City Launches Pilot Program to Legalize Basement Apartments

Almost three years after it was first proposed, a pilot program to legalize basements in East New York was approved last week in the City Council.

The legislation, Intro 1004, which passed with 44 votes in the City Council, will establish a pilot program for basement units in East New York by making changes to the city’s building and fire codes. It will also fund community organizations to become the pipeline for homeowners who want to legalize their basements by seeking out low-interest loans to finance construction costs in order to meet those codes and navigating the city’s application process. The program will be administered through the city’s Housing Preservation and Development in partnership with the Buildings Department and FDNY.

Councilmembers Ruben Diaz, Sr. and I. Daneek Miller were absent votes while Councilmembers Joseph Borelli, Barry Grodenchik, Robert Holden, Steven Matteo and Paul Vallone voted against the bill.

The city has invested $11.7 million in this three-year program to provide low-interest loans and grants to qualified low- and moderate-income homeowners to make improvements to create what the city says will be safe, legal, and affordable basement apartments.

“Converting basement units into safe and legal housing is an important way to address New York City’s affordability crisis,” said Council Member Brad Lander in a press release. “This pilot program will create affordable housing for tenants, financial stability for homeowners, and investment in East New York. It will also enable us to learn useful lessons to smartly expand the program to neighborhoods around the city in the future.”

Typical illegal basement and cellar units have no lease terms, limited tenant rights and, possibly, poor conditions. Last year, when the pilot program was proposed the city said it would use the pilot program to identify existing housing stock and giving homeowners a path to create safe basement apartment units.

According to the city’s Department of Buildings website, the modifications of code standards include minimum ceiling heights and window sizes in basement and cellar spaces. It also strengthened requirements for emergency exits and fire safety codes.

The bill came out of the city’s 2016 rezoning plan of a 190-block area of East New York and and a 15-block area of neighboring Ocean Hill, said City Councilmember Rafael Espinal during the City Council vote.

Brooklyn’s Community District 5, including East New York, has an ample existing building stock of one- and two-family homes. According to HPD data, one- to five-unit buildings are the predominant residential building while larger apartment buildings do exist. More than 50 percent of the housing stock is unregulated and an estimated 30 percent of all units were financed using HPD or other government subsidies. An additional 10 percent of units in the neighborhood are owned and managed by NYCHA and an estimated five percent are rent stabilized but not subject to regulatory agreements with a government agency. The basement apartments pilot program is seen as an opportunity to create housing stock as part of the city’s housing plan.

“We know there are many homeowners who are renting out their basements currently and we know they are safe. Legalizing basements will help those homeowners to secure their income to pay their mortgages and will also make those basement apartments habitable for tenants. Overall it is a common sense piece of legislation,” said Councilmember Rafael Espinal, a co-sponsor, during his vote.

The legislation requires that a basement apartment have a minimum clear ceiling height of seven feet, an automatic sprinkler system, emergency escape and rescue openings, smoke and carbon monoxide alarms, among other details outlined in the bill,

HPD will work with community-based organizations to identify homeowners able to participate in the program, including providing technical assistance, low-interest financing, helping select an architect and contractor from a pre-qualified list, assisting in the temporary relocation of any tenants and helping to monitor construction and leases upon completion of the renovations. In order for homeowners to qualify for the program, a homeowner must have an income at or below 165 percent of the Area Median Income, which isat $154,935 for a family of three, and occupy the home as their primary residence.

“The legislation applies to any homeowner within the community district, so even if a homeowner doesn’t need the financing, doesn’t want the financial assistance. The technical support that we’ll be providing [will allow them to] still take advantage of the code changes [for the basement apartments],” said Kim Darga, Assistant Commissioner, HPD Division of Preservation Finance during a City Council Sub-Committee for Housing and Buildings hearing held last year in November.

A 2009 study by the Pratt Center for Community Development and the Chhaya Community Development Corporation estimated that there are more than 114,000 units in New York City’s basement apartment housing stock.

“This bill will increase the stock of safe and quality housing in a city where housing is imminently needed. The number of people who are homeless, rent-burdened, ‘couch-surfing’ and living ‘doubled-up’ are representative of the need for safe, pleasant, affordable housing,” said Councilmember Inez Barron, a co-sponsor, during her vote. “This bill allows those basement apartments to meet the criteria of health, fire and safety codes.”

Chhaya Community Development Corporation, which founded the Basement Apartments Safe for Everyone (BASE) campaign a decade ago, said they advocated for “common-sense” code changes and were excited about the launch of the basement conversion pilot project, “[We] welcome this landmark legislation that will pave the way for the East New York basement conversion pilot,” Annetta Seecharran, executive Director of Chhaya CDC said in a press release. “Basements are a critical source of affordable housing for tenants and a stabilizing force for low-to-moderate income homeowners.”

Some City Councilmembers had voiced concerns about the bill, including whether the pilot program would make households with existing basement apartments targets for fines. In the November hearing, HPD Deputy Commissioner for the Office of Policy and Strategy Matt Murphy told the City Council that households that fall within the boundaries of the pilot program will be subject to modified building codes which will accommodate those basement apartments and help avoid fines through the help of community based organizations.

Other community groups such as the Cypress Hills Local Development Corp. expressed excitement for the pilot program in the area and said the pilot was a promise made to the community during the East New York rezoning plan. Cypress Hills LDC was part of the Coalition of Community Advancement which engaged with the city during the rezoning process.

“It’s almost every other house, and you’ll see the extra door bell, or the extra mailbox,” said Michelle Nuegebauer, Executive Director Cypress Hills LDC. “During the East New York rezoning, the Coalition for Community Advancement, made up of stakeholders and residents, wanted one main thing and that was preservation.”

Nuegebauer said East New York households tend to be low-to moderate income and the area was on the forefront of the 2008 mortgage crisis. The additional income from leasing out basement apartments would help preserve property owners from the East New York community, “[It] was one of the two top foreclosure neighborhoods in the city.”

She said advocates really pushed for preservation because before and after the rezoning, Cypress Hills LDC has seen “relentless house flipping.” Neugebauer said many homeowners are facing foreclosure, with senior citizens often affected.

Nuegebauer said the other issue was enforcement waves or sweeps. She said she had heard homeowners describe outlandish fines for having a basement apartment, “In some cases, the tenant with family would have to vacate the basement apartment and move to a shelter,” she said. The pilot program would mitigate those, she hoped.