A year of historic reform in rent regulations.

Last Year, the Rent Stabilization Association led a united real estate industry in a battle to win the first real reforms of New York's arcane and arbitrary system of rent regulations in decades.

In a campaign that captured unprecedented media attention, we lobbied for an end to the rent controls and stabilization that have strangled the development of new housing and vastly depleted the viability of existing housing. The result was the historic Rent Regulation Reform Act of 1997 - the crowning achievement in a year that brought numerous positive results for the industry.

The remarkable reforms we achieved were necessary for all property owners, large and small, to survive in a market where income is fixed, while ever-increasing operating costs are not. For the first time, owners are guaranteed a permanent 20 percent increase on two-year leases when a rental unit becomes vacant, as well as a vacancy bonus for units that have been occupied on a long-term basis. For the first time, succession is limited to one generation.

Small owners burdened with a high percentage of units held by rent-controlled tenants paying far less than maintenance levels will benefit especially. These owners will also benefit when we eventually prevail in the courts on the calculation of Maximum Base Rent, which will result in a 33 percent increase for controlled apartments.

The income level at which high-rent apartments may be decontrolled has been lowered from $250,000 to $175,000. And apartments are deregulated now upon vacancy whenever rent reaches a $2,000 threshold. Virtually everyone agreed that people living under such affluent circumstances did not need protection in the form of a rent subsidy.

New rules were adopted to ease the restrictions on demolition of older, nonfunctioning buildings to allow for desperately needed new construction. Rehabilitation of the existing housing stock will become a more realistic process, too.

One of the most important reforms is a requirement for mandatory deposit of tents into escrow when rent is withheld while awaiting trial or settlement of a dispute in Housing Court. Cases can drag on for months or years in the overcrowded and understaffed courts. A decision favoring an owner often results in the tenant being unable to pay large sums of back rent. (Each year tenants have failed to pay rent totaling more than $146 million. Pursuing nonpayment cases has added another $100 million in legal and court costs to property owners' total losses.)

Owners of buildings with 12 or less units can have the money deposited directly with them. Many operate on razor-thin margins and need those funds each month to provide essential services such as heat and hot water.

Equally important is a strict four-year statute of limitations which will end unlimited liability for rent overcharges. Service reductions, too, can no longer result in the imposition of simultaneous abatements by both the court and the Division of Housing and Community Renewal.

As I look ahead, I'm certain the struggle to gain acceptable rent increases for rent stabilized apartments in 1998 will not be an easy one. Those who rely on tenant votes for re-election will want to distance themselves from anything that could possibly be construed as favorable to landlords. The Rent Guidelines Board will continue to be dominated by mayoral appointees, and it's almost certain our success last year at the state level, coupled with a generally low rate of inflation, will increase pressure for extremely low renewal increases.

I expect that we will spend much of this year defending our 1997 victories from assaults in the courts. We have just won a very important decision upholding the four-year statute of limitations, and expect to prevail in the Maximum Base Rent case. The mandatory rent deposit provisions of the new law are currently being challenged, too.

I believe the new legislation will prevail. The U.S. Supreme Court upheld the constitutionality of rent deposits in a 1971 decision. Mandatory deposit should not be a problem for tenants who have a legitimate grievance, while tenants who are using the Housing Courts to avoid paying rent will be exposed. As for tenants who cannot afford to pay rent, that is a burden society should bear, not individual property owners.

As an industry, we will continue to press for other reforms. Environmental requirements that are more restrictive than those the State imposes, disabled access requirements that exceed recently enacted federal requirements, overly restrictive zoning, outdated building codes and burdensome procedural and public development policies all severely limit the creation of new housing and rehabilitation of existing housing, and must be scaled back or changed.

The perception of New York City as a tourist destination is arguably higher now than it has ever been, and long overdue changes are needed to raise the perception of the city as a place to live. The time for a housing renaissance - one that secures desirable options for current and future New Yorkers - is now.