A Sensible Plan for Rent Decontrol
New York Times, December 8, 1996
About a million apartments in New York City are covered by rent regulations that will expire this June. The Republican majority leader of the State Senate, Joseph Bruno, announced Thursday that he will not allow a renewal of the laws, unless it is tied to a plan for swift deregulation.
Mr. Bruno is right to call for decontrol. Rent regulation has not served New York City well. It has discouraged investment in the upkeep of old properties and the construction of new ones. The laws hurt the entire city by reducing the tax base. An expensive and extremely cumbersome state bureaucracy is required to implement them. Especially galling, the laws create an irrational system in which some well-to-do tenants pay very little rent for large apartments while less-prosperous newcomers are forced to pay rates that are artificially inflated by the shortage of market-rate housing.
But a system that affects so many people should not be undone hastily. Mr. Bruno's proposal to eliminate all rent control and stabilization laws in two years is far too abrupt. Assembly Speaker Sheldon Silver, on the other hand, seems committed to retaining the system as it is.
The politics of this standoff are obvious. Mr. Silver's Democrats are based in New York City, where well over two million people live in rent-regulated dwellings. Mr. Bruno's upstate political base couldn't care less about New York City rent regulations. But city real estate interests, which stand to get enormous windfalls from deregulation, are big campaign contributors to state Republicans, including Mr. Bruno.
Rent regulation has been here for a half-century and scrapping it suddenly would create major economic and social dislocation. Although the market rents in many poor neighborhoods are already lower than legal limits, there are still tens of thousands of low-income people whose housing costs will go up sharply when rents are decontrolled. Many families with more money will still have to move to areas with lower market rates. Businesses and service workers will lose income as money that rent-regulated tenants were able to spend on things like child care, entertainment and transportation is shifted to housing. The only people who would gain from a swift decontrol are landlords, who could reap immense profits by selling buildings they bought at rent-regulated prices.
Mr. Bruno and Mr. Silver should work with housing experts and city officials to develop a plan for gradual decontrol with a final, certain date at which rent regulations would be eliminated entirely. Negotiations should begin in January. The leaders must avoid the usual scenario in which Mr. Bruno demands the moon, Mr. Silver stonewalls, the state budget becomes months overdue and both sides wait to see who will cave in first.
Several approaches are possible. The first stage of gradual decontrol could include dropping all regulations on units as they become vacant. The plan could also gradually reduce the maximum allowable income for rent-regulated tenants from the present $250,000 on down. Or it could allow rents to rise by limited amounts each year until they reached market levels. Either way, the time period before final decontrol should be extended from two years to perhaps 10 years. Officials can then monitor the effects of the transition, making adjustments as needed.
Any changes must be made in an atmosphere that keeps the fate of poor New Yorkers constantly in mind. The Senate Republicans have offered to expand protections for the low-income elderly and the disabled. But they have not mentioned the equally pressing problems of poor families with children. Mr.
Bruno's confidence that the unregulated marketplace will solve the housing shortage in poor neighborhoods is misplaced. Residents there simply do not have enough money to pay rents that would make unsubsidized housing practical.
So far, the Republicans have not suggested that the state should couple decontrol with more subsidized housing or some other safety net for the substantial number of very poor tenants.
That is an issue Mr. Silver must put on the table.
Copyright 1996 The New York Times Company