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Hannon: rent change fight continues.

Looking back on the legislature's actions to reform and extend the rent stabilization laws, Nassau Republican Senator Kemp Hannon, chair of the Senate Housing Committee, told REW that the few changes made in the measure were achieved through great struggle.

"Getting the Assembly to the point of just agreeing to this -- well it took three short-term extensions," he noted.

One of Hannon's bigger disappointments was not being able to address the issue of low-rent hardship buildings. "There are a large number of them at risk because of the fierce economic pressures," he said.

The lawmakers were not able to discuss the "arena of rents" because those are governed by the rent guidelines, he noted.

Hannon ticked off the problems facing owners: Low rents, the water bills, the looming problem of lead and the fact that the Division of Housing and Community Renewal has a 90--page application for hardship increases.

"[Some of these owners] have trouble with English," he said. "What happens if these buildings are taken over in rem? Then the city takes them over and they are run by HPD [Housing Preservation & Development] and then they raise the rents. We are going to keep trying We'll bring it up again."

Legislation had been passed in the Senate to set an income threshold of $100,000 but the Assembly would not agree to that number, opting instead to go to $250,000. Some people argued families were doubling up and so their incomes would easily exceed that figure. But Hannon doesn't believe families are banding together in apartments renting for $1,500 or $2,000.

In fact, the last vacancy rate survey conducted by the U.S. Census Bureau showed 96 percent of those apartments where people had incomes of $100,000 or more had four or fewer people.

Since an income limit was set -- albeit at $250,000 -- it "preserves the issue," he noted. "I'm not going to say we've solved it."

Destabilization advocates point to figures obtained during the last vacancy rate survey conducted in 1991 which found the vacancy rate for apartments renting at $1,500 or more is 12.1 percent.

"So the very standard of emergency has ceased to exist at that level," the Senator noted. "It also pointed out that folks renting [at that cost level] were paying 5 to 15 percent of their incomes for their housing. The national average is 25 percent."

Hannon pointed to government requirements for the poor who request Section 8 housing vouchers who must spend 30 percent of their income on housing before they can obtain their vouchers.

He was pleased they were able to place the 1/40 payback into legislation and take it out of the domain of DHCR regulation. "The claim was it was about to be changed to 1/72," he said.

Commissioner Angelo Aponte had told owners representatives the shift would be forthcoming.

Another positive action in the measure was the creation of the ability to register buildings where rents were legal without facing treble damages.

"The suburban problem becomes a horse of a different color," he continued. Hannon believes suburban co-op and condo vacancy decontrol was left out when the laws were originally written in a drafting error. "The least we can say is that it was a mistake," he said wryly.

When the tenants descended on Albany over the July 4th weekend to vigorously protest destabilizing those suburban co-op and condo tenants in place, the provision "was not locked in stone at that point."

He agrees there are still problems for those unit owners who subsequently rented to tenants they must now live with forever.

With the new ETPA regulations in place, however, Hannon feels the lenders can be pushed to take another look at these buildings for both end loans and underlying mortgages. "This may get some of these developments into 50 percent ownership," he said, noting an owner-occupancy threshold regulators have set for the secondary market. "There are people in bigger houses who want to go to a co-op or condo."

He blames the shortage of housing in the suburbs on tight zoning but notes that lifting the rent regulations on currently vacant units alone will bring 3,000 units onto the market immediately.

The new bill also provides an unusual separability clause to ensure the system survives any Constitutional challenges. Hannon said the Assembly had a fear that the addition of a means test would create an unconstitutional taking. "It takes about five corkscrew turns of logic to get to that," he laughed.

In the equal protection arena, this lawyer believes, "We are still governed by the 'rational basis' test.

There are those who argue the rental "emergency" no longer exists and the laws should not come under the police powers of the state, he said. "If that police powers argument is used," Hannon explained, "then what we have done is make it less a violation because we've removed those making above $250,000 and those paying more than $2,000 rent. So if you accept that argument, we've taken steps to cure that problem."

But, he observed, one can use the existing set of facts to prove the use of the police powers is no longer valid since the surveys show the vacancy of 12.1 percent in units renting for more than $1,500 decreasing to around 5 percent for those renting for $600. "So when you make the police power argument you are endangering the rest of the system," he said. "It's a fascinating argument but whoever devised that had to use corkscrew logic."

The fact that the lawmakers, including the Senate, passed a rent stabilization accord and did not just allow the protections to expire acts in the Senate's benefit, Hannon noted. "This prevents some of the professional or full-time employees of the tenants to claim we were trying to do away with it altogether. This was not what we were trying to do."

The Senator added, "Once the tenants hung around in Albany, they found out we didn't have horns. They invited us to visit."
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Title Annotation:Senate Housing Committee chairman Kemp Hannon describes struggle to reform and extend rent stabilization laws
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Jul 21, 1993
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