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Industry balks at proposed rent hikes.

The New York City Rent Guidelines Board has proposed increases for rent stabilized leases amounting to 3 percent for a one-year lease and 5 percent for a two-year lease. The vacancy allowance, which helps owners make up some rent and gives them an "allowance" to paint and redecorate between tenants, was given nothing by the board. If passed in June, the proposed guidelines would go into effect for leases signed beginning October 1 of this year.

The vacancy allowance, which helps owners make up some rent and gives them an "allowance" to paint and redecorate between tenants, was given nothing by the board. If passed in June, the proposed guidelines would go into effect for leases signed beginning Oct. 1 of this year.

Meanwhile, in Albany, the State Senate has passed a measured decontrolling apartments for tenants whose incomes top $ 100,000 and where the rent goes over $2,000. Five different bills have been introduced in by the City Council minority leader Alfred Cerullo III of Staten Island. The bills propose to decontrol units under several criteria including where tenants are earning $75,000 or more, units are renting for $750 or more and as units become vacant.

In light of the poor economy owners and representatives believe the Rent Guidelines Board is insensitive to owners' rising costs. The increase in multiple dwelling tax delinquencies.

John J. Gilbert III, president of the Rent Stabilization Association, said the guidelines are a total disaster. "One would think that an industry that provides $2 billion a year in property taxes would be treated with respect by the Rent Guidelines Board but their actions treated us like second class citizens," he said.

Harold A. Lubell, an owner-member of the RGB and a partner in the law firm of Robinson Silverman Pearce Aronsohn & Berman, noted that there are large numbers of people who cannot afford to pay their rent but that this is nothing new in New York City.

"It's absurd to say |zero' (for a vacancy allowance)," Lubell noted, "when that has no effect on tenants in place or on those who are unemployed or on fixed incomes. It's probably the most effective method in this cockamamie situation of letting owners catch up."

"It's not the fault of the owner that someone is on a fixed income or someone is unemployed," Lubell said, "but they are being made to pay for it. It's a major social problem."

Co-ops, which are still reeling from past fiscal problems, could see the recent effects of refinancing being diluted as holders of unsold shares are spread thin once again between maintenance costs and actual rent collected by tenants in place. "Where maintenance exceeds [a rise of] 3 percent how do they recoup this?," Lubell asked.

Mary Ann Rothman, executive director of the Council of New York Cooperatives, said the proposed guidelines "seem so incredibly unrealistically low to what it actually costs to run a building." Co-ops, she said, try to operate efficiently and at a break even cost. "It's been clear over the last decade that there is a regular cost of living increase between 4.5 percent and 7 percent annually," she said.

Dan Margulies, executive director of the Community Housing Improvement Program (CHIP) agreed the proposed guidelines will discourage a rebound in the co-op market. "This puts further economic pressure on the existing co-ops and creates foreclosure and lost housing opportunities in co-ops because of the effects of their actions in not meeting maintenance increases," he said.

Margulies said, "It's exactly this kind of irresponsibility by the Guidelines Board that makes the case for deregulation clear. If there was ever any justification in the system, these guys have completely undermined it by ignoring all of the data before it."

Last year the vacancy allowance was 5 percent, as it was the year before. In Oct. 1989, the vacancy allowance was 12 percent, while the one-year renewal was 5.5 percent and the two year renewal 9 percent. A supplemental rent of $5 was also added that year to any rents under $325. Increases have gone down steadily since.

"This year the Mayor's appointees are intent on eliminating the vacancy allowance altogether just as they killed the low-rent supplement," Margulies said. "This is clearly driven by the Dinkin's agenda and is being championed by the |public members' he has appointed."

Two of the public members, Ellen Gesmer and Hilda Blanco, a new appointee, lined up immediately with the tenants' representatives, Margulies said, and established a four-vote block with Victor Marrero and Augustin Rivera. "The Mayor's representatives were far more pro-tenant than the tenants' representatives," agreed City Council Aide Marc A. Wurzel.

The most telling comments, Margulies recalled, were by the new board member Hilda Blanco, who said in trying to strike a balance between owners' costs and tenants' ability to pay, the |ethical weight' was on the tenant's side because there are more tenants than owners.

"It's that kind of political unethical thinking that is destroying the housing stock," Margulies said.

"It's time for property owners to stand up and fight by coming to the hearings and contacting the individual Rent Guidelines Board members," said Gilbert.

Hearings are scheduled on the proposed guidelines at 1 p.m. on June 16 and 6 p.m. on June 18 at One Police Plaza while a final vote will be taken on June 22 at 5 p.m.

Decontrol Bills

The legislation that passed the Senate, sponsored by Senator Joseph Bruno, of Albany/Troy would decontrol apartments where rents exceeded $2,000 per month, or income was $100,000 or more. Bills with lower limits have been proposed in the City Council.

Gilbert said the issue is growing with bi-partisan support. The only people who could vote against it, he said, are the representatives of the high-rent areas of Manhattan. "The other areas will only gain services and will lose nothing," Gilbert added.

Marc A. Wurzel, counsel to City Council Member Alfred C. Cerullo III of Staten Island, said the Council bills were introduced at the request of Borough President Guy V. Molinari.

Wurzel said Cerullo introduced five separate bills that stand on their own separately. The bills each address one issue: (1) decontrol rental units when vacant, (2) establishes income restrictions of $75,000 to qualify for rent regulation protection; (3) decontrols units in multiple dwellings of 20 units or less; (4) establishes minimum base rent in multiple dwellings of 20 units or less based on RGB findings; and (5) decontrols units with rents of $750 or more.

While some critics complain it would be difficult to check tenants income, Wurzel said the city currently verifies income for many housing programs. "We do it for Mitchell Lama, we do it for SCRIE," he said.

Wurzel said the income for the bill's purposes would come only from those on the lease or who file joint returns. "If the law recognizes common law marriages and roommates and one name is on the lease, there has to be a nexus between the parties for the income to be checked," he said. Since new State laws have clarified roommates and others who are allowed possession of the apartments, the pooling or not pooling of income for rent regulation purposes may provide another angle for owners to use in attempting to gain repossession of apartments.

"Clearly rent regulation has had benefits and has had burdens. We're seeking to have the low-income people benefit and not the more affluent," Wurzel added.
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Title Annotation:increases for rent stabilized leases proposed by New York City Rent Guidelines Board
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:May 20, 1992
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