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Housing industry under siege.

An animated Dan Margulies, executive director of the Community Housing Improvement Program (CHIP) told REW there are several major themes that are dominating the organization and the multi-family housing industry.

First of course, he said, is the economy. "What we're seeing is buildings unable to pay their taxes and record increases in city takings," Margulies noted.

For example, properties on which in rem actions have begun have gone up 253 percent over the year before in Brooklyn.

"That is something telling us we have to convince the city to lower assessments and reduce spending," he explained. "There is no alternative if housing is going to survive. "

Water Metering

Water metering is potentially a disaster for one-third of the housing, Margulies said. "I do expect some major changes in billing methods to occur beginning in July which will at least partly reflect our concerns and the administration's response," he said.

The city is looking into splitting the water bills into fixed and variable portions.

"While we're not endorsing the plan until we see the details, it's a clear, indication the city doesn't want to own the buildings either," he said.

The city is also looking at rebate programs for fixture replacement and, while Margulies says those may be less likely to be adopted this summer, he feels "it's a real possibility and a real response to owners to be able to finance these conservation methods from the rent rolls."

Lead Abatement

A third area of concern to everyone is what happens on the city's policy regarding lead abatement. The City Council is considering legislation that would allow Housing Preservation & Development (HPD) to adopt a completely new approach and would involve safety procedures and abatement methods far more costly than anything done today.

"And that is the good plan!," Margulies observed.

"They are also contemplating measures that would make the law absolutely impossible to comply with at any rent level. How that plays out will determine the future of rental housing in the city."

Fourth, is the continuing frustration with the Division of Housing and Community Renewal (DHCR) and rent administration.

"The agency seems to go two steps backward for every step forward," Margulies said.

"This year, in processing the Maximum Base Rent (MBR) applications, DHCR held up orders for hundreds of buildings for several weeks because they ran out of envelopes!," Margulies said incredulously.

"They can't seem to get their act together," he said. "We are seeing more decisions coming down but no increase in accuracy so there are more incorrect decisions that have to be appealed. "

There are policies being issued that endanger housing broadly, he said. For example, the new policy statement on proof of registration indicates that if you don't have proof of mailing the annual registration statements, the agency will look at the preponderance of the evidence to see if tenants were served.

Margulies said the written requirements are "service by first class mail."

"If you follow the rules, which leave you with no particular proof, they will not believe you," he says. "So people who honestly served their tenants six or seven years ago are in trouble."

While there is normally a four-year statute of limitation, the agency says it doesn't apply if there isn't a seamless registration statement.

"So you could run the risk of rolling back rents to 1984," he explained. "That sort of policy statement - of requiring proof of mailing seven years ago - puts a broad swath of housing at risk."

Renewal of Rent Laws

In June, owners are facing a possible renewal of the rental laws in Albany. The enabling law expires and will be discussed on the floor of the legislature. Because of the economy, because of the high vacancy rate, because of the pressures created by these other issues, Margulies believes, owners have a strong opportunity to win reforms this year.

"It's fair to say that the industry's vulnerability has not been so great since the legislature last enacted vacancy decontrol measures in 1970," he said. "Tax arrears were climbing then and the industry was in serious trouble. We haven't been in such serious trouble since then. Today it is worse. It's time to wake up some people to the tremendous dangers we face if Albany doesn't change things."

Margulies calls the situation a "good news/bad news" scenario. "The industry is going down the tubes," he said, "but maybe it will get their attention - but it's not really very good news."

Margulies urged owners to sign the CHIP rent scroll which will be available at the show, in order to let Albany know how many units are represented.

"They can write notes and feel free to express their opinion," Margulies added.
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Title Annotation:commentary by Dan Margulies, executive director of Community Housing Improvement Program
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Oct 28, 1992
Previous Article:Levi Strauss to open in Manhattan.
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