Deal Is Achieved as Rent Laws Expire

New York Times, June 16, 1997
Gov. George E. Pataki and legislative leaders reached the outlines of an agreement early this morning that would largely preserve the state's 50-year-old system of rent restrictions while giving landlords additional income on vacant apartments and reducing protections for some wealthy tenants.

The tentative deal did not come fast enough to keep the rent laws from expiring at midnight. But the leaders said that with a deal almost in place, they expected they could reimpose the laws -- along with the new revisions -- within the next day or two, as soon as the laws could be rewritten and passed.

Very few tenants will be immediately affected by the expiration, provided that a final agreement can be reached in the coming days. To insure the protections, the Legislature was considering passing a bill this morning that would prevent landlords from evicting any tenants for 24 hours.

At the core of the plan the leaders tentatively agreed to last night was an increase in what is known as the vacancy bonus that is given to landlords when rent-stabilized apartments become vacant. Under current law, landlords last year were allowed to increase rent by between 14 and 16 percent on units where tenants moved out, were evicted or died. The plan under consideration would increase that amount to something over 20 percent, aides said, though they declined to give precise figures.

The leaders were also discussing expanding the policy known as luxury decontrol, in which rent restrictions are immediately lifted on wealthy tenants. Current law lifts protections for tenants who earn more than $250,000 a year for two consecutive years and live in apartments that rent for more than $2,000 a month. The proposal under discussion this morning would bring that income threshold down to around $200,000 a year for two consecutive years. It was not clear whether the plan would change the rent provisions of the law.

Aides to both sides in the fight said that one of the last major stumbling blocks to a deal was getting the State Senate majority leader, Joseph L. Bruno, a Rensselaer County Republican, to agree to the plan. Mr. Bruno began the year calling for an end to almost all rent regulations in two years, but the proposed deal under discussion tonight represented a major concession on his part away from that original plan.

The late developments were a significant turnabout from earlier in the talks on Sunday, when Mr. Pataki and Mr. Bruno ridiculed a proposal by the Assembly Speaker, Sheldon Silver, a Manhattan Democrat who has been the leading defender of the rent laws, to increase the vacancy bonus.

In a preview of what the next few days might hold if the laws lapse tonight, Republicans and Democrats used their news briefings on Sunday to attack each other, pointing the finger of blame for the deadlock.

"We have to go tell the 25,000 landlords that their money can't change what is good for the downstate region," Mr. Silver said at a morning news conference. "The $2 million they provided in campaign contributions to the Republican Party should not be the reason why 2.7 million people are in jeopardy and the city is in jeopardy."

Mr. Pataki responded several hours later, "If Silver lets the laws expire over this, I would hope he would look in the mirror and stop talking about protecting tenants and talk about the fact that it was his political decision to let the laws expire."

While the leaders were meeting behind closed doors in the Governor's second-floor Capitol office, about 100 tenants who had driven to Albany Sunday afternoon stood on the street below, waving signs and chanting, "Governor, remember, we vote every November" and "George Pataki, you can't hide; you're on the landlords' side."

At the same time in New York City, more than 300 people gathered in front of the Governor's midtown office on Third Avenue to assail the plan for vacancy decontrol. Carrying signs saying "Vacancy Decontrol Equals Evictions," tenants voiced their outrage at the Governor's plan.

The Democratic plan that was the focus of today's talks would increase the vacancy bonus already allotted to landlords when tenants vacate rent-stabilized apartments. There are more than one million such units, almost all of them in New York City.

Under current law, the New York City Rent Guidelines Board, which is appointed by the Mayor, sets limits each year on how much landlords can increase rents on stabilized units where the tenant has moved away, been evicted or died.

Last year, that vacancy bonus was 9 percent, which came on top of a 5 percent increase allowed on one-year leases and a 7 percent increase on two-year leases. That meant that landlords could charge new tenants an additional 14 percent on one-year leases for stabilized units. Landlords are also given so-called hardship allowances of $20 a month on apartments that lease for less than $400 a month. On June 23, the rent board is expected to change those percentages to 2 percent for a one-year lease, 4 percent for a two-year lease and 5 percent for a vacancy.

Landlords are already allowed to raise rents on rent-controlled apartments to market rates as they become vacant. There are more than 70,000 rent-controlled units in New York City, but those units are not covered under the state law and would remain regulated even if the state law expired.

In a proposal that he presented to Mr. Pataki and Mr. Bruno on Sunday morning, Mr. Silver offered to increase the vacancy bonus by half a percentage point for each year a tenant has been in an apartment, with a cap of 10 percent.

The additional increase would be given only on apartments where the same tenant has resided for 10 years or more. That means that on a unit renting for $500 a month that has been occupied by the same tenant for 20 years, the landlord could ask for $50 a month more than he could have obtained under the current rules. The plan would also require landlords to plow the additional money into apartment improvements.

Earlier on Sunday, Mr. Bruno and Mr. Pataki ridiculed the idea, saying it would provide virtually no relief to landlords. "The vacancy bonus proposal was quite simply absurd," Mr. Pataki said during the afternoon news conference.

But by Sunday evening, Mr. Silver had apparently enriched the plan sufficiently to draw more favorable comments from the Republicans. The fact that they were seriously considering the vacancy bonus idea was a significant compromise by the Republicans in itself since both Mr. Bruno and Mr. Pataki had for months held out for completely deregulating apartments as they become vacant, a policy known as vacancy decontrol.

Asked if he could accept the vacancy bonus as a framework for a final deal, Mr. Bruno, who represents Rensselaer County, hinted that he could if the numbers accomplished the same goal of eventually allowing landlords a market-rate rent. "If it gets to market or close to market, it's another way of getting there," he said Sunday evening.

Mr. Pataki also signaled that he could accept the idea, provided that the bonus was large enough. But he also suggested that Mr. Silver would have to compromise on other areas of the rent fight before a final deal could be forged. Those issues include decontrolling apartments for wealthier tenants and requiring tenants to pay rent into escrow accounts during disputes with landlords, a measure strongly sought by landlords.

Tenants around the city grew increasingly nervous as the deadline loomed. By 5 P.M. Sunday, 1,848 people had called the emergency information telephone lines that Mayor Rudolph W. Giuliani set up for concerned tenants. A total of 3,166 people have called since Friday afternoon, when the lines opened, the Mayor said.

Most of the callers live in Manhattan.

At the 10:15 A.M. Mass at St. Patrick's Cathedral on Sunday, John Cardinal O'Connor reiterated his position, saying current rent regulations should be extended until "a just and fair resolution for everybody involved" can be reached, said Joseph Zwilling, a spokesman for the Roman Catholic Archdiocese of New York.

The Cardinal asked congregants at the Mass to pray for the officials in Albany who are working on the issue, though he did not specifically cite anyone by name.