Rent Hikes Will Cost City
By MICHAEL FINNEGANScrapping rent protections for more than 2 million tenants could sock the city economy with more than $1 billion in losses as New Yorkers cut back to pay higher rents, some economists predict.
NY Daily News, May 11, 1997
Tenants will skip clothing buys, cancel restaurant reservations and forgo even small splurges such as movies as they dig deeper to pay the 14% average rent hikes projected if the state lets the laws expire, the experts say.
Just ask Angelica Rosado. The Queens secretary pays $976 a month for the apartment she and her two children share on 164th St. in Jamaica.
Rosado's annual salary of $30,000 allows the family to eat out occasionally. "We go to McDonald's or Wendy's. It comes out to $15 or $20 for three people," she said.
Rosado said those "splurges" could end if her rent rose to $1,200 — the cost of unregulated units in the neighborhood.
Economists and retailers said her story typifies the likely economic fallout citywide if state officials don't renew the laws threatened with expiration on June 15.
Although Gov. Pataki today is expected to release details of a plan that could extend the regulations, it's unclear whether his proposal will win approval from Senate Majority Leader Joseph Bruno — who has vowed to scrap the laws.
Citywide, deregulation would force tenants to shell out $1.2 billion a year in higher rent payments, according to a recent study conducted for the Rent Stabilization Association, a major landlord group.
The study predicted a $5 billion boom from higher taxes and from landlords spending the rent windfall on building renovations. That would more than make up for the lost retail spending by tenants. But some economists and business owners are skeptical.
"It would have a negative impact on retail trade, that's for sure," said Dick Netzer, an economics professor at New York University's Wagner School of Public Service.
Ken Giddon, owner of Rothman's, a men's clothing store on Manhattan's Union Square, said businesses like his would face losses if tenants are forced to cut back. "You can keep a suit a year or two longer if you're struggling to make ends meet," said Giddon.
The impact would be even harder on stores in lower-income neighborhoods, said John Barnes, the owner of Theresa Fashions, a clothing store on Harlem's main shopping strip.
"Our customers here on 125th St. are not the wealthiest in the world," said Barnes. Retailers on Manhattan's upper West Side — an area where the landlord projected whopping 51% rent hikes after deregulation — could be among the hardest hit, said Peter Marcuse, a Columbia University urban planning professor.
That's because market rate rents in the area far exceed the cost of rent-stabilized units. "It wouldn't take a big change to put people out of business or cause hardship," said Marcuse.
Actor Ron Johnston and his wife, Cynthia, executive assistant to a fashion designer, have lived for 26 years in a two-bedroom apartment at 82d St. and Broadway.
Their $804 monthly rent is far below the $2,000 market value. But they say their $60,000 yearly income barely covers the rent now.
Loss of rent laws, the actor said, would force them to cut back on dining out and cheap seat trips to the ballet and opera at nearby Lincoln Center.
"It's the reason for living in New York City, all of this stuff," he said. "We would probably have to cut back on everything."
But Peter Salins of the Manhattan Institute, said only wealthy tenants would be hit hard with rent hikes.