WNYC covers rent regulations

Adam Davidson, appearing on WNYC's morning "Brian Lehrer Show" discussion program, gave his strongest argument for rent deregulation without any analysis at all. Instead, he appeals to authority: economists on all sides agree that rent regulations are bad for the housing market and harm the middle class. 

True, economists agree on across-the-board rent regulations, but that's not New York's model. New units in NYC are not required to be regulated, so rent regulations here incentivize new construction. Deregulation would remove that incentive since raising rents and evicting tenants are cheaper and easier than construction. The New York model is actually healthy for the market.

Davidson refers to one economist, Christopher Mayer, but Mayer completely forgets that deregulated tenants don't simply disappear from the rental pool. If they have to vacate, they move from upscale neighborhoods into middle class neighborhoods and create a tighter market, raising rents there. So deregulation will hurt the middle class especially. In aggregate: 

deregulation = same # of units, same # of renters, just more wages going into rent, a windfall for landlords and no incentive to construct or ever ease the market. 

A land tax would help, tagged to upzonings in selected neighborhoods that can withstand increased development. 

The Times at it again

Rent regs in the Times again. Amazing to me that they can print baldfaced lies. 

This was empirically studied in Boston:  when rents were deregulated, all rents rose. 

Mayer's key assumption is false. When the deregulated renters vacate, they don't disappear -- they have jobs and family in the city. They move to cheaper neighborhoods where their numbers create a much tighter market in those lower-income neighborhoods, raising rents, displacing more renters who in turn move down the ladder creating a tighter market down the line.

So deregulation would raise rents steeply for the middle class and those below. The highest renters alone might get a break. Deregulation is a win for landlords and maybe the wealthiest renters, a lose for everyone else. 

Building new units will increase supply and ease market rates. Since new units are not required to be regulated in New York, our rent regulations incentivize new unit construction. Deregulation would end that incentive: raising rents and evicting tenants are cheaper than building new housing. Deregulation will likely raise rents steeply across the board while tightening the market even more, driving the middle class out to the further reaches of the metro area. Deregulation is a gift to landlords at the expense of nearly everyone else.

NYC's rent regulations are healthy for its housing market except it's deeply unfair for new arrivals. The state should really get back into housing of all kinds -- upscale to low -- using the upscale housing to finance the rest.

Shaoul, the BSA, DoB and WTF

Went to the Board of Standards and Appeals to see their response to Shaoul's request for a variance to keep the 6th floor expansion that the BSA had ruled illegally built some years ago. Shaoul's attorney made the good point that the Department of Buildings had issued a permit for the expansion, and the BSA didn't rule it illegal until after the expansion had been completed.

The BSA chair wasn't having any of it. She pointed out that the even though the building didn't have a Certificate of Occupancy, the owner had been renting the apartments illegally for years.

In reply, the attorney blamed that on the DoB for not enforcing the law. I was truly impressed with audacity of this legal argument. I really like it. If you place several hundred landlords, say, into a ship and sink it and drown them, it's the fault of the Coast Guard for not stopping you. I'm all for it.

But seriously, this attorney nailed the truth about NYC real estate: the DoB encourages illegal activity at every turn, either by issuing illegal permits (commonly permitting bulkheads that are actually intended for residential use, to skirt the zoning limits on residential space), or by failing to enforce blatantly illegal expansions, demolitions, hazardous endangerments to tenants -- literally whatever and whateverything landlords can think up.

Btw addendum: the BSA didn't rule on Shaoul's request at this hearing. They scheduled another hearing in late June and another in July to finish up. It was pretty clear that the BSA intends to deny him -- a whole bunch of elected officials signed on to a letter asking for a denial. But even if they deny, without enforcement, he'll just continue to flout the law.

Upcoming

1) Urge Albany to pass new rent laws before the end of the session June 22
2) Town Hall on the future of Chinatown, June 1

Urge Albany to pass new rent laws before the end of the session June 22
The key phone numbers are:
Gov. Paterson: 212-681-4580
Majority Leader Smith- 212-298-55-85
Housing Committee Chair Espada-518-455-3395

Phone numbers for other holdouts -- if you know anyone in these districts, ask them to call to urge their state senator to vote for the ten bills now before the Senate:

Jeffrey Klein(D) -1-800-718-2039 -34th Distict Bronx/Westchester
(ThrogsNeck, Weschester Sq. Morris Park, Pelham Parkway,
Eastchester-Bronx, New Rochelle, Mount Vernon, Eastchester-Westchester,
North Riverdale, Woodlawn, Norwood, Belmont Park

Carl Kruger(D)-718-743-8610-27th District Brooklyn(Midwood,
Gravesend, Flatlands, Sheepshead Bay, Ocen Parkway, Mapleton)

Martin Golden(R)-718-238-6044- 22nd District Brooklyn ( Bayridge,
Dyker Heights, Bensonhurst, Bath Beach, Gravesend, Ocean Parkway South,
Sheepshead Bay, Gerritson Beach)

Martin Malave Dilan(D)-718-573-1726-17th District Booklyn
(Williamsberg, East Williamsberg, Greenpoint, Bushwick, Clinton Hill,
Wyckoff Heights, Broadway Junction, Highland Park, Cypress Hills)

Diane Savino (D) 718-333-0311- 23rd Distict Brooklyn/Staten Island
(Sunset Park, Bay Ridge, Coney Island, Grasmere, Rosebank, Grymes Hill,
Clifton, Stapleton, New Brighton, Livingston, Port Richmond)

Craig Johnson(D)-516-746-5923 7th District Nassau County( Great Neck,
Port Washington, Floral Park, Bellrose, Mineola, Carle Place


Chinatown Town Hall flyer:

TOWN HALL: The Future of Chinatown
Hosted by the Chinatown Working Group

Monday, June 1
6:30 p.m.
PS 124
40 Division street
Between Bowery and Manhattan Bridge
Translator will be available.
(Please see attached flyers in English and Chinese.)

The Chinatown Working Group Town Hall will cover a number issues regarding the future of Chinatown including jobs, affordable housing, traffic, parking, parks, funding schools and concerns about history and culture. Help decide the future of Chinatown!

The Chinatown Working Group is a newly formed democratic and open community-based planning initiative on the future of Chinatown. Our goal is to support the community's residents, workers, businesses and visitors. Chinatown Working Group's members are Chinatown's stakeholders -- LIKE YOU!


English Flyer: http://www.chinatownworkinggroup.org/cwg%20town%20hall%20flyer%20EnglishJune1.pdf
Chinese Flyer: http://www.chinatownworkinggroup.org/cwg%20town%20hall%20flyer%20ChineseJune%201.pdf
CWG Web Site: http://www.chinatownworkinggroup.org

Changes to housing regulations

On August 12, 10am-4pm, at Spector Hall, 22 Reade Street, the Department of Housing and Community Renewal (DHCR), the NY State agency that oversees housing regulation, will hold a hearing on several proposed changes to housing regulations. Of most concern to tenants, DHCR intends to

1. allow landlords to evict tenants merely to gut and renovate a building, a procedure known as "phony demolition"
2. base the stipend given to such evicted tenants on stabilized rents levels rather than on market-rate rent levels

Holding the hearing in the dead of August ensures that publicity, discussion and resistance will be muted. Please consider writing to DHCR and attending the hearing.

Here's a version of a sample letter sent around for public use by Village Independent Democrats.
DHCR's proposal can be found on page 28 of the pdf at this link
http://www.dos.state.ny.us/info/register/2008/jun25/pdfs/rules.pdf


Juy 10,2008
Deborah VanAmerongen
Commissioner
DHCR
25 Beaver Street
New York, New York 10004


Dear Commissioner,

I strongly object to the unfairness of the new formula you are
proposing for people forced out of their homes because of demolition. It
should be based on the difference between a comparable market rate
apartment in the same neighborhood and what the tenant is now paying
This was the recommendation of the Working Group of elected officials and
housing groups that your office met with over the past year. They urged
the stipend be given for ten years (120 months). Why have you not
listened to them? To base the stipend on the average rent stabilized
amount is totally unrealistic. Rent stabilized apartments are not
available for people to rent. They have to go to a market rate apartment
if forced to move. Rent stabilized apartments are being
demolished to put up more luxury condos.

I also object to the proposed code change that would make phony
demolitions legal. It is not right to define gutting the interior of a
building as "demolition." The law's original definition intended "razing a
building to the ground." Your proposed code change only helps developers
destroy more affordable housing. It takes away the last grounds on which
tenants could make a legal challenge to the loss of their home. I want
you to start protecting tenants by enacting code changes that slow down
the frenzy of demolition. I want you to preserve affordable housing.

The hearing should not be held in August when most people are
away on vacation. It should be held in September.



Sincerely,

The effects of deregulation

In case you think deregulation of housing will bring rental prices down by a general leveling of the market, here's what's actually happening as a result of deregulation (from Liz Peek, NY Sun, of all places):

"According to a report from the Harvard University Joint Center for Housing Studies, the stock of what is considered low-cost rentals in America fell by 1.2 million units between 1993 and 2003. For a variety of reasons, "affordable" rental units have been disappearing, causing prices for the remaining properties to rise. In 2005, according to the MacArthur Foundation, almost 9 million middle- and low-income Americans spent more than half of their income on housing, an all-time record.

"According to a study by the Furman Center for Real Estate & Urban Policy, median rents in New York have risen considerably faster than incomes. It says the number of rental units "affordable to low and moderate income households in the city fell significantly" between 2002 and 2005. During that period, the report says, the total number of rental units in New York grew by only 0.4%, while the number of condos and other owned units grew by 3.5%. Adding to the problems of low-income citizens, the new housing stock shifted significantly upmarket, with higher-priced units growing by almost 25%. These trends are also in place across the country."

http://www.nysun.com/article/68414?page_no=1

In other words, the effect of deregulation is not a leveling of the market. The effect is more upscale housing in the city, more of the labor force moving out of the city. No leveling, just up or out.

Same thing happened in Boston when they deregulated housing there: no leveling, just more upscaling and gentrification. Even the conservative Manhattan Institute's study couldn't find any beneficial effect on rents in Boston's deregulation.

Why do you think regulations were created in the first place?

Testify on landlord harassment!

City Council Hearing on a Landlord Harassment Bill
City Council Chambers, City Hall
Monday Dec. 17, 10am
(Arrive early -- the line will be long -- or late in the afternoon, after many have left.)

This Monday, the City Council will hold a hearing on legislation to protect tenants from landlord harassment. This hearing affords tenants the opportunity to testify
on the increasing problem of landlord harassment,
on the difficulty of bringing harassment charges against a landlord under current law,
on the lack of anti-harassment enforcement and investigation by government agencies charged with tenant protection,
and on the ineffectiveness of fines against large corporate landlords.

Under current law, "harassment" does not include landlords repeatedly filing baseless law suits against tenants, and all harassment charges against a landlord must be initiated by the tenant and filed not in housing court but through the state by a difficult and often ineffective process. The Council is considering a bill which will allow tenants who are being taken to court by a landlord on a baseless, frivolous suit, to charge the landlord in housing court with harassment.

Unfortunately, the bill's penalties for harassment are meager fines -- only up to $5,000, an insignificant sum, especially for large corporate landlords. No jail sentences are being considered, nor surrender of premises, even for repeat offenders.

Of course, the ideal solution would be for city agencies to investigate and prosecute landlords themselves, rather than rely on harassed tenants to file charges. But while the Bloomberg administration continues to defund the agencies responsible for protecting tenants, this bill is a needed protection.

(The Council is also considering a bill that would allow landlords to sue tenants who file frivolous suits against the landlord, but this pro-landlord bill appears to be dead. It was introduced under the pretense of "fairness," but when you consider that tenants have no economic incentive to harass landlords (a bankrupted landlord can't provide services), while landlords have strong economic incentive to harass and bankrupt tenants out of stabilized apartments, it's quite clear that the "fairness" argument is misapplied and disguises a subversive strategy: to prevent tenants from filing any kind of suit against a landlord who could retaliate with a corporate legal team charging the tenant with harassing the landlord. The sponsors of this pro-landlord bill, Maria Baez and Joel Rivera, have been appropriately exposed and excoriated in the press.)

Look what's goin' down

For real estate speculators, the destabilization of regulated apartments is an investment strategy.

Normandy Real Estate recently bought a building here for $6.4 million, up from $4.5 million, for which the building sold in March 2006. The City of New York got a hefty $167,952.83 in real property transfer taxes for this transaction; the State of New York got another $25,594.00.

Who is Normandy? They are located in New Jersey and hold properties all over the East Coast. Their expressed goal here is to turn stabilized apartments into market-rate apartments.

From their website:
"This portfolio of primarily rent-stabilized apartments is strategically located in Brooklyn, the Bronx, and Upper Manhattan. The investment strategy is to capitalize on the strength of the local economy and New York City rental market as well as the increased institutional appetite for New York City rent stabilized housing transactions. There is a near-term opportunity to increase cash flow by converting rent stabilized apartments to market rate as tenants vacate units."

On the East Village, from their website:
"This newly-gentrified area ... has exceptional potential for growth. There is an opportunity to increase rental income at the properties by renovating units and releasing at market rate."

Investors profit from deregulation; the city profits from investors. The fix is in.

Check out their website
http://www.normandyrealty.com/normandycorporate/home/tabid/37/Default.aspx)

These folks are big:
"Normandy Real Estate Partners, LLC is a fully integrated real estate investment management firm based in Morristown, NJ with offices in New York, Boston, and Washington, DC. Normandy has invested over $1 billion of equity totaling approximately $4 billion in asset value. Normandy recently closed on its current discretionary real estate fund, Normandy Real Estate Fund, L.P., with projected total purchasing power of approximately $1.8 billion. Targeting the northeast and mid-Atlantic markets of Boston, Metro New York City, Northern New Jersey, Philadelphia, and Metro Washington D.C., ..."

City-wide tenants union meeting

Spread the word --

City-wide Tenants Union Meeting!
to plan
A MAJOR FALL EVENT
on rent regulations,
on tenant protections,
on displacement, harassment, tenant law,
the failure of city agencies to uphold the law,
and the upscale overdevelopment of our city

Wednesday, August 15, 7pm
ANGEL ORENSANZ FOUNDATION
172 Norfolk Street
(one block east of Essex/Ave. A, just south of Houston)
basement level.
The Orensanz Foundation is a landmark of community organizing and the arts.
Grateful thanks to Al for donating his space!

New York is under assault from developers and landlords. Our legal rights and protections have been eroded, loopholes have been exploited and there is little or no regulatory oversight. Affordable housing that sustains communities is rapidly disappearing. We are in crisis.

UNYTE is a New York city-wide tenant's empowerment group formed to confront this crisis. We are a democratic grassroots organization open to all renters in New York: tenants organizing tenants into a powerful political voice to strengthen tenant protections, laws and regulations and ensure government accountability, transparency, oversight, responsibility and enforcement.

Come help us plan an event that will bring the city's attention to the needs of its people.

TENANTS UNITE!

Wednesday is the big tenants demonstration around Stuyvesant Town. There will be all sorts of tenants advocacy groups and tenants unions there. The newest tenants union, UNYTE will be there at 14th & 1st Ave., 5pm.

UNYTE is organizing tenants at the grass roots -- a tenants union of, by and for tenants, completely democratic in form and substance. I've got high hopes for it. Tenants need an independent voice all their own. They need their own organized numbers to speak for them.

What's happening to housing in the city is shocking even by New York standards. From City Limits:
"This past October, Metropolitan Life Insurance sold Stuyvesant Town and Peter Cooper Village, containing 11,250 units, to Tishman Speyer for $5.4 billion – the largest housing transaction in American history. In the seven months since, the new owners have doubled and tripled rents of many apartments.

In December, investors put Starrett City on the block. Starrett is the Unites States’ largest federally subsidized apartment complex, home to nearly 12,000 poor and working-class New Yorkers. The price was similarly staggering – $1.3 billion, or $221,000 an apartment, in a community where the average annual income is around $22,000."
Take a look at the statistics
NYC lost 9,272 stabilized units in 2005, a 50% increase over 2002 (NYC Rent Guidelines Board)
The number of median-income affordable units fell from 58% to 48% (Furman Center, NYU)
Median rent increased by 20% while median income fell by 6.3% between 2002 and 2005 (Furman)
For the first time in history the median share of income spent on rent has exceeded the 30% maximum burden a family should bear (Furman)
Low income unsubsidized renters now pay over 50% of their income in rent, up from 43.9% in 2002 (Furman)
Homelessness increased by 11% last year, by 17% among families (Coalition for the Homeless)

A city-wide tenants union?

Monday saw the second meeting of the new city-wide tenants union UNYTE (Union of New York TEnants). Tenants showed up from Greenwich Village, the East Village, the Lower East Side and the Upper East Side -- and we haven't even started outreach. Here's the petition that we approved:

Union of New York Tenants (UNYTE)

Tenants Unite!

New York is under assault from developers and landlords. Our legal rights have been eroded, loopholes have been exploited and there is little or no regulatory oversight. Affordable housing that sustains communities is rapidly disappearing. We are in crisis. We are losing our rights and protections.

Landlords and developers have organized; so must we.

The 1947 rent regulations were designed to address the shortage of affordable housing and preserve the diversity of our neighborhoods. We demand the strengthening of those laws and their equitable and uniform enforcement. We demand administrative transparency and accountability, the closing of loopholes and the right to live secure in our homes free of intimidation, predatory litigation, abuse and fear.

We shall not be removed!

CITY-WIDE TENANTS' UNION
Sixth Street Community Center
638 East 6th Street
(between Avenues B&C)
Monday, May 14, 6:30pm.

New York is under assault from developers and landlords. Our legal rights have been eroded, loopholes have been exploited and there is little or no regulatory oversight. Affordable housing that sustains communities is rapidly disappearing. We are in crisis. We are losing our rights.

Landlords and developers have organized; so must we.

This is an important project that fills a dire need. We got a good start at our last meeting, creating a program committee which has been working and communicating all week. We're moving forward. Join us.

Tenants unite!

Hope to see you there,

Rob Hollander
LES Residents for Responsible Development
622 E 11, #10
NYC 10009
212-228-6152