Panel examines future of rent regulated housing market.

The outcome of the State's gubernatorial election next month could signal a turning point for New York City's rent-regulated housing market, according to one industry expert who, along with two other panelists, assumed the role of political pundit at a roundtable session sponsored by the Community Housing Improvement Program (C.H.I.P.).

The experts assembled by C.H.I.P., a New York City-based organization that represents rent-regulated property owners, also agreed that while the New York State Senate would likely retain its Republican majority, the 2008 election could have a very different outcome.

The participants in the political roundtable included Nicole Gelinas, senior fellow at the Manhattan Institute; Lawrence Mandelker, Esq., of the Manhattan law firm of Kantor, Davidoff, Wolfe, Mandelker & Kass, PC, and Joseph Strasburg, President of the Rent Stabilization Association, the largest industry organization of rent-regulated housing in the five boroughs.

Democratic gubernatorial hopeful Eliot Spitzer sounded an alarm with his recent comments to a Bronx-based tenant advocacy organization about raising the $2,000 vacancy decontrol threshold--a move that many believe would bring the deregulation process, which began in 1994 when Albany amended rent regulations, to a crawl.

"Since 1994 there has been progress, [albeit] modest and gradual, toward rent deregulation. But Spitzer's comments on revisiting the deregulation ceiling has raised concerns because it would be a major policy change in [State government]," Gelinas told the audience of property owners and industry officials at C.H.I.P.'s political roundtable, held at the Association of the Bar of the City of New York in Manhattan.

"Under Mr. Spitzer's plan, it would take at least 25 years and four vacancies for an apartment to be deregulated," said Gelinas, noting that his position could mean the difference between a rent-regulated industry that continues toward a free market, or one where deregulation is stifled.

Although none of the participants ruled out long-shot Republican candidate John Faso, the discussion on the gubernatorial race focused on the front-running Spitzer. "Mr. Spitzer has a huge lead where it counts--the polls and raising money. No one is hearing what Mr. Faso has to say because he can't raise enough money to communicate his message; and since Mr. Spitzer does not have to pay attention to Mr. Faso, he hasn't been pressed to lay out a detailed [campaign platform]. He has campaigned on who he is and his record as attorney general," Mandelker said.

"Other than his comments to a Bronx tenants' group, Mr. Spitzer hasn't really addressed rent regulation, Mitchell-Lama, the Urstadt Law or home rule."

Mandelker added, "Mr. Spitzer's big [campaign] issue is reforming the dysfunctional Albany. He wants more budget transparency, campaign financing and lobbying reform, and reform to the process under which legislative districts are drawn."

Weighing in on the gubernatorial campaign, Strasburg said, "Owners of rent-regulated properties will be watching with great interest who Mr. Spitzer taps as commissioner of the State's Division of Housing and Community Renewal, the agency that controls the industry on a day to-day basis."

Strasburg, who represents 25,000 owners of 1.1 million rent-stabilized apartments in the five boroughs, continued, "Mr. Spitzer has made it clear that he intends to bring in professionals to run his administration, thus eliminating political patronage in appointed positions. In the case of the DHCR commissioner position, this would be good for tenants and owners."

The RSA President also noted that tenant organizers have been unsuccessful in their attempts to impose on the gubernatorial election their mantra for home rule and repeal of the State's Urstadt Law. "Tenant organizers are trying to gain support for these issues in exchange for their votes," Strasburg said.

All three panelists agreed that Senate Republicans would remain in the majority, but also noted that the real challenge for the Senate could come in the 2008 elections.

"Conventional wisdom says that in this election, Democrats will not pick up the four seats they need to gain control of the State Senate. While I sense anger and frustration against the national Republican Party and Bush Administration, there is no State issue riling voters the way the Iraq war is affecting Congressional races; there's no State issue, such as Katrina on the Federal level, demonstrating incompetence," Mandelker explained.

"Even if voters thought that the Republican-run State government is dysfunctional, they still believe that their own Republican legislator is doing a good job and would keep them in office."

Strasburg views 2008 as potentially problematic for the Republican Senate. "The problem is really a question of who replaces the old guard two years down the road. Successors have to be groomed well in advance of the 2008 election. The most obvious place to look for replacements is among the Assembly's Republican minority."

And if the Democrats were to assume control of the Senate? "For starters," said Strasburg, "the State legislature would support home rule because it would be much easier to say rent regulation is a City problem that belongs in the hands of the City Council."

C.H.I.P. vice chairman Barry Rudofsky, who moderated the event, said the discussion left guests with many thought-provoking observations. "If Mr. Spitzer wins, what will the dynamic be between him and Assembly Speaker Sheldon Silver? Will Mr. Spitzer find the same issues important as the Speaker and Democratic Caucus, which is made up mostly of City Democrats? Will the Assembly and Speaker Silver have to swallow some bitter medicine? And what will that medicine be--campaign finance reform, lobbying reform, campaign for fiscal equity, or Medicaid reform?" Rudofsky said.