The Great Rent Control Shakedown
by Glenn ThrushLAST DECEMBER, I sat in a hotel ballroom listening to Republican State Senate boss Joseph Bruno snap his vowels like a wet gym towel at a crowd of ecstatic city landlords. "We will end rent regulation as we know it," he announced, making himself an instant New York anti-celebrity.
Newsday, June 15, 1997
But sitting behind Joe Bruno, stage-manager style, was Joe Brain-o, the man who is really running the rent war. His full name is Joe Strasburg. He is a deal-cutting New York City Democrat who has quietly ridden the helm of the landlords' Rent Stabilization Association to the brink of victory - with Bruno hired on as an extremely expensive scare-mask. Upstater Bruno has gotten the headlines, but it's been the Bronx native Strasburg's expertise, honed from years of close contact with shady city political fixers like Donnie Manes, Meade Esposito and Stanley Friedman, that has given the landlords their edge. Strasburg's upstate strategy has been based on one simple New York City street proverb: No politician can resist the offer of a good, clean shakedown.
Two years ago, Strasburg (through the RSA's network of PACs and campaign contributors) ponied up $1 million and invited the state Republican Party to shake him down. Until he cracked the golden checkbook, rent regulation was an issue that nobody upstate really gave a damn about. But that all changed with the Strasburg payday.
Because of this simple scheme, rent regulations may end completely on Sunday.
But they won't - for one deliciously ironic reason. Joe Strasburg, the man who has masterminded the assault on the laws, is desperately afraid to see them expire. Consider Strasburg's recent letter to landlords, which reads in part: "I want each and every owner to understand that even if the rent laws lapse for a day, a week, or longer, they are likely to be extended in some form eventually." From this first principle, Strasburg went on to beg landlords to obey the law and not make themselves appear to be heartless rent-gougers.
And there's the twist: Strasburg understands that the outright elimination of the system - even for a few days - will unleash a torrent of greedy landlord demons straight out of "Ghostbusters." Even if the vast majority of landlords behave, he knows that enough owners will try to kick law-abiding tenants out on the street to fill every tabloid front page and evening newscast in New York City. Not only would that create a re-regulation backlash, but it could generate enough anger among city voters to place Gov. George Pataki - whose New York City approval rating has bottomed out over the course of the rent wars - back in Peekskill on a full-time basis.
The last time I saw him, Strasburg veered toward me with the news that he was battling to keep his owner flock on the shortest possible leash. "We've got some really good landlords," he said. "But, you know, we've also got some dirtbags."
So, as we face the brink, we also face a nearly unfathomable political scenario. The panicked threesome of Pataki, Strasburg and Bruno were desperate to get something passed before the deadline. In the meantime, Democratic Assembly Speaker Sheldon Silver was holding his ground, strangely calm in the face of a fast-ticking clock and two million nervous Gotham tenants.
Strasburg knows that unless outraged tenants turn on Silver - which isn't likely in the short term - a lapse in the laws will most hurt the landlord cause because any bill that ultimately gets passed will contain retroactive provisions aiding tenants left in the lurch.
Even if Strasburg gets his vacancy decontrol package through, the demon landlords will waste little time in getting to work. Tenant harassment will almost certainly increase, although it probably won't be as bad as the defenders of rent control are predicting - largely because most owners understand it is in their best interests to accept their windfall slowly. In Cambridge, Mass., where decontrol was enacted two years ago, landlord groups put a tight clamp on landlord behavior to keep harassment tales to a minimum. Even the lefty Boston Phoenix has had trouble scaring up horror stories - a fact not lost on Strasburg, who recently helped organize a group of landlords to police other owners in the event of vacancy decontrol.
Likewise, new criminal penalties placed on landlord harassment in Pataki's plan will likely chill the most overt forms of abuse, such as flood-outs and outright threats. But that's not to say landlords won't be working overtime hatching ways of getting old-law tenants out. Expect a guerrilla war. Owners will employ subtler, ultimately more effective forms of coercion, including stalled lease renewals, technicality-based eviction orders and elaborately fabricated charges that formerly good tenants have suddenly turned so bad they need to be booted out. Pataki's law, in fact, seems to be purposely constructed to allow such shenanigans. First, any criminal harassment charge is, by its nature, almost impossible to prove in court. Besides, under the governor's law, landlords would only be prosecuted for second offenses - meaning tenants will have to prove their nearly impossible case not once, but twice.
And there will be huge, nearly immediate rent increases in some neighborhoods - cutting against the popular perception that rent-stabilized tenants cling to their aprtments for life. According to Prof. Edgar Olsen, a University of Virginia economist, one out of every four rent-stabilized apartments will be vacated by renters and their families each year. Although Olsen and other economists say the hikes will eventually moderate, neighborhoods in Manhattan like Midtown, Chelsea/Clinton, the Upper West Side, Harlem and Washington Heights will see their rents soar by about 30 percent; Elmhurst, Corona and Flushing in Queens will experience similar rent-jacking, Olsen says.
These higher rents will transform New York - a city in which renters already pay a third of their income on housing - into an even more unaffordable place. The changes in rent regulation mean that multi-ethnic, multi-income neighborhoods will grow whiter and richer. The Upper West Side will become a gilded Vanilla Coast to match the East Side - a fallout even the most rabid decontrollers don't seriously dispute. And if incoming tenants in those neighborhoods can't afford to pay the new rents, they will seek apartments in other parts of the city, especially in borderline neighborhoods where the working poor are already being displaced by gentrification.
And this may be vacancy decontrol's ugliest legacy. Communities like Mott Haven, Crown Heights and Sunset Park, already on the rebound, will experience pass-along rent hikes as wealthier tenants move in, displacing the working poor. Many of those struggling families, victims of a new kind of gentrification, would have no way to pay and nowhere to go. They face an economic reality no one in the rent wars has bothered to address: In the last three years, the city has lost nearly 113,000 apartments under $500 a month, despite the fact that real wages have declined at an alarming rate.
When you factor in the virtual shutoff of the federal housing subsidies and the devastating impact of welfare reform on the rent rolls in poor neighborhoods, decontrol means low-income renters are faced with only two real alternatives: "They will have to move in with relatives or they will have to move out of New York to places where rents are cheaper," says Michael Schill of New York University's Center for Real Estate and Urban Policy.
Even if Joe Bruno is oblivious, Joe Brain-o knows all about this. After all, he grew up in a rent-controlled apartment in the Bronx himself.
Glenn Thrush is senior editor with City Limits magazine.