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Some bad, some good comes out of Albany.

For most owners, the recent legislative session in Albany on extension of the rent stabilization laws was, from a short-term view, a waste of time. Because of what it could have accomplished, I might even call it a disaster for the affordable housing industry.

As everyone acknowledges, the luxury decontrol that was adopted will help only a minuscule part of the private rental housing business.

It's my sense that owners of private low- and middle-income apartment properties are stunned by adoption of a four-year extension without their getting significant relief as a tradeoff.

Nobody I know expected the rent stabilization laws to be extended for more than the usual two years. A representative of an afford-able housing owner-group was so angry he compared the impact of the rent-law extension on his members to owners receiving a four-year sentence on top of 50 years already served.

However, on a happier note, we should acknowledge the significance of the State Senate refusing to extend the stabilization laws without at least some changes. The Senate used its ability to stymie the entire renewal process as a fulcrum for change. I believe this was the first time that this has happened, and I commend the Senate for putting this tactic to good use by launching the start of what I hope will be a decontrol process, however long it takes.

I am sorry to say that while reading newspaper reports about the rent-law extension negotiations (the media presented them as cliff-hangers) I got a definite impression that far too many of our state elected officials don't understand the plight of the owners of affordable, private rental apartment properties and the terrible impact that controls have had and are continuing to have on this valuable asset.

Fortunately, we were able to hold off an anticipated assault on the Major Capital Improvement program. Angelo Aponte, commissioner of the Division of Housing and Community Renewal, had announced a desire to extend the pay-back period for MCIs to 72 months, up from 40 months. It didn't happen. The 40-month period holds and any MCI increase will remain a permanent part of the rent.

Probably the most positive achievement that came out of the legislative battle on extension of rent stabilization was the tacit recognition by the legislature in passing luxury decontrol that the rent laws are a subsidy. The industry has been maintaining this for decades. In addition, the new rent law relates rent-regulatory protection to income. This is a "first" for this.

It's too bad that so many of our state legislators hold the view that even families earning $240,000 a year still need the subsidy of rent regulatory protection.

Under the decontrol bills passed by the legislature:

* For families earning $250,000 a year for two consecutive years and paying $2,000 a month in rent as of Oct. 1 rent law protection will be taken away from them when their leases expire and when their incomes are verified by the State Department of Finance and Taxation acting for the Division of Housing and Community Renewal. The DHCR presumably will then issue a decontrol order.

* For families paying $2,000 a month in apartment rent - rent law protection will be taken away from these apartments, but only after the current tenants vacate them

Considering.that owner groups were asking for the decontrol of apartments occupied by families earning $100,000 a year and paying closer to $750 a month, the above changes are relatively minor. That leaves many of us wondering what really went on in Albany. Did the legislators pay much attention to the issue of why the floor was $250,000 and not, say, $245,000? Or why a tenant earning $250,000 or more and paying only $1,000 a month should continue to be protected by the rent laws, while a tenant earning the same amount and paying a much higher rental would lose the protection?

There isn't any logic to the way these-decontrol provisions of the new law were structured, 'and nobody I've heard is suggesting that the luxury decontrol changes will encourage owners to rebuild the city's affordable housing stock. The new regulations will only affect some 12,000 apartments in New York, or less than 2 percent of the apartments in New York City and its suburbs.

But, still, tenant advocates, fearing the $250,000 floor might be lowered in the future, attacked the changes. The fact that tenant groups were able to marshal sizeable forces in opposition to the changes even though they really had nothing immediate to lose from luxury decontrol, highlights the fantastic grip the rent laws have on us. These groups bussed their members by the thousands to Albany.

I haven't meant to appear to be overly pessimistic, but as a practical political matter it must be admitted that general vacancy decontrol -- however logical - is not yet in the cards. Initially, the State Senate took what seemed to be a very strong position on this, and then backed away.

The BRAB, Ruben Klein president, is the largest owner-industry organization in the Bronx. BRAB represents more than a thousand owners of 2,000 buildings housing more than 150,000 residents.
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Title Annotation:The Owner's Voice; evaluation of rent stabilization laws passed in Albany, New York
Author:Klein, Ruben
Publication:Real Estate Weekly
Article Type:Column
Date:Jul 28, 1993
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