Rent Law Extension Remains Unofficial

New York Times, June 19, 1997
ALBANY, N.Y. -- For the third consecutive day, the Legislature adjourned Wednesday without passing a bill to extend state rent laws, as negotiators fought over a provision intended to make it easier for landlords to decontrol apartments that rent for more than $2,000 a month.

Gov. George Pataki and legislative leaders said they did not think the latest dispute would endanger the rent agreement they reached early Monday morning after months of contentious debate. That deal would give landlords more money for vacant apartments while keeping rent regulations largely intact.

Though the laws expired at midnight on Sunday, the leaders said the bill being drafted would reimpose rent protections retroactively so that tenants would not be harmed by the lapse.

"My expectation is we will take it up tomorrow," said the Senate majority leader, Joseph Bruno, R-Rensselaer County, moments after adjourning the Senate Wednesday afternoon. "I can't imagine this would be anything that would keep us from concluding."

At issue is when landlords will be allowed to decontrol certain high-priced units.

Under the law that just expired, landlords were able to decontrol apartments as they became vacant if the departing tenants had been paying more than $2,000 a month. Now lawmakers are debating whether landlords should be allowed to decontrol an apartment that was rented for less than $2,000 a month to the departing tenant if the rent rules allow the rent to rise above $2,000 for the new tenant.

The Republicans say that landlords who are permitted under the law to raise rents on vacant apartments to over $2,000 a month because of improvements to the units should be allowed to decontrol them immediately. The law allows landlords to pass one-fortieth of the cost of improvements on apartments to the tenants.

That means, under the Republican proposal, that a vacant apartment for which the previous rent-regulated tenant had paid $1,800 a month, and on which the landlord then made $9,000 in improvements, would be decontrolled for the next tenant, because the new rent would be $2,025 a month.

The Democrats contend that those units should not be decontrolled until the next time they become vacant.

The Republican proposal would also allow landlords to decontrol units for which the rent was allowed to rise to more than $2,000 a month because of the so-called vacancy allowances granted to regulated units when tenants move out, are evicted or die. The agreement reached Monday morning increases those allowances substantially.

The proposal would also affect a policy known as luxury decontrol, under which rent protections are lifted from wealthier tenants. Under the agreement reached on Monday, apartments that rent for more than $2,000 a month to tenants earning $175,000 a year or more for two consecutive years would be deregulated. The Republicans contend that luxury decontrol should apply to tenants earning that much whose rents rise over $2,000 through capital improvements. Democrats are opposed.

The issue over decontrolling higher-priced apartments is particularly important now, because many landlords appear to have kept units off the market awaiting the outcome of the rent fight. If the Republican plan is approved, many more of those units, though it is impossible to say just how many, will be decontrolled.

Several real estate brokers interviewed Wednesday in New York City said that for the last two or three months many landlords had been aggressively warehousing -- not renting apartments that became vacant -- as they waited for the outcome of the negotiations in Albany.