One Million Gone?
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 1997the more conservative figure tossed around among landlords is 35,000. Either way, about 5 percent of the 1 million rent-stabilized apartmentsor 50,000 unitsare 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.
On a larger scale, the combination of the rent hike and the decontrol law could end up in massive displacement by putting apartments above the average tenant's income. "Vacancy deregulation is a prize for all landlords to reach. Certainly that started in the more prestigious neighborhoods," says former RGB member Ken Rosenfeld, the legal services director for Northern Manhattan Development Corporation. The development community (and Bloomberg, says Rosenfeld) are really only concerned with developing and freeing "core Manhattan"south of 110th Streetwith few concerns about displacement. However, New Yorkers have already experienced an array of problems stemming from this drive to development, including a rise in homelessness among those on fixed incomes and greater pressure on the housing markets in outlying areas when people from "core Manhattan" are displaced.
So far Bruno has not threatened death to stabilization laws as he did in 1997. "That was disastrous for him and [Governor George] Pataki politically," says Rosenfeld. Maybe they have learned their lesson, but more likely, there is simply no need for a clamor since they ultimately have what they want with the decontrol law. On the other hand, Bruno is also not yet indicating there will be a move to repeal decontrol or even to raise the $2,000 cap as tenant advocates are demanding.
Silver, a hardcore supporter of rent stabilization, has been on the case since early in the year, guiding passage of an assembly bill in February to extend rent stabilization laws and eliminate vacancy decontrol. Since then, though, Bruno's insistence that discussion of the bill be put off until after a budget has passed has stymied Silver's efforts. It's likely Bruno's plan is to stall discussion until the last minute, critics say, so that he can pass the laws with the decontrol intact and with little political damage.
Officially, there isn't much a mayor can do to alter a vote in the senate. However, in 1997, Giuliani was out with lobbying guns blazing by March in resistance to Bruno's threats to bag rent stabilization laws by June. Giuliani even aligned himself with tenants' groups he had previously battled. With that same deadline approaching, Bloomberg's budget woes may be keeping him at home as the vote nears.
In the meantime, tenant and landlord groups will spend the next month lobbying RGB members to alter the final vote on the rent stabilization hike in June. In the past decade there have been three occasions that the final decision has differed from the preliminary votetwo of those times the rates went further up. The more cynical say there is little chance of change. "This was all scripted," says Rosenfeld, arguing the landlords screamed for a double-digit increase so when the 8.5 percent hike was passed the blow wouldn't seem so hard. "The mayor was in on the entire plan and unless he calls for a change, there won't be one."
Activists like McKee are not giving up. Even a half-percentage lower saves millions of dollars for tenants, he says. Still, that decrease won't change much in the overall deregulation process.
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