Albany Can Make History for Tenants – The New York Times

Gov. Andrew Cuomo could make history soon by signing legislation to reverse a quarter-century-long erosion of rent protections that cover over 40 percent of New York City’s rental units. The package of bills, which have strong support in the State Senate and Assembly, would put the needs of tenants before the demands of the real estate industry for the first time in years.

New York has long limited the ability of landlords to raise the rents of regulated apartments, which are largely in buildings constructed before 1974 and mainly benefit low- and moderate-income households. But the real estate industry began to have its way with those rent stabilization laws in 1993, as New York City roused itself from what once seemed like a terminal case of fiscal, social and economic decay.

Invoking a dark vision of New York a few years earlier — neighborhoods burning and rotting as struggling owners abandoned properties — landlords warned that it could all happen again if they were not freed from the burden of rent regulations. Besides, they complained, some well-off tenants were getting rent protection they didn’t deserve.

The Legislature approved what is known as “vacancy decontrol” — that is, permitting owners to take an apartment out of the regulatory system and onto the open market after a tenant moved out and the rent reached a certain level. In 1993, that level was a seemingly exorbitant $2,000 a month. The state has since raised the line to $2,774.76, well behind the effects of inflation, making it easier for landlords to remove properties from rent stabilization. If the original standard had been maintained, the level would now be more than $3,500.

In 1997, lawmakers allowed landlords to increase rents by 20 percent every time a tenant left — which helped landlords reach that point of decontrol. The following year, the number of deregulated apartments tripled.

Together, those measures and others helped push at least 290,000 apartments onto the open market at a time when the city’s population was growing and its economy was surging. As once rent-regulated apartments were converted into luxury rentals, condos and co-ops, middle-income residents were pushed ever farther out from the city’s core into neighborhoods where affordable housing was once plentiful, putting enormous pressure on working class and poorer New Yorkers.

While the real estate market may be cooling off, this is still largely a city of tenants, and New York has rents second only to San Francisco’s. Housing has become less affordable for all but the wealthy, helping to send more than 11,000 families, with more than 20,000 children, into homeless shelters.

The need for affordable housing requires a comprehensive response, including reducing regulatory impediments to the construction of market-rate housing and subsidizing the construction of more housing for moderate and lower-income people.

Any such response should also include safeguarding the nearly one million rent-stabilized apartments left in New York City, and the thousands of others across the state, to maintain a substantial number of affordable homes.

That’s why revamping the rent laws, which are renewed regularly and expire on Saturday, has been the central goal of Democrats since they became the Senate majority in last fall’s elections and took full control of state government for the first time in years. Mr. Cuomo, who has said he generally supports most of the measures, has recently expressed annoyance that tenant activists have demanded that he be excluded from negotiations on the bills’ details because he has received so many donations from real estate interests. His annoyance is understandable — tenants need the governor, and he says he is with them. If all goes as it should, he and the legislative leaders will work together to get this done in the next few days.

The most crucial bills would end the practice of letting landlords take an apartment out of the regulatory system once the rent reaches a certain level, and put a stop to the 20 percent rent increase now permitted when a new tenant moves in.

Legislators also are wrestling with another problem of their own creation. Landlords who can’t find tenants willing to pay the legally permitted rent on stabilized apartments are free to offer discounts. Historically, a tenant had a right to that “preferential rent” for as long as that tenant lived in the apartment. Any legal increases were calculated from that baseline. In 2003, however, the Legislature allowed landlords to raise the rent to the legal maximum whenever a lease was renewed. A quarter-million tenants in stabilized apartments potentially face sharp rent increases at the end of their leases, according to ProPublica. That undermines an important goal of the stabilization program, which is to provide tenants with the ability to keep living in the same places. A sensible bill before the Legislature would restore the old rules.

Those who think it is unfair that landlords cannot always charge what the market will bear should keep in mind that the rise of property values is a result of the city’s prosperity, and of restraints on development. Landlords did not create this windfall, and it’s in the public interest to require them to share the benefits.

The government needs to make sure the owners of rent-stabilized buildings are earning a sufficient return, so that real estate remains an attractive investment. But the government also has an interest in making sure New Yorkers have places to live. The evidence suggests the balance has tilted too far in favor of the landlords.

In New York City, the net operating income from rent-stabilized buildings — rents minus operation and maintenance expenses — has increased in each of the past 13 years, according to the city’s Rent Guidelines Board, which sets annual increases in regulated apartments.

One major sticking point between Governor Cuomo and the Legislature are laws that allow landlords to charge permanent rent increases as compensation for making apartment renovations or major capital improvements to a building, like replacing a roof or a boiler. Even though they can recoup their expenses after a few years, the rent increase goes on. That’s ridiculous.

Proposed legislation, though, would entirely eliminate any compensation for improvements; legislators want to do away with these programs, for which there is little or no oversight, because they invite fraud by owners who artificially inflate costs. That could lead some landlords to avoid necessary improvements. To prevent this from happening, lawmakers could consider replacing the current incentive programs with a system in which landlords who are struggling, or own distressed buildings, could get a tax credit for improvements to their buildings.

The dismantling of rent protections over the past 25 years has helped create a housing crisis that threatens New York City’s future as a vibrant metropolis. Mr. Cuomo and the State Legislature have a chance to begin making things right. Approving this long-overdue package of bills would help millions of New Yorkers stay in the place they call home.

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