The price of the rent deal

New York Post, June 18, 1997

For all the high crimes and misdemeanors committed over the years in the vaulted corridors of Albany's historic Capitol, the building is still richly populated by the ghosts of men who could get things done when circumstances demanded action.

Four New York governors moved on from the Capitol to the White House; several others were serious presidential contenders or the actual nominees of their parties. Albany long served as an incubator for new ideas that ultimately would be harnessed to help solve national problems. Arguably, the New Deal was the brainchild of Gov. Alfred E. Smith; many of its programs received their first trial runs in Albany under the aegis of his successor, Gov. Franklin D. Roosevelt.

Certainly, it's hard to imagine men like Smith or Roosevelt -- or Charles Evans Hughes, Herbert Lehman, Thomas Dewey, Averell Harriman or Nelson Rockefeller -- being seriously baffled by something so essentially mundane as New York City rent regulation.

To be perfectly fair, of course, they governed during a period when New York was animated by hope and high expectations -- rather than by a desire to preserve the status quo.

Times change.

It should surprise no one that only cosmetic changes in the city's archaic and often destructive rent-regulation system could be obtained after months of political drama.

After all, Manhattan's waterfront -- containing some of the most potentially valuable real estate on the planet -- today lies nearly dormant because development involves change, and special interests can be counted on to block change. In New York City, they usually prevail.

This means, in effect, that no political coalition is strong enough to overcome the blockages to economic growth in the city. And irony of ironies, it is now the Democratic Party -- the party of Al Smith and FDR -- that is the principal institutional barrier to real investment in New York's future.

It is the Democrats who went to the mat in Albany for continued rent regulation. And, it would appear, they won. The Democrats showed that the rather small groups they could bus up to rally in favor of keeping an important sector of the city's economy tightly enmeshed in regulation were sufficient. As a result, developers now will be in no more hurry to enter the New York real-estate market than they were before this past weekend; the city's seemingly perpetual housing shortage seems fated to live on.

What will be the price -- counted in lost jobs -- of Sunday night's deal? That's impossible to say, but we'd guess the number will be substantial.

In the end, though, a principal casualty of the rent wars will be what remains of New York's reputation as a city hungry for new challenges.

FDR would not be pleased.