Rent regulation stymies co-ops.

When the State legislature permitted rent-regulated tenants to remain in place under cooperative non-eviction plans, and allowed buildings to convert with only 15 percent purchasers and 35 percent for eviction plans, they also created trouble they never saw coming.

Today, owner-occupiers and renters live in an awkward truce, with animosity bubbling up between them more and more.

The former renters and new buyers now find themselves in the shoes of the original owner: required to maintain services at an affordable price and also collect the rent money, now known as maintenance fees.

The renters who remained in place - and often their successors in interest, as the courts have broadened these roommate privileges in the intervening years - enjoy building improvements but still fight to keep old services they enjoyed in the past.

"Rental tenants and co-op tenants sometimes come to blows, but there are solutions that work for both sides," said Mary Ann Rothman, executive director of the Council of New York Cooperatives, which hears many of the stories.

One such problem recently arose in Jackson Heights, where the shareholders and the Board of Directors began to seek ways to save money.

The 144-unit building has 42 rent stabilized tenants, 18 at market rents and 82 shareholders plus the super.

The board realized they were the only building around that still had doorman services at night and began to explore ways to save what amounted to over a $54,000 a year tab. Previously, they were able to work out an agreement with the union, because it totally eliminated a position.

But the rent regulation rules provide that owners of buildings cannot decrease services, and the tenants in the building fought the proposal by filing service reduction complaints with the New York State Division of Housing and Community Renewal (DHCR).

"Renters are perfectly decent people,' said board communications director Beverly O'Reilly, "but they know under the law they have the fight to demand that a service they had many years ago can't be taken away."

There are practical services the co-op has to provide, like hot water, says Charles R. Rappaport, president of the Federation of New York Housing Cooperatives, but the renter has to look to the owner of the unsold shares to fix leaky faucets, new stoves, etc.

At one Brooklyn co-op, he recalled, the renters protested because a garden was going to be created out of sitting areas. "Those relationships are terrible and if you live in the building and decide not to be a purchaser, that is the nature of the beast," said Rappaport. "The shareholder not getting the same service or a different kind of service."

A favorable decision to the cooperative was eventually reached by DHCR when the cooperators agreed to install video surveillance equipment and a buzzer system, rather than paying a live doorperson for the midnight shift.

The tenants appealed the decision, but eventually lost. While the tenants were notified in the beginning of 1997, the paperwork was somehow never completed by DHCR and the decision was not officially received by the co-op's sponsor, who was still the owner of the tenants' units, leaving the process in limbo.

Recently, the board's communication's chairperson followed up with DHCR personnel, who discovered an 'irregularity," and promptly supplied the required paperwork.

"The last appeal was made in 1995 and now we have a decision,' said O'Reilly, who is still numb from the long process.

"If this is what a coop has to go through to control its budget and keep its corporation financially viable, it makes buying into a co-op that has some rent stabilized tenants living in the building downright foolish,' she said.

In Manhattan, a developer/owner has one tenant left in a brownstone studio under an eviction plan who pays $325 a month in a unit where the market rent would otherwise be $1,500.

But the other units are all owner-occupied and one owner would also like to recapture the space and create a duplex unit. The sponsor has offered the renter $10,000 to move, but she has refused.

He says the renting individual is handicapped with a mental imparity and while not a nuisance, she constantly stymies efforts by the board to put through Major Capital Improvements and other building enhancements.

"If we get an annual increase of $30 to $40 a month, we spend $600 to $700 each year in legal fees," he says. "She goes to DHCR and they help her write her appeals. We subsidize her to the tune of $1,200 a month. If anyone deserves rent assistance, she does,' he admits, 'but why should it be privately subsidized?. Give her a voucher."

O'Reilly recently complained to Attorney General Dennis C. Vacco regarding the hardships that rent stabilized tenants cause for many cooperatives.

The Attorney General has established the Martin Act Task Force, which is currently examining issues relating to conversion. But Assistant First Deputy Attorney General Stephen L. Hicks wrote O'Reilly on February 24th that while "numerous issues were raised, including the issue of cooperatives and condominiums providing required services to rent regulated tenants... the Task Force determined that at this time the issue was not appropriate for discussion.'

O'Reilly counters "When would the 'appropriate time' be to have the issued discussed if not now, when the Rent Stabilization law is under discussion and probably revision?'