NYC NOW - November 13, 2024: Midday News

Episode Date: November 13, 2024

Amtrak trains from Penn Station to New Haven remain suspended Wednesday afternoon after a transformer fire in the Bronx. Meanwhile, a Hudson Valley judge struck down the New York Voting Rights Act last week, calling it overly broad. Plus, the City Council is expected to pass a law Wednesday requiring landlords, not tenants, to pay broker fees. WNYC’s David Furst speaks with Anna Klenkar, a real estate broker at Sotheby’s who supports the bill, and Dev Awasthi with the Real Estate Board of New York, who opposes it.

Welcome to NYC Now, your source for local news in and around New York City from WMYC. It's Wednesday, November 13th. Here's the midday news from Michael Hill. Amtrak trains from Penn Station to New Haven are still suspended this afternoon after a transformer fire in the Bronx yesterday. The company says customers can use their tickets on Metro North trains in the meantime. should be restored around two this afternoon. FDNY chief of operations, Kevin Wood said firefighters had to use foam to suppress the flames. We had to have all train traffic stops. We had to have the overhead catenary wires, power removed from them. We needed power also removed from

the transformer. Another fire burned around the same time at a nearby warehouse. FDNY officials say they're investigating both fires. A Hudson Valley judge has struck down the entire New York Voting Rights Act last week, calling it overly broad. The ruling came in a lawsuit over how in the town of Newburgh elects its town council. Black and Hispanic residents of the majority White Newberg argue the town's at-large voting system illegally diluted their votes. All voters there are cast ballots for all of the seats on the town council. The plaintiffs appealed the decision on Monday. We're still dry, windy, and with low humidity ripe for fires starting and spreading, so Governor Hulkel says, She's implementing a statewide burn ban through November 30th due to ongoing drought conditions.

The ban also applies to fires to dispose of trash, leaves, or brush, as well as open camping or cooking fires, backyard fire pits, and small contained campfires are still allowed. Sunny and 48 for a high today with a wind from the north. And then tomorrow, mostly cloudy and 48. Friday we warm up to the mid-50s with sunshine, Saturday and Sunday, sunshine near 60. Stay close. There's more after the break. On WNYC, I'm David First. Most New York City renters have to pay a large up-front cost just to secure their apartment. That money not only includes the first month's rent and a security deposit, but also a broker's fee that's typically 12 to 15% of the year's rent.

But the City Council is expected to pass a law that would reform the practice, requiring whoever hired the broker to pay the fee instead. Ed. Joining us now is Anna Klenkhar. She's a real estate broker at Sotheby's who supports the bill. Anna, can you tell us why renters have had to pay this broker's fee, even if they didn't hire the broker? Where did this policy come from? So this policy is all about leverage. It only exists in New York City and Boston. These are both cities with very low vacancy rates, a high percentage of renters, and a very very high imbalance of power between landlords and renters. So it's not so much that it's a policy. It's something that grew out of an extended housing crisis. A lot of brokers oppose the bill.

The Real Estate Board of New York, or Rebney, is the city's main real estate lobby. The group says the measure will lead to less money for brokers, since landlords will pay a smaller percentage. So why are you, as a broker, supporting the bill? I think this will improve the market right now. You have tenant-side agents who run around for weeks, only to have to send their client direct when a listing agent wants a 15% fee. Everyone will go in to a transaction kind of knowing what they're going to pay and what they're going to earn. People will be able to move, which is better for agents. And people can save more easily for down payments, theoretically, which again is better. for the real estate industry as a whole and for the agents who get to represent them. You think this will improve the market. New York City has at least 40,000 licensed real estate brokers.

How would this bill affect their livelihoods? There will be some agents who, you know, are able to earn more. They might set up sort of a tenant consulting situation where, you know, tenants can pay you different amounts of money for different levels of support, which is not available in that. the current market because what they pay is dictated by landlords primarily. They will be able to collect a one-month fee from their client, the tenant, and they'll actually earn more than if they were splitting 15% with the listing agent. It will affect people higher up the food chain the most. It's more that they have landlord portfolios and they have agents under them. So if each commission

drops just a percentage point or two. When that's at scale, that can affect them. But again, I think that the agents who are actually working on the ground, a large number of them support this legislation, think it's fair, are tenants themselves, and just want this industry to work in a way that's better for everyone. Anna, one of Rebney's main arguments is that this bill would increase rent for tenants, because landlords will just factor the broker's fees into a unit's rent. Do they have a point? Will this bill impact tenants by elevating the city's already sky-high rental costs? The idea that a landlord looks at their expenses and then sets the rent based on that is misguided or ridiculous. I have launched hundreds of rentals in my career and never once was that the primary factor.

You look at the market and you see what tenants are willing to pay. even if we ignore all of that and we say that, okay, a landlord is going to pay a fee, they're going to factor that into the rent. It still would be less to tenants overall. And it would not be done as an upfront fee that really keeps a lot of people stuck in situations and also allows landlords to negotiate higher than fair market renewal rents because they can use that 15% fee as kind of a threat to keep tenants from going. and back into the market. Anna Klinkar, a real estate broker at Sotheby's. Thanks for speaking with us. Thank you for having me. And now we're going to hear from the Real Estate Board of New York or Rebony. It's the city's largest real estate lobbying group, and it opposes the bill that reforms the city's broker fee laws. Joining us to talk more is Dev Awasti, the vice president of

City Government Affairs for Rebony. Dev, New York City is one of the very few places in the country. that has tenants paying fees for brokers that were hired by the landlord. And a lot of tenants listening right now probably think, wow, this sounds great. No more upfront fees. So tell us why you support the current arrangement. Yeah, of course. Thank you so much for having me on.

And so I think one thing that sets us apart is the fact that in New York City, we have a 70% rental market. So 70% of New Yorkers are renting. So that, I think, differentiates us from many other housing market in the country. And then two, I think the big issue that we have with this legislation is the fact that we believe that it is going to result in increased rents overall for tenants. And so if you look at Street Easy right now, there's no fee apartments and there's fee apartments. If you just compare the pricing of neighborhoods that are similarly situated with similar amenities, that no fee apartment is going to be a significant amount more per month. And so all those costs are going to end up going to the tenant as they end up paying more per year.

based on the no fee, then they would if they paid the one-time broker fee. In addition, so if that tenant would like to resign, they're now starting at a higher position, right? They're starting from a higher rent that is only going to increase when they re-sign their lease. Okay, Rebney says this bill would lead to higher monthly rents for tenants, but supporters of the bill say it would eliminate that upfront cost that makes housing so inaccessible to many low-income and middle-income individuals and families, how would you respond to their concerns about those prohibitive upfront costs? Yeah, I think realistically, the real issue here is the supply and demand, right? We have a market, I think you drew attention to this earlier. New York is one of the few

jurisdictions that has this, and that's because we have a 70% of the market that's rental. 70% of New Yorkers are renting currently, and we only have a 1.4% vacancy rate. So there's no work in this legislation that results in increasing that supply to meet that demand. In fact, based on our conversations with stakeholders, those on the ground that are doing this work, that there's actually going to be an increase in rent, as I mentioned, because those landlords are now going to have to hire their own brokers. And in order to do that, they'll have to raise the rent. How also are they going to afford to do so?

Well, Dev, in your view, who benefits from this bill and who is hurt by it? I think everyone is hurt from it in this situation. Unfortunately, I believe that both tenants and landlords are going to be hurt from this because it's going to limit the amount of opportunities because landlords won't be able to post all their open units because they may not be able to afford the broker fee for all of those. And that results in less units being available to New Yorkers when we already face, as I mentioned before, that only 1.4% vacancy rate. And let's look a little bit further into the future now. How do you think this bill will affect brokers' livelihoods and New York's real estate industry overall? Yeah, I mean, I think a lot of times when people think of brokers, they think of, you know, million-dollar listing. In reality, the starting wage for a New York City real estate agent is really only about $52,000 per year.

I think this legislation in the way that it's shaped right now is going to jeopardize those people's livelihoods, right? It disincentivized landlords from contracting with agents, which is going to create greater uncertainty. certainty around compensation and lead to more agents exhausting resources, marketing open listings, only for one agent who can end up getting paid for it. Dev Awasti, the vice president of city government affairs for the Real Estate Board of New York. Thank you for joining us. Thank you for having me. Appreciate it.

Thanks for listening. This is NYC now from WMYC. Check us out for updates every weekday, three times a day, for the latest news headlines and occasional deep dives. And subscribe wherever you. get your podcast. We'll be back this evening.