The ’97 Rent-Law Disaster:
Where Do We Go from Here?
by Kenny Schaeffer

Thousands of tenants are still trying to understand how a fight that seemed to be going so well ended so disastrously, with a "mandatory rent deposit" (read, "mandatory eviction") law and other provisions that strike at the already inadequate supply of affordable rental housing in New York.

The battle lines for 1997 were drawn in 1993, when the state Legislature last renewed the laws. The Rent Regulation Reform Act of 1993 enacted so-called "luxury decontrol," deregulating vacant apartments renting for more than $2,000 a month, as well as occupied apartments at that rental whose tenants failed to certify that their incomes were below $250,000 a year. In 1994, the City Council passed a similar law.

Cuomo-Pataki 1994

In November 1994, voters in New York State turned out Governor Mario Cuomo in favor of George Pataki, a relatively unknown State Senator from Peekskill. A relative handful of tenants were aware that Pataki had made a career attacking rent and eviction protections, even though they had nothing to do with his district. Most New York City voters supported Cuomo, but tens of thousands stayed home on Election Day, totally uninspired with his performance.

Under Cuomo, the state Division of Housing and Community Renewal had failed to enforce rent regulations. It took an average of five years to rule on rent challenges, while "fast tracking" owners' applications for rent increases such as Major Capital Improvements (MCIs), which allow landlords to recoup the cost of improvements many times over.

The Pataki admininstration was inaugurated January 1, 1995 with a transition report advocating vacancy decontrol. Pataki's appointees to DHCR interpreted the 1993 law to allow complete deregulation of any apartment where the landlord could legally charge at least $2,000. As a result, in many neighborhoods, particularly but not entirely in Manhattan, many rent-stabilized apartments were permanently lost when the existing tenants were displaced and new tenants willing to pay at least $2,000 were found.

These new $2,000 renters were not necessarily wealthy. They frequently consisted of several roommates or one two-income family, making $40,000 to $70,000 total income and paying 40 percent, 50 percent, 60 percent or more of their income for rent. Decontrol meant they had none of the protections of rent stabilization: no right to renew their lease and no effective right to withhold rent for lack of services.

Rent-Deposit Issue Heats Up

Starting in January 1995, the real-estate industry began a major push for mandatory rent deposits, which would deprive poor tenants of what little due process they currently can expect in resisting dispossess proceedings in Housing Court. The Rent Stabilization Association, the real estate industry's political arm, instigated a move to get the City Council to come out for rent deposits.

The RSA's new president, Joe Strasburg, a former top aide to City Council Speaker Peter Vallone (D-Queens), flouted laws prohibiting lobbying by recent government employees. The group's three most closely held assets in the Council-Vallone, Housing Comittee chair Archie Spigner (D-Queens) and Antonio Pagan (D-Manhattan)-proposed a resolution urging the state Legislature to pass a law requiring rent deposits.

The draft resolution began with 14 "whereas" clauses, supposedly detailing the imbalances in favor of poor tenants in Housing Court-an obscene distortion, as anyone familiar with the facts can attest. In Housing Court, 90 percent of tenants have no counsel, while 99 percent of owners either have lawyers or are lawyers, and 25,000 families are evicted every year even if they have valid defenses such as illegal rents or lack of repairs.

Tenants and affordable-housing advocates, including Met Council, mobilized to expose the lies underpinning the resolution, as well as the injustice and enormous social costs of creating a massive increase in homelessness by evicting thousands of families. As a result, Spigner did not even have enough votes to get the resolution out of his own committee.

The victory was largely symbolic, as the City Council does not have jurisdiction to require rent deposits. But at this point, there was little support in Albany for them, except from the likes of Pataki and State Senator Joseph Bruno. 1995 also saw tenants organize to defeat proposals by Mayor Rudolph Giuliani's Rent Guidelines Board appointees to allow huge vacancy increases, especially on low-rent apartments.

Landlord "Justice" Week

January 1996 saw an RSA-sponsored "Justice Week" in Housing Court, in which landlords and their lawyers tried to get judges to order rent deposits under the existing law, which gives them discretion to require rent deposits in narrow circumstances (rarely exercised, for a variety of good reasons). Again, Met Council worked with tenants and other affordable-housing advocates, particularly Legal Aid and legal services attorneys, to meet the threat.

Tenants were able to show that rent-deposit orders would be inappropriate in just about every case, because their effect would have been to deny the tenant justice. As in the City Council fight in 1995, Justice Week resulted in a tenant victory-although later that year, Giuliani's RGB appointees forced through the highest rent increases since the 1980s.

In June 1996, the Loft Law, covering 10,000 people in 5,000 units, expired. Tenants lobbied to renew the law with no weakening amendments, the Assembly held firm, and the law was renewed with no significant changes. It seemed to bode well for 1997.

Then, on December 5, 1996, Joseph Bruno, now Senate majority leader, dropped his bombshell, threatening to let the rent laws expire unless the Assembly agreed to phase them out in two years.

Readers of these pages know what happened next. Tenants in New York City mobilized as never before. Ignoring Bruno, who was basically inaccessible, they focused on his mentors, Governor Pataki and U.S. Sen. Alfonse D'Amato, both of whom would need downstate votes to get re-elected in '98. They were both forced to distance themselves from Bruno's extreme position, although in early May Pataki revealed his almost equally extreme package, which included complete vacancy decontrol and mandatory rent deposits.

The City Council had to renew the laws by March 31, and Met Council helped lead an effort that preserved the laws intact and improved them significantly.

The council restricted high-rent vacancy decontrol to apartments where the previous tenant's legal rent was already at least $2,000, ending landlords' incentive to displace tenants and jack the rent up in order to get an instantly deregulated apartment. This victory came about due to grass-roots pressure on Democratic Council-members throughout the city, working closely with key Council supporters, and direct pressure on Speaker Peter Vallone.

Tenant Lobby Day on May 20 saw more than 7,000 tenants flood Albany, with support from unions, religious leaders, the NAACP, and community groups which had never participated before in the rent-regulation battle.

Assembly Speaker Sheldon Silver (D-Manhattan) addressed the crowd and promised "No Compromise!" Most of us had to feel pretty good, because it looked like we were winning.

Three days later, clouds appeared on the rosy horizon. The Daily News and New York Post ran almost identical stories on May 23, quoting Pat Lynch, Silver's press spokesperson and intimate confidant, as saying that the Speaker was willing to make major concessions on "rent and eviction protections." Both stories quoted Bruno as saying that the Speaker had specifically indicated willingness to agree to mandatory rent deposits. By this time, word had also gotten out that Silver aide (and landlord) Don Liebowitz had told a group from the Westside SRO Law Project on Tenant Lobby Day that Silver was going to agree to rent deposits.

Despite these clear warning signs, the organized tenant movement did nothing to put public pressure on Silver and his Assembly colleagues to force them not to compromise on rent deposits. Suggestions to do so were rejected with assurances that Lynch and Liebowitz were not influential (which turned out to be incorrect, as they were both in the room when Silver, Pataki, and Bruno agreed to rent deposits), and that it would be impolite to target Silver.

Too Little, Too Late

Eventually, a small effort was mounted to pressure the Assembly to stand fast, consisting of some leafleting at Housing Court and a mini-lobby trip on June 10, which resulted in Nick Perry (D-Brooklyn), one of three Assembly Democrats who had introduced a rent-deposit bill, agreeing to withdraw it, as Gloria Davis (D-Bronx) and Ed Griffith (D-Brooklyn) had previously done.

Meanwhile, the mass media completely misrepresented this issue when they talked about it at all. They characterized rent deposits as merely requiring tenants involved in "disputes" to put the money in a safe place.

Compromising Positions

On June 15, the honeymoon between tenants and Silver was over without ever having been consummated. The "con- ceptual agreement" Silver, Bruno, and Pataki announced included man- datory rent deposits and steep vacancy increases, and revoked the law which had prohibited evicting tenants in order to demolish sound buildings.

Over the next four days, this agreement (which amazingly had been hailed as a "victory" in many quarters), deteriorated in several critical areas, including terrible specifics on rent deposits accepted on June 17 and the June 19 overturning of the City Council's restrictions on vacancy deregulation, which will lead to complete vacancy decontrol in neighborhoods where $2,000 rents can be commanded.

As the Governor gleefully signed the final bill on June 20, those who had wanted to target Silver before it was too late wished we had followed our instincts more, even if it meant rocking the boat called "unity."

Rising from the Ashes

We can and must rise from the ashes of the staggering defeat of 1997, starting by recognizing the following:

The mobilization of thousands of tenants around the city to fight for their homes shows a powerful political resource that we must build on in the future.

While the Assembly Democrats let us down, to put it politely, or sold us out, by surrendering so much in a fight we thought we were winning, we must remember that it was the Republicans-Pataki, Bruno, D'Amato, and Giuliani-who wanted this damage, and we must make them pay at the polls this year and next. We must keep spreading the word about how bad the Rent Regulation Reform Act of 1997 was, so tenants will know they have a reason to retaliate.

Finally, we must learn the lesson we should have already known, that even "liberal" Democrats cannot be taken for granted to stand up for low and moderate-income people against the most powerful interests in New York State. We have to develop better ways to compete with the deep pockets of the real-estate industry and force Democratic elected officials to champion our interests, even if this means running primaries against those who have let us down.

Tenant political power does work. We learned this from major victories in the City Council rent-deposit fight and the Rent Guidelines Board in 1995; at "Justice Week" in Housing Court and in the fight to renew the Loft Law in 1996; and in the City Council rent-law-renewal fight this year. The mobilization for this year's Albany showdown was tremendous and seemed to be headed for success, with only minor concessions in the offing.

The stunning reversals of June 15-20 must not demoralize or demobilize us. If we made a huge mistake in taking the Assembly Democrats for granted, we must simply learn from it. History teaches us that no defeat, and no victory, is permanent.