Vacancy Issue Becomes Focus of New York Rent Debate

by JAMES DAO
New York Times, June 10, 1997

ALBANY, N.Y. -- With just six days to go before state rent laws are due to expire, the battle over the future of those laws is focused almost entirely on one exceptionally thorny issue: whether landlords should be allowed to raise rents as much as they want on regulated apartments that become vacant.

At its heart, the current debate is about how long the rent regulation system, created in the 1940s as a temporary set of protections to relieve wartime housing problems, should continue. The state Senate's Republican majority leader, Joseph Bruno, who six months ago called for abolishing most protections in two years, now supports a more gradual phase out over 12 years or more through the policy of deregulating apartments once they are vacated. But Democrats want the system to continue indefinitely.

To date, the vacancy decontrol idea has seemed to defy compromise, with both sides publicly declaring granitelike positions for or against it. But on Monday, even as Gov. George Pataki and legislative leaders reported little progress in the negotiations, all sides were cautiously signaling a willingness to discuss middle-ground proposals that would give landlords the ability to raise rents on vacant apartments more than is possible under current laws.

Assembly Speaker Sheldon Silver, a Manhattan Democrat who is leading the fight to preserve the rent laws unchanged, opened the door a crack, saying he believes that "there are a lot of approaches that can be made" to resolving the problem. Pataki, who has endorsed vacancy decontrol, echoed his remarks, saying: "Never on any issue have I said my way is the only way. I've always been willing to listen. I've always been willing to compromise."

Both Republican and Democratic aides said they have begun sketching out in closed-door meetings possible alternatives to full vacancy decontrol that could provide more money for owners of regulated apartments without deregulating the entire rental market -- or at least not for several decades.

Among those ideas is a proposal that would increase by 5 percent to 10 percent what is known as the vacancy bonus, now about 9 percent, which is given to landlords when a regulated apartment is vacated. Another idea being talked about would allow rents to rise to market rates when an apartment became vacant while imposing new limits on subsequent increases as long as a tenant remains in the same apartment.

But so far, none of those ideas have been palatable to all sides, leaving it far from clear whether a compromise can be reached by the end of the day Sunday, when the laws regulating rents on 1.1 million units are scheduled to expire. Bruno has vowed to let the laws lapse unless Democrats agree to phase them out.

On Monday, Democrats and Republicans resumed their war of invective, blaming each other for the impasse and calling on voters to hold the other side responsible if the laws lapse. Tenant groups also said they were planning to begin a new wave of television commercials on Tuesday urging voters to demand that the Republican governor and Bruno, a Rensselaer County Republican, back down from their support of vacancy decontrol.

"The Pataki-D'Amato decontrol plan means an end to rent regulation," says the narrator in the commercial, with the sound of a clock bearing the faces of Pataki and his mentor, U.S. Sen. Alfonse D'Amato, ticking loudly in the background. "So tell Pataki and D'Amato to join the Assembly Democrats and renew the rent protection laws now, before the clock runs out."

Democrats also assailed Pataki for scheduling a $2,500-per-person fund-raiser for Tuesday at the Meadow Brook Golf Club in Jericho. The event was organized in part by Charles Urstadt, an executive with a Manhattan real estate concern and a board member for two major landlords groups. In 1971, when he was state commissioner of housing and community renewal, Urstadt helped push a vacancy decontrol bill through the Legislature. The measure was repealed in 1974 amid widespread concerns about harassment of tenants and rent gouging by landlords.

"If anyone had any doubts about Governor Pataki being in the pocket of the landlords," said Judith Hope, chairman of the State Democratic Committee, "this should put those doubts to rest. As millions of middle-class tenants in New York worry about being able to afford housing, the governor is playing golf and raising money from the very landlords who will profit from vacancy decontrol."

Pataki said he would be in Albany on Tuesday morning for a negotiating session with Bruno and Silver and would stay for as long as he thinks it is useful. "If that meeting takes 2 hours, 6 hours, 10 hours, 24 hours, if we are making progress, whatever it takes, we will do," he said.

Vacancy decontrol has emerged as the single most complicated and emotional issue in the rent fight. Landlords contend that the policy will bring a measure of fairness into the system by allowing them to charge market rates on apartments whose rents have been kept what they consider absurdly low by decades of rent restrictions.

But tenant advocates say vacancy decontrol will encourage landlords to harass tenants to leave their apartments. And because vacancy decontrol will bring about the eventual end of rent protections, as more and more units are vacated, tenant advocates assert that rents will gradually rise to the point where many neighborhoods will be priced beyond middle-class incomes.

In their public pronouncements, Bruno has insisted that he must have vacancy decontrol while Silver has insisted that he will have none of it. But behind the scenes, legislative aides have been quietly exploring possible areas of compromise.

One proposal would raise the so-called vacancy bonus -- the special rent increase now allowed for landlords when a regulated apartment is vacated. That bonus has traditionally been under 10 percent, but one idea would be to raise the bonus to 15 percent or more. Though some Democrats have expressed interest in this, landlords contend that it will do little to help landlords who need to raise rents 100 percent or more to reach market rates.

Another idea would be to impose what is known as the Los Angeles system, in which landlords are allowed to raise rents to market levels upon vacancy but must abide by rent restrictions once the apartment is reoccupied. Bruno said on Monday that there has been some discussion of that idea but that he had rejected it because he thinks it would encourage rent gouging as landlords tried to raise rents as high as possible when they got the chance. Silver said he would also oppose the idea.

Bruno also reaffirmed his opposition to passing a short-term extension of the rent laws on June 15 to buy more time for negotiations. "There will be no extensions, even if the governor asks for one," he said.

During an afternoon news conference, Silver pushed his idea of using more than $650 million in government and private funds to build 21,000 new housing units in New York City. Doing that, he said, would within four years push the city's vacancy rate above 5 percent, a level at which current law requires all rent regulations to expire.

But Pataki said thousands of apartments are removed from the market each year, so that building 21,000 new units would barely keep pace with the current vacancy rate. "That's classic," he said of Silver's plan. "Spend hundreds of millions to solve a problem. It hasn't worked."

While the leaders debated inside the Capitol, D'Amato was nearby, presenting a federal grant to a Troy community organization. Though he said he was not in town to help in the rent fight, D'Amato, the state's most powerful Republican, suggested he would get involved if asked to by Pataki and the legislative leaders.

"I'm not going to participate unless all of the parties would do that," he said. "I don't know what constructive role I could play at this point."

In New York City, Mayor Rudolph Giuliani announced that he would be setting up an interagency task force to answer tenants' questions about their rights and to assist them in the event that the laws expire on June 15.