Thursday, July 16, 2015

2016 Tax Rates by Class

‎In case anyone missed it:

The City Council adopted real property tax rates for fiscal year 2016, which begins July 1, 2015.  Here are the 2016 tax rates by class as well as last year's rates for comparison.  
Tax Rates by Class

Please note that the tax bills issued for the first half of fiscal year 2016 (July 2015 through December 2015) were based on the fiscal year 2015 tax rates.
As a result, your second half tax bill will be based on the recently adopted fiscal year 2016 tax
 rates and will include an adjustment for any overpayment or underpayment in 
the first half of the year.


Monday, July 13, 2015

My Own Non-Scientific Take on the City-Verizon Spat

I've been following Crain's NY Business' chronicle of the fight that the De Blasio administration is picking with Verizon over its failure to roll out FIOS citywide. In a nutshell, Verizon struck an agreement with the Bloomberg administration in 2008 to install fiber optic cable (trademark FiOS) internet access throughout the city, ostensibly so that areas served by only one cable provider (Time Warner, Cablevision, etc.) will have another choice.  This makes sense on the face of it. After all, cable companies are currently the only broadband providers in certain areas. Sure, you can go with another "provider" if you want - you might get mailings announcing "alternatives", but the fact is that in most areas, those companies have to rent capacity from the main cable company in the area, for the simple reason that those are the only cables in the ground.

My bugaboo with the whole scheme is that while attempting to lay all this fiber, Verizon has completely neglected the existing copper wire network that runs throughout New York. It is falling apart - and that fact is not being covered all that extensively.  One article in Ars Technica from 2014 mentions it briefly, as does the above Crain's article, again, briefly.

Let me paint a picture at how bad it has gotten by talking about two buildings that my firm manages. The first is on West 11th in Greenwich Village, a building with residential and business tenants.  At least every two months, and sometimes more often (depends on the weather conditions), I am forced to meet a Verizon repair tech at this building to let them through an apartment to the back, where they try to find a "good pair" in the phone box. This box is older than the hills, and it's full of rust. But when I have asked about replacing said box, I'm told that Verizon isn't replacing ANY copper phone equipment.

The problem is sometimes within the line between the building and the hub, which is an apartment building on the next block south. The tech must then go back and forth between this building and that, trying to find a connection that will hold. Once, I was told it was not the box, but the line between the hub and the box, which - in contradiction to Verizon's claims in the articles - runs above ground. You can see the phone wire strung all along the back yards of the block! When the line "goes bad" - meaning that it gets exposed and nicked/broken somehow - the tech has to "splice" it, meaning cutting the damaged part of the line out and basically taping the two ends together.  The tech who told me about the line said "that line has so many splices in it I don't know how it still works."  When I asked about getting a new copper line run - yes, you guessed it!  "They're not replacing anything."

 So, the tenants in this building constantly lose the phone service they pay so much for. And it's not just that building! My firm manages an adjacent building that has also had similar phone problems.

I looked into FiOS as an option to get away from the crumbling infrastructure and found to my amazement (though not so much now that I've been reading articles telling of similar experiences all around the city) that FiOS is NOT available on that block. This blew my mind. I understand that Verizon may not wish to wire every small building right off the bat (though seven years in one would hope they'd made some headway), but this building is right between two major thoroughfares - Fifth and Sixth Avenues - that surely must have fiber available? They don't have to bring it that far, and they have a building manager - ME - who is willing to get them access - all so they don't have to waste thousands of dollars visiting this building's back yard every six to eight weeks. Recently I head that another building towards Fifth Ave had successfully managed to get FiOS installed. How did they do that?

Which leads me to the other building, also on Fifth Avenue in the Flatiron. This building is not a large office building but it happens to have line running through it that serves some adjacent buildings as well. Within the past two months I have had at least five technicians needing access to that basement to repair copper phone and data connections! Again, I am completely shocked. The copper here in Silicon Alley is no better maintained (though it is apparently underground)! And I listen to the techs speaking with their home office, trying again to find "good lines". There isn't enough capacity to service all the commercial and residential tenants in that block!  The tech suggested I try to get some of them to sign up for "fiber", which would alleviate the crowded copper box.

Today I had a conversation with a very nice lady from the Verizon business office, and she informed me that she knew "no more FiOS installations were being scheduled for the rest of the year".  !!!!!!  In the meantime Verizon is spending millions of dollars running fiber "past" buildings but telling potential customers that it's not available to them. What kind of shell game is that? It reminds me of the recent scandal about the military contractors who built all kinds of equipment that only got destroyed once it was shipped to the Middle East. And all the money spent on advertising a service that no one can get? There's just no answer to that.

Following which, I might as well air my frustration at the fact that I am seeing many many of those little internet antennae popping up all over the place in Manhattan subway stations... but I am not getting any service!  I travel all over the city (forget the fact that not a single underground station in Brookyn has service), and I have seen these tell-tale signs of service in Washington Heights, East Harlem, and the Lower East Side - some for eight months or longer - but zero bars in any of these stations (I'm looking at YOU Second Avenue!).

I've said before that Transit Wireless' strategy seems completely haphazard. Their blog states that they have begun installing equipment in Upper Manhattan and the Bronx, but their Lower East Side stations? Nary a word - oh wait, I see that Delancy is part of the Phase 3 rollout - but no announcement as to when that will happen?

Oh, and the website seems to have been hijacked, or given up. It takes you to a website about call forwarding. It does not, as suggested on the Transit Wireless website, show you which stations have service.

Friday, June 20, 2014

How Much Higher Can Rents Go if Manhattan Wages Keep Falling?

According to the US Labor Department, employment in Manhattan increased, but wages have fallen because fewer jobs were added back in the finance industry. Overall private sector wages fell 3.3% in Manhattan.  

What does this mean for the crazy rents that we see throughout Manhattan? And the crazy home valuations? It could mean bad things. Sure, there are still tons of foreign buyers snapping up townhouses and condos in Manhattan; but that's still a small fraction of the people who live on the island. So... eventually... either we get a new extreme high wage-paying industry to employ lots of people.... or finance resurges in Manhattan.... or rents are going to have to come down.

It has been a strange year in Manhattan so far. Rents slipped quite a bit in November to a new 7 year high, which is par for the course, but Manhattan landlords were introducing incentives as late as February 2014.
According to Elliman's monthly report, May 2014 vacancy rates were just a tick lower than May 2013, and actually .13% higher than April 2014.  Some articles made mention that Brooklyn rents and Manhattan rents came close to equal during this time, suggesting that many Manhattanites are decamping to Brooklyn. But ultimately, it may simply be that rents are just too damn high, especially since the people who could afford the sky-high rents, and all the amenities, are less and less likely to be working in Manhattan.

I'm not saying that rents are going to fall off a cliff. New York is still the place to be and many people from all over the world locate here. And there is still a housing shortage, albeit an affordable housing shortage. The first developments to be squeezed will be the mid-range developments, those renting for $3500-$7000/month. The danger is that we might start to see more high end rentals than affordable developments, for the same reason that high end condo developments have proliferated in this city over middle class ownership housing: the middle class is getting squeezed, wages are falling, and the rich are the ones we can count on to have money.

But the 1% is only a single percent, so eventually rents will have to fall a little. Or even a lot. At least until New York finds its next big wage paying industry.

Friday, May 30, 2014

How Much Should You Borrow Based on What You Want to Pay Monthly

So you hear a lot about relative cost to rent versus cost to buy, but really, you're thinking... What can I afford?  Or, more likely, how much can I borrow but still pay the same amount in mortgage as in rent?  Today I want to show you a quick and dirty way to figure that out.

First, take your monthly amount of rent. Let's say $3000 for a round number.

Then, you need to subtract something to represent the maintenance (for a coop), or common charges + property taxes (for a condo) that you might be paying. This amount varies a great deal based on the size of the property that you are looking at. Common amounts are $500-$800 for a one bedroom or $800 - $1000 for a two bedroom, and go up from there. 

Let's say we're looking at a one-bedroom and want to be conservative, so we'll take $800 as the number. $3000-$800=$2200.  Notice we didn't include insurance. This is because homeowners policies are not a very big jump from renters insurance policies, so we'll assume that cost remains the same. (If you don't have a renter's insurance policy, you should seriously consider getting one up - your belongings are not covered by the landlord's insurance policy if they are stolen or destroyed).

So we have a principal and interest payment of $2200. Now, we look at the current interest rates. Your bank's website can provide those to you. Keep in mind two things: 1) interest rates change daily and 2) when the economy is good, interest rates tend to move up.  So if you are doing this exercise for a future purchase six months from now, you might want to add .25%-.5% just to be safe. (of course you can always buy the interest rate back down if you have the cash and the desire).

At the moment I am writing this, I just clicked over to the website. Bankrate is an independent web site that publishes information about mortgage rates across many banks and regions of the US. Keep in mind that New York rates may be different from the national average. Coop loan rates are usually higher, as are condo loans, though somewhat less so.  Indeed, Bankrate gives me a range of 3.97%-4.89%, while the national average is listed as 4.29%.

Let's again be conservative and use 4.75% as our rate. Now, we flip over to, where we find a nicely laid out table of the cost per $1000 borrowed. Scroll down to 4.75 in the first column, then slide your finger over to the 30-year column (all the way to the right). The number is $5.22. That means for every $1000 you borrow at 4.75% interest rate, your monthly payment is $5.22 for a 30 year self-amortizing loan (meaning when you hit the last payment of the 30 year loan, you have paid off the loan).

Ok, so now we take your monthly rent payment less allowance for monthly maintenance fees (remember that? $3000-$800=$2200), and we divide $2200 by $5.22. So in other words, we are seeing how many thousands of dollars we can service with the $2200 we already pay.  The answer? 421.456. Just multiply that by $1000 (or  move the decimal over 3 places) and you'll get $421,456, which is the amount of mortgage you can carry, plus maintenance charges and (if condo) property taxes.  

Now let's take that one step further. You generally need a 20% down payment to get a mortgage. Most coops require that at least 20% be put down. Condos might only require 10% (some coops do as well, but banks have become more stringent since 2008 and it's harder to get a 90% mortgage on a coop than it once was).

The amount of mortgage that we figured, $421,456, represents 80% of the total cost of the property that you can purchase. This is the maximum loan to value ratio (or LTV) that most loans allow. Dividing that number by four tells us what 20% of the total price must be. Answer: $105,364.

To get 100% of potential purchase price, we multiply that number by five. (because 5 x 20% = 100%). So $105,364 x 5 = $526,820.

So, the total purchase price that you can likely afford while still keeping  a similar housing payment to what you pay in rent is $526,820. This assumes a down payment of $105,364 (the 20% number we calculated earlier).

In the hottest parts of Manhattan, this will get you a studio or a small one bedroom. In northern Manhattan, this will get you even a two bedroom. Even in Brooklyn, you can score a very nicely sized one bedroom or even two bedroom depending on area (though probably not in Williamsburg, alas).  So if you feel you can't afford to buy, think again. You can afford to buy if you can afford to rent at Manhattan's prices.

Friday, May 23, 2014

What's a Non-Conforming Coop?

You're searching the Internet for your new home to buy.  You find a property - a coop unit - that looks really, really good. You read through the description and you are loving the way it sounds. The photos look great too. Then you see at the bottom of the listing "Non-conforming building - cash offers only (or preferred)." Huh. What does that mean?

You Google the term "nonconforming building". The returns define it to be a building that doesn't conform to existing zoning laws. But in New York City, it's more likely to mean that the building's financials and/or owner occupancy do not conform to guidelines set by Fannie Mae (FNMA) and her compatriot, Freddie Mac (FHLMC), the two entities that purchase loans on the secondary market from the banks that originate them.

So you Google "nonconforming loans".  This search just gives you a lot of information about jumbo loans, which are a type of nonconforming loan, because the amount of the loan is higher than Fannie Mae conforming limits.

But this property is asking less than the published conforming loan limits. Are there other issues that can put a property into nonconforming territory?

Answer: yes there are. One of the big ones is owner occupancy. This refers to the number of units in the coop that have been sold by the sponsor to individual owners and are occupied by those owners and their families. Units that are owned by individuals but sublet to renters do not count, but individually-owned vacant units do. Sponsor-owned units also are not considered owner-occupied (a sponsor unit is one that continues to be owned by the original landlord of the building who created the coop, or their successor).

FNMA/FHLMC requires 51% of cooperative units to be "owner occupied". Not 50%, but 51%. This was a big issue back in the 1980s and 1990s when sponsors owned more than 50% of units in many coops that had just been converted. The sponsor ownership is less of a problem these days, but smaller coops (under 40 units) can still slip into this nonconforming status if they have a significant percentage of sponsor ownership (ie, 25-40%) and if the coop allows too many owners to sublet in addition. When that happens, the coop falls into non-conforming status.

In the olden days, it was possible to get something called a "waiver" on nonconforming buildings. This literally meant that the owner occupancy issue could be waived, and a bank could get you a conforming loan. Since 2008, however, that is practically impossible, according to mortgage lenders that I have considered. Whereas waivers were practically a given before the mortgage crisis (for a small fee), now each application for a waiver is scrutinized and takes weeks to process. Few are granted.

So that leaves us back to this beautiful coop in your price range. You don't have cash, but you see it's a bargain. What can be done?

First, realize that while many mortgage programs are not going to be available for that particular unit, some loans might be. These loans are called portfolio loans, and they may be given by banks or mortgage lenders.  A portfolio loan is a loan that a bank cannot sell to FNMA/FHLMC. The bank has limited choices - either the loan must be held and collected by the bank until the end of the term, or the loan can be sold to an investor who will deal in nonconforming loans.

Unfortunately, that translates to a slightly higher interest rate for the borrower.
But such a property may present an opportunity. Remember, every coop is different. Some may be primarily investor-owned, while others may simply be one unit from conforming.  Ask your agent what the situation is.  If the situation is just one unit, then you might have an opportunity to get a little pop in value when that one unit does finally turn the owner occupancy ratio over 51%. You have the option of refinancing into a conforming loan once the building is conforming as well.

So, all in all, don't leave those gems in the dust. Nonconforming coops can present an opportunity to the person looking for a below market opportunity for a long term primary residence.

Monday, January 13, 2014

2 Digital Maps to Help You Know New York City and How to Use Them

The IS department of the City of New York has some beautiful map tools available for use by the general public. If you're searching for a home, you might be interested in a couple of them:

1) The NYC Crime map shows how many and what types of crimes occurred throughout the city. You can look by precinct, by graduated point map (which shows how many crimes occurred in a specific spot that you can drill down by zooming in), and by heat map (where changing colors indicate a larger number of crimes). You can even specify which kinds of crimes you would like to see information for. 

One thing you won't see too much of is murder. Thankfully, as former Mayor Bloomberg pointed out, NYC has had very few violent crimes given how large the city is over the past few years. This tool is great for people moving to the city who want to understand what happens in different neighborhoods, and residents who what to keep track of what is happening in their particular area.

2) The NYC Business Atlas shows a variety of demographic information about population and business density. It shows businesses by heat maps and also the number of different types of businesses in a specific area, as well as what types of businesses have started up recently. Prospective residents might find this information useful as they evaluate various neighborhoods.


Tuesday, December 31, 2013

Happy New Year!

Wow, what a year it's been! New York saw a huge break out of activity at the ultra top end of the real estate market, but lagged behind the rest of the country in lowering unemployment. The stock market had it's best year in about a decade, but Wall Street did not regain employment as companies sought to diversify to other lower cost states.

Today, we are seeing the end of the Michael Bloomberg era (which I personally enjoyed and I thought overall enhanced the quality of life for New Yorkers).  The incoming mayor, Bill DeBlasio, was a come from behind candidate who has pledged to be progressive and, many people hope will also bring more focus to the outer boroughs, some areas of which are still truly suffering from the havoc of Hurricane Sandy. Though I do not know him personally, Mr. DeBlasio was in fact my city councilman for nearly 8 years. I wish him luck and good progress.

I wish a very prosperous new year to my family, friends, colleagues, and to everyone I have yet to meet!

Wednesday, December 11, 2013

Brooklyn Rents Rise While Manhattan Gets Cheaper, Report Shows - Upper East Side - New York

If it seems like Topsy Turvy to have Manhattan rents sink while Brooklyn rents rise, it's not all that hard to understand : quite simply, when two things are considered equal, prices reach a similar level. Given that many people now work in Dumbo and Williamsburg, ‎or just across the river in Lower Manhattan, it's not too hard to equate the lively Brownstone neighborhoods in Brooklyn to the charming Landmarked areas in the Village, Soho and Tribeca. So rents in the two areas are meeting each other.

The article somewhat contradicts itself by saying that tight credit markets (making purchasing homes harder) hold renters in place, but that Manhattan rents may have gone down because many purchased. I say that the more likely answer is that people now see Manhattan and parts of Brooklyn as interchangeable and live where they find the most personal value in doing so.

Thursday, December 05, 2013

The Flickering Light Bulb In Your Furnace

Every winter, at least one of the properties I manage experiences issues with the heat. Usually the first sign of trouble is when it fails to turn on in that shoulder season in October. You know, when it dips into the 50s and below at night. Tenants call me to say their radiators are cold, and I call the plumber. Then suddenly, the heat comes on! I cancel the plumber. All is well... until we get a 10 degree temperature drop.  Inexplicably, the heat goes out again. Sometimes it kicks on again before I can get the plumber over there, so we leave it again. But the writing is on the wall: I know that it's only a matter of time before the problem is back, and usually in a matter of days.

signal relay
Signal Relay - this little guy might be to blame if your boiler
doesn't come on when it should, but then comes on by itself later on.

This week I finally put a name to the most likely culprit: signal relay. A signal relay is a switch that turns on the circulating pump (which draws hot water up through the radiator and back to the furnace to be re-heated). They are electrical circuits, and they fail. It's hard to say how often they fail - and there might be more than one if the furnace has zoned heat.  But, if your heat fails to go on when it should (and may or may not come on later without a plumber's help), or goes off at an inappropriate time (either to come back on or not), you can put money on a signal relay failing or having failed.

If you're wondering why shouldn't we have the plumber in even when the heat starts working by itself, the answer unfortunately is because you can't tell a signal relay is broken unless it's actually not working. Think of a light bulb in a chandelier. Sometimes, the filament in one bulb disconnects from one of the two contact wires and the bulb goes out. You think to yourself "I need to replace the light bulb", but before you can, the filament reattaches and the bulb starts working again.  Now, you can't remember which bulb it was (unless you're really good like that), and you don't want to change out the good light bulbs because that would be a waste... so you have to wait until it goes out again before you can identify it.

Same thing with a boiler. If the signal relay is causing the problem but it's still working intermittently, then the heat is on while it's working, and if tested the relay will not seem broken. So, unfortunately usually the heat has to be off for the plumber to find the problem.

The good news is it's usually an easy fix if your plumber has a compatible part with him. Make sure you can tell him the make and model of your furnace when you call. Otherwise he may not have a compatible part and may have to come back the next day - meaning more hourly charges and possibly a very cold overnight.

Tuesday, September 03, 2013

Plastic Bag Law Not So Bad - Says My Dad

Last month I went down to visit my father and stepmother who live in the District of Columbia. My first morning there, I headed around the corner to get my morning tea at the Starbucks and a quick stop at the convenience store to pick up a few things I'd forgotten to bring with me (and some donuts for Dad).

At the 7-Eleven, I stared blankly at the screen as the cashier rang up my purchases. Then my eyes focused on one thing: a bag charge of ten cents. I hadn't even thought twice when she'd asked me if I wanted a bag. "Huh," I commented (did I mention I am NOT a morning person - even a late morning person?). "How long has this bag charge been around?"

"About three years," said the cashier.

I headed over to Starbucks and got my coffee, a breakfast sandwich and the pound of ground coffee beans my stepmother asked for. The barista asked if I wanted a bag. "No thanks," I said, and tucked it all into the bag I'd gotten from the 7-Eleven. One bag saved.

Back at the ranch, I told my Dad about my discovery of the bag charge. "Oh yeah," he said, "that's been around a while now. I didn't realize you didn't know about it."

"How are you handling it?" I asked curiously. Dad is in great shape, but senior citizens aren't known for their desire for change or inconvenience, and being charged for bags that used to be free isn't something that seems convenient OR like the status quo.

"You know, I like it," Dad said.


"Yeah. We drive around (because despite the Metro, DC is very much a driving city) with a couple of these reusable bags that the grocery store gave us in the trunk of each car, and it's not a big deal. Plus, it's really cut down on plastic bag litter. And if I have to, I can always pay the ten cents. But I usually don't have to."

What struck me most was my father's comment about the lack of plastic bag litter. I think we've all seen plastic bags stuffed into planters, flying around in the wind and caught in trees. Bags that benignly end up preserved forever in our landfills or more worse: that end up in our waste water ( potentially clogging up rain sewers); can get into our rivers and wash up on the shores; or worst, get out into the ocean where larger sea life can eat or get stuck in them and die. Free-ranging plastic bags journey to join one of the several oceanic gyres of plastic waste that have congregated with the currents in many parts of the world.

In economic terms, litter is an externality. That is the term we use for something that affects many people as a result of actions created by a few. In this case, plastic bags which are given for free to shoppers end up affecting many more people as litter in our public places. It's sad but many people - for reasons of convenience, spite, or accident - fail to properly dispose of plastic bags. And everyone, polluter and non-polluter alike, pays the cost of cleanup (sanitation, parks & recreation staff, supplemental cleanup such as the Doe Fund, and countless hours of building superintendants, plus volunteer hours of generous citizens).

Moreover, for the moment, more than 99% of plastic bags used in New York City are going to landfills. Aside from being able to bring plastic bags to certain grocery stores and retail stores as mandated by state law, there is nowhere to recycle plastic bags. The city specifically says not to put them in the curbside recycling (though I do). And who wants to hoard them at home to shlep them to the grocery store anyway?

I speculate that flimsy plastic bags do not recycle well and therefore recycling companies do not see profit in accepting them. That means plastic bags are an end product that - even if reused once or twice - have no resurrection factor. The free market is a long way away from bringing them back into the resource chain.

Plastic bags - plastic grocery-type bags in particular - have no long term value. They have a maximum of two uses - to ferry a set of groceries from your local store to your house, and maybe to pick up some dog poop. Ironically, dog poop would return safely to the earth if we put it in a compost pile but because we put it in a non-biodegradable plastic bag and toss it into a landfill, it will probably not biodegrade for decades. Or - another irony - you could use the plastic bag to stuff full of paper (yes I have done this, when I've run out of Whole Foods paper grocery bags) to put in the curbside recycling!

Enter the idea of just not using plastic bags in New York City. If you use them, you have to pay towards the cost of cleaning them up. Easy as that.

Naturally there are people who will oppose this for monetary reasons. The most obvious group will be manufacturers of plastic bags for grocery and retail stores, who will see their revenues fall when shoppers opt not to take a plastic bag, leading stores to cut their orders of these bags. To them I say: sorry. Figure out how to make a widely available recycling program and we'll talk.

I expect regular people to object too. I expect their reason will be something along the lines of: "You're taking away another thing I used to get for free!" To them I say: the bags were never free. You pay for them twice: once when you bought something at a store and again when you pay taxes to have them cleaned up off the streets and out of parks. You pay for them in the time you spend volunteering to clean up your favorite parks and beaches. Plastic bags are convenient, but what price should we pay for that convenience? Should it be the oceans, and our public parks and streets? Our landfills which, once filled, cannot be used for decades? Should it be loss of the ingredients of those plastic bags - which could have made up something much more useful - like school desks or chairs? Just so we could carry something around for an hour?

I carry a lot on my back as I move about the city, but starting tomorrow I am putting another thing in my backpack - a reusable bag that packs down into a corner of itself. It was a promotional item from a seminar at Google. When it wears out I have another just like it ready to go. I won't always be able to avoid using plastic bags, but I'll try. And when (not if - I'm pretty sure this bag charge will pass) we have to pay for our plastic bags, I'll do it when I need to. And then - sorry, Department of Sanitation, consider it a civil protest - I'm putting it my curbside recycling.