One Million Gone?

Is Bloomberg Sitting Tight While Housing Destabilizes?

Mayor Michael Bloomberg remains astoundingly silent as death looms for the rent stabilization of 1 million New York City apartments affected by rent hikes and a pending vote in the state legislature.

Tenants were hit with a preliminary vote by the Rent Guidelines Board (RGB) on May 5 to hike stabilized rents by 5.5 And 8.5 Percent for one- and two-year leases respectively. Bloomberg replaced five of the nine members of that board just two weeks before the vote. Four of those five voted for the hike.

Now tenants will also likely see the state legislature renew rent stabilization laws that contain a loophole enabling erosion in the pool of stabilized apartments. The state laws, which expire June 15, are especially threatening combined with the RGB's rent hikes since they allow for deregulation of apartments once they hit $2,000 per month.

Bloomberg has remained eerily mum on the stabilization issues, sitting out lobbying efforts in Albany as tenant advocates demand that the state drop the $2,000 loophole or at least raise the cap.

Bloomberg remain passive? That's not typical. But it may be due to the fact that Senate Majority Leader Joseph Bruno and assembly leader Sheldon Silver are the mayor's last hopes for a budget that will soften the need for massive service cuts in the city. Bruno is a strong opponent of rent stabilization and was a major reason why the $2,000 loophole was added to state laws the last time they were renewed in 1997. Bruno actually threatened to kill stabilization then by calling on legislators not to renew the laws. Calls to the offices of Bloomberg, Bruno, and Silver were not returned by deadline.

Some say Bloomberg is playing out a free-market fantasy, in which he supports rent regulation for now, while he subtly turns a blind eye on laws that will result in a decontrolled market over the long term. Though the mayor has created a plan to build thousands of units of affordable housing, activists argue that's not enough. "He is ignoring the fact that we are going to lose four times that number of units by decontrol," says Mike McKee, director of the New York Tenants and Neighbors Coalition.

Estimates by tenant groups show the city has lost 50,000 to 80,000 regulated apartments since 1997—the more conservative figure tossed around among landlords is 35,000. Either way, about 5 percent of the 1 million rent-stabilized apartments—or 50,000 units—are priced to become deregulated if the current rent stabilization hike passes and the state's $2,000 cap remains, says Anita Visser of the Rent Guidelines Board.

Clearly the business community is banking on decontrol. The headline on the lead story in Crain's New York Business last week read: "Landlords Snap Up Apartment Buildings as '97 Decontrol Provision Boosts Profits." The article posits that the city will be "virtually decontrolled" within 20 years, making rent-stabilized space "one of the hottest segments of the New York real estate market."

Questions about Bloomberg's loyalty to stabilization started in 2002 when he appointed RGB chair Marvin Markus, a former Koch-administration chairman, affectionately known as Marvin "Markup" for the double-digit increases made during his tenure. Markus told the Voice he supports rent stabilization, but sees need for changes in policy. Other board members, past and present, say Markus has made no bones about supporting rent stabilization for the present, but believing in a free and fair market in the long term. A member of the board who asked not to be named said that in private conversation Bloomberg mirrored that sentiment, saying that as a businessman, Bloomberg believes the market works on its own in the long run. In the meantime, the mayor sees the need for regulation, the member says.

Martin Zelnik, another Bloomberg appointee, voted against the hike, calling it too much of a burden for renters but he also supports an eventual transition out of rent regulation. In a Voice interview, he said regulation limits developers from building more apartments, which maintains a housing shortage and outrageously high rents. Still Zelnik's vote that went against the grain may show that Bloomberg actually appointed new members who would be fair and independent. During interviews with all of the new members, each stressed that Bloomberg urged them to be independent and fair.

Some analysts say he has good intentions but can't afford to be vocal about changes that could further hamper business for landlords after he infuriated their lobby with an 18.5 percent property tax increase this year.

"Bloomberg totally sidestepped the real estate lobby. The people who suffer the most from the tax are large residential building owners, not really the homeowners. He can't turn around now and say they can't raise the rent," says Andrew White, director of the New School's Center for New York City Affairs. In pushing forth the tax hike, White says, Bloomberg actually made a major show of independence.

It's still going to take more than good intentions to deal with the mounting problems facing tenants. In any year, a staggering rent stabilization hike alone would send New Yorkers reeling. In this case, a tenant in a $1,200-a-month apartment stands to be soaked for an extra $100 a month on a two-year lease.

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