What will rent laws look like June 16, 1997?

Many of the changes in government, business, and society we have witnessed during the year were undreamed of 12 months ago. Survival has dictated the downsizing of many businesses (TWA, AT&T, IBM, etc.). Even the U.S. Government is downsizing - in place are dramatic revisions to the welfare system regarding work fare and lesser grants.

The trend is toward personal responsibility coupled with a lessening of responsibility coupled with a lessening of entitlement programs. The concept that each must pay his own way is finally coming into its own.

Many among us would have labeled the possible end, or dramatic change, in our rent laws as nothing but fairy tale a year ago. I admit I had given up seeing meaningful changes in those laws during my lifetime. But here we are poised for a battle royal on a playing field more level than it has been in 52 years.

We all know that the battle call came from State Senate Majority Leader Joseph Bruno on December 5, 1996 when he announced at the RSA Annual Meeting: "For too long, we simply extended rent regulations and allowed the City's housing stock to deteriorate. Next year will be different. We are going to liberate the City."

Predictably, Mayor Giuliani, Sheldon Silver, the Democratic Assembly and tenant groups took up the banner to keep rent laws in place forever.

It would seem, however, that Bruno does have some leverage. While he is from upstate New York, he recognizes that a depressed New York City economy is bad for the entire State. Unless renewed, rent regulations will end June 15th - no votes needed.

And there is a ground-swell for at least major revisions in the rent laws. Many of our newspapers have recently proclaimed that it is time to end rent controls. To quote a few recent editorials and articles:

New York Post Editorial, 12/9/96: Time to End the Rent Laws: "... In fact 50-plus years after the onset of rent regulations in New York City, it's all but impossible to find an intellectually honest defense of the current system. Nothing like it exists anywhere outside New York - and for good reasons. Inside the City it has all but wrecked what should be a thriving rental market by effectively removing private sector incentives to build new housing."

"Rent regulation contributes substantially to the deterioration of existing housing stock by preventing landlords from passing operating cost increases on to tenants in a reasonable and timely manner."

"Perversely, it even lifts real estate values outside of the City by effectively forcing landlords to subsidize middle class rents here which then allow renters to use their extra cash to purchase second homes."

New York Times Editorial, 12/8/96: A Sensible Plan for Rent Dacontrol: "...Mr. Bruno is right to call for decontrol. Rent regulation has not served New York City well. It has discouraged investment in the upkeep of our properties and the construction of new ones. The laws hurt the entire City by reducing the tax base. An expansion and extremely cumbersome state bureaucracy is required to implement them. Especially going, the laws create an irrational system in which some well-to-do tenants pay very little rent for large apartments while less prosperous newcomers are forced to pay rates that are artificially inflated by the shortage of market rate housing."

This editorial does call for gradual decontrol over two-to-10 years, and lists several possible approaches: Vacancy decontrol, reduction of maximum allowable income from present $250,000 on down, time allowance for rents to rise until they reach market levels.

Staten Island Sunday Advance Editorial, 12/8/96: A Bargaining Chip: "...The fact is Mr. Bruno is on the right side of the issues. So long as senior citizens and the disabled are protected, as they would be under his proposal, there has to be some reform of the rent control laws, although perhaps not as sweeping as the conservative Senate Majority Leader urges. The fact is that many longtime renters are paying far below market value for their apartments while other renters not eligible for such rent protection are charged higher rents than warranted to make up the difference. The result is an unfair, two-tier rent system in the City."

New York Post Article 12/6/96: Lifestyles of the Rich and Famous Often Dirt Cheap (by Kyle Smith): "Celebrities and politicians have long lived a life of luxury in glorious rent controlled apartments at dirt cheap prices."

"Some of rent controls biggest proponents have been the biggest beneficiaries - such as Manhattan Borough President Ruth Messinger, who grew up in a palatial eight-room apartment on Central Park West. Her parents paid only $851.25 a month for the resplendent pad as recently as 1988 when it went co-op."

This article goes on to cite former Mayors David Dinkins and Ed Koch, both of whom lived in ridiculously cheap apartments, Ed Koch paying $400 a month for a spacious one bedroom. Also included in the article is Manfred Orenstein, Mia Farrow, Lauren Hutton, Betty Buckley ($89 a month for six rooms until six years ago when the building went co-op), Alistair Cooke and Carly Simon.

Further, recognition of the devastation caused by controls come from an unlikely source: Nelson Dennis, as reported in a Daily News Article, 12/6/96: As Money Talks, Albany Listens, (by Jim Dwyer): "... Nelson Dennis, who now represents East Harlem in the Assembly, says he's not ready to abandon rent control or stabilization but makes a frank, politically dangerous point. 'Whatever we have got now is not working. Clearly, there must be some other configuration, some optimal point that will work for landlords and tenants.'"

"Proof of the failure is just seven minutes from Midtown Manhattan, where there are 600 buildings in East Harlem abandoned beth by private landlords and the City. That comes to 40 solid acres of wasteland."

Regarding the effect of deregulation on rent, several recent articles have compared current rents with market rents in various areas. (See 12/6/96 Daily News Article by Schaye & Finnegan).

And a study undertaken by Harvard regarding rents, reported in the New York Times, 12/6/96, Article: GOP Leader Urges Ending of Rent Laws (by Richard Perez-Pena), indicates that while deregulation would not affect average rents, it will affect the rentals in New York City buildings below 96th Street.

To sum up, a New York Times 12/17/97 Editorial: New Era for Rents, quotes Peter D. Salins, Professor of Urban Planning at Hunter College: "Rent regulation is being eliminated all over. Massachusetts got rid of it last year by referendum. California is doing it, sort of city by city. There's been mounting evidence that it makes sense."

One cannot help but wonder what our rent regulations will look like on June 16, 1997. They will be changed. The fiscal nightmares and social problems caused by 52 years of controls must end. Even Mayor Giuliani, a staunch supporter of rent laws, admits that New York City continues to lose 15,000 units yearly while replacing only 5,000.

There will be recognition that the well is running dry. There are even rumors that Section 8 will be downsized in the near future as the government cannot afford to keep paying out the enormous sums now required. How can our City expect our landlords to keep subsidizing our tenants?

It is hoped that with more responsibility thrust on our renters that in time personal pride will be engendered, helping to rebuild buildings, blocks and neighborhoods so that the downward spiral of so many years will become a spiral upward.

If Senator Bruno is able to successfully spearhead the drive to change our rent laws, I suggest we turn over to him the job of obtaining mandatory deposit of rent in court. Nothing has been more destructive to our once fine housing stock than the Housing Court's procedures and attitude.

(The Bronx Realty Advisory Board (BRAB) is the largest owner-industry organization in the Bronx. BRAB represents more than a thousand owners of 2,000 buildings housing over 150,000 residents.)