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RSA conference sent powerful message.

The Rent Stabilization Association's recent excellent conference on the survival of affordable housing in New York City was remarkable for presenting, in human as well as economic terms, the problems of owning and operating affordable rental apartment buildings here.

Conference speakers -- both scheduled and unscheduled -- highlighted a disturbing, but significant, fact that most of us in the business of middle-and low-income rental housing have had to deal with for many years: City officials want the stock of affordable rental housing maintained, and yet it's the city's own policies that are the primary reasons the city's supply of affordable rental apartments is diminishing, and, in fact, is slowly being destroyed.

In his brief remarks opening the conference, Mayor Dinkins indicated that he understands the importance of the industry to the city, but not many in the audience felt he fully appreciated the harmful effects that city policies are having on their ability to operate rental housing. In fact, while he was reviewing Administration accomplishments that he regards as favorable to the industry -- a freeze on real estate taxes, extension of the ICIP, a lower crime rate -- a member of the audience rose and asked what the mayor was doing about the Housing Court "where landlords never win?"

Subsequently, during the program, an owner in the audience interrupted the proceedings and explained that she was operating several small apartment buildings, and feared losing them to the in rem process because of the cost of paying taxes and meeting city environmental requirements. During the Q&A session, an owner, "speaking for owners who had lost their properties," said that water charges "do make a difference," that he believes he is dealing with a "hostile government" that doesn't appreciate the taxes owners pay and which takes-over many hundreds of rental units a year under in rem, driving hundreds of owners out of business.

Their fears were supported by the following numbers cited in the context of the city's growing in rem problem (and by the fact that 50,000 regulated units in the city's poorest neighborhoods are in "immediate" danger of an in rem takeover): Average operating costs are $379 a unit while the average rent per unit in the Bronx is $362 and in Brooklyn $352. Meanwhile, the welfare shelter allowance was cited as being $312 per unit per month.

If you were to add on additional water charges that invariably result from metering (especially in high-density buildings) the city soon would be operating 50,000 units on top of 43,000 it presently owns. Incidentally, a spokeswoman for private co-op apartments also reported that rental income from many unsold regulated units was not equalling operating costs. The issue cuts across boundaries.

While the conference, attended by more than 1,000 owners, managing agents and real estate attorneys, served as a medium for reviewing problems facing owners of low- and middle-income rental housing here, few viable answers emerged to the problems. One hoped for but realistically did not expect answers to New York City's affordable housing problems. Even RSA President John Gilbert, at the outset of the conference, acknowledged that the conference could not in a few hours supply answers to the complex problems besetting the industry. And I have no doubt that if we want government officials to deal with our problems -- and we do need legislative and regulatory changes -- then we may well have to hold another conference on surviving and perhaps yet another until they act and the things that have to be done are done.

But, importantly, the facts that were cited during this conference and the emotion that burst forth during the meeting had to inform the dozens of public officials who were present of the desperation many owners of small apartment properties feel. Speaker comments, remarks from the audience and a special film focused on pressures resulting from limited income under the rent regulation and the impact of higher costs -- current and potential -- generated by city-imposed requirements.

The film, specially made by RSA for the conference, and the "rainbow" appearance of the audience, made it apparent that most of the city's affordable rental apartments are owned, not by corporate giants with deep pockets, but by men and women from minority groups trying to obtain a piece of the American dream. For example: Sixty percent of owners of rent-regulated multi-family housing own fewer than 20 apartments each; 87 percent manage their own buildings; and over half are foreign-born immigrants.

One of the officials at the conference, Deputy Mayor Barbara Fife said she would bring the message of the conference back to the mayor. I hope she does. Lewis Rudin, a major owner in the city and a conference speaker, also suggested that the mayor and other officials view the film that was shown, and he alluded to the rent regulations as a "cancer" and "destructive."

For me, the emphasis of speakers and members of the audience on high city taxes and water and sewer charges was most important, as was the recognition given to Housing Court inequities. The Housing Court, it was noted several times, consistently behaves more like a social service agency than a court of equity. Even when one judge might issue a warrant of eviction, it was pointed out, another will likely issue a six-month stay during which the owner does not receive rent (and the warrants rarely are issued).

In addition, the potential financial threat to owners from socalled environmental regulations was cited. Deputy Mayor Fife said the city probably was on its own in curing the lead paint problem, explaining that little assistance could be expected from the federal government. Councilman Archie Spigner said that the mayor, the Council and Council Speaker Peter Vallone were collaborating on a lead-removal aid bill that "will not do violence to the city's important real estate industry."

On the water metering issue, there is recognition of the problem among government officials, and some action might be forthcoming. Mayor Dinkins said the issue was among those being studied by his administration. State Senator Kemp Hannon, rightly, I think, pointed out that if we don't resolve the problem of water metering costs, we could see a replay of the in rem situation of the 1970's. Councilman Alfred C. Cerullo III said he would sponsor a bill authorizing a water-charge pass-along. Council Speaker Vallone noted that the Water Board had a budgetary surplus, raising the question of why the agency was pushing the metering issue. As a solution to high water metered charges, he said that the Council, among other things, was looking into the possibility of having the city charge a combined flat and metered rate. And so it went. As the three-hour-plus meeting progressed, the audience, including many owners of smaller rental apartment properties, became restive and, as I indicated earlier, several of them felt the need to interrupt speakers and shout out their frustration with the industry's seemingly intractable problems. Though one cannot condone interrupting the mayor and other officials, it was impossible not to sympathize with the owners.

I hope the government officials on the dais and in the audience were not tuning out the speakers. If they listened, they had to have a better understanding at the end of the conference of the depth of concern that owners have about losing their properties.

The Bronx Realty Advisory Board is the largest owner-industry organization in the Bronx. BRAB represents more than 1,000 owners of 2,000 buildings housing more than 150,00 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:Rent Stabilization Association presents program addressing ownership and operation of affordable rental apartment buildings in New York, New York
Author:Klein, Ruben
Publication:Real Estate Weekly
Date:Dec 30, 1992
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