rent apartment queens ny

♪♪ [theme music] ♪♪ >>>michael stoler: new york cityhas a crisis and the crisis is there's not enough affordablehousing in new york city. and where can we build it?there's not enough land. there's not enoughspace. there's not enough money. there's avariety of problems. but i don'tknow the answers, so i'veassembled with my buddy, the executive producer ofthe show, chuck brass, today,

a group of individuals who can tell people what'shappening in affordable housing, how they might beable to find an affordable housing and all thedifferent discussion on that. i'm very lucky tohave gary rodney, who is the president ofnew york city housing developmentcorporation, dan moritz, who is a principle atthe arker companies, eli weiss, who'sthe director at joy

construction, andlast but not least, as i said, the manresponsible for bringing this grouptogether, chuck brass, who is a principle atforsyth street advisors. >>>charles brass: advisors,right. >>>michael stoler: and theformer president of new york city housingdevelopment corporation. >>>michael stoler: i should alsopreface that with the exception of dan, this is thealumni association of hdc.

also, for the lastclarification, 14 years ago when i started the show, the firstshow of the stoler report, i had a show on affordablehousing and it hasn't changed much. and one of myguests was chuck brass, live from charlotte's kosherrestaurant in the sony center. >>>charles brass: we had alittle table in the back. you could hear them droppingthe dishes, clearing the tables. >>>michael stoler: so okay, chuckie, so what has changed in14 years in affordable housing?

>>>charles brass: that's a goodquestion. i think what's changed is we have a mature -- moremature industry. the programs that arearound today are very similar to the onesthat were in effect then, but that was reallythe very beginning of certainly with regardto the programs that hdc runs. we were just creatingthem and starting them. >>>michael stoler: you know, youcould go up to the bronx and find land that wasowned by the city. you could get

the land for a dollar or forvery minimal amounts. that's when harlem, when jefflevine built the affordable - >>>charles brass: co-op. >>>michael stoler: co-op on116th street. this was a different time. today we don'thave that situation. so here, i have to lookat the two developers over here. why does a developer -- iknow you're very altruistic, you want to help the state. whydo you become an affordable housing? first you andthen mr. weiss.

>>>daniel moritz: sure,i would say becoming an affordablehousing developer, you're in a market that isessentially market proof. it's consistent in good times.it's consistent in bad times. you're never going to have aproject that is a homerun, but you're going to do verywell with constant projects -- singles type of projects. and it's a good consistentbusiness and we always have a highdemand for apartments.

>>>michael stoler: youdon't have a vacancy. >>>daniel moritz: we rununder one percent vacancy. and when we open up a newbuilding, we get tens of thousands of applications for ahundred apartments. >>>michael stoler:let's talk about that. eli, you were saying justprior to the show that you're building abuilding in crown heights. >>>eli weiss: correct. >>>michael stoler: tellme a little bit about it,

how you found the land andhow much of the building is affordable andthe lottery system, which i think is veryimportant to discuss. >>>eli weiss: sure. so the site that we're talkingabout is on franklin avenue. and the building is actuallycalled elliot j hobbs garden. elliot hobbs was a banker at jpmorgan chase for many years, who was a real pillar in theaffordable housing industry and great person and a greatprofessional.

he unfortunately passedaway two years ago and my partners and i, we renamedthe building in honor or elliot. the building is 93 units. it'sessentially an 80/20. however, the 80 - >>>michael stoler: explain---nomore inside baseball. explain to myaudience what an 80/20 is. 80 percent of theunits are middle income, so they're set with rentsup to 130 percent of new york city's areamedian income.

>>>michael stoler: and what isnew york city's area median - >>>eli weiss: new york city'sarea median income for a family of four is about $85,000. >>>michael stoler:soit's $85,00 at 135, means it's,like, $112,000. >>>eli weiss:that's right. the rents are set at130 percent of ami, but people who can make upto 175 percent of ami are also eligible tolive in that building.

so you have 80 percent ofthe unit set for middle income tenants, asi just described. and then 20 percent peoplewho are considered low income, which are peoplewho earn 40 or 50 percent of that 80 percent number. >>>michael stoler: whichis probably between 18 to 27,000 i think,something in that range. so on both sides ofthe 93 apartments, is there a lotteryfor all of them?

>>>eli weiss: there is. there'sa lottery for all of the units. the lottery is somethingthat's set up that you work inconjunction with hdc. there's a verysophisticated and talented marketing staff at hdc,so starting about a year before youanticipate occupancy, you set up a meetingwith hdc to discuss the marketing guidelines for thebuilding, the timing of the- >>>michael stoler:so since you're discussing --

i want gary to talk about that.what do you do over there? >>>gary rodney: onthe marketing end, i will sit down withthe developer staff. in this case,eli and his team. we'll go through themarketing materials. we'll go through kind ofthe ad that will be placed in the newspaper. we'll also discuss kind ofwhat the income ranges are that will beallowed for each unit.

>>>michael stoler: when do youput the ad in the newspaper and when does it go on the websitethat the apartment's going to- >>>eli weiss: sixto eight months prior to tco. >>>gary rodney: aboutsix to eight months before you're actually readyto have people move in. >>>michael stoler:now, eli said before, you had how manyapplications for the >>>eli weiss:roughly 51,00 for the 93 unit. >>>michael stoler: 51,000,so it's truly like winning a

lottery. but part of the problemis the income bands. if certain peoplehave said to me, "i could qualify, but ifi make $20 more than that income band, i'm out."what does that- >>>gary rodney: that has to dowith how we structure the financing for the deal. so in eli's case, we have20 percent of the building that are lowerincome levels, 80 percent are athigher income levels.

but as he described, wetry to give them a band to work with so you don'thave so much of an issue with somebodywho's slightly over. however, therules are the rules. and we do need to kind of stickwithin those income guidelines. otherwise, it throws our- >>>michael stoler: now hereis the question. when somebodygets one of these, wins the lottery for oneof these 93 apartments,

how long are they allowedto be in that apartment? >>>gary rodney: aslong as they want to. >>>michael stoler: let'ssay that person at this time is juststarting their career, their business career, andthey're earning x dollars. and their world changesand their business does well. they are protected forlife for that apartment? >>>charles brass: throughrent stabilization -- well, these buildingsare always subject to rent

stabilization and they'retherefore able to get a lease renewal as ofright or whatever the rent guidelines board approves,eventually in some cases, the restrictionsmay fade away. but that's very far offin the distant future. >>>michael stoler: someone couldbe moving into your building or someone could be moving intoan 80/20 in manhattan- >>>gary rodney: correct. >>>michael stoler: -whichwould have 20 percent

affordable or evendifferent rates and they could be protected for the rest oftheir life at this market rate, which now reduces thepossibility of, as i was saying, the increased numberof people moving into the city. >>>eli weiss: i think that'ssomething we would all want to see. i think thatproviding somebody with an affordable and qualityhome at the time when they need it and they'reincome qualified, you want to see that --you'd like to think that

that home was part of theplatform that allowed them to do better, that allowedthem to focus on their professional life, thathelped them get that. and you don't want to see the twofactors, their sort of success. >>>gary rodney: you don'twant to penalize somebody. >>>michael stoler:i'm not disagreeing. i'm just trying to go throughall the philosophies over here. >>>charles brass: butthere is an argument to be said, that if someone getsan affordable apartment

and are paying $800 amonth and five years, ten years later,they're making $400,00 a year, that it would be better if thatapartment could turn over so that you could give anopportunity to somebody else. but that's not the waythe law works in new york. >>>michael stoler: here's myquestion. you had this land. you could have made thisbuilding 100 percent market rate. why'd you build as anaffordable housing? >>>eli weiss: it was acombination of reasons.

number one, at the time when webought the land, the market there wasn't as robust andstrong as it is today. number two real estatedevelopment in new york is driven by -- especially newconstruction, by tax abatement. part of securing a long term taxabatement on the site would be to put an affordablecomponent on the site anyway. and at the time, the rentsthat i was describing, the middle income rents,those 130 percent of ama rents, weren't really thatfar off from the market rate.

so when you combine thatwith the plethora of sort of financing goodies thatgo along with working with a governmentprogram, it made sense. >>>michael stoler: chuck, i meanas i said, you were president of hdc,you were with cpc, you've been involvedwith all these things. today, you're more of anadvisor to many companies with regard to structuringand the finance. who's coming to you?

are regular developerscoming to you for advice on this type of market? >>>charles brass: well, we haveall kinds of clients coming to us. we have a lot of- >>>michael stoler: the good,the bad and the ugly? >>>charles brass: yes. wetry and weed out the ugly. we try and separate thebad from the not so bad. so almostanybody is redeemable. we can makeanybody look good,

at least wetry to think so. but we have, forexample, in our 80/20, we do some consulting fordevelopers who are doing 80/20 projects, the oneswho are established and have been doingit for a while, who did it back evenwhen hdc was doing 80/20s, they don't come to us. there's a whole new cadreof developers who either have noexperience developing,

very little experience or theywere condo developers but for some reason, they own a sitewhere they feel that they either have to do 80/20 or they wantto and they need advice on -- because the rules are verycomplicated. >>>michael stoler: solet me throw my initial question to all of you and eachone see who wants to pick it up. the amount of developable landhas been diminished over the year. we don't have that muchland in the new york city-- in the report, which is onyour website.

great, go to nychdc.com. there'sa report on the housing- >>>gary rodney: thehousing of new york. >>>michael stoler: thehousing of new york. where can we build? how can we increasethe number of units? i know that you've donework in preservation, in a number ofpreservation deals. we have projectstoday where there's large potential, affordableis hunters point,

the domino deal,the hallets point, east new york, certainparts of the bronx, even in manhattan or maybewashington heights if we build up. where can we find theaffordable housing and how do we build moreaffordable housing? who wants to try toanswer that question? >>>daniel moritz: the biggestissue, like you said today, is finding land to buildaffordable housing. and hdc and hpd have greatprograms available to help

us with the tools we needto build new construction, but thechallenge, again for us, is finding land thatfits into the bucket. >>>michael stoler: solet's say we find the land. can't we, throughcertain programs or other opportunities like theinclusionary housing program, which givescertain people -- we're also doing affordablehousing for supportive housing. we're doing it forhomeless people.

we're having allthese type of things. if we build higher, we canpossibly get more apartments. >>>eli weiss: absolutely. >>>gary rodney: i think wehave to get more creative. as you mentioned before,in different neighborhoods there were spotsof land available. now, it's not so much. sowe have to build taller, we have to build a littlebit denser and we have to kind of think aboutlocations that weren't the

number one spotsthat everybody went to. but i think there would actuallystill be good locations. and i'll also say kindof building a little bit bigger isn't putting a 45story building in crown heights. it could be the differenceof going from a six or seven story buildingto maybe eight or nine. i think there are plentyof opportunities there, the fact that we'vegot a good team on the administration sideworking together,

both from cityplanning, hpd, hdc. maybe there's goingto be some additional possibilities inbuilding on nycha land. >>>michael stoler: let'stalk about the nycha land. nycha land,for my audience, is new york cityhousing authority land, sometimes alsoknown as the projects. but a lot of thenycha land had parking, has parking, has densitypossibilities and where

you can take that land-- maybe take over the parking, maybe youcan build above ground parking, structuredparking and then you can have housing over there. and in many ofthese nycha locations, these are- the city isgentrified very well, so it's a big difference. so thenycha is a good possibility. have you pursuednycha? >>>eli weiss: i have not,but i've looked at the rfps.

typically, the process isa request for a proposal for a nychapiece of property. so far, i've notsubmitted for one. i've looked at them.they're fairly complicated. it's sort of like goingback to the inclusion area. many times -- and theprograms of hdc and hpd are great, but intoday's market, when things move soquickly in terms of land and makingexecution decisions,

the timing of the programsand getting in and making sure that you're going tosecure a piece of property and you'respending time and focus, it doesn'tmove fast enough. >>>michael stoler: chuck,would you explain what inclusionaryhousing means? >>>charles brass: sure. inclusionary housing isbasically under the zoning there may be a certain, what'scalled a floor area ratio,

meaning if alot is a certain size, you can build a buildingwith five times the square foot. for example, a10,000 square foot lot, you could build a50,000 square foot lot. in exchange for buildingaffordable housing under the inclusionaryhousing program, the city might let you build a60,00 square foot building, instead of a 50,00square foot building. but you'd have to setaside a portion of the

units for peopleat a lower rent. >>>michael stoler: and theyare on site or offsite today? >>>charles brass: inmost of the inclusionary programs, they have to be onsite. there are a couple. there's the originalinclusionary program. there's still onewhere you can do offsite. >>>michael stoler: nowthere's the question of -- and you know my audiencealways likes to know, when somebody buildsa building --

you're building this 93 unitdevelopment and arker has always been veryinvolved in preservation, i know a lot infar rockaway and new buildings. are the units differentfor the 20 percent of the units or arethey the same? >>>eli weiss: so in thebuildings that we're building, they're the samemostly because the entire building is under anaffordable program and go through a designguideline by hpd and hdc.

so the units areexactly the same. you can't tell the differencebetween any of the units. they're dispersed equallythroughout all of the building. there's no differencebetween the amenities. there's noseparate lobbies. this is truly programmaticaffordable housing from the beginning,from everything, from thefinancing to the design, working in conjunctionwith the government agency.

>>>michael stoler: butwhat about the other discussion where there arecertain apartments within a 80/20, whichis open market, any rent that you can get,and then there's 20 percent, which is theaffordable component. are there any differencesin those apartments? >>>gary rodney: very minor. it may be the differencebetween the countertops or things like that inthe appliance package.

but for the most part, the unitsizes, they're very similar. they're supposed to beproportional across the building in terms of ifwhatever number of one bedrooms and twobedrooms or studios, you have to have an equalpercentage of the low income- >>>charles brass:in certain instances, the affordable apartmentsmay actually be better than the market rateapartments because there are certain designguidelines that the city

has for thoseaffordable apartments, which make them actuallybe larger than what a developer may wantfor a market rate. >>>michael stoler: and nowhow many years do these apartments have toremain affordable? >>>gary rodney: dependingon which program you're referring to -- inthe case of the 80/20s, it's usually for thelength of our mortgage or i should say thetax abatement,

so it can go out 30 years,sometimes a little bit longer. in the case of theinclusionary deals that chuck wasdescribing earlier, those are usually done inperpetuity because once your building isdone, it's built, you've receivedthat extra benefit. >>>michael stoler:dan was trying to say, prior to the show, you'renot going for homeruns, you're going for singles.

how could you make aprofit for 20 years when the rents are so low? i understand the taxes arelower, but what else is lower? >>>daniel moritz:well basically, as an affordablehousing developer, we're making a trade inexchange for the upside on rents and upside inincrease in valuation because of thecap on our rents. we make a fee up front inexchange for developing

affordable housing. that'stypically about 10 percent of the total development costs. and so it's a trade off inexchange for- >>>michael stoler: and then youget a management fee also. >>>daniel moritz: rightand we continue to manage the properties. we manageeverything that we own. but it's a tradeoff. you're trading awaythe future upside. >>>michael stoler: what happenswhen we call a hap contract?

people arebuying hap buildings. why do developers buy hapbuildings and explain what a hap building is. >>>gary rodney: i'll jumpin because i used to live this every day fora very long time. a hap contract is ahousing assistance payment contract from the federalgovernment. it's a section 8. so the section 8 contract iswith the building and typically hud will cover approximately70 percent of your rent.

>>>michael stoler: so if thetenant really can't afford -- if the rent is $12,00 -- $1,000,let's use it, the government or hud willgive $700 towards it and the individualwill take $300. >>>gary rodney: yesand in some cases if the individual can'tafford to pay the $300, sometimes hud willcover a little bit more. that varies onbuilding by building. >>>michael stoler: so why dopeople buy hap contract deals?

>>>gary rodney: stable income.it's very steady income. >>>charles brass: a checkevery month from uncle sam- >>>eli weiss: it'sa credit worthy tenant. you have a 70 percentmaster lease to uncle sam. >>>daniel moritz: basically, you're underwriting thefederal government as opposed tounderwriting tenants. >>>michael stoler: now,but a number of these hap buildings are trying tobecome out of the hap program.

there havebeen discussions. >>>charles brass: withoutgetting too complicated, basically if you have acontract with hud for a section 8 and you're in areally good market area, you can actuallygo to hud and say, "i have the choice to optout of the program or pay me the market rent ifyou want to keep these buildings affordable."so in that case, if you're paying$1,000 a month,

but you're really inmanhattan or even in certain other neighborhoodsthat are now trendy, where market rents are veryhigh, hud will pay you $3,000. >>>michael stoler: iremember the cherry street. i remember the deal thatapollo was involved with dvl. the units can go higher. >>>charles brass: yes,so hud will pay you $3,00 a month if you'rein manhattan or $4,00 a month to preservethe affordable housing.

>>>eli weiss: -at the beginningof the century, 10, 12 years ago, this is what was goingon with the mitchell-lama. whether it wasindependence plaza or waterside plaza, itwas the same concept. these buildings were builtat a time where they were working within agovernment program and the rents were set to somelevel of affordability and times changed and theneighborhoods changed and the owners wanted toopt out of the program.

>>>gary rodney:and in many cases, they were creating the marketat that point in time. so that's part of the reasonfor these government programs. it helps to incentivizefolks like eli and dan to kind of go into theseneighborhoods and actually make it cost effectiveand beneficial to build. >>>daniel moritz: and huddoesn't want to lose these units, so that's' whythey're willing to pay the market rent in order tokeep the units affordable

because a lot ofthese projects are large, a lot of units and they'd hateto lose all of the affordable- >>>michael stoler: but not everyapartment in a hap contract has to be a hud apartment. >>>daniel moritz: generally, it's 90 percent or more of theunits are under the contract. >>>michael stoler: if thetenant moves out and you can get a market ratetenant, you're allowed? >>>charles brass: no, ifyou sign a new contract,

the tenant moves out,then you have to rent to another low income tenant. >>>eli weiss: it's a regulatoryagreement against the- >>>michael stoler: andhow does somebody get into a hap building? because i heardabout the lottery now. how did somebody getinto a building later on? >>>gary rodney: sodepending on the program, it's slightly different. inthe hap contract buildings, there's a waiting list. theowner of that building,

or the management company,has to go through the waiting list in theorder that they come in. >>>michael stoler: and thewaiting list is then based on the income bandsthat we discussed earlier? >>>gary rodney: thehap contract buildings, they're actually a littlebit different and those buildings, the maximumincome is at 80 percent of the area of median income. so that's just shy of$70,00 for a family of four.

>>>daniel moritz: rightand it can go basically all the way down to 0because the structure of the hap contract is thatthey'll pay 30 percent, or the tenant will pay 30percent of their income towards rent,whatever their income is. so it can be down to 0 orcan be up to 80 percent. >>>gary rodney: and inthe other buildings, for example, in eli'smiddle income project in crown heights, he has togo through the lottery

system for the firstinitial rent up and then after that, he will beable to kind of rent to the open market, so to speak. but it's provided thatthey meet the income bands that we've establishedfor the property. >>>michael stoler: theincome bands and so on. what about -- there wasonce something called affordable cooperatives. we were talking before,jeff levine's on 116th street.

what happened tothe affordable coops? >>>charles brass: well,they're still out there, the ones that were built. it's not an active programthat the city has anymore. really in thefinancial recession, in 2007 and 8, this was anaffordable housing market that actually was effected. wetalked about the rental market, demand is constant.but even in that- >>>daniel moritz: itbecame very difficult

for the end buyersto get end loans. >>>michael stoler: no,but here's something right now. i know that there's abuilding being built on first avenue bytoll brothers. and i believe that 20percent of the apartments -- and it's a condo. so how are they doing affordablecondos in the building? >>>charles brass: idon't believe that the affordable unitswill be condominiums.

they'll be rentalsin all likelihood. >>>daniel moritz: right. what they may do is have acondo for the 20 percent of the units, whichwill end up actually being affordable rentals. >>>eli weiss: it's amethod to get a tax abatement. >>>michael stoler: iunderstood that they are going to beaffordable condos. so somebody's going to beable to get a $400-

>>>eli weiss: they'lltry to sell. >>>gary rodney: withoutknowing the particulars of this exact deal, it could justbe an internal cross subsidy, where they'reagreeing to sell some units at a lower income tobenefit from a tax abate. >>>michael stoler: iremember a number of units were built in the rockaways.these were affordable houses, the three family, and thebiggest problem is these people couldn'tqualify for mortgages.

>>>eli weiss: right, i thinkit's an availability issue. as the financial crisis happenedand loans became difficult for anybody- i mean, if you had any k-1 income, youcouldn't get an end loan. >>>charles brass: even benbernake says he can't get a mortgage. >>>eli weiss: and now youhave an underwriter for end loans looking ata fairly complicated regulatory agreement anda complicated financing

structure andit's just passed. >>>michael stoler: itsounds like we do have a potential crisis becausewe have more people. the good part is peoplewant to come to new york. the bad part is there aren'tthat many apartments, so people aregoing to have to look at areas where theydidn't plan to be before. maybe there will be moredevelopment on staten island. >>>daniel moritz:we're working on it.

>>>charles brass: we justadvised -- development building the first80/20 rental housing project in staten island on theside of the old home port. iron state development, goingto be an 800 unit development. >>>daniel moritz: andwe're going to break ground in january on a new senior housingproject in staten island. >>>michael stoler: andthe senior housing is affordable and it'salso based on the lottery, the same concept there?

>>>daniel moritz: exactly. >>>michael stoler: butthose are available at the age 62 andover, i believe. correct? >>>daniel moritz: correct. >>>michaelstoler: so i think, in my 14thseason -- chuck, you were therefrom day one. hopefully you'll be thereafter the 700th show, which we'll dolater on in the fall.

i'd like to have allof you back and we'll continue this discussionon affordable housing. i'd like tothank gary, dan, eli and needlessto say, chuck. thanks for being here andi'll see you next week.