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Protection bill shelved for now.

Protection bill shelved for now

A measure that would have made it illegal for the Resolution Trust Corporation (RTC) to evict tenants under New York State rental laws has been put on hold in Congress.

Meanwhile, rent-controlled and stabilized tenants in co-op buildings that have been taken over by the RTC are still awaiting a decision as to their fate. The RTC sought to evict New York City tenants in September of 1990, but has been kept at bay while State Attorney General Robert Abrams and the Division of Housing and Community Renewal (DHCR) make legal moves to keep the Feds from exercising control of the New York State regulated tenants.

A staff member with Senator Daniel Patrick Moynihan's office in Washington said the efforts to include a Tenant Protection bill as a part of a larger RTC funding bill, or as a stand alone law, will now probably await the outcome of the New York State court case because of the threat of having income caps placed on any Congressional measure.

John J. Gilbert, III, president of the Rent Stabilization Association, has been pressing for removal of rental controls, which he believes amount to tenant subsidies, particularly for high-income tenants. "From that standpoint," Gilbert said, "that Congress acknowledges that rent regulation is a subsidy, it is a minor victory. The next step obviously has to be to determine who gets the benefit and who doesn't. Obviously, those people who could afford to pay more should."

The bill, meant to enforce state's rights and limit the powers of the RTC to evict tenants, was introduced in Congress by Bronx Rep. Eliot L. Engel and Senator Daniel Patrick Moynihan earlier this year and had the backing of at least 30 House Members.

The staff member said there was, however, also a great deal of support in Congress to add income caps to the rental limits. This would have meant that rents would be raised for those RTC tenants with income above a certain amount, contrary to current New York law.

"The court case is going reasonably well and we didn't want to jeopardize that," the staffer added. Right now, he said, the legal case is being argued on the point that evicting residential tenants was not intended by Congress when it created the RTC and gave it the right to cancel leases.

Richard Barr, a spokesperson for the New York State Attorney General's office, said the suit is in active discovery and depositions are being taken both in New York and in Washington. "If bills passed that specifically said that the RTC's authority does not extend to occupied rental units protected by State laws, it could only help," he said.

Had the tenant protection measure been included in an RTC funding bill, or gone through a House conference committee, income caps would have been added by other Congressional members or the protections, would have dropped altogether. "If the Senate says, |let's prevent the RTC from evicting tenants,' and the bill drops it out, then it might be perceived that the Senate has spoken on the issue and does not want [the RTC to be limited]," the staffer explained, in that way endangering the lawsuit.

The $25 billion RTC funding was passed prior to the Thanksgiving weekend so it would not run out of money to pay off depositors prior to Congress returning from its break.

Although he expects Senator Moynihan will re-introduce the Tenant Protection Act when Congress reconvenes on Jan. 21, the staff member expects "things will not change that much between now and the court outcome."

The actions were precipitated when the RTC acted to evict tenants under rent control and rent stabilization from a luxury co-op at 444 East 57th Street when the units fell into its hands. The sponsor, Gerald Gutterman, defaulted on his loan to Nassau Federal and the thrift was later taken over by the RTC. The court has put a stay on the evictions while the legal action is pending.

Frank Pizzuro, press secretary for Congressman Eliot L. Engel, said opponents of rent stabilization and rent control in Washington undermined the measure. "Some people don't hide their opposition to it," he said. "They view this battle on those terms."

The House version, which is the same as Senator Moynihan's bill, also never came up for a vote in committee. "We'll probably reintroduce the bill again," Pizzuro said. "If it was going to go through committee or through a conference, we would want it to go through true to form so we decided to pull back rather than compromise the legislation."

The bill was introduced in the House with over 30 co-sponsors including the support of Representative. Ted Weiss in the Banking Committee. "We've gotten people to sign on from urban areas who understand housing shortages and the need to keep it affordable," Pizzuro noted. "It's a basic States rights issue. We hope that we can get it though one way or the other. The [lawsuit] buys us time so we are not confronted with people being evicted."

Pizzuro said even if the legislation was ultimately passed before a court determination, the lawsuit would probably continue "because both sides have invested time and money and would want to hear the court's opinion of it."
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Title Annotation:bill that would have made it illegal for Resolution Trust Corp. to evict tenants under NY State rental laws shelved by Congress
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Dec 11, 1991
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