The Vacancy-Decontrol Scam
The landlord lobby is out of the closet. After proclaiming for months that its members wanted rent regulations ended immediately, the Rent Stabilization Association is buying ads touting Gov. George Pataki's vacancy decontrol plan, under which, tenant advocates say, rent controls will die a slow and painful death.
The ads, starting on radio and reportedly soon to hit TV screens, repeat Pataki's promise that his proposal protects 99% of rent-regulated tenants, a claim Penny Laforest of the Queens League of United Tenants hotly disputes. Although current tenants would be protected as long as they stay in their apartments, "there's a new generation of working- and middle-class kids—new families starting out" who will be unable to find apartments they can afford, Laforest charges. "Politicians talk about protecting the elderly and the disabled, but this is an attack on working-class and middle-class young people."
Laforest, a tenant in a Glen Oaks, Queens, development that went coop, says her family has already experienced vacancy decontrol: "My mother lives in my development, my sister lives in my development, I live in my development, but my daughter had to go elsewhere." Why? Because, she explains, when regulated tenants leave the complex, their units are no longer regulated, and the apartments go to market rent.
It's not just young apartment-hunters who will face major problems under vacancy decontrol, according to Angelita Anderson, executive director of the City-Wide Task Force on Housing Court. Her group, which offers help every day to tenants at each of the city's landlord-tenant courts, is seeing an increase in landlords moving to oust tenants to take advantage of the higher rents they can already charge when apartments become vacant.
"In this environment of landlords flexing their muscles, we're seeing more ‘self-help evictions,’ " she says—evictions in which landlords simply lock out tenants and dump their belongings on the street. She also reports an increasing number of "frivolous" eviction suits in which a landlord charges a tenant with nonpayment when, in fact, they have paid—or with failing to complete out a lease form when none has been provided. Tenants can prevail in such cases, but they have to take time off from work—often repeatedly—to make court dates, and they can end up deciding it’s less trouble to move. "Decontrol will offer an increased incentive for landlords to bring these kind of frivolous cases," Anderson charges, since getting rid of regulated tenants will have an immediate payoff in increased rent.
She also worries about a less-publicized aspect of Pataki’s plan, the requirement that tenants in Housing Court proceedings put disputed rent in escrow. She explains that many tenants have claims against their landlords—such as code violations or lack of services—that mean they don't actually owe any rent. Requiring them to come up with the money in advance is "charging an admission fee to court," she complains. "It's based on the assumption that tenants are going to lose their cases." Many tenants who can't cough up the escrow money in advance might lose their homes, she warns.
Penny Laforest dismisses the stiff anti-harassment penalties in Pataki's proposal. "You can't legislate against harassment," she scoffs. To use them, a tenant being harassed would have to "get a babysitter, take time off from work, take out papers, take time off again to go to court." Better, she says, not to give landlords an economic incentive to harass tenants.
Most of these gloomy scenarios assume that landlords will be able to charge much higher rents in the open market than under rent regulation. But a study released last month co-sponsored by the city's Rent Guidelines Board, which administers rent regulations, made a less alarming forecast. It predicted that vacancy decontrol would hit some neighborhoods hard, including much of Manhattan, but would result in a relatively modest citywide average rent hike of $32 a month, or 4%.
There are several problems with the study, however. First, the prediction only covers the first two years of vacancy decontrol. ‘Over the long run…we can expect substantially larger increases," Michael Schill, who heads the real estate institute at New York University Law School, which co-sponsored the survey, told the New York Times.
Ken Rosenfeld, one of two tenant representatives on the RGB, dismisses the study as "a rush job," noting that the board only supplied key information to its author, Edgar Olsen, a University of Virginia economist, in April. "It's incomplete—he never finalized it," he gripes.
Rosenfeld, who heads the legal services office at the Northern Manhattan Improvement Corp. in Washington Heights, also criticizes Olsen for failing to account for the likely ripple effect of tenants fleeing big increases in much of Manhattan. With the study anticipating rent hikes of 30% on the Upper West Side, 23% in Chelsea and Hell’s Kitchen and 14% in Stuyvesant Town and Turtle Bay, "You can be sure that working- and middle-class people who can no longer find apartments in lower Manhattan at $1,000 a month will be looking in Washington Heights," he warns, predicting "intense gentrification and displacement" there and in outer-borough neighborhoods.
For Donna Ellaby, executive director of the tenants’ rights group Good Old Lower East Side, Olsen’s conclusion that rents in her neighborhood will not increase at all under vacancy decontrol flies in the face of her daily experience. "I'm seeing cases now where landlords are upping rents on rent-stabilized apartments from $350 to $900." That's not legal, she says; the landlord is taking the risk that tenants won’t challenge the rent with the state Division of Housing and Community Renewal. "With vacancy decontrol, landlords won’t have to even maintain the facade—they won’t have to worry about tenants challenging the rent."
Meanwhile, a pair of studies by Public Advocate Mark Green debunks landlords’ claim that rent regulation amounts to a landlord subsidy of often well-off tenants. The most recent survey, released May 18, found that from 1975 to 1997, the RGB allowed rent increases that were 27% to 47% above the level suggested by its own standard formula, which is designed to take landlords’ costs into account and maintain their income at a constant level. The board granted increases greater than those suggested by the formula in 18 of the last 22 years, according to the study. For one-year leases, an apartment that rented for $400 a month in 1975 would now cost $1,240 under the rent hikes authorized by the RGB, whereas it would have only gone up to $972 if the board had considered only the standard formula. (Those numbers do not even include increases based on capital improvements or allowed when an apartment is vacated.)
While landlord income has kept pace with inflation over the past several years, according to the study, tenant income has not. From 1990-1995, tenants' median household income, after adjusting for inflation, fell 14.6%. And in an analysis released April 23, Green’s office determined that 37% of rent-stabilized tenants are paying 40% or more of their income on rent, and 17.4%—one out of six—are paying 80% or more.
With the June 15 expiration of rent regulations rapidly approaching, Laforest concedes that there will have to be some compromise with the landlords and their friends in the Legislature. "We'll have to give up something—they've got the money and they're powerful," she says. "But not vacancy decontrol. We can't accept it. It's a defeat, not a compromise."
Journalist and folksinger Chris Seymour is looking for an inexpensive one-bedroom apartment in Fort Greene, Brooklyn.