Real Estate Week in Review for July 29

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This week was a prime example of how the real estate industry and  state and local politics are often inextricably intertwined.

In New York, shortly after a vote by the Public Authorities Control Board, Gov. Kathy Hochul announced that development of 5 World Trade Center is a go.

The skyscraper will add 1,200 apartments to the Financial District, with one-third of the new units going to low- and moderate-income New Yorkers as well as 9/11 survivors and first responders.

It is the only residential project in the World Trade Center redevelopment, along with being the tallest affordable one in Lower Manhattan — albeit not the 100 percent affordable project some advocates wanted.

Also in New York, the brokerage industry is vigorously opposing a bill to spare apartment seekers from having to pay rental listing agents hired by landlords.

In arguing against the measure, the industry says the law would also harm consumers.

Brokerage executives and agents warn of fewer and less detailed online listings, higher rents and less knowledgeable rental brokers if the city enacts Council Member Chi Ossé’s bill to place the burden of payment on the hiring party.

Meanwhile, in Chicago, the real estate community could be in for a fight this fall with not only some of the city’s aldermen, but its progressive voters, too, concerning a proposed transfer tax.

Industry lobbyists have their work cut out for them to beat back a proposal they say would be costly for their clients by fattening a city tax derived mostly from commercial property transactions, as the legislation got its first day in the sun with a packed three-hour hearing Thursday.

The proposal being drafted by Mayor Brandon Johnson would increase the transfer taxes charged at the time of a sale on deals priced at $1 million or more in order to dedicate a revenue stream toward combating homelessness. This week’s hearing came months after the City Council failed to get a quorum to consider the measure during former mayor Lori Lightfoot’s tenure.

Johnson’s administration, the group Chicago Coalition for the Homeless and progressives on the City Council are pushing for legislation to authorize a ballot initiative that would ask voters to authorize the increase on $1 million-plus deals.

Johnson has also been busy trying to keep the NFL’s Bears in the city limits.

Johnson and team president Kevin Warren are gearing up to explore potential stadium sites in Chicago, as the Bears look to move on from Soldier Field, where it’s played for almost a century, Crain’s reported.

The team appeared locked in to building a $5 billion stadium district in Arlington Heights when it finalized a deal to pay $197 million for the former Arlington International Racecourse in February and began its demolition shortly thereafter. But, the Bears were forced to look elsewhere after being hit with a $197 million property tax reassessment and have since explored sites in other suburbs, including Naperville.

One of Johnson’s challenges is finding enough acreage to allow for a potential entertainment district along with a stadium, like the team was planning in Arlington Heights. 

In Florida, a controversial proposal to tweak development regulations for Damac Properties’ project in Surfside fizzled out amid concerns that the ordinance amounted to special treatment of the Dubai-based developer, allegedly allowing it to maximize profit from its proposed condominium building.  

In a raucous special meeting on Tuesday –– with elected officials speaking over each other on the dais and one former town mayor getting escorted out of the chamber ––  commissioners voted 3-2 against the ordinance. 

“We are coming here and giving special meetings to developers,” said Commissioner Nelly Velasquez. “It is a favor. You are asking us to change our ordinance to help the developer to do what they want to do.” 

YIMBYs have scored some victories in Austin, the city that has some of Texas’ strictest zoning regulations, which appears to be changing its tack amid a housing crisis.

This month, the City Council passed a resolution to decrease the minimum single-family lot size from 5,750 square feet to 2,500 square feet. The plan, introduced by Council member Leslie Pool, would also amend the development code to allow at least three housing units per lot (the current maximum is two).

That could mean Austin seeing more triplexes, townhomes and other small multifamily developments in single-family zoned districts. 

Not everyone is thrilled by the move — one resident at the council meetings called it a “let them eat cake policy,” and resolution sponsor Leslie Pool pushed back against doomsday interpretations of the plan.

Finally, in Los Angeles, landlords filed a lawsuit against the city to contest pandemic-era regulations on apartment rents.

The Apartment Association of Greater Los Angeles has filed a constitutional challenge to a city ordinance that freezes rents and bars rate increases for 624,000 rent-controlled apartments, the Commercial Observer reported.

The landlord group argues the rent freeze passed in March 2020 violates the U.S. and California constitutions, as annual increases are mandated by the city’s Rent Stabilization Ordinance, and deprives property owners of due process.

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