Neighbor vs. Neighbor

New York Times, April 16, 1997

As the adage has it, a conservative is a liberal mugged by reality. Add to that adage: A conservative is an erstwhile liberal tenant who is now a co-op owner in an apartment building put at financial risk by tenants who pay rents below -- often far below -- the building's per unit maintenance costs.

That ideological conversion was driven home to me by my daughter, a woman of impeccable liberal pedigree, for whom landlord was once among the filthier eight-letter words in the language. In the course of time, she became president of a upper-middle-class co-op with several rent-regulated tenants. Among that number was a tenant in a vintage rent-controlled apartment obliged to pay only what ancient property deeds referred to as a peppercorn rent.

My daughter and her board, sympathetic to the elderly tenant's plight, patiently waited nature's passage. A few years later, the lady died. But before the apartment could be recaptured, there suddenly appeared from afar a relative laying claims to the fabled bargain. The claim was eventually defeated but only after protracted and costly litigation.

The episode was a bitter lesson. Today's co-op owners have learned something about the economics of housing: That rent regulations start battles not only between landlords and tenants, but also between neighbors in the same building.

The co-op conversions of the 1980's tripled the number of owners who graduated from tenancy. Thousands of these new owners live in hybrid buildings in which regulated apartments constitute a high proportion, or even a majority, of the occupancy roll. Such buildings usually suffer from a wobbly bottom line, frequently on the verge of defaulting on their mortgages or taxes. Given their dubious financial circumstances, banks often resist refinancing co-op mortgages or giving loans to prospective co-op buyers, further damaging the future of these buildings.

The thousands of former tenants who are now unhappy or angry micro-landlords constitute a new factor in the pitched battle that will chew up Albany in the months ahead.

Traditionally, the battle over rent regulations has been between a coalition of property owners led by the Rent Stabilization Association, a dependable contributor to campaign coffers, and the entrenched lobby of tenant advocates, accustomed to victory because they wield hundreds of thousands of votes.

The checkbook is generally a poor match against the ballot box. But the thousands of new co-op owner-voters could help balance the debate over rent regulations. They would powerfully augment the landlords' cries of hardship: Against the impending hardships to tenants are the current hardships of these small-property owners.

Moreover, this new interest group, assuming the landlord lobby is sapient enough to recruit it, is geographically skewed toward traditionally liberal voting precincts. The gap between the co-op owner's monthly maintenance and the submarket rent of the lucky tenant across the hall is the widest in the bastions of the liberal elite, such as the Upper West Side and Park Slope. And the most financially troubled hybrid co-ops are concentrated in the Democratic fastness of Brooklyn, Forest Hills and Riverdale. In both cases, the once-faithful are much less certain to remain unalloyed devotees of the rent-control theology.

A compromise there will be, since neither the state Senate nor Assembly can afford to be permanently stymied on this issue.

Were history alone the guide, compromise would likely be struck at a point nearer the tenant than the landlord. But this time there may well be a shift the other way.

Louis Winnick is vice chairman of the Institute of Public Administration, which studies government management.

Copyright 1997 The New York Times Company