Note: The following transcript covers over 300 pages of testimony in seven separate files. At the end of each file, click the "next" link to advance to the next part of the transcript. Some pages were missing from the original we received and the transcript is marked where these ommissions occurred.
...continued CHAIRPERSON SPIGNER: We have representatives of State Senators Leichter, Glick, Gottfried and Abate. Tobi Koffer, representing Senator Deborah Glick. MS. T. KOFFER: My name is Tobi Koffer, from State Senator Deborah Glick's office. I'm here today to testify on behalf the State Senator who is in Albany and cannot make it so I'm here on her behalf. "I'm here today to testify on behalf of New York City rent regulated tenants who face the elimination of rent protection for their homes. I am also here to say that I stand with so many others in declaring housing in New York City in a state of emergency, as stated in City Council Resolution No. 2177. "The Spigner-Vallone bill, Intro No. 920, calls for the renewal of rent protection for New York City residents as they are now, which is crucial to keeping housing affordable and crucial in the battle against homelessness. This bill, however, does not include the repeal of Local Law 4, the luxury decontrol measure. "With so many New Yorkers struggling to survive on a daily basis just paying their rent and bills, Local Law 4 encourages landlords to intimidate tenants thus creating faster turnover of apartments. I absolutely support the renewal of rent protection for rent controlled and rent stabilized apartments, but the statute must include the repeal of luxury decontrol. "It is crucial that the City Council renew these regulations. Almost 75 percent of New Yorkers rent their homes or apartments. In my district 66.8 percent of the apartments are rent regulated. Unfortunately, vacancies in New York City remain very low, particularly for apartments in the low and moderate rent ranges. "By keeping New York City affordable, we keep a vibrant and diverse city. It is imperative that residents of New York City talk to their friends and relatives around the state to encourage their legislators to support the continuation of these laws. "Furthermore, I am encouraging all concerned tenants to contact statewide officials such as Governor Pataki, State Senator Joseph Bruno and U.S. Senator Alfonse D'Amato, and let them know that their blatant disregard for the basic right to affordable housing in unacceptable. We must ensure that the State Legislature and Governor take action to ensure the continuation of the emergency tenant protection act in June. "The very fabric of our neighborhoods is threatened by plans to eliminate rent protection, which is essential for the continuation of affordable housing. Maintaining the diversity of our neighborhood residents is crucial to maintaining the vibrancy of our city. I will do whatever it takes to fight for the continuation of rent protection for New Yorkers." Thank you. CHAIRPERSON SPIGNER: Thank you very much. We're joined by our Council Member from Manhattan, Tom Duane. MS. R. KINSELLA: Good afternoon, Chairman Spigner, committee members. Thank you for holding this. I'm here for Assembly Member Richard Gottfried, who is not able to tend. He is in session in Albany today and I have a statement I would like to deliver on his behalf. "I am Assembly Member Richard N. Gottfried. I represent the 64th Assembly District, which includes the neighborhoods of Chelsea, Clinton, Midtown, Murray Hill and part of the Lincoln Center area. My district has one of the highest concentrations of rent regulated apartments in New York City. "I regret that the legislative sessions makes it impossible for me to be here in person, but I wanted to take this opportunity to speak to you on an issue of the greatest importance to me, New York's rent laws. "I urge you to protect 2.5 million people, residents of this city, by renewing rent control and rent regulation. In addition, Local Law 4, which was passed in 1994, must be repealed. "Clearly and simply, redistributing income from tenants to landlords is the motivation behind the movement to end rent regulations. But preserving our rent laws is not just a pocketbook issue. Rent regulations protect the homes and neighborhoods of millions of tenants. We must defend seniors, families, entire neighborhoods from unfair rents, lack of maintenance and service and unwarranted evictions. "Rent regulations developed in response to a housing crisis. This crisis still exists. The most recent Housing and Vacancy Survey reveals that the current vacancy rate is around four percent. While this number is higher than what we have seen in recent years, it is still a full point under five percent, which constitutes a housing emergency. "All New Yorkers -- including those who don't live in rent regulated apartments -- benefit from the family and community stability the rent laws provide. "In New York City, most tenants consider their apartments and their neighborhood to be their home. They have lived there for years and want and expect to live there for years to come. The rent laws guarantee them the right to renew their tenancy and thus keep their homes. The right to renew a lease can only work if there is a reasonable limit on how much the landlord can raise the rent. "Without rent laws, a landlord can throw a family out of its home for almost any or for no reason. Having to move can mean your children lose their school and friends, you lose your neighborhood, you gear the physical and financial burden of moving. "A landlord with that kind of power and leverage has an open invitation to rent gouge or to punish a tenant who complains. The law ought to help protect people and stabilize their homes and families. That is what New York's rent laws do. "The elimination of laws governing lease renewals could result in wide scale evictions for any reason. Allowing landlords the right to refuse lease renewals or terminate leases for any reason is basically unfair. "As people are forced out of their homes they will place a burden on an already overtaxed, underfunded shelter system, double up with family or friends, creating massive overcrowding. "Rent controlled tenants are particularly at risk. In addition to the low income associated with these households, the opportunities for rent controlled tenants to move are severely limited. Eighty-four percent of rent controlled tenants have lived in their apartments for 25 years or more. "The rent laws are vital to maintaining a New York that is for everyone, not just the so-called rich. Free market rents are beyond the means of most New Yorkers. In fact, if New York is allowed to become a city where only the wealthy can afford to live, we are robbing ourselves of the many young people who come here each year, bringing their talents and skills with them. "There is a dangerous notion going around that the rent laws aren't needed by higher income tenants. But a family with two school teacher salaries adds up to more income than some have been targeting for decontrol. Raising their rents and eliminating their right to keep their apartments would be outrageously unfair to them and would not benefit lower income tenants at all. "If we suggest raising taxes on upper income New Yorkers, we are told that they will head for the suburbs. Imagine the impact if we let their landlords raise their rent by a thousand or more a month. "At present people are tripled and quadrupled up in small apartments just to meet the rent. New units of affordable housing are not being built. "The rent laws do not discourage investment in new housing because new housing is exempt from the regulations. In fact, statistics show that rent regulations actually have no effect on the building of new housing. Interest rates, construction costs and tax incentives do. "Rent regulation doesn't interfere with property owners' legitimate rights. It gives them substantial rent increases at lease renewal and entitles them to a fair return on their investment. Tenants can be evicted for violating the lease or the law. "The end of rent regulations would mean the end of New York's communities as we know them. Much effort has gone into rebuilding our neighborhoods over the past few decades. Please protect those efforts. Please renew the rent laws and please repeal Local Law 4." Thank you. MR. KAREN LIN: My name is Karen Lin. I'm a staff person with Senator Catherine Abate's office, and I have a statement from her to present to you today. "Good afternoon. I am State Senator Catherine Abate and I represent the 27th Senate District in Manhattan. I am here today to give testimony to urge the committee to renew New York City rent stabilization and rent control laws, Introduction 920, and to support the declaration of a housing emergency in New York City, Resolution 2177. "With a vacancy rate barely over three percent and an acute scarcity of affordable housing, New York City continues to face a housing emergency. But the solution is not to abolish rent regulation. Rent protections preserve the diversity and stability of neighborhoods by protecting elderly and disabled citizens and middle and low income families from rent gouging and wild market fluctuations. "Rent regulations have allowed middle and low income New Yorkers, many of them residents of the same neighborhood for decades, to stay in their homes. Contrary to reports that rent regulations tend to help wealthy tenants, almost 50 percent of tenants in apartments renting for under S300 have a household income of $10,000 or less per year. "Eighty percent have incomes under S25,000. According to a 1993 survey, more than half the tenants in apartments renting for $400 or less pay 30 percent or more of their income toward rent. "Even with rent regulation, New York City rents have consistently outpaced the national rate of inflation and the Consumer Price Index. A rent stabilized apartment that rented for s200 in 1972 would rent for $497 in 1995, an increase of 250 percent, not including increases for vacancy allowances, major capital improvements, renovations or new equipment installations. "A rent controlled apartment renting for $200 in 1972 would rent for S674 in 1995, an increase of 337 percent based on MBR allowances alone. "Although tenant income has risen, rents have risen twice as fast. More than 55 percent of regulated tenants pay more than 30 percent of their income on rent, while for very low income tenants rents often constitute 60 to 70 percent of income. "Rent regulations are not only about keeping rents at a moderate rate while providing a fair return to the owners. Rent regulations allow a tenant to exercise their right to safe and habitable premises without fear of eviction. Furthermore, rent regulations help ensure that buildings will be maintained and repaired. "The vacancy decontrol provisions enacted in 1993 and 1994 were the first instance of chipping away at the rent laws. This year State Senator Joe Bruno has vowed to end rent control as we know it. Much of his boldness has been brought on by the deregulation provisions of 1993 and 1994. The Council must send a strong message to the State Senate that the City of New York will not tolerate any weakening of the rent laws. "History has already shown us what will happen if rent laws are not renewed. In 1971, the last time New York experimented with vacancy decontrol, rent gouging was rampant and mass evictions ensued. Rent regulations as a result were reinstated in 1974. New York City cannot sustain deregulation in totality nor in any form that dilutes tenant protections. "For these reasons I strongly urge the Council to renew the New York City rent control and stabilization laws and Resolution 2177 to declare a housing emergency." Thank you for your time. MS. M. BLACK: Thank you, Mr. Chairman, members of the committee. I have written testimony from State Senator Leichter which I would like to put into the record. What the Senator would like me to do is recap the most important part of his testimony for you. "I am State Senator Franz S. Leichter and I represent parts of Manhattan's West Side, Washington Heights, Inwood and the northwest Bronx. "As you know, the Senate Republicans in Albany and the Governor are mounting a serious effort to endorse dramatically curtailed rent regulation in New York City. If this occurs, over two million New Yorkers will be affected. "The City Council now has the opportunity to send a loud message to Albany that rent regulations must be renewed and that no erosion of rent protections is acceptable. "In the last few years, rents have risen through the roof in my district, throughout Manhattan and across the city, affecting thousands of individuals families. Finding an affordable apartment in Manhattan has become Mission Impossible, while an increasing number of New Yorkers are being priced out of the city altogether. "The Daily News recently reported that rents across the city have risen by 30 percent over the last three years. These skyrocketing rents have disproportionately affected New Yorkers with low and moderate incomes. An increasing number of people living in rent regulated apartments have incomes below the poverty level. "According to the 1996 Housing and Vacancy Survey, HVS, the proportion of renter households living below the poverty level has increased from 29.9 percent to 32.3 percent over the last three years. Meanwhile, the median income of renter households dropped by 2.7 percent when adjusted for inflation. "This alarming trend will become far worse if the Council and the legislature allow rent protections to be eroded. It is the responsibility of government to protect its citizens, especially the most vulnerable among us. "The city's affordable housing crisis will continue to get worse unless the City Council reverses its misguided decision in 1994 to adopt vacancy decontrol, a law that permanently removes affordable housing stock from the open market. "Local Law 4 decontrolled any apartment, upon vacancy, which rented for S2,000 or more a month. This legislation was a mistake. The dramatic increase of rents in recent years debunks the myth that a rent of S2,000 or more should be considered a luxury rent. "A one bedroom rent stabilized apartment on the Upper West Side of Manhattan now rents for $1,475, according to the Daily News survey. Although a one bedroom apartment can hardly be considered luxurious, this type of rent is dangerously close to the S2,000 ceiling. "In addition, this system for decontrol is open to fraud by landlords, who can decontrol apartments simply by claiming that a vacant apartment rents for over $2,000. Because there is no oversight, there is no telling how often this practice occurs. "The mistakes of the past tell us that vacancy decontrol will only lead to more problems. In 1971 New York City adopted vacancy decontrol. It was abandoned three years later because the prospect of raising rents prompted so many landlords into harassing tenants into moving. I strongly urge you to adopt the Michels-Fields legislation that revokes vacancy decontrol. "The most devastating statistic revealed by the 1996 HVS report was the rise of gross rent-income ratio for tenants. The rent-income ratio increased from 30.8 percent in 1993 to 32.3 percent in 1996. The widely accepted standard of housing affordability is for tenants to pay between 25 to 30 percent of their income. "Are we to ask our most vulnerable citizens to choose between paying rent, buying food or seeking medical care? According to former HPD Commissioner Lilliam Barrios-Paoli, the findings of the HVS study suggest that, quote, there is still much work to be done to provide affordable rental housing in New York City. "I can only tell you that the action by City Council in 1994 on vacancy decontrol has only emboldened state legislators in favor of weakening rent protections and encouraged real estate groups and others in favor of eliminating or weakening rent regulations. "You must send a strong message to Albany that weakening of rent regulations is unacceptable. I strongly urge you to speak out loud for the adoption of the Michels-Fields legislation and the renewal of rent protections for all New Yorkers." CHAIRPERSON SPIGNER: Richard Anderson. MR. R. ANDERSON: Mr. Chairman, members of the Council, my name is Richard Anderson, president of the New York Building Congress. We are a coalition of the design, construction and real estate industry in the city. There is widespread agreement, Mr. Chairman, that residential rent controls reduce new rental housing construction and inhibit the maintenance of existing units. This is the issue that we are most concerned about. At the same time, as you've heard, the city needs at least 20,000 new units a year to replace units that are lost and will accommodate new households. So we have twin challenges. We need one of the largest housing construction programs in the City of New York to meet the needs for affordable housing and to replace existing units and to repair existing units. But we've reached a number of conclusions with respect to the issue before you today. The first is that new rental housing construction is severely reduced when we have the extent of rent regulation we have now. And my statement, Mr. Chairman, will explain some of the reasons why our industry has reached that conclusion. Secondly, we've concluded that there's consistent under-investment in maintenance and services in the rental housing market to compensate for low profits caused by rent regulation and many owners skimp on spending for housing services. If their profits fall low enough to cause them to disinvest, then they also cut back on maintenance, and this has been seen throughout the city. Third, Mr. Chairman, we've concluded that alleviating rent regulations would stimulate new construction and building maintenance. The Building Congress estimates that an additional $769 million a year of new construction would be generated if we were to ease rent regulations. Another $560 million would be available for maintenance financing, for a total of over $1.34 billion a year. This would have a very salutary effect on the city economy and it would generate another 15,000 jobs in design and construction each year. So if you were to combine a step of phasing out rent regulations in the city with other initiatives such as changes in zoning and other regulatory procedure, site preparations, tax policy, building code reform, property tax modifications, and continuing, and I emphasize this -- (Disruption from the audience.) CHAIRPERSON SPIGNER: Just a moment. I'm going to say, ladies and gentlemen, I don't see too many dark skins in the audience. You're all adults. Why act like children? You know, you're not going to win any arguments here. so let's have your cooperation, let's have Mr. Anderson present his views and respect that, and you present your views and respect that, and if you can't abide by those rules why don't you find someplace else to go. Continue, Mr. Anderson. MR. R. ANDERSON: Thank you, Chairman Spigner. I think what everyone in this room agrees with is that we need a large residential building program in this city and I think if we were to take the kind of steps that I'm outlining here and continuing and expanding our efforts to build affordable housing, the cumulative effect would yield one of the largest residential building booms in this city's history. That's what we need and that's what we need now. I urge the City Council to work with the Mayor, Governor and State Legislature to prepare a realistic program for phasing out rent regulations. We are confident that transitional issues affecting the elderly and needy can be addressed expeditiously and fairly in such a program. There is no doubt in our mind that extension of current rent control and rent stabilization laws in their current form will serve no useful purpose. The Building Congress is ready to assist in any ways that will be helpful. We thank you. CHAIRPERSON SPIGNER: Council Member Michels would like to discuss the issue. COUNCIL MEMBER MICHELS: Good afternoon, Mr. Anderson. I'm always troubled by the statement, and I would like you to clarify it, that rent control is responsible for new units not being constructed when it s been very clear, and it's all settled and I think you know that as well, that since 1974 if any builder or landlord chooses to build housing without subsidies from the city or the state he's not under rent control or rent stabilization. So how do you link the two? And the second point I would like you to address is if somebody has to depend on the landlord to give him a lease every two years or three years, don't you think that would make them a little more careful about complaints, about the maintenance of their building, and therefore the person who is secure in his building is more likely to keep the landlord's maintenance up on the building, don t you think so? MR. R. ANDERSON: Council Member, investment of assets, whether it's from a corporation or from an individual, fundamentally relies on a question of confidence, and so much of the investment community, where funding would be available for residential investment in the city, just simply does not have confidence that their investment will not end up being regulated and controlled to a degree. So this is a personal or an organizational decision. On the other hand, I think it's understandable why rent regulation has been instituted in this city over time. The question is until the investment community has confidence that regulations would not be instituted or reinstituted once again, they simply do not put monies in housing, they put it elsewhere. COUNCIL MEMBER MICHELS: Let me just ask you this. It's now been 23 years since we provided that there's no rent regulations for new housing. How many more years do the landlords or the builders need this confidence to build properly this housing that is needed? MR. R. ANDERSON: I would encourage the Council to form a group to work with investors and ask that question of them because the money is not flowing into the residential sector of New York City, that's a fact of life. And I think if you were to objectively take a look at that issue, you would find some answers, and it may yield some new initiatives. COUNCIL MEMBER MICHELS: Isn't it the cost of construction, the study that I've seen is the cost of construction and other things you mentioned and you might have well throw in rent control as well, but the fact is there are many other reasons why construction isn't going on in the city. Rent control plays a very small part in it. MR. R. ANDERSON: Not really. CHAIRPERSON SPIGNER: Council Member Duane. COUNCIL MEMBER DUANE: Isn't it the cost of land acquisition, costs, et cetera, are part of that -- I have to go back to what my colleague said, that with new construction no public subsidies are being used, the new units are not under any kind of rent regulation, and so it's a misunderstanding or you're purposely misleading as to what that is, that there are other factors that go into the cost of construction. Also, I object to your -- you make the observation that maintenance is not being done by land owners because you say that they re not getting enough revenue. But in fact, we have no way of knowing that because we're never really provided with the facts and figures of the individual owners -- (Disruption from the audience.) COUNCIL MEMBER DUANE: I hear from people all the time who live in residential buildings that they are being inundated with MCIs and people believe, and I think it's hard to say this isn't true, that maintenance is often withheld so ultimately the owners can apply for and usually receive these MCIs. MR. R. ANDERSON: I assume there's a question there, which is -- COUNCIL MEMBER DUANE: It's more of a --you can decide to respond or you're not required to respond. MR. R. ANDERSON: All the members of the Council have put their fingers on a very complex series of issues involving housing development and they're all relevant, but the bottom line is funds are not flowing into housing maintenance and housing construction. Our conclusion is that rent regulation plays a very critical role. It's not the only role, and all we're asking you to do is to take that into account when you consider the future of rent regulation in the City of New York. It's as simple as that. CHAIRPERSON SPIGNER: Council Member Ognibene. COUNCIL MEMBER OGNIBENE: Mr. Anderson, I wanted to go into this issue about new construction. One of the things that it seems to me, and I'm not an expert, is that when you build a new building nowadays after June 30, 1975, you get a new C of O, you immediately go into a tax Class 2-B and request the new construction. Your taxes are astronomical. So it really doesn't pay for people to build residential housing because the taxes are and construction costs are such under rent regulation that you couldn't get the rent to support it. And what's interesting is what development does is that the reason that people do build is because they get J-51, but when you get J-51 the Catch 22 is then you've got to accept rent stabilization. So if we came up with a sensible J-51 tax abatement program without rent stabilization we would have a wonderful creation of residential apartments in the City of New York, and that's a point apparently that my colleagues missed when they were discussing why there's no new construction. And I look here and -- and I apologize to you for the noise. I notice when the other speakers were speaking nobody made any noise. But we have a progressive labor party, their attitude is everybody shares a Communist society. Another thing here, the Housing Solidarity Network, because you have to understand where they're coming from, they say no rent controls, we say no rent, so the people don't want to pay any rent at all, let alone a reasonable rent. You have here the New York State Communist Party and Young Communist League. The point that I'm getting at is we are trying to achieve a responsible system of rent regulation within the City of New York and one of the proposals that I think we see Mr. Bruno make is that people making more than $100,000 shouldn't be under the protection of rent regulation. And also what we see is that while we understand the need for the poor to receive housing, everybody on both sides of the aisle, we don't think that's the responsibility of individual landlords but government's responsibility to subsidize them. Even in my neighborhood, a small local paper, somebody said that if a loaf of bread cost 50 cents and government made the baker sell it for 25 cents, people would eventually go hungry. We have to come up with a rational system. And I thank you for your testimony. COUNCIL MEMBER MICHELS: Mr. Chairman, is the next witness Senator McCarthy? CHAIRPERSON SPIGNER: There's a set time when we're going to recess this meeting and the longer you demonstrate and delay, the fewer of you will have an opportunity to eventually testify. We move on now with James Cobb, Barry Jacobson and Gloria Freedman. Please identify yourself. MR. J. COBB: Good afternoon. I'm James Cobb, president of Local 1219, which represents real estate employees in New York City, HPD, and, I'm also chairperson of D.C. 37's housing committee. And I'm also a vice president of District Council 37's executive board. I am here to speak to you today on behalf of the 28,000 D.C. 37 members who live in rent controlled and rent stabilized apartments and on behalf of the other 100,000 D.C. 37 members who either have parents, friends and/or other relatives residing in rent controlled and rent stabilized apartments. D.C. 37 members are fearful of losing their apartments since: o Many of our members earn less than $30,000 a year and are supporting a large family; o Some are single parents who are trying to support a family on one income; o Most are paying college tuition for their child/children; o Some are caring for an elderly or disabled family member; o They are retirees and members on a fixed income who can barely pay bills now. D.C. 37 also has 530 members in Local 1359, which represents Rent and Rehabilitation employees. If these regulations were allowed to expire, these members would no longer be employed and unable to support their families. In conclusion, our members would face severe economic hardship if these rent regulations were allowed to expire. We urge you as the City Council to do everything in your power to impress upon Governor Pataki and your colleagues in the State Legislature to renew the state rent regulations before they expire in June. Attached is D.C. 37's fact sheet on rent control and stabilization for your information. Also, Council Members, when it's time to be reelected, D.C. 37 does not turn their back on you. We don't want you to turn your back on this very important bill. Thanks for inviting me to testify today and on behalf of our executive director, Stanley Hill, who also send his regards, I would be happy to answer any questions you may have after my two other colleagues speak. Thank you. MR. B. JACOBSON: Good afternoon. My name is Barry Jacobson, president of Local 154 of District Council 37. I represent the Amalgamated Professional Employees of New York City. I am also a member of the D.C. 37's housing committee. The elimination of the rent regulation laws would cause severe hardship on the D.C. 37 members in the five boroughs who reside in rent controlled or rent stabilized apartments. The housing committee has received many phones calls regarding the extension of the rent regulation laws. Many of our members would have to move in with relatives or even be homeless if this legislation fails to pass in New York City and State. I urge you to implore New York State legislators to pass rent control and rent stabilization legislation as well. Also, it is our belief the regulations do not discourage new housing construction, the new housing construction would not be subject to rent regulations, and that would be a benefit to developers under the present guidelines. Landlords already make an estimated $7 billion yearly from regulated apartments and could gouge more millions if there were no regulation laws in effect. Once again, we urge you, the City Council, to extend rent control and rent regulation laws in New York City. We must continue to keep affordable housing available to all New Yorkers. Thank you for the opportunity to speak. MS. G. FREEDMAN: My name is Gloria Freedman. I represent 25,000 retirees of the City of New York who are members of the retirees association of District Council 37. We are urging you to think seriously about what you're doing here today. We want you to think seriously about Joseph Bruno, who does not represent tenants. All of his district are full of private homes. He has no feeling at all about tenants in New York City. And I would also like to say that all 25,000 members who are retirees who have worked hard for the City of New York are in jeopardy if these rent regulations are gotten rid of. We must have continuation. They have given loyal service to the City of New York and we don't want them to suffer any privations, which they certainly would do. They are fearful now, even though they are on rent regulations. Landlords are not giving them heat. They take their money and they freeze and they die of pneumonia. And we want you to know that the rent regulations must continue. We thank you for listening and we hope you will do the right thing. CHAIRPERSON SPIGNER: Our next panel is Queens League of United Tenants, Tenants and Neighbors, and Met Council on Housing. MS. J. LAURIE: It's really great to testify. My name is Jenny Laurie. I'm the executive director of Met Council on Housing, which is a New York State organization. Intro 920, if passed, would include weakening the decontrol amendments that the Council passed in 1994. Those amendments allow for the immediate decontrol of apartments renting for $2,000 per month where the tenant earns $250,000 a year, and vacancy decontrol of apartments renting for $2,000 per month. The provision passed by the Council in 1994 removed the October 1, 1993 base date and opened the door for landlords to escalate rents. By renewing the laws with these provisions, the City Council sends a clear signal to the Republicans in Albany, Senate Majority Leader Joseph Bruno and Governor Pataki, that it is okay with the Democratic leadership of the City Council to get rid of New York City's rent regulations. Speaker Vallone and the other leaders of the City Council and the Mayor would like tenants to believe that they will do the right thing this year, coincidentally an election year. But that won't be the case. Tenants will know the leadership of this City Council assisted the landlords in decontrolling New York City. The Republicans in Albany are proposing to lower the income decontrol threshold to $100,000 per year, the vacancy decontrol threshold to $1,200 per month. They are also proposing full vacancy decontrol. Senator Bruno has threatened to allow total decontrol if the Democrats won't negotiate a deal. The City Council is under no such threat. Then why does it wish to signal to Joe Bruno and George Pataki that higher rent decontrols are okay? It can only be because the real estate industry asked it to. In 1994 Speaker Vallone showed support for weakening the rent regulations and forced the Council to pass Local Law 4. In a meeting with tenant advocates in 1994, Peter Vallone said that he favored continuing rent regulations for tenants in place, revealing to us that he supports vacancy decontrol. The recently released Housing and Vacancy Survey shows that tenants are in essentially the same condition they were in three years ago, a housing emergency, very few vacancies at affordable rents, low incomes and poor housing conditions. These conditions would worsen without rent regulations despite landlord studies to the contrary. The landlords claim that the city would earn billions in new revenue if the housing market were decontrolled. If this is true, it would come at the cost of a few hundred thousand evictions and tremendous rent increases for tenants. The latest HVS shows that the current median gross rent-income ration increased from 30.8 in 1993 to 32.8 in 1996, showing that half of all tenants already pay over one-third of their income for rent. This is no time to be talking about decontrol, whether gradual or sudden. We've been told by our Democratic friends in the city that the battle is all in Albany, that the City Council intends to do the right thing. Clearly this is not the case. We urge the Council to show clearly which side it is on, support the measure proposed by Stanley Michels and C. Virginia Fields which would remove the high rent decontrol amendment. This is what tenants want and this is how you send a clear message to Albany saying that New York City's laws belong to the city's residents, not the real estate industry. (Disruption from the audience.) CHAIRPERSON SPIGNER: Folks, please. MR. M. McKee: My name is Michael McKee. I'm the rent law campaign manager for the New York State Tenants and Neighbors Coalition. Tenants and Neighbors is a statewide membership organization that advocates, organizes and lobbies for tenants rights. We have 143 organizational members and 17,000 individual members. I want to begin my testimony today by thanking Council Members Guillermo Linares, Helen Marshall and Stanley Michels, the only three members of this committee who helped us and supported us in 1994. You opposed the leadership of the City Council when it pushed through a decontrol amendment as part of the three year extension of rent control and rent stabilization. I also want to thank the other 15 members of this Council listed on the attached honor role, including Mr. DiBrienza and Mr. Duane, who voted against the decontrol amendment on the floor. We are deeply grateful for your support. This year the leadership of the Council has an opportunity to redeem itself in the eyes of tenants. To do so, you must undo the harm you did to the rent and eviction regulation system three years ago. You can accomplish this by closing the window which you opened in 1994, by inserting a new cutoff date after which the so-called high rent and high income decontrol provisions will no longer apply. Failure to do so now will mean a failure by the City Council to protect the rent and eviction regulation system. And I want to draw your attention to an attachment here which is an article from the real estate section of The New York Times from Sunday, November 24, 1996, about hunting season. That's what landlords call it. And that is what you did to the rent regulation system in 1984. The leadership of the Council in enacting a decontrol amendment three years ago contributed to the current political climate in which the very existence of rent and eviction protection laws is in doubt. The leadership of the Council was as aware of anyone, in the aftermath of the 1993 session of the State Legislature -- when tenants suffered five decontrol amendments as the price of a four year renewal of the rent and co-op laws -- that there was a concerted plan to eliminate the tenants protection laws in Albany once and for all, and that the 1997 fight in Albany would be crucial. You failed the test. Apparently, the Council leadership now hopes to be absolved of its responsibility for helping to undermine the rent and eviction protection laws in 1994 by passing a straight extender of rent control and rent stabilization. The last time, the Council acted a few months after members were elected to a four year term. This time, of course, you are acting a few months before the next election. If that is what it takes for the City Council to show leadership, then every year should be an election year. MR. R. KATZ: My name is Robert Katz. I'm counsel to the Queens League of United Tenants. Before I read my formal statement I will inform this committee that there is litigation pending in Supreme Court, New York County, on the question of the constitutionality of Local Law 4 as applied to, by DHCR. And now I'll read my formal statement. Sir Winston Churchill cried out in the wilderness to a docile England to look at history. His plea went unheeded and all know the consequences. Now a cloud comes before you to again speak in terms of looking at history, the history of rent regulation. We have the abysmal record of the Rockefeller decontrol law to here review and to examine how the brigands of the real estate industry abused the truth, the trust and good faith of the people of this state to the point where the honorable Governor Malcolm Wilson and the Democratic legislature in concert saw the necessity of placing vacant rent controlled apartments into rent stabilization with the rent regulated by a fair market procedure. Even though that remedial legislation came forth with relative speed, this city had already felt the effects and ravages throughout the communities. Now a Draconian Nero named Bruno and his disciples are turning a blind eye to that history, speaking in the name of the behemoth real estate and banking industries, to reenact that tragedy, albeit on a grander scale. What they will accomplish in this unmindful quest will lead to the political burning of the Republican Party in this city and of course the destruction of the remaining affordable housing stock and the displacement of tenants and the small merchants who those tenants patronize. And last but not least, the displacement of tenants so that more will now sleep upon the streets of New York. Then shall we have the Utopia of the grand landlords who will cater to the rich, the rents in the stratosphere for those who can pay. But alas, that will not be the middle class or the working poor who if they are not on the street will be doubled and tripled up in the hovels which will become the slums of New York. CHAIRPERSON SPIGNER: Council Member Duane. COUNCIL MEMBER DUANE: Mr. Chairman, thank you. This is particularly for Michael and for Jenny. I've been reading what has happened with what is called the phase-in of the elimination of rent protection in Massachusetts and particularly Boston, and I'm wondering if your organizations have been tracking what's been happening there, if you can describe for us any information you have. MR. M. MCKEE: All you need to do is ask the representatives of the real estate lobby and there is no problem and no one is being evicted and lots of new housing is being built. The reality is that pages of the Boston Globe and the Herald are filled with stories virtually on a daily basis of people being thrown out of their houses, people who have lived in their house for 30 plus years, seniors -- and you're talking about a total universe in Boston, Cambridge and Brookline, which is a very small number compared to New York City, a total of something like 70,000 apartments that were rent regulated that have now been removed from rent and eviction regulation. So it's been a horror show. The Mayor of Boston has publicly called on landlords to lower rent increases, not to throw tenants out, and the pleas have apparently fallen on deaf ears. The municipalities are struggling to come up with subsidies, the Section 8 or other kinds of subsidies, to make it possible for at least some of the tenants to stay in their homes, and it's a drop in the bucket. COUNCIL MEMBER DUANE: I have one additional question, Mr. Chairman, and I think, Michael, this one will be for you as well and it's partly because we've been around for a while. You I think were already involved in housing issues in the early '70s during the period of vacancy decontrol. Could you describe for us what happened in terms of the maintenance issues which we discussed? I asked the industry people about that, but could you describe for us what the impact of deregulation on is on maintenance? MR. M. MCKEE: According to the State Commission on Living Costs and the Economy, which was appointed by Governor Nelson Rockefeller in the spring of 1973 and issued its report in February of 1974, maintenance and improvements of decontrolled apartments actually went down significantly, so that despite the fact that owners were collecting more rent for the decontrolled apartments they were actually spending less on fixing them up. COUNCIL MEMBER DUANE: Thank you. COUNCIL MEMBER DIBRIENZA: Mr. Chairman, I have a question for the witnesses and I want to make a brief comment. As you know, these budget hearings are going on across the hall. I'm chairing at the moment the General Welfare agencies and social service agencies, so I apologize for having to run in and run out. But as always, I appreciate the Chair's flexibility in accommodating myself and my colleagues. I actually just wanted to ask one question because I did vote against this erosion of rent protections and I will when offered as an amendment, I'm not a member of this committee, but when offered either at this committee first if it passes, ultimately on the floor, be prepared to vote again to undo the damage. But that's not really why I'm here. I wanted to ask any of the three of you, clearly it appears to me that these are two, albeit it slightly different, erosions. You phrase it nicely -- MS. J. LAURIE: The high income decontrol and the maintenance decontrol and the high rent -- COUNCIL MEMBER DIBRIENZA: Would you agree that you could look at it as two different problems, two different erosions? MS. J. LAURIE: Yes. COUNCIL MEMBER DIBRIENZA: I voted against if because I disagree with both of them. But do you think either present a bigger problem, in other words, are they equal in your mind? MS. J. LAURIE: It's our position that there should be no weakening of the rent control laws. I'm not going to open those two issues so that you can separate out income from high rent -- COUNCIL MEMBER DIBRIENZA: By the way, I'm just wondering out loud because I'm committed to my position and it's not going to change. I was just -- MS. J. LAURIE: Clearly if you have decontrol by rent level you can have a situation which is going on today which is landlords are escalating rents and harassing tenants to move out in areas where they can get $2,000 rent. If the State Legislature lowers that to $1,200, obviously that pressure will increase. They can't do much to pressure on $250,000 a year. I wish they would apply that to me -- COUNCIL MEMBER DIBRIENZA: I'm just thinking about it. And lastly, particularly for those who would argue that the numbers are so high as to not have an effect, that after all, if you can make that much money, you've heard all the arguments from those in favor, it seems to me one of the keys here, first you've highlighted one, which is the actual condition of the rental market, the actual numbers that continue to climb and the threat to reduce the threshold to even lower, in short, the notion that it's the concept of decontrol that is inherently problematic, notwithstanding where the numbers are fixed at any given moment. MS. J. LAURIE: Exactly, it opens the door, the slippery slope, however you want to phrase it. COUNCIL MEMBER DIBRIENZA: I just wanted to ask all that to be sure that people are understanding the fullness of the issue. And you obviously are experts, but as members when we vote we have a record here, and it's frozen in time. People look to Pataki but I think the broad points you raise are critical. MS. J. LAURIE: Absolutely. The point that this will not affect neighborhoods where housing has lower rents generally misses the thrust of the real estate industry which is to decontrol the entire market. It also says that pressure on one part of the market doesn't affect another part of the market, which of course is inaccurate. COUNCIL MEMBER DIBRIENZA: I couldn't agree with you more. And my colleague, Council Member Michels, has taken a strong lead here. Whether the amendment is in the committee or out on the floor, we're committed to help. Thank you very much. MS. J. LAURIE: Thank you COUNCIL MEMBER DIBRIENZA: Thank you, Mr. Chairman. ************************************************************** Continued...