly distributed, with the exception of Staten Island (1%). Even though only one-quarter of the units receiving J-51 tax abatements were located in the Bronx, the dollar amount of tax abatements from this borough constituted nearly half of the total. Manhattan had the next highest dollar amount with almost $40 million. Brooklyn and Queens accounted for $24 million and $9 million, respectively.
Not surprisingly, the Bronx and Manhattan had the highest average tax abatement benefits (about $3900 and $2400 per unit, respectively), while the lowest was in Queens averaging under $700 per unit. The averages were $1400 and $1000, respectively, for Brooklyn and Staten Island.
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 Manhattan saw greater improvements than units in the other boroughs.
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 graph on the next page shows that the number of units receiving 421-a certificates in 1994 fell 31% from 910 to 630 units, the lowest number in recent years.
Similar to J-51 tax abatements, the number of units receiving 421-a certificates in the four boroughs (again excluding Staten Island which had less than 1%) were relatively evenly distributed. The number of units in the Bronx constituted 37% of the City total while Manhattan had the lowest proportion with roughly 18% of all units receiving 421-a certificates. Brooklyn and Queens had 22% and 21%, respectively. This is in marked contrast to 1992 when Manhattan constituted more than 50% of the city total.
See Fewer Units are Receiving Certificates for 421-a Tax Abatements
The number of buildings in the City's Central Management in rem stock remained virtually unchanged in fiscal year 1995, falling from 4760 to 4750. Vacant buildings decreased roughly 4% during this period, while occupied buildings increased slightly more than 2%, leading to a decrease of 10 buildings in the overall in rem stock. According to the Mayor's Management Report (March 1995), the City continues to reduce its in rem stock largely through sales or rehabilitations of vacant buildings. Vacant buildings declined to 1687 in FY 95. Though the number of occupied buildings in the in rem stock has remained relatively stable in the 1990s, this is the first year that the number of occupied buildings increased. There are currently 2992 occupied buildings in the City's in rem stock.
Though the number of buildings in the City's stock is unchanged, the total number of in rem units decreased by nearly 2.5% in fiscal 1995. 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 one-third 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 Number of Units in Vacant City-Owned Buildings Declines for the Sixth Straight Year
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 multi-family building is 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 chart [HPD Vestings of Multiple Dwellings Continued to Decline in FY 1995] are the actual number of buildings vested by the City.
Fewer buildings were vested in fiscal year 1994 (69) than in any recent year. So far this fiscal year, even fewer buildings have been vested - only 17 buildings, 14 of which were in Manhattan. The sharp decline in the number of vestings is due to HPD's recent moratorium on foreclosure activities. HPD states that it can no longer afford to manage the thousands of occupied buildings the City currently owns.
The overall level of co-op and condo construction and conversion activities increased in 1994 to 72 plans after falling for five straight years to a low of 58 plans accepted for filing in 1993. Most of the increase was due to a surge in the number of HPD sponsored plans from 15 in 1993 to 48 in 1994.
Of the 72 plans, only 18% (13 plans) were for new construction and amounted to 383 units. Similar to last year, the majority of the new construction plans (8 out of 13) were in Brooklyn. As mentioned above, two-thirds (48) of the accepted plans were HPD sponsored conversions. Approximately 14% of all plans were private co-op and condominium conversions under a non-eviction plan and only one plan was for a private conversion with evictions. With the exception of one non-eviction plan which was in Brooklyn, all eviction and non-eviction plans were in Manhattan.
See Co-op and Condo Plans Increased Slightly Last Year