If Rent Controls End
NY Post, June 13, 1997What would happen if the bulk of New York City's rent regulation laws were to expire -- once and for all -- at the stroke of midnight Sunday? Not the compromise favored by Gov. Pataki; not measured vacancy decontrol -- but simply a virtual end to rent regulation. If events attending the recent demise of rent control in Massachusetts are a useful indicator for the Big Apple, the impact on the city housing market could be quite favorable.
Obviously, cities like Boston (pop. 550,000) and Cambridge (pop. 96,000) are not New York. At the same time, an abrupt phase-out of rent regulation here isn't likely either -- unless, of course, the crisis Assembly Speaker Sheldon Silver (D-Manhattan) seems bent on precipitating spins completely out of control. In that case, anything is possible.
The laws underpinning New York's Byzantine rent-regulation system will expire at 12:01 a.m. Monday unless a wholly unexpected deal to renew them can be struck among Silver, Gov. Pataki and state Senate Majority Leader Joseph Bruno (R-Rensselaer).
Bruno, who once promised an outright and immediate end to rent regulation, yesterday linked arms with the governor on what in other circumstances could be considered a generous -- if somewhat oddly timed -- compromise offer. The problem, of course, remains unchanged: Silver won't even discuss the issue.
The speaker's give-no-quarter posture was undercut sharply yesterday by published poll results demonstrating that Pataki's pro-vacancy-decontrol position is supported by a plurality (48 percent) of New York City residents -- the supposed beneficiaries of the status quo.
It is true that Pataki himself doesn't fare too well in the poll; this is not surprising, given the personal attacks on him leveled by the self-styled tenants' advocates and by Silver himself.
These are reminiscent of the mud-slinging by pro-rent-regulation forces during the campaign for a 1994 Massachusetts referendum on abolishing a 25-year-old system of controls there.
Visions of homeless elderly folks wandering the streets after -- as Boston Mayor Thomas Menino put it -- "greedy landlords
astronomical rent increases" were conjured up by the pro-control people.
So was demise of the controls as apocalyptic as forecast? Not really. The referendum passed handily; the rent regulations came to an end in a measured way and -- while the story is still very much developing -- an unprecedented revival of the rental housing market began in Boston and Cambridge.
It turned out that very few older people were living in controlled apartments to begin with; and, anyway, they received special protection under the new law -- much as the elderly stand to be protected under the Pataki-Bruno proposals.
Yes, young professionals found themselves paying higher rents -- as would likely be the case eventually in New York. After all, an estimated 70 percent of those benefiting from artificial rent protection here live in Manhattan below 96th Street -- surely the most affluent collection of neighborhoods in the city.
Back in Massachusetts, what one study termed "the largest amount of conventionally financed rental
since the beginning of rent control" got under way; landlords undertook long-overdue rehab work on existing units -- and the state saw a sharp increase in property-tax revenue as reassessments reflected the increased value of rental property.
Again, Beantown ain't the Big Apple. The laws of economics, however, are the same everywhere: Rent controls historically are destructive; when they're phased out, the market flourishes.