Note: The following transcript covers over 300 pages of testimony in seven separate files. At the end of each file, click the "next" link to advance to the next part of the transcript. Some pages were missing from the original we received and the transcript is marked where these ommissions occurred.
...continued (Written testimony submitted by Richard Anderson, New York Building Congress): The subject of residential rent regulation in the City of New York is critically important to all New Yorkers, including the design, construction and real estate industry, which the Building Congress represents. Our officers, directors and members appreciate the opportunity to present our views on what the extension of rent control and rent stabilization means for housing construction and maintenance. There is widespread agreement that residential rent controls reduce new rental housing construction and inhibit maintenance of existing units. All rent regulations transfer income from owners to tenants or between various classes of tenants, often with short term benefits for affluent as well as poor households. Regardless of impact, New York City is the only major American municipality that still has stringent residential rent regulation. At the same time, New York City needs to add at least 20,000 dwelling units a year to its housing stock just to stay even -- that is, accommodate new household formation and keep up with replacement. In recent years the city has added only four or five thousand units a year and even the best years seldom reach 10,000 units. The "housing gap" in New York is huge and has been for a long time. By any measure, the city needs a large housing construction program if it is to meet any of its social and economic goals. Because of rent regulation, building owners are under-investing in their apartments and buildings on an enormous scale. The shortfall has been documented by numerous studies emanating from various quarters, locally and nationally. Housing construction and maintenance in New York City cannot be sustained under the current rules of the game. New York Building Congress has reached a number of conclusions with respect to this critical situation. 1) New rental housing construction is **************************************** missing page 296 **************************************** maintenance and improvements. As a result, controlled units sometimes suffer from more deterioration and obsolescence than identical units not under controls, reducing both the quality and quantity of the existing housing supply. Many studies indicate that stringent rent controls cause more deterioration in rental units than would occur without controls. The 1993 and 1987 Housing and Vacancy Surveys for New York City show that rental properties under rent control and rent stabilization were clearly in worse physical condition than decontrolled properties. 3) Alleviating rent regulations would stimulate new construction and building maintenance. If rent regulations were lifted in New York City, the Building Congress estimates that an additional $769 million of new construction would be generated. Another $560 million would be available for maintenance financing, for a total of $1.34 billion. This would increase the New York City economy by almost $2 billion and add $477 million to household income in the city. Most important, it would create more than 15,000 jobs in design and construction. In conclusion, it is our firm belief that elimination of rent regulation in New York City will have a significant and sustained positive impact on new construction and building maintenance. If this step were combined with other initiatives, such as changes in zoning and other regulatory procedures, site preparations, tax policies, building code reform, property tax modifications, and continuing and expanding efforts to build affordable housing, the cumulative impact could yield one of the largest residential building booms in city history. Everyone knows that the need is there, and lack of housing has acted as a constraint on economic development for some time. New York is a global center whose real potential is waiting to happen. Freeing the housing market to realize that potential will yield enormous benefits to every New Yorker. In the long run, we are convinced that greater supply of housing will lead to more rent stabilization than through regulation. We urge the City Council to work with the Mayor, Governor and State Legislature to prepare a realistic program for phasing out rent regulations. We are confident that transitional issues affecting the **************************************** missing page 299 **************************************** administration and politicization of the original rent laws failed to provide the price inflation rent adjustments necessary to provide for profit incentive, upgrading and new construction. The resulting low rents helped smaller single generation family units and single parent family units to live more graciously in larger housing units at the expense of a few private owners. By 1974 rent stabilization was invented in New York City to provide an inflation sensitive rent control system. Self-extinguishing decontrol features of the original federal rent control system were eliminated. Rent stabilization has threaded a path between two percent wage inflation and six percent housing cost inflation, which does not help tenants or property owners. In the '70s it became necessary for the wages of both husband and wife to support low and moderate income families. Today, the differences in inflation rates have forced market rate units to be occupied by old fashioned multi-generational families, or cooperatives of same generation people. Low and moderate income units are occupied by old fashioned multi-generational families and cooperatives of same generation people paying their own way, or single parent families in need of or possessing public support of rent. These new non-profit operations that you hear about are nothing more than a smokescreen for nine-to-five salaries that equal or exceed what used to be called return on investment, or profit. All owners who have survived this very traumatic 55 years of New York City housing operations have been counting on an eventual awakening by the State and City Legislatures that government micro-management of housing prices will not fund repairs, upgrades, incentives and adequate amounts of new housing units. The fact that some government controlled private housing rents are one-quarter to one-third of the current true cost of private housing units is being attributed by politicians and the media to owner avarice. On the contrary, this price disparity is due to unchanging inflation economics, and the interference of government and politics in a previously effective private business. State Senator Bruno has recognized the actual housing business situation, and is proposing a **************************************** missing page 302 **************************************** and design programs which have helped to secure civil rights, affordable and accessible housing, accessible transportation, and quality health care for veterans and others with disabilities. EPVA is greatly concerned with the possible expiration of the rent control and stabilization laws. Many of the organization's 2,100 veterans who served in the United States Armed Forces in World War II, the Korean War, the Vietnam War and the Gulf War reside in rent controlled and rent stabilized apartments in New York States. Expiration of these laws would mean that veterans and other New York tenants would have no right to renew their leases, no limitations on what a landlord could charge for rent, no Senior Citizen Rent Increase Exemption, no succession rights for family members and loved ones, no right to continuation of current services and repairs, and no ability to form tenant associations for fear of retaliation and eviction. Any one of these losses could have serious implications. Combined, they are a recipe for unnecessary evictions and upheaval in the housing rental market. Rent control and rent stabilization cover 1.2 million New York City apartments, housing 2.5 million tenants, over half of all renters in the city. The median income of all renters is about $20,000 a year. Elderly rent controlled tenants, often on fixed incomes, earn only $15,000. Although landlords have claimed that rent laws have kept rents artificially low and affected their profit margins, they have never been willing to open their books and demonstrate these losses. EPVA members are painfully aware of the discrimination that renters with special needs face. The staff at EPVA are frequently called on to answer questions about rent increases, accessibility modifications, and other types of landlord-tenant disputes. Our experiences in dealing with these issues are wide and varied. We are greatly concerned that the elimination of the rent laws will make this type of advocacy more difficult and thereby displace individuals living in housing that is accessible to them. Tenants with disabilities frequently pay to make their apartments accessible and, if forced to move, would lose both their home and the investments they have made. We understand that some attempts at protecting people with disabilities are being proposed. To date, we have not seen these proposals. We fear that the definition of disability will be narrow and that people who should be protected will not be protected. Furthermore, enforcement of the rent laws in New York State is the responsibility of the Department of Housing and Community Renewal. Will this agency be maintained if the only people using it are people with disabilities? If that system is dismantled, how will people with disabilities be protected? Enforcement is a critical component of any statute. Without the ability to enforce laws they become meaningless and people remain unprotected. Public housing will not offer the protection some assume since New Yorkers who are already facing housing shortages and have been on long waiting lists for public housing can expect no relief from the federal government. In fact, public housing is being jeopardized by federal legislation which seeks to privatize the nation's public housing stock. Construction of public housing funded by the United States Department of Housing and Urban Development has almost come to a halt. In addition, the number of Section 8 vouchers and certificates has been frozen at previous levels, despite increased need. As a result of these barriers, our members will be increasingly compelled to rely upon the private housing market which, if the rent guidelines expire, may no longer be affordable to them. EPVA strongly urges you to renew the rent control and rent stabilization law and to repeal vacancy decontrol provisions passed in 1994. (Written testimony submitted by Anita Romm): "Showdown 97": We won't have our homes if Joe Bruno has his way. If the rent laws sunset, we'll have no place to stay. The sheriff's staff will come and evict us out the door, And we won't have a home in this world anymore. If we lose our homes, we'll have no place to go. How can greedy landlords grind us down so low? The sheriff's staff will come and evict us out the door, And we won't have a home in this world anymore. Showdown '97 is what we must support Or we don't have much chance if we go to Housing Court. We must work to get a system that is fair, And as far as I'm concerned, laissez-faire, mon derrier. (Written testimony submitted by P.O.W., Property Owning Women): There is abundant evidence of inequity in housing law and its interpretation in housing court adversely affecting women owners of small buildings. The following statistics are taken from three city publications: A.J. Blackburn: Housing New York City 1993; the Rent Guidelines Board: Housing New York City: Rents, Markets and Trends '95; and Rent Regulation in New York State 1993: Owning a building has traditionally been a major route to the good life for working class people handy with tools. This is true for women, too, who comprise 15 to 20 percent of small property owners, and 50 percent of rooming house owners. (My analysis of a random sampling of the tax assessment records.) Most are older and multicultural, and for many rental income represents their "retirement plan.' They take care of their buildings; only one-half of one percent of owner occupied buildings had five or more maintenance or equipment deficiencies. With lifetime earnings roughly 65 percent of men's and savings half that, they are at the bottom of a relatively poor heap. In 1985, 30 percent of all small owners earned under $20,000 a year and nine percent earned under $10,000. Sixty percent had only one building, and over a third bought it as a home. Small owners earn 64 percent of the average of owners of larger buildings, yet have costs 108 percent of the average. This results from their being forced to rent, under inequitable rent guidelines policies, more of their units below the citywide base of $400 a month. Twenty-five percent of their tenants receive public assistance, while only nine percent of them get rend subsidies from the city. Note that among boroughs, stable, advantaged Manhattan is the worst offender. Women owners are prone to exploitation by savvy tenants, ranging from groundless complaints to frivolous litigation to bodily injury in the service of obtaining lowered or free rent. Few women can afford the legal costs of defending themselves, and many have lost their buildings to self-interested activism. Deadbeats are major offenders against women knowing that only one percent of them will ever be evicted. The courts assume, on the basis of landlord-tenant law, that owners are at fault in all cases. When as a result of these discriminatory practices women owners get into financial difficulty, they are scapegoated as "incompetent." The city rushes to foreclose with 18 percent interest rates and five percent penalties on top of that. When their buildings are taken over by "non-profits," the city forgives the taxes owed, gives them millions of dollars in subsidies, and immediately raises the rents so that the buildings run on a pay-as-you-go system. Doesn't this sound like a transfer of wealth program? The result of these policies has been building abandonment, widespread flight, disinvestment, and polarization of the population into a declining middle class versus an entitlement class. It has meant egregious rents in new buildings and poverty rents in older ones. It has also meant enormous suffering on the part of the women struggling to hold onto their buildings. The toll in stress related illness is incalculable. It has also cost the city dearly. In 1995, the city spent $332,626 for every building it had to reclaim from abandonment. The cost to each man, woman and child in the city is 8246 annually. For a family of four that is almost a thousand dollars. More than half the 1997 budget shortfall relates to these housing policy related costs, $7.8 billion in all. Remedies? Easy, just level the playing field. Only keep rent regulation with means testing so that rent is the lesser of market value or 25 percent of total family income as shown on income tax returns with a city subsidy for the balance. This way, support money will go to the tenant, not the bureaucracy. Second homes will count as assets, and rent increases will be pegged up or down to inflation. End rent regulation of owner occupied small buildings and provide rent supplements at government expense to displaced tenants whose total family income falls within the city guidelines for poverty. (In Boston, when rents passed into the free market, fewer than 1,000 of the tenants qualified as elderly, handicapped or low income. Source: The Small Property Owner Newsletter, Vol. 1, No. 9, June 1996.) Avoid vacancy decontrol. This exacerbates the difficulty of the transition, pushes the responsibility onto the next generation, and it does not help women owners. It keeps the rental market tight instead of opening it up, and promotes chicanery and dirty tricks on both sides. Making these changes would help give the working women of this city a fair shake. It would help the city retain its intellectual and artistic capital while freeing up the housing market by spurring investment. And it would return us to greater stability and a deeper sense of community because owners and renters would no longer be provoked by the law into animosity. (Written testimony submitted by D.P. Duffy, SRO Law Project): City Council Member Spigner: I am writing in regards to the current battle over rent control and affordable housing in New York City. I am a tenant of a rent stabilized SRO hotel and know first-hand the plights of many residents, residents who will be unable to afford housing in our city if rent control is gutted. These tenants have little voice in this debate because money talks, and money is the resource they lack, the same resource the landlords have plentifully. Which brings us back to the main point: rent control laws are a necessary element in the economics of this city. To a great extent they are the only affordable housing that exists, especially in the Borough of Manhattan. Eradicating or even chipping away at these laws means many will no longer have access to housing at all. We are at the crossroads of the determination of this city's very nature. If we gut rent control, we will go down in history as the culture which killed culture in New York, in order to make way for a lovely new playground for the rich. The soul of this city has a great deal to do with the arts, and artists are notorious for living at poverty levels. Affordable housing allows them to have time to create. Imagine a New York without performance artists. Not only would we be castrating our cultural legacy, but the ramifications in areas like local film, literary magazines, tourism, and training institutions would make a serious economic impact on the city. Not to mention the service industry which depends on affordable housing. All those waiters who staff chic Upper East Side restaurants certainly cannot afford the rents in that neighborhood. They travel back to their SRO hotels and rent controlled apartments in other neighborhoods. But mark my words, force them to the far extremes of the outer boroughs and you will lose them as a work force. Then who will do the jobs that Wall Street executives and landlords deign beneath them? Keep in mind cab drivers, apartment cleaners, maintenance people, and many others who make this city run. There are so many others who will be affected, the elderly, the sick, homebound people with AIDS and other ailments. I ask you to be a strong proponent of rent control for tenants. Landlords have enough voice in these matters already. And I remind you of the hardship exemption to rent control law which already exists to protect landlords against the very things they complain and make issue about. All they really have to do to stop unfair rent control is open their books. It doesn't take a genius to realize why they don't. I would like a response to this letter. As a member of the SRO Law Project, I will be receiving a history of your voting record and I, like many others, will be watching. (Written testimony submitted by Frank Brodhead, West Side SRO Law Project): My name is Frank Brodhead. I am on the staff of the West Side SRO Law Project. The Law Project is a non-profit agency that serves SRO residents on Manhattan's West Side Before coming to New York, I worked for 11 years for a city funded tenants rights organization in Philadelphia. Philadelphia has no rent control, and it has none of the legal protections included in the rent stabilization laws now under discussion. The experience of tenants in Philadelphia helps to show the importance of the rent stabilization laws to residents of New York City. Real estate spokesmen claim that the rent stabilization laws are responsible for housing abandonment in New York. Philadelphia, without any rent laws, has a terrible problem with housing abandonment. Philadelphia, with about one-eighth the number of rental units that York has, has a backlog of some 25,000 abandoned houses, and 3,000 new homes are abandoned each year. Housing abandonment is such a problem that a large proportion of the city's Department of Buildings staff is allocated to Clean and Seal. Rent regulation is not the cause of housing abandonment in Philadelphia. Real estate spokesmen also claim that the rent stabilization laws are responsible for the lack of new housing construction in New York. Philadelphia, without any rent laws, has not had any new low or moderate income rental housing built by private real estate operators in living memory. Only subsidized housing operations produces any new affordable units in Philadelphia. Rent regulation is not the reason why there is no new construction in Philadelphia. In fact, the absence of anything like New York's rent stabilization laws contributed to the deterioration and abandonment of affordable rental housing in Philadelphia. In my job as a housing counselor, I worked with several thousand families facing eviction. In a very large number of cases their homes were without heat or were otherwise "unfit for human habitation." Yet they were intimidated and prevented from asking their landlord for repairs, or compelling repairs by withholding their rent. This was because their landlord could evict them without good cause, simply by refusing to renew their month to month lease. One consequence o the lack of tenant protections -- the kind of protections afforded New York renters by the rent stabilization laws -- was that landlords had little incentive to invest in **************************************** missing pages 317 through 328 inclusive **************************************** populations settling there brought about economic revitalization. It was the affordable housing in these neighborhoods, protected by rent regulations, that made settlement there so attractive. This destabilizing effect will impact not just low income renters in the area but middle income renters and homeowners as well. In addition, the increase of income spent on rent will not only decrease spending power in the community but also will have a severe impact on the real estate market throughout the city. The more people will have to spend on rent, the less they will be able to save toward purchasing their own home. Immigrants to this country have a history of transitioning out of rentals into home ownership and, in the last few years, there has been a national trend in the growth of home ownership in general. Deregulation, however, would produce fewer affordable home ownership opportunities, thus actually diminishing the availability of affordable housing to all segments of the population. This, in turn, will have a most negative impact on the city's entire economy. Finally, when examined closely, the claims by property owners that rent regulations detrimentally depress new building construction and rehabilitation of existing stock do not bear out. Quite simply, regulation already does not apply to any new construction, except where built through certain programs, like low income housing tax credits. Likewise, landlords can apply for and receive permission to charge market rent for previously vacant, fully rehabilitated apartments. What is needed is not the end of rent regulations but other solutions which can address the need of property owners to access resources so that they can adequately maintain and improve their property. The ability to live in secure, decent, affordable housing often means the difference between getting ahead or falling behind for the over 2.5 million people in New York City residing in rent regulated housing. These laws prevent homelessness and preserve neighborhoods. New York City is already one of the most expensive places to live in this country. We must ensure that the protections and benefits afforded to all by rent regulations continue, without dilution or limiting conditions. Housing is an essential need of every human being who lives here, and the protections under the rent laws make fulfilling that need easier for millions of people Thank you very much. (Written testimony submitted by Joseph Bolanos): "I am the Face of Rent Control": I am the face of rent control. I am the perceived evil of this city. I have lived in my residence for over two decades. I have lived by the laws that have always protected my home. I've never sublet my apartment and I've never sought to "flip" it for any reason. My life is not mortgaged by a bank And I've never been approved by any board. My apartment is my home and not an investment. I don't know about high finance or mutual funds because my wealth is in my spirit. I am the face of historic New York. I am the witness to years of development, if you choose to call it that. I am the struggling artist who enriches this city through a life of personal survival. I am the senior citizen who survived the Holocaust who understands the perils of displacement. I am the senior citizen who cannot live anywhere else in the world. I am the single working mother who shares a studio apartment with her only child. I am the person on a fixed income who is integral to the community experience. I am the bus driver, the teacher, the student. I am the mother, the husband, the daughter, and the widow. I am the flavor, and the color, and the soul of New York. And let me make it very clear that I am not the real estate investor. I am not the opportunist, often absentee landlord. I am not the young executive whose idea of being a New Yorker is Zinfandel evenings and decaf cappuccino mornings. I am not a person who pays $30 for a T-shirt at The Gap, or five dollars for a cup of coffee at Starbucks. And, most important of all, I am not a person who is unkind to my neighbors. No, ladies and gentlemen, I am not a visitor claiming to be a New Yorker through my financial portfolio. I am New York. I am the face of rent control. ************************************************************* CERTIFICATE STATE OF NEW YORK ) SS. COUNTY OF NEW YORK ) I, LINDA BAYLES, a Stenotype Reporter and Notary Public in and for the State of New York, do hereby certify that the foregoing is a true and accurate transcript of the within proceeding. I further certify that I am not related to any of the parties to this action by blood or marriage, and that I am in no way interested in the outcome of this matter. IN WITNESS WHEREOF, I have hereunto set my hand this 8th day of April 1997. LINDA BAYLES C E R T I F I C A T I O N I, LINDA BAYLES, a Notary Public in and for the State of New York, do hereby certify the aforesaid to be a true and accurate copy of the original of my stenographic notes. LINDA BAYLES **************************************************************