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: Joe Strasburg and Marolyn Davenport. MR. J. STRASBURG: I just want to also add that Jerome Bellson (phonetic) is not here so he has asked me to say that he is supportive of our opposition here today. Honorable Chairman Spigner, Mr. Chairman, members of the committee, today we released two studies which will be available to you that show an analysis which clearly and convincingly demonstrates the economic windfall which will benefit the residents of this city and state once rent regulations are eliminated. (Disruption from the audience.) MR. J. STRASBURG: This analysis predicts that with total deregulation it will result in more than $5 billion in economic activity, 66,000 new jobs and more than $560 million in additional city and state taxes, including approximately $180 million in real property taxes alone. For too long, we have refused to acknowledge that there is a price to be paid for below market rents. That price is the substandard quality of rent regulated housing and the loss of economic activity normally associated with a free housing market. And the steep price we pay is not a cost which benefits all New Yorkers equally -- far from it. Only a relatively few privileged New Yorkers benefit substantially from our shotgun approach to rent regulation. And I think that is something that we should digest as we debate this issue in the next few weeks. But let me just highlight a couple of the things that will be in the report. Seventy percent of the subsidy of rent regulations goes to just 26 percent of stabilized renters in Manhattan, and that is one of the startling findings that we have been able to get out of one of the studies. But I want to touch on the Housing and Vacancy Survey. The vacancy rate for the Bronx exceeds five percent, and according to the law the Council may deregulate on any class of housing when the vacancy rate exceeds five percent and by definition there is no longer a housing emergency. But there is a basis for broader deregulation. The current citywide vacancy rate of more than four percent is the highest vacancy rate in more than three decades. We have long contended that the manner in which the vacancy rate is calculated virtually assures a finding of a so-called housing emergency. For example, if we took almost any category of housing classified as vacant but unavailable for rent, such as undergoing renovation or held for occasional use, and added it to the vacant stock, then the vacancy rate would exceed five percent. In fact, I suggest that we have now gotten as close as we will ever get to a vacancy rate in excess of five percent. What we see in the housing market today is not a housing emergency but merely a very tight housing market in a city where, so long as it remains a world capital, there will always be a tight housing market. I want also to suggest to members of this committee that if the political courage is lacking to begin phasing out the rent regulations, there are other minimal actions you should take to at least make our current system a little more rational. For example, this Council and the State Legislature have appropriately determined that the wealthy should not receive the benefits of rent protections. Therefore, the law allows for the deregulation of apartments occupied by households who earn more than S250,000 in each of two consecutive years and pay rent of $2,000 or more per month. But if a high income household is lucky enough to pay less than $2,000 per month in rent, they will retain their rent protections. And that makes absolutely no sense. I urge the Council to enact legislation which would deregulate any apartment occupied by households earning more than $100,000 per year, regardless of what the rent they are paying. It's high time that the average New York taxpayer stopped subsidizing the rents of high income regulated renters. There are other abuses of the rent regulatory systems, but one of the most egregious, to my mind, occurs when bargain rents allow stabilized renters to purchase a second home outside the city and lead a lifestyle of which most of us can only dream. Every one of us knows of renters enjoying rent regulatory protections who have used their savings to purchase a vacation or weekend house in the Hamptons, the Berkshires or upstate New York. I urge the Council to enact legislation which would deregulate any apartment occupied by a household which owns another residence inside or outside of the city. Thank you for the opportunity to testify. MS. M. DAVENPORT: Mr. Chairman, members of the committee, thank you for the opportunity to testify on behalf of the Real Estate Board of New York, a trade association representing owners, builders and managers of high rise property located predominantly in Manhattan. When rent controls were instituted over 50 years ago, they served a public purpose. Scarce construction resources were needed for the war effort, and the country could not rely on the normal market processes to produce the housing needed in New York City or across the country, both during and immediately after the war. But the war has long been over, and most other locales have abolished their rent controls but New York City has perpetuated a system that has become one of the causes of, not a solution to, our housing crisis. More than 50 years experience with this system has -- (Disruption from the audience.) COUNCIL MEMBER OGNIBENE: Please hold your testimony, I can't hear you. CHAIRPERSON SPIGNER: If you can't restrain yourself, please leave the room, please. MS. M. DAVENPORT: More than 50 years experience with this system has given us ample evidence that it doesn't work, that it contributes to the decline of our rental housing stock. It is time to abolish it. It is time to drop the pretense that it is an emergency solution and to find new solutions to providing affordable rental housing. There are indeed many New Yorkers who need housing subsidies. The problem with this system is that it relies on the private property owner to provide that subsidy. This is government's role. By limiting the return on investment that a property owner can make and requiring him to subsidize tenants, rent regulations have created an economic climate in which investment in housing is discouraged. It is one of the primary causes of our housing shortage. The first and most serious effect of rent regulations is the lack of new construction of any kind of rental housing. New York City produced roughly 7,000 units of new housing in 1995. The 1996 statistics are not available yet. This is a disgrace. We haven't built sufficient units to replace those that have been lost to deterioration and abandonment in 30 years. It has been estimated that in a good year we need from 15,000 to 18,000 units a year just to break even. For the first time in decades, New York City's population is actually growing, so we need more than that. In the 1980s, when we saw a boom in office building construction, fewer than 10,000 apartment units a year were built on average. Thousands of units were converted to cooperative ownership. While home ownership is a worthy goal and one REBNY supports, these units were lost to the rental market. Equally important is the deterioration of existing housing that occurs when the economic incentives to investment are removed. Much of our housing stock is old and needs renovation and substantial maintenance. Limiting the return on capital discourages much needed refurbishing and upgrading of this stock. Further, rent controls severely distort the marketplace as benefits are unevenly and unfairly distributed to a select few. Study after study has shown that it is the long term tenant and middle and upper income Manhattanites who benefit from them. Tenants in rent controlled and rent stabilized units have an incentive to remain in place, keeping housing turnover law. Newly formed households and immigrants to the city suffer most as their access to affordable housing is severely limited. In its study of the impacts of rent regulations, the Citizens Budget Commission found that rent controlled households with incomes greater than $75,000 received nearly twice the average subsidy of rent controlled households with incomes below $l0,000. Rent regulations are a failed housing policy. It's time to find a better solution. COUNCIL MEMBER OGNIBENE: There was an issue raised earlier about 3,400 apartments and I wonder, I know 1,700 of them were decontrolled because the people were making more than a quarter million dollars a year, and it's my understanding that more is done than just deregulate those 1,700. What percentage does that represent of the housing market in New York City? MR. J. STRASBURG: 3,400 represent approximately one-half of one percent of the total housing stock in the city. Those were all south of 96th Street. In order to achieve upon vacancy a $2,000 threshold, because I've walked away with the belief that if you move out and your rent is $700 a month that the owner can automatically bring that up to $2,000 legally, but the reality is for an owner to be able to get that apartment decontrolled he must do certain things that's called the MCIs. They have to invest a tremendous amount of money to bring it up. So theoretically he could do a $50,000 gut rehab in that particular apartment, to bring it up to $50,000. But I would ask the committee to recognize that since we are talking about 1,700 units in the entire universe, very few owners have the wherewithal to be able to do that. The reality is you can't get more than you can charge in East New York, the Bronx rent in excess of $2,000. It's a very limited kind of universe we're talking about. So the reality is that there's much ado about nothing in terms of everybody saying it's the beginning of the end of the rent regulations begun by this Council three years ago. COUNCIL MEMBER MICHELS: The numbers you cite, where do you get those numbers from? MR. J. STRASBURG: You just cited them earlier. COUNCIL MEMBER MICHELS: We're talking about -- I didn't cite any numbers. I am asking you, this is my question, my question is very simple. I want to know where you got your numbers, since we passed Local Law 4 -- MR. J. STRASBURG: I heard, Mr. Michels, that the number of 3,400 was in fact mentioned and in a debate earlier, not by you, but it came out -- CHAIRPERSON SPIGNER: Just a moment, just a moment. Those are the numbers that we have used and and they have come from DHCR. COUNCIL MEMBER MICHELS: Whatever they gave you, and are you aware of where they got those numbers from? MR. J. STRASBURG: I assume that since they regulated all the apartments in the City of New York they're in a better position to know what is in fact deregulated and what is not. COUNCIL MEMBER MICHELS: Are you aware of the regulation of DHCR which says that when you deregulate, when you decide to deregulate the apartment there is no procedure to deregulate by the DHCR? There is no procedure for them to deregulate. The landlord simply says the apartment has reached a $2,000 level and -- MR. J. STRASBURG: With all due respect, if an owner than makes a statement that his apartment is in excess of $2,000 and he has not done so legally, then he is a subject to rent rollbacks, and since we're the -- COUNCIL MEMBER MICHELS: You're begging the question, sir. If the tenant within 90 days brings action against them that will happen, but there's no procedure on the part of DHCR to deregulate those apartments -- MR. J. STRASBURG: That's an issue that I think you should bring DHCR in here and discuss that. But when a tenant comes in subsequently that last legally registered rent is on the books and that tenant has a right to sue, to go into court and sue to get that rental back. COUNCIL MEMBER MICHELS: Getting back to the question I asked you, are you aware that DHCR does not have a procedure to deregulate those apartments -- MR. J. STRASBURG: I think in terms of the DHCR, I think that that's a policy discussion that I would love to have with you at the table with DHCR -- COUNCIL MEMBER MICHELS: I'm just trying to get certain facts that we agree on. We agree that there's no procedure for DHCR to deregulate and therefore it's very difficult for them to come up with a figure as to how many apartments actually have been deregulated except by counting the number of apartments which filed for registration in April of last year and April of the year before and compare it to the numbers, the previous numbers, to see how many are now not filing for registration. MS. M. DAVENPORT: DHCR can determine the number of apartments that have been regulated by vacancy decontrol simply by taking the legally registered rent of the existing tenant, and when Tenant B comes in that goes off that roll and they have to register their initial rent -- I don't want to use initial, it's a legal term -- they have to register this rent up until that time when they can qualify to go over the 2,000. So you can by process of elimination come up with that number. COUNCIL MEMBER MICHELS: So there is no -- wait one second, please, we can't talk at the same time -- there is no procedure to deregulate apartments which the landlords decide should be deregulated, that's a fact. Marilyn, they have to file the last rent, the last rent by April 1st. The only way to come up with these figures is by comparing the year before with last year. Now the other point I wanted to make, and it takes a long time to get to this point because we're trying to agree on certain facts, that those registrations are done in April of every year -- what month is this, March, right -- so we have a whole year almost when we don't know because we have not gotten from DHCR as to the number of apartments that we deregulated. So the three year period of time we had a full year when we don't know the numbers. Now the other problem which we must ask you to consider, and it is a problem if the landlords or the owners who have these apartments are not registering and we must rely upon the new tenant who moves in to protest within a 90 day period, which is a problem with that because you can have a friend move in, but let's assume for the time the argument the new tenant moves in and he doesn't protest and then nobody has a right to protest and therefore you've lost the apartment which very well may have been brought up to $2,000. (Disruption from the audience.) COUNCIL MEMBER MICHELS: We're trying to have a discourse here. I'm not doing this to make any points except the points I'm making with Mr. Strasburg. And the other problem, to follow up, when there comes a realization that some disreputable agents, I hope very few, that they can with impunity deregulate apartments, there's an incentive to evict tenants out of their apartment, and that's the problem. MR. J. STRASBURG: We've a had a history since 1984 when the -- (inaudible) -- was developed, we built housing and after the end of tax abatement they would then go to a free market. If anything -- COUNCIL MEMBER MICHELS: When the subsidy was up? MR. J. STRASBURG: Right. If owners were ever going to harass because the benefits of harassment would result in more money it would have been in that category. And we don't have one record whatsoever. Why? Because when the apartments become vacant then they can go to fair market which would allow the owners the right to sanction increases. There isn't one case of a legal harassment in that kind of situation, upon vacancy. COUNCIL MEMBER MICHELS: Mr. Strasburg, what you're saying to me is because of 421 it's a category of apartments that you can use as an example -- but you're telling me that there is a great universe of apartments, almost a million apartments that they won't harass now, but what took place in Albany when they had vacancy decontrol? MR. J. STRASBURG: That's another issue of debate I think we should have. In 1971, under the three year experiment, there was a person by the name of Andy Stein who wanted to run for higher office and he came out with a report that nothing in that report indicated real evidence of harassment. The other only issue that came up was substantial increases in rents. Owners did not get increases on the rent control for 20, 30 years. It was frozen in time. When an apartment became vacant they were able to go up to a fair market. So when you had audits and rents going from $200 to $300 or $400, yes, everybody started crying and saying, good God, this is rent gouging. So the fact that everyone points to the '74 study, if you look at the facts they are not -- (Disruption from the audience.) COUNCIL MEMBER MICHELS: Mr. Strasburg, we're all entitled to our own opinion, we're all entitled to our own opinion, but we re not entitled to our own facts. COUNCIL MEMBER DUANE: I just wanted to add the other part of that which something I talked about earlier, the advocates' regulation, that there was no measure of an increase in maintenance when that happened and I think that people are very concerned about that. If everyone's goal is to preserve our housing stock, I think that's of great concern and I think that's something that we all care about, is the preservation of the housing stock. I just want to ask Ms. Davenport just a question so I can clarify the position of the Real Estate Board. It's been said, although there was a lot of noise around it, but the issue of new construction that gets no public subsidy is not under regulation. Is it your position -- and I think I know that this may cause hooting and hollers, but I'm not doing it to try to make that happen, I want to try to get to what the position is -- you're saying that you believe that it's owners and landlords are subsidizing tenants, but is it your position that the board would like to continue to get the subsidies but not have to have the protection? Do you think that that's what would, that that is a solution to the problem? Is that the board's position? MS. M. DAVENPORT: You're mixing two separate points that I made. The first issue is the issue of rent regulations depressing new construction, and I think that this is a very important thing -- COUNCIL MEMBER DUANE: But I'm trying to get to a specific policy or point of view. MS. M. DAVENPORT: I think I'm going to get to it. I think Dick Anderson said it best when he said you have to have an economic climate that encourages people to put their money into new construction. The second issue, and it was entirely separate, is the issue which I raised of low income tenants who may need housing subsidies. That's a separate issue. It is not incumbent on the private sector to provide those subsidies. That should be government's role. (Disruption from the audience.) COUNCIL MEMBER DUANE: I think that I'm trying to ask questions in a very civil manner. I appreciate the person who is trying to respond in a civilized manner. I think in order for us to have the debate appropriately -- Could we hold down the noise, please? Does the Real Estate Board, would the board prefer to continue to get, for instance, J-51 and/or 421-A, and not have those units under any form of regulation? Is that a policy position held by the board? MS. M. DAVENPORT: I am looking at this from a much broader perspective than the individual programs that you have raised, that you have mentioned that do indeed, are designed to address this housing crisis that we have in our city, a terrible, terrible shortage. From the broader perspective you need an environment when you address that shortage from a lot of different angles. Rent regulations are only one. You have to go at it from several different perspectives. COUNCIL MEMBER DUANE: I don't think I got an answer but we'll move along anyway. This is a comment, and again I don't mean to do this to be inflammatory but only to really further the debate in an appropriate way. I object when the whole issue of the Hamptons is raised -- may I finish? -- you know, we read the papers, and I know certainly we have read in the papers or seen it on TV, but the unfortunate part of doing that is there is a whole other side that doesn't get hurt, and I'm not saying that you don't care about it but it is important, that overall for rent stabilized tenants -- (Disruption from the audience.) CHAIRPERSON SPIGNER: Let's continue the meeting, please. Council Member Duane, do you have a question? COUNCIL MEMBER DUANE: -- that overall the New York City median household income for rent stabilized tenants is a little bit over $20,000 a year. And we all know on one side, and this is -- we all know and all tenants, and you know in my district that there are landlords that you in no way could be proud of, but we all also, and I say that in -- but also we all know of people who, their ability to stay in New York at these incomes is dependent upon both a price ceiling, and that is part of what this is about, about also a way to make sure that apartments are regulated in a way that keeps them habitable. Thank you. CHAIRPERSON SPIGNER: Council Member Ognibene. COUNCIL MEMBER OGNIBENE: One of the issues that was raised regarding the 1,700 apartments, that the rent went over $2,000, as somebody who comes from Queens, and I know you have a background of private industry, what is the likelihood in an apartment in Ozone Park, let's say, or Richmond Hill when deregulated, would there be a type of clientele or availability of clientele to pay $2,000? MR. J. STRASBURG: Not in those areas. There's a reality and the reality is that those who want to live in Manhattan pay a premium. There are those, some in Riverdale, some in Brooklyn Heights that might be impacted. But that's not a reality of the city as a whole. And I think the debate in -- the one thing that does come out is that clearly those type of rents we're talking about do not exist above 96th Street. COUNCIL MEMBER OGNIBENE: One gentleman who came in from D.C. 37 who expressed some concerns for his members, and I respected that, but what is the likelihood of members from D.C. 37, you mentioned a figure of a $100,000 household income, what is the likelihood that they are going to be affected by the law that just deregulates above the $100,000 income? MR. J. STRASBURG: Let me point out two things, there were representatives from the retirees of District Council 37, who represents the former employees of the city, and the one thing that has become clear in the debate, whether on a local or state level, is that everyone has made a clear statement that they will be protecting the senior citizen population, the most fragile as well as the poor. but the reality -- I would like to respond to Massachusetts also but I don't have a whole day to do it, but the issue of income of $100,000 or more, the recent poll that was done where 60 percent of the people of the City of New York still favor the continuation of rent regulation, however, a majority of them still believe that rent protection should not be granted to those who are making $100,000 or more, because the reality is you're talking about less than one percent of the population. So the problem is as we debate the issue, not once in the history of 50 years has anyone said, hey, wait a second, let's look at this system -- (Disruption from the audience.) COUNCIL MEMBER OGNIBENE: So the issue of means testing on that level would be too difficult, but I know from my own experience in my community when people apply for a mortgage the first things the bank asks for is federal income tax data to prove how much they make. Why would that be so difficult for tenants? MR. J. STRASBURG: In Mitchell-Lama, any potential tenants have to show their tax returns as a condition of getting the apartment, but they won't allow the private sector the same thing. COUNCIL MEMBER OGNIBENE: Thank you very much. CHAIRPERSON SPIGNER: Thank you very much. Deanne D'Aloia, Association for Neighborhood and Housing Development. Angelita Anderson, the Citywide Task Force on Housing Court. Adriane Holder, Legal Aid Society. Would you all identify yourselves, please. MS. D. D'ALOIA: My name is Deanne D'Aloia and I am speaking on behalf of the Association for Neighborhood and Housing Development. MS. O. FRIEDHEIM: I'm Oda Friedheim from the Legal Aid Society. MS. J. MURRAY: Julia Murray, also from the Legal Aid Society. MS. O. FRIEDHEIM: We split it up between us. We are a panel representing Legal Aid, legal services. We have prepared joint testimony and each of us will simply highlight a few points. We are here to urge you to renew the rent regulations law and to repeal the vacancy decontrol laws. The public emergency that gave rise to rent regulation in the first place has hardly abated. Hopelessness is still very much among us. There are thousands of men and women in the homeless system. In addition, there are many, many homeless on the streets. They are the hidden homeless. The waiting list for public housing is tens of thousands of families long and it takes about ten years to get into public housing. So it is hard to argue that we don't need rent regulation anymore. Obsession with higher rent, higher income renters seem absurd when you think about the fact that rent regulation protection, over two million people whose median income is $21,000 and among them are very, very poor families as well, which in our practice of course particularly encounter. Moreover, half of the renters that are occupying rent stabilized housing are non-white households. Rent regulation is critical. First of all, it does provide ample rent increases to landlords. It simply prevents landlords from charging anything that the market will bear. However, the rents over the last three years, figures show that rents have gone up an amazing 18 percent, way ahead of inflation. Furthermore, we all know between MCIs, individual apartment rent increases and vacancy increases, rents have been allowed to climb to shocking proportions. In fact, median asking rents right now are $650, hardly something that poor people can afford. But rent regulation also provides security especially to families, remaining family members. It also is an important tool at a time when we don't have enough inspectors to make sure that landlords comply with housing codes. It is really the tenants in the buildings that are the eyes and ears of housing code enforcement. If they don't have the protection against being evicted they will not be able to speak up and complain about conditions in their buildings. As a staff attorney in Queens, I have the opportunity to see a little bit into the future, what the world would look like without rent regulations. I see rents of $900 and $1,000. Now you would think these would be decent apartments. Most of the time they are hellholes. And when you think that landlords would actually take this rent money and reinvest it to bring up the housing to standard, far from it. There are gaping holes, $900, gaping holes, rats running all over. So looking at the housing stock in particular in Queens certainly is a shocking lesson of what the world would look like without rent regulation, no one mentioned the fact that tenants would have no protection and could be evicted at will. The rent regulation is also important to keeping the stability of neighborhoods together. Finally, I just want to make one quick point. The landlords have made ample comments about the inability to reinvest in housing because of the rent regulations. Well, as housing advocates we see a very different picture. We see many a building going through foreclosure because regardless of the rent law they have invested, so the argument that rental housing cannot attract dollars seems quite erroneous. I will turn this over to my colleague, Julia Murray. MS. J. MURRAY: Mr. Chairman, my name is Julia Murray and I'm going to be speaking about the - impact that the elimination of the rent regulations would have specifically on poor tenants throughout New York City and the impact that that would have on the New York City and State budget. Now 270,000 rent stabilized households live below the poverty line and so projecting in the future it's really not difficult to predict the consequences that discontinuation of rent stabilization would have on these families. Without protection from arbitrary rent increases, each of these families will be at immediate risk of eviction and homelessness. The impact that this would have on New York and the city's budget would be tremendous. For example, even if only a quarter of these families, which would be about 68,000 people, were evicted and had to enter the homeless system, it would cost New York City and the state more than $204 million per month to house these families. Of the 270,000 rent stabilization households living below the poverty level, 220,000 of them receive public assistance. These families are particularly vulnerable to temporary rent increases because the shelter allowance that is provided to a family of four, for example, is only $312 per month, which is nearly 40 percent below the average rent stabilized apartment in New York city of about $593. Because the shelter allowances provided public assistance families is so low, 70 percent must rent apartments below the monthly shelter allowance. This number will only increase without protection of rent stabilization. As it is, an original vacant rent stabilized apartment goes for about $650 and that is more than double the $312 provided to a family of four for shelter on public assistance. If the same apartment became vacant in a deregulated housing market, the rent would be undoubtedly much higher and would ultimately be unaffordable for not only tenants on public assistance but the working poor on well. Even under rent stabilization the affordable housing stock is being diminished. For example, since 1993 the number of apartments renting for less than $500 per month has decreased by 20 percent. In that same year there were 212,000 rent stabilized apartments with rents less than $400 per month, and of the tenants that lived in those apartments 64 percent had household incomes of less than $l5,000 per year. When you consider the rent to income ratio amongst this group of people, it's hard to imagine how they would survive in a deregulated housing market. With over one-third of these households paying more than 50 percent of their income just for rent, little is left for other essentials such as food, medical expenses, clothing and transportation. This reduction in the amount spent on non-housing expenses in order to prevent a family's eviction and keep them in their home is called shelter poverty because with the high cost of housing markets is virtually impossible to obtain -- excuse me, because of the high cost of rent it's virtually impossible for them to obtain other basic necessities. In a deregulated rent market the availability of affordable housing will result in families on public assistance being evicted. The financial burden these homeless families would place on New York City's and the state's budget would be tremendous, costing over $636 million per month to provide shelter to them. For families that rely on public assistance, the impact that increased rent would have on them is profound. The shelter allowance given to families receiving public assistance has not kept pace with the rising cost of rents in New York City, and this is a fact that has been acknowledged by the Court of Appeals -- CHAIRPERSON SPIGNER: We agree on the shelter inadequacy but I don't know if we want to spend the rest the afternoon on this issue. MS. J. MURRAY: Mr. Chairman, I will conclude shortly. The most vulnerable group of more persons to be affected by rent deregulation are those who live in rent controlled apartments. These individuals have lived in their apartments for over 26 years and are typically elderly and often disabled. Their income comes mostly from Social Security and SSI benefits, and although their rent is relatively low the rent is often paid with great difficulty. There are currently 27,000 rent controlled tenants who receive a SCRIE, or a Senior Citizen Rent Increase Exemption. Absent rent regulations, SCRIE will not be available to elderly tenants since they are predicated on a rent regulated system. If these 17,728 elderly tenants lose their housing because rent control is eliminated, the city and the state will have to pay $1,800 per month to shelter these tenants, which would be a total of $31,910,400. So we urge the Council to continue rent regulation in New York not just for poor people but for all New Yorkers. Thank you. MS. D. D'ALOIA: Good afternoon. Thank you for the opportunity to testify. My name is Deanne D'Aloia and I am speaking on behalf of the Association for Neighborhood and Hosing Developing, Inc., a membership organization of over 75 community based organizations involved in the preservation and creation of housing affordable to low income New Yorkers. As organizations whose missions are to provide affordable housing and rebuild neighborhoods in some of the most disenfranchised areas of the city, the non-profit housing organizations we represent understand that rent regulations are crucial to stabilizing the communities they serve. Arguments for the end of rent regulations are categorized by profit, not larger concerns for the community or the people who live and work there. Non-profits know that federal changes of priority and policy have already affected the non-profit housing community's ability to house the neediest and develop affordable housing, thereby making the preservation of affordable, privately owned housing stock a priority. Rent regulations came out of a history of housing crisis. We who are working on the front lines know that this crisis still exists, and while rent regulations are not the perfect or sole solution to the housing crisis, they are crucial to maintaining a supply of affordable housing. There is still a housing crisis in New York City. According to the 1996 New York City Housing and Vacancy Survey, the vacancy rate is 4.01 percent, which is below the five percent threshold that justifies the need for the continuation of rent control and rent stabilization. Furthermore, of the 81,256 units available for rent, only 33 percent rent for under $600 a month, which is considered affordable for a household earning $24,000 annually. However, the median income of renters in New York City is only $20,000, making even those apartments a stretch for the average renter. This doesn't even figure in the 10.3 percent of households in overcrowded situations, nor does it anticipate the impending further crisis in the making due to welfare and immigration reform, which will make it even more difficult for people to afford their housing. Rent regulations help stabilize communities by allowing and encouraging tenants to stay in their homes and remain in the community. They do this by: 1) Preventing widely fluctuating rents, promoting tenant affordability and ensuring a fair return for owners; 2) Providing guidelines for the provisions of maintenance and services; and 3) Providing eviction controls. While rent regulations do not guarantee that all tenants will be able to afford the rent, they allow for manageable annual increases in rents to cover building operating costs. Meeting the fiscal bottom line is a reality for all property managers, but even with their need to meet the fiscal bottom line, managers of non-profit affordable housing recognize their responsibility to provide housing to those low and moderate income households who would not have other alternatives. Additionally, we recognize the value of having a stable tenancy and know that evictions can cost more than keeping rents affordable to existing tenants. Increasing rents, without recognizing the impact on the tenants, is not the only or most efficient way to meet the fiscal bottom line or ensure a profit in the private sector. Efficient building operating and preventive maintenance systems reduce expenses and allow managers of non-profit housing to succeed. These systems also work in the private sector. Other affordable reforms, that is, water and sewer tax structure, may be part of a broader, long term solution to reducing expenses and maintaining affordability. Further, many non-profit organizations would choose to limit rent increases voluntarily, without regulations, because of their social commitment to housing low income households. Still, the renewal of rent regulations is important even to these groups, because of their commitment to promoting stable communities which involves more than just the amount of rent charged. The other protections provided by rent regulations are also part of the equation. Some landlords may attempt to meet their fiscal bottom line by reducing maintenance and services. Rent regulations address this by requiring landlords to maintain a guaranteed level of services to buildings and not sacrifice services in order to reduced costs and/or increase profits. Reductions in services impact the entire neighborhood, not just individual buildings. Reduced services often have a domino effect, first affecting the surrounding buildings, and eventually the whole neighborhood suffers. When sanitation and security services are reduced or are neglected, crime tends to increase. Rent regulations mandate that landlords offer lease renewals. They also mandate so-called just cause for evictions. These two components of rent regulations also encourage neighborhood stability by allowing people to remain in their homes and set down roots. The removal of rent regulations would cause many people to be forced from their homes. Without rent regulations, landlords, in addition to raising rents, could terminate tenancy without cause, refuse to renew leases and/or significantly reduce maintenance and services so that people would be forced to leave their homes. While some of those people might find other apartments in the neighborhood, others would probably leave the neighborhood or double up with family and friends. Those that aren't forced out will be under more pressure as rent increases would make money tighter overall, again, the net effect being higher demand on limited resources and community destabilization. These situations will result in an increase in pressures on the community as a whole and the groups that serve them with greater demands being made for ever-decreasing assistance and social service resources. The end of rent regulations will have devastating effects on our communities, wreaking havoc on the 20 plus years of work done to rebuild these neighborhoods. We also support the Michels-Fields bill, which calls for repeal of so-called high rent vacancy decontrol and decontrol based on income which was passed in 1994. These so-called luxury decontrol measures are just excuses to destroy rent regulations. The bottom line is that these decontrol measures remove apartments from regulation and make them permanently unaffordable to those with less income. Besides making units unaffordable to those with lower incomes, deregulating apartments also removes the other very important protections, including guaranteeing services, lease renewal, and requiring just cause for evictions. This is dangerous, particularly in neighborhoods which are experiencing regrowth and are attracting higher income households. While not under consideration by the City Council, mandatory rent deposits have also been discussed as part of a compromise for extending rent regulations. The push for mandatory rent despots is an excuse to circumvent the system and push evictions through faster. The Association for Neighborhood and Housing Development is firmly opposed to such compromises. My colleagues will discuss this more fully. MR. J. MUNIZ: Good afternoon. My name is Julio Muniz, the Bronx coordinator of the Citywide Task Force on Housing Court. CHAIRPERSON SPIGNER: I hope you don't intend to read all these pages. MR. J. MUNIZ: It was once written in that the misery of our poor is not created by natural disasters but by our institutions. Great is our sin. At no moment in recent history has that been any more true. One of the true indicators of the housing crisis that we talk about in New York is the volume of cases that is travel through the halls of Housing Court. The numbers in New York City have exceeded over a million people over the last few years, people who are unable to pay rent at this moment and will not be able to pay rent if rent regulations are eliminated. It's hard to believe that the argument is based on the few who have an income over $100,000, a small percent of the tenants that live in the city, will determine the outcome of a whole city. The impact of homelessness: To the extent that low income households are forced into homelessness as a result of unaffordable rents, they are likely to suffer a host of devastating consequences. Homeless people are at a much greater risk of suffering severe medical and social problems that endure long beyond the initial trauma of eviction. For example, people who are homeless are more likely to suffer from health problems than the general population. The impact of homelessness on infants and children is particularly tragic. Women living in shelters are more than twice as likely to give birth to babies with low birth weights than an average woman. Moreover, the infant morality rate for babies born to mothers who live in shelters is more than twice the national average. The common bouncing of families from one placement to another often make school attendance impossible, as do disputes among school districts regarding who has the responsibility to educate a homeless child. Homelessness is often cause of the breakup of families, with placement and retention of children in foster care often the result of the lack of a home. The cost to the state and city of homelessness is also profound because of the $3,000 a month that houses a homeless family in the shelter system. It also costs $18,000 a month to house a single person in that shelter system. We at the Citywide Task Force on Housing Court urge the continuation of rent regulations, and we thank you very much. MR. D. ROBINSON: My name is David Robinson, a staff attorney with Legal Services for New York. I'm going to be very brief since most of the rest of the panel have made most of the points that really need to be made. The one thing that I would like to add is to say how important it is not only for low income tenants as well as the rest of the tenant population to repeal the vacancy decontrol and high income rent deregulation provisions that were passed three years ago because these provisions do provide an incentive for landlords to raise the rents to the threshold level, thus removing vital apartments from the rent regulation system. They create an incentive to harass tenants to get them out of their apartments -- (inaudible) -- improvements that are made with inflated costs, to get the rents up over $2,000. If the rents are removed -- the regulation system, with all that's been mentioned about the removal, and even if the landlord can't continue to collect over $2,000 a month in rent, the unit is lost to the system and the vital protection associated with those are lost. I think it's very important in this year in which the rent regulation laws are up for renewal in Albany that the City Council send a very strong political message to Albany by renewing the rent regulation laws, extending them and repealing the vacancy decontrol amendments that were passed three years ago. It will send the kind of positive and emphatic message that's needed in Albany for the removal of the laws as they should be. Thank you. ************************************************************** Continued...