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Not to early to confront rent laws.

The rent control and rent stabilization laws will expire -- but of course will be extended in some form -- next June, and the Rent Stabilization Association is to be commended for launching a plenary rent-law meeting of industry leaders in late August. It's not too early for the industry to begin to prepare its case for rent-law changes. We must do whatever we can to ease the burden of the rent laws on the affordable housing industry here.

It also seems to me that with a Mayoralty election coming up next year, there is a need to prepare our case against the unconscionably high tax climate in which many affordable rental housing market investors are finding it difficult to survive. Unless we get some relief in this area, I believe the rate of apartment building abandonment will climb even higher than it is.

Form what BRAB's members tell us, because of the rent laws and high taxes things are going from bad to worse and, seemingly, at an even more rapid pace. Our difficulties seem to be multiplying .

What we do about these developments is an issue with which we must deal quickly, and just as urgent is the question of to whom do we speak to get relief? Which of our elected and appointed officials will hear us with an open mind and not assume we're exaggerating our difficulties, or that listening to us will cost them their jobs?

We must find public officials who respond to us when we tell them that the authorized Rent Guidelines Board increases for stabilized apartments are inadequate. In a month or so, owners will begin implementing a 3 percent and a 5 percent rent increase for one-year and two-year leases, respectively.

These rent-increase levels, of course, ignore the fact that data presented by owners to the Rent Guidelines Board earlier this year showed that operating expenses had increased at a rate of more than twice the allowable rent increases. And the same inequity was true of the board's increases in prior years.

The fact is that the playing field for owners, tenants and regulators in the affordable housing market is not level. We must make public officials understand what it means to an owner trying to operate and maintain his or her apartment building when water and sewer taxes are more than five times what they were, say, 15 years ago, and that real estate taxes have tripled.

I've written many times in this column about the difficulty of obtaining Major Capital Increase rentals for modernization work completed in a rent regulated apartment building. The MCI route still is being denied owners as an efficient source of rent-forworkdone. As a result, they can't afford to hire vendors to do the work, and this has shown up recently as some of the vendors serving the industry, such as window companies, began to go out of business.

For years, owners have improved and upgraded their properties by modernizing windows (which also was a way of reducing fuel bills and making apartments more livable). But because owners are not able to pay for the work done, they are not able to upgrade their properties this way and the window companies have had to cut back, with some closing their doors.

A solution also is needed for the problem of city inspectors imposing the highest fines permitted for alleged violations, and many of us believed that at the high rates these fines are thinly veiled real estate taxes. Exacerbating this situation is that, often, usually, owners have no control over some of the violations -- garbage thrown on streets near a building, holes punched in walls or fire doors that are broken.

With all this as background -- controls inadequate increases, fines -- I am not the first owner's representative to wonder if the city is concerned about destabilizing private rental apartment house ownership, and even though this fosters abandonment.

Abandonment of regulated apartments becomes an option for several reasons: the below-market rents; the taxes, fines, and water and sewer levies that are too high for many owners to bear; vacancy rates that, because of the economy, are up even in the affordable rental housing market; and the Housing Court, that by refusing to grant or at least by delaying warrants of eviction, continues to protect tenants who don't pay rent, further depressing a building's rental income.

For a while in the past year, we had high hopes that the state and federal appeals courts would be the means to ease our rent law burdens by recognizing that the rent laws constitute an unconstitutional taking of property without just compensation. We have not given up hope on constitutional resolutions of the rent laws problem, but, so far this has not happened. For example, a few physical taking of their property.

This was disappointment to us. However, the High Court has held out the hope that in the Escondido case a claim of a regulatory taking, rather than a physical taking, might receive a more receptive ear. But this approach, though important, is not a quick solution.

Meanwhile, the time is overdue for public officials to listen to the pleas of owners for help and understanding. Without a change in attitude, the city may well find that it has become the largest single owner of affordable housing. If this happens, I don't think that either the city or the tenants will appreciate it.

Ruben Klein, president, is the largest owner-industry organization in the Bronx. BRAB represents more than a 1,000 owners of 2,000 buildings housing more than 150,000 residents. It offers members a full range of services, including labor negotiations and representation, informative seminars and periodic newsletters. Over the years, BRAB has participated with other city organizations in bringing and defending all necessary lawsuits.
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Title Annotation:The Owner's Voice
Author:Klein, Ruben
Publication:Real Estate Weekly
Article Type:Column
Date:Sep 16, 1992
Words:966
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