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Rent regulation expires tonight: senators demand reform.

As a result of an action extending rent stabilization in the New York State last week for a mere eight days, rent regulations became the center of down to the wire negotiations to meet tonight's Wednesday, June 23 -- midnight deadline. If not extended or amended, rent stabilization could expire permanently.

Meanwhile, the Rent Guidelines Board was set to vote this past Tuesday on the increases for lease renewals beginning Oct. 1, 1993. On the table is a proposal for 3 percent for one-year renewals, 5.5 percent for two years and a 5 percent vacancy allowance for those units renting for less than $4430. Owners were fighting hard to increase these amounts, even as lawmakers in Albany struggled over the very existence of the regulations.

Owner representatives were delighted that lawmakers were taking the problems of housing maintenance seriously but worried that the governor and Assembly speaker would stand firm against reform and convince Senate Republicans they would be in danger of losing their seats. Steven Greenberg, spokesperson for Assembly Speaker Saul Weprin, said the speaker believes the rent regulations should be extended and made permanent but at the minimum extended for two years.

"He agreed to extend them for eight days so the affected Senators in New York City and Westchester County would have the ability to convince Senate Majority Leader Ralph Marino to do the right thing," said Greenberg.

The Assembly has already passed both a two-year extender for the rent stabilization laws, as well as a measure that would make them permanent. The Senate, however, has listened to testimony from owners who are on the brink of abandonment, and realize the continued viability of privately owned housing stock is at stake.

John J. Gilbert III, president of the Rent Stabilization Association who is leaving next week to work for Rudin Management, would like to see some positive changes to reflect his tenure. "We are closer than we've been in 22 years toward reform," he said.

Gilbert called on property owners to continue their letters and phone calls to their individual legislators, Speaker Weprin and Governor Mario N. Cuomo. "It's a sacred cow," Gilbert explained. "They are fearful the tenants will think they have caved and look the other way in elections."

Dan Margulies, executive director of the Community Housing Improvement Program (CHIP) which represents 2,500 owners, said it's good that the Assembly and Senate will be able to focus their attention on these issues.

"The Senate strategy of refusing to sign on to business as usual is a good one to force the examination of a terrible law," he said. "It took strong resolve on the part of the Senate to wake the Assembly up and now they can get down to working out some real reforms."

Margulies believes few politicians are willing to stand up and protect the rich.

Mayoral hopeful Rudolf Giuliani supports the extension of the current rent regulations to protect the elderly and the poor. His spokesperson, Ken Frydman said, "There are abuses in the system that need to be addressed and they will be in the future."

Lewis Rudin, president of Rudin Management and the Association for a Better New York, said at the National Realty Club luncheon that rent control and rent stabilization don't help his bottom line, but vacancy decontrol in a couple of buildings has been a positive force for his overall financial health. "We must fight very hard," he said. "There is no reason people earning in the hundreds of thousands of dollars are protected by rent control and rent stabilization."

Rudin noted rent control has been around since 1943. "If that isn't permanent I don't know what is," he observed. "We have to have vacancy decontrol and some kind of means test in a practical way." He recalled that in 1967 there was too much residential space and owners were giving away fur coats to get tenants. Three years later, he said, a shortage of apartments led to owners asking for, in some cases, 50 percent and 100 percent increases in rent. "Then we go to stabilization," he said. "The owners didn't understand we had to self-police. Instead of taking a 25 percent increase for three years, we got 10 to 15 percent increases."

Michael McKee, chairperson, New York State Tenant and Neighborhood Coalition was not at all happy about the turn of events in Albany. "We're positively disgusted," he said, adding that they were also relieved the laws did not expire. He believes the Senate is intent on "extracting a pound of flesh" for the renewal of the rent regs in the form of luxury decontrol and vacancy control.

"There are a number of needed changes in rent regulations, McKee admitted, but we won't negotiate in the context of dismantling." McKee said in 1971 there were over a million people under rent control and that figure is now down around 124,000. Rent control itself does not expire until June 1994. "We believe if you enacted full vacancy decontrol is would take ten to fifteen years for it to phase out completely," he said, "because harassment would increase." Ruben Klein, president of the Bronx Realty Advisory Board, is concerned about the 7,500 multiple dwellings that the Community Service Society has estimated are on the brink of abandonment.

Representing more than a thousand owners of 2,000 buildings housing over 150,000 residents, Klein said, "The legislature would make a serious mistake if it continues to protect affluent tenants with below-market rents at the expense of protecting the city's affordable housing stock. Owners must be allowed to earn rents that enable them to maintain their properties."

Klein noted that people must provide basic financial information o qualify for such programs as welfare and unemployment while the city requires owners to provide income and expense statements.

"There is no good reason why tenants should not also have to meet income qualifications set by the legislature to receive the benefits of the rent laws," Klein added.

Margulies noted that there is no Major Capital Improvement work and no 1/40th work because the capital is not available to make these investments given the low returns on the properties. With carrots like vacancy allowances or decontrol and luxury decontrol, Margulies believes there will be a "future."

Jerome Belson, president of Associated Builders Organization (ABO) and the company that bears his name, said, "There must come a time in life when an emergency ceases to be an emergency." Although the industry is not against making rent stabilization available to people who deserve it, Belson pointed to the overriding obligation to maintain the housing inventory.

"A vacancy decontrol concept doesn't hurt any existing persons and has an infinite value to owners," Belson explained. He said it would enable owners to generate a source of income to maintain their property and pay real estate taxes and water and sewer charges that benefit the residents in the building at the same time upgrading the property.

"There is no protection against limiting expenses," Belson noted. "How can you limit income?"

Belson also pointed to both the HUD and Mitchell-Lama programs which require the tenants to certify their incomes and pay more money as their incomes go up. In HUD programs they pay a minimum of 30 percent of their incomes, he said. The Mitchell-Lama already has mechanisms in place to interface with the New York State income tax data bank to verify the resident's affidavit. "We have certifying and verifying," Belson noted. "It's not a new concept."

There is also the specter of the abandonment of housing. Currently, Belson said, the delinquencies are up 157 percent according to the Comptroller's office over last year.
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Title Annotation:June 23, 2993
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Jun 23, 1993
Previous Article:NYC tax rates finalized.
Next Article:'Senate will cave'.

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