Gov. says "deposit rent in court." (New York Gov. George Pataki)

In a short but sweet speech to the Rent Stabilization Association (RSA), Governor George Pataki told the apartment house owners what they wanted to hear: "It is absolutely wrong that when there is a legitimate dispute over whether or not the tenant should make a rent payment, that the tenant decides not to pay it - it should be paid to court."

That remark came near the end of his speech at the Sheraton New York, and garnered the governor a long, standing ovation from the 1,400 owners that were present.

The speech also marked the first time a governor has spoken before a rental housing owners' group, and that in itself was an accomplishment that bolstered the audience.

While Pataki never mentioned rent control or rent stabilization even once during his remarks, REW cornered the governor on the topic as he left the stage. "The bill expires in two years and we will be looking at it and coming up with proposals between now and then," Pataki promised.

The governor praised Division of Housing and Community Development (DHCR) Commissioner Joseph Holland, who had stopped by the Sheraton earlier to visit with owners before going across town where he was giving his own speech. "He is going to be an outstanding commissioner," the governor said, adding, "He is going to begin the process of lessening some of the regulatory burden that's been left on you."

The governor's second executive order - after ordering a moratorium on hiring - was issuing a moratorium on new regulations. "[There is] a requirement that [the commissioners] should go back and look at the existing regulations and see what we can get rid of," he added, to another burst of applause.

Pataki also spoke about the need to trim the state budget and to change failed policies. "We'll have welfare replaced by workfare," he insisted. He bragged about his success in downsizing the state's middle management by 23 percent when he had merely vowed to cut it by 20 percent.

"We are going to have real tax cuts," he proposed, "this year, and next year, and throughout my term of office."

The governor did confess that he is not happy about cutting the spending of the State University system, but explained that instead of going to North Carolina for a job, with a more stable state economy, the graduates would be able to get one right here in New York City.

"I'm a realist," the governor admitted. "But that realism gives me a tremendous cause for optimism... I look forward to coming back here again and again, to talk not about being the highest taxed people, not about having the lowest credit rating in America, not about job losses, but about the new jobs and opportunities that are springing up and appearing in this city and all across the state."

Wrapping up after disclosing his support for the deposit of rent in court and receiving his standing ovation, the governor told the smiling owners, "Thank you for being here. Thank you for your support. Thank you for your commitment to the people of this city and this state."

Owners and owner's group representatives praised the governor for taking a stand on the deposit of rent in court issue.

RSA's president, Joseph Strasburg, said the speech came directly from the heart because the governor did not read any prepared statement. "This is probably the first time he stated his support for mandatory deposit of rent with the court," Strasburg said. "It is going to cause some repercussion among the tenant's groups, but he really believes in it. He is so supportive of it, if it is not introduced, he will make it a program bill. You would never see that from any previous administration."

Owner Mike Laub, president of the Bronx Board of Realtors, said "The governor said what everybody in this room gave him a standing ovation for - and that is rent deposit to court. I don't need anything else but to collect my rent. If I do that, I can keep my housing going."

Property owner R. Bonnie Haber, who heads RBH Management and is president of the middle market owner's group, Community Housing Preservation Program (CHIP), said "I was glad to hear him coming out and wanting to fulfill the promises of his campaign by reducing regulations and requiring the deposit of rent in court."

CHIP's executive director, Dan Margulies, noted the governor expects to introduce the rent deposit requirement through a program bill. "That is a wonderful initiative that will probably bring the best short-term benefit to the industry," he said. "Mario Cuomo refused to listen to our concerns, but he also refused to meet to discuss them. This is a tremendous breath of fresh air that we finally have a governor who recognizes that we are part of the business community and the citizenry of this state."

Richard Esposito, the head of Prana Investments, who owns property in Upper Manhattan in Harlem and Washington Heights, said "If you can't collect rent you can't pay bills, you can't pay taxes, you can't pay your bills to the hardware store, you can't pay your laborers - who are people who come from the community - so I was very happy to hear that we have political support for this deposit of rent, which is just simple fairness."

The president of the Real Estate Board of New York (REBNY), Steven Spinola, thought Pataki made an accurate assessment of the conditions in the state and is making some very difficult decisions. He is eager for DHCR to phase out some of the overregulation of housing. "Rent in escrow is clearly the first step, and by 1997, I hope we will have a real dramatic reform of the program."

REBNY made a series of proposals to the Pataki transition team. "We'll now offer to continue to support those recommendations," added Spinola.