Push For Stronger NY Rent Laws Goes Up Against Powerful Landlord Lobby

Push For Stronger NY Rent Laws Goes Up Against Powerful Landlord Lobby

Published: 
April 2019

With Democrats having won a clear majority in the New York state Senate for the first time since the 1960s, there is strong momentum to strengthen the state’s rent-regulation laws. Legislators and housing activists say changes are virtually inevitable—from the rollback of Giuliani-era loopholes to a proposed expansion of renter protections that some have touted as “universal rent control.”

But the real-estate lobby, even in a climate where some politicians are proclaiming their refusal of its campaign donations, is pushing to minimize the scope of any changes. And both Governor Andrew Cuomo and state Assembly Speaker Carl Heastie have indicated that they may oppose more radical reforms.

The nine bills introduced or planned by state legislators fall into two categories: Some would increase protections for tenants whose apartments were already regulated, primarily by closing the loopholes enacted by the state in 1997. Others would dramatically expand the number of regulated apartments, by letting local governments outside New York City and its inner suburbs enact rent stabilization, and prohibiting eviction except for “good cause” statewide. That would include banning the eviction of tenants who could not pay “unconscionable” rent increases.

The first category includes a bill to repeal the 1997 decontrol of high-rent vacant apartments—at the time, any apartment where the landlord claimed the legal rent was $2,000 or more—and reregulating most of the estimated 300,000 apartments deregulated under that law. Other measures would repeal the 20 percent rent increase on vacant apartments established in 1997 and make “preferential rent” discounts last for the duration of the tenancy, so renters can’t be hit with a sudden increase from $1,300 to $1,800 when they renew their lease. The Assembly regularly passed similar bills over the last several years, but they went nowhere in the Republican-controlled Senate.

Another bill would base increases for the about 22,000 remaining rent-controlled tenants on those for rentstabilized tenants. In practice, Assemblymember Linda Rosenthal (D-Manhattan) told Met Council’s annual meeting March 16, this would reduce increases from 7.5 percent a year to about 1 percent.

“I think we’re in good shape on the ones we passed last year,” says Assemblymember Harvey Epstein (D-Manhattan). But the bills to expand the scope of rent regulations, he admitted, will be “a tough lift.”

Those include the goodcause eviction measure proposed by Sen. Julia Salazar (D-Brooklyn); an extension of the Emergency Tenant Protection Act of 1974 beyond New York City and Westchester, Nassau, and Rockland counties, so places like Rochester, Syracuse, or Suffolk County could regulate rents; and two bills that would abolish rent increases for building-wide major capital improvements (MCIs) and individual apartment improvements (IAIs), which have been widely used by landlords to raise rents by hundreds of millions of dollars a year.

The most far-reaching measure is Salazar’s bill, which would prohibit landlords from evicting tenants or refusing to renew a lease without a reason such as the resident not paying rent or creating a nuisance; buildings of three units or less that are occupied by the owner would be exempted. As rent stabilization applies only to buildings with six or more units, this would effectively expand protections to cover the four-apartment buildings common in neighborhoods like Bushwick, Ridgewood, and East New York.

The measure would also give tenants the right to stay if they fail to pay an “unconscionable” rent increase, which it defines as more than 1.5 times the previous year’s increase in the region’s Consumer Price Index. As of now, that would effectively limit rent increases to about 3.5 percent, although landlords would have the right to try to prove they need more.

Legislators and activists who support expanding rent controls statewide say unaffordable housing is no longer just a New York City issue. “Many of the upstate legislators can no longer say ‘this doesn’t affect my community,’” Salazar told the Met Council meeting.

“Both upstate and downstate should have good tenant protections,” says Assemblymember Pamela Hunter (DSyracuse), the bill’s lead sponsor in the lower house.

In Syracuse, a city of 125,000, she says, courts now handle 12,000 eviction cases a year, as downtown gentrifies and low-rent apartments over storefronts get replaced with $400,000 condos.

“People who live in these places shouldn’t get booted out because they live in a prime spot for real estate,” Hunter says. “There’s nowhere for them to go.”

“Our city needs it like crazy,” says Allison Dentinger, director of the Supports on the Streets homelessoutreach program in Rochester. “The number-one reason people are becoming homeless is because they can’t pay their rent.”

Rochester, with about 210,000 people, now has more than 1,000 visibly homeless people, she says, and that doesn’t include those living in cars or doubled up with friends or relatives. In the last couple years, she’s seen a “drastic” increase in the number of people who didn’t have drug or mental-health problems before they became homeless.

“It’s only going to get worse as the city gentrifies,” Dentinger says. Rochester is almost half renters, she explains, and a lot of landlords are moving to 30-day leases, which tenants have no right to renew.

To the real-estate lobby, the biggest source of campaign money in state elections, these eviction restrictions are a back-door way to enact statewide rent control.

Real-estate interests suffered a major defeat in the 2018 elections. Democrats gained eight seats in the state Senate, giving them a solid 39-24 majority. And six of the eight Democratic incumbents whose alliance with Republicans helped them kill Assembly-passed bills to strengthen rent regulations lost primaries to challengers running on an explicitly pro-tenant platform.

“They know vacancy decontrol is going to be repealed,” says Michael McKee of TenantsPAC. The lobby’s strategy now, he says, is to cultivate Democrats from upstate and Long Island, trying to discourage them from signing on to measures such as allowing local governments there to enact rent stabilization.

“What we are desperately pleading with people is to understand the unintended consequences of some of the legislation,” John Banks, head of the Real Estate Board of New York trade group, told The Real Deal in February.

“The proposals we’ve seen so far do nothing to ease vacancy rates, make apartments more affordable, or create a single new unit,” Banks said in a statement released March 19 by the Taxpayers for an Affordable NY coalition. The coalition, which consists of REBNY, the Rent Stabilization Association, and two smaller landlord groups, argues that the bills proposed would hurt small owners most, that MCIs and other increases “have contributed to improving the quality and quantity of the city’s rent-regulated housing stock,” and that more than 28,000 households who earn more than $200,000 a year live in rent-stabilized apartments. (That’s about 3 percent of the 966,000 rent-stabilized units in the city, whose residents had a median household income below $45,000, according to the city’s 2017 Housing and Vacancy Survey.)

Cuomo has only committed to a short list of rent law changes: repealing both vacancy decontrol and the 20 percent bonus that landlords are allowed to tack on to regulated rents when an apartment becomes vacant; closing the preferential-rent loophole; and “reform” of MCIs—possibly making them temporary increases until the cost of the renovations is paid off.

The governor has apparent support from Assembly Speaker Carl Heastie (D-Bronx), who told a Crain’s New York Business breakfast March 8 that while “the city has become almost unaffordable,” he didn’t want to have the pendulum swing “all the way back to the other side,” to the point where it would “disincentivize” landlords from investing in their properties. He said that while he wouldn’t rule out other legislation, his top priorities would be ending vacancy decontrol, and reforming vacancy bonuses, preferential rents, and MCI and IAI increases. The Speaker has been one of Albany’s more aggressive fundraisers, setting up a PAC last year that has collected donations from REBNY among other major funders. In the last five years, when he ran unopposed or with only token opposition, he has received about $74,000 from real-estate sources, including the Rent Stabilization Association PAC and Hudson Yards developer the Related Companies.

Heastie’s office did not respond to requests for comment. Cuomo spokesman Tyrone Stevens said the governor “is fully committed to working with the legislature and tenant community to reform rent regulations, including ending vacancy decontrol, repealing preferential rent, and limiting capital improvement charges to protect affordable housing and respect tenants’ rights.”

“The fact that we have an overwhelming Democratic majority in both houses is no guarantee we’re going to win,” McKee told the Met Council meeting. “We have to hold every single legislator accountable, including our friends.” One key battleground will be the bills to ban rent increases for major capital improvements and individual apartment improvements. They’re now permanent additions to the rent, with IAIs the main means of jacking up the rent on specific vacant apartments; building-wide MCIs are more commonly used to raise rents on current tenants in areas where the market isn’t as hot.

There is currently “no oversight” over those increases, says Assemblymember Epstein, formerly a tenant representative on the city Rent Guidelines Board. “A landlord could put a bill in to say they spent $30 million, and nobody looks at it.”

That lack of regulation is one reason why so many apartments have been deregulated under the 1997 vacancy law. Until 2015, the state allowed landlords to use renovations on vacant apartments to raise rents over the deregulation threshold, removing those units permanently from rent stabilization. The only way to contest those increases was if individual tenants challenged them, and the 1997 law largely prohibits challenging illegal increases more than four years old. One bill introduced this year by Assemblymember Jeff Dinowitz (D-Bronx) and Sen. Zellnor Myrie (D-Brooklyn) would expand challenges to include all “reasonably necessary” information about past rent hikes.

The bill to repeal vacancy decontrol, sponsored by Senate Majority Leader Andrea Stewart-Cousins (DWestchester), would also reregulate deregulated apartments in New York City that rented for less than $5,000 a month in the last six years, plus those that rented for less than $3,500 in Nassau, Westchester, and Rockland counties. It would roll back rents on these units to their 2014 levels, plus any annual increases allowed by the RGB since then.

Repealing vacancy decontrol has been the centerpiece of tenant demands for some two decades, but the movement is now demanding more. Like the decline of labor unions, the weakening of rent regulations has created a two-tier economy, with most younger people not included in rights and protections. Strengthening rent controls would protect the some 2 million people living in regulated apartments, but would still leave the rest of New Yorkers exposed to unlimited rent increases or forced to move when their lease runs out. In this year’s political climate, the real-estate lobby would likely consider it a victory if it can preserve this two-tier system.

While Cuomo included some measures to strengthen rent stabilization in his proposed budget, they were not part of the deal reached March 31. Myrie said both houses of the Legislature had agreed they didn’t want to try to wedge complex rent legislation into the budget bill. “We feel very strongly this has to be done outside that process,” he said.

That leaves less than three months for debate on the myriad bills to be considered. The rent-stabilization laws expire June 15.

“After April 1st, you need to be in the ears of your legislators every single day,” Myrie told the Met Council meeting. “The people who don’t want to see this happen—they are relentless, and they have a lot more money than you.”

“You have two months to explain these are absolutely critical issues,” Epstein says. “We could get something amazing done this year.”

A version of this story originally appeared in Gothamist. Georgia Kromrei contributed data on campaign contributions.