Cautious Motion Toward a Rent Compromise

New York Times, June 13, 1997
ALBANY, N.Y. -- Beneath the deeply pessimistic tone of the rent debate, negotiators have actually begun serious deliberations on proposals that could prevent the rules from expiring on Sunday. Officials on both sides of the fight said Thursday that Democrats are now privately displaying greater openness than in the past about helping landlords increase rents on some apartments.

The negotiators have been focusing their discussions on ways of allowing landlords to bring rents closer to market levels on regulated apartments that become vacant. Current laws place strict limits on rent increases for vacated units, but landlords contend those restrictions must be lifted to end huge price disparities in the market.

On the surface, the issue has seemed insoluble. Republicans, led by Gov. George Pataki, have advocated deregulating apartments once tenants move out or die, a policy known as vacancy decontrol. Democrats, led by Assembly Speaker Sheldon Silver, have rejected vacancy decontrol out of hand, saying it would end all rent regulations over time as more and more units turned over.

But behind closed doors, negotiators for both sides have shown greater flexibility than has been expressed by their leaders in public. Democrats have floated ideas about mechanisms to enable landlords some increases on vacant apartments, but less than could be obtained on the open market. And Republicans have proposed a number of partial vacancy decontrol ideas, ranging from applying the policy only to small buildings or high-priced apartments, to spreading out market-rate rent increases over extended periods of time.

So far, none of those ideas has stuck. But officials in both parties say they believe that if vacancy decontrol can be resolved, the other outstanding issues -- such as lifting protections for wealthy tenants -- will fall into place. And there is a widespread sense among legislators in both parties that if Joseph Bruno, the Republican Senate majority leader who has been Albany's staunchest advocate for vacancy decontrol, plays a smaller role in the endgame talks -- as recent actions have suggested -- the way could be paved for a compromise.

But the negotiators still face a tall political hurdle: structuring a deal that allows all sides to declare victory. Democrats have so staunchly opposed vacancy decontrol that they would find it difficult to accept anything that even faintly smacks of the policy, lest they come under fierce attack by an important constituency, tenants' groups. Republicans have been so adamant about bringing a gradual end to rent regulations that a complete retreat from vacancy decontrol would be widely viewed as a political embarrassment.

Still, negotiators have expressed very guarded optimism that a deal can be struck that would allow Republicans to contend that they had brought free-market reforms to New York City's rental system and Democrats to proclaim that they had kept tenant protections largely intact, thereby protecting the middle class.

The question is: Can they do it by the end of the day on June 15, when the laws, which set rent ceilings for more than 1 million apartments, are to expire? "I don't know that anyone has found the answer yet, but I'm confident we will," said one Republican official, speaking on condition of anonymity. "I just don't think that it will be by the 15th."

Though aides to the governor and legislative leaders met Thursday, there were no major negotiations on rent because Silver was observing the Jewish holiday of Shavuot. The leaders were scheduled to resume their talks on Friday morning.

Both houses of the Legislature are to return to Albany on Sunday night just a few hours before the laws are set to expire, giving themselves enough time to pass a bill if Pataki and the legislative leaders reach an agreement. The Legislature could also pass a short-term extension of the current laws to buy negotiators time to iron out their differences. But Bruno has said he will block any extensions of the existing law. If the Legislature does nothing, the laws will lapse.

Officials in both parties say that Silver's chief negotiator, Fred Jacobs, has rejected Republican proposals on vacancy decontrol during the closed-door negotiations. But that has not prevented discussion about other ideas that might achieve some of the goals of vacancy decontrol -- namely, providing ways for landlords with regulated units to increase their income -- without actually decontrolling large numbers of units.

One idea that Democrats have tentatively advanced would be to increase what is known as the vacancy bonus already allowed under law for regulated units that become vacant. But the two sides have been sharply divided over the size of the bonus, who would set it and how expansive the policy should be: Republicans want it applied to all regulated units; Democrats want it restricted to a small number of apartments.

Another idea that has been promoted by Mayor Rudolph Giuliani during talks with Legislative leaders would be to allow vacancy decontrol for high-rent apartments. Current law allows units that rent for over $2000 a month to be decontrolled if vacated. The policy could be expanded by lowering that threshold to, say, $1750 a month or lower.

Democrats have been opposed to that idea on the grounds that, with time and inflation, the majority of apartments will fall into this category. To address that concern, they have discussed the idea of lowering the threshold, but then allowing it to rise again according to an index tied to the inflation rate. So far, Republicans have balked at that idea.

Republicans have floated proposals to apply vacancy decontrol only to small buildings, for example, those with 10 units or less, and to allow landlords to bring rents on vacated units to market levels, but only over long periods of time. So far, Democrats have been unwilling to accept either. But the fact that they continue to talk has kept Republican hopes for compromise alive.

Many Republicans also say that as the deadline approaches, Silver might soften out of concern that Democrats, too, will be blamed for the laws lapsing. "You won't see any meaningful dialogue until the final hours," Sen. Nicholas Spano, R-Westchester, said.

Many Republicans contend that Silver, the state's most powerful Democrat, wants the laws to expire on the theory that frightened tenants will punish Pataki and other Republican officials at the polls for any pain, panic or problems that might ensue after June 15.

Aides to Silver, while acknowledging that they think Republicans will bear the brunt of voters' wrath if the laws lapse, deny any partisan motivations, saying the Democrats are simply fighting to protect the rent laws.