Bonus Plan Could Lead to Rent-Control Compromise

New York Times, June 16, 1997
NEW YORK -- As the rent-regulation debate in Albany narrowed to a numbers game Sunday, the vacancy-bonus proposal advanced by Assembly Speaker Sheldon Silver made its way rapidly along the grapevine of anxious rental-property owners in New York City. The reaction was unequivocal.

"I think this stinks," said Bonnie Haber, whose family owns 14 small apartment buildings in Queens and Washington Heights. Ms. Haber called Silver's plan -- in which apartments would remain regulated but landlords would get slightly bigger rent increases when those units became vacant -- "a token that's barely even a token."

In Albany on Sunday, Gov. George Pataki and Joseph Bruno, the Senate majority leader, dismissed Silver's plan, which calls for an increase in the vacancy bonus already allotted to landlords when tenants vacate rent-stabilized apartments. Nevertheless, both sides said some version of the Silver plan, one of the approaches discussed by negotiators last week, could form the basis for a compromise.

Silver's plan would allow owners to increase the rents by one-half of 1 percent for every year the previous tenant had lived in the apartment, up to 10 percent.

The increase would be on top of those already allowed under law and set by the city's Rent Guidelines Board every year. When it votes June 23, the board is expected to approve a 2 percent increase for a one-year lease and a 4 percent increase for a two-year lease. In addition, the board is expected to allow a 5 percent increase when an apartment becomes vacant.

So under the scenario offered by Assembly Democrats, the biggest increase a landlord could expect on a vacant apartment would be 19 percent. A $1,200 rent, for example, could be raised to $1,428 if the previous tenant who left it had been there 20 years.

But landlords said angrily on Sunday that even the biggest increase allowed under Silver's plan was paltry when stacked against mounting operating costs and other expenses. They also predicted that the Silver plan, if enacted, would not enable them to obtain the maximum increase for most apartments, because tenants who had been in their apartments for 20 years tended to remain until they died.

They added that the proposal sets up an unworkable dichotomy: In the apartments where regulations have kept rents very low -- at $400, say -- even a 19 percent increase would be tiny, bringing the rent to $476. On more expensive apartments, where high turnover had allowed regular increases, many landlords said the market would not bear even the increases allowed under law.

"A percentage increase just won't work," said Ming Wang, an architect who owns two small apartment buildings on the Upper East Side. "They have to let us go to a market rent, or the problems that we have in our buildings stay."

Billy Easton, a leader of the New York State Tenants and Neighbors Coalition, which advocates preserving the current rent laws, said Sunday that he also adamantly opposed Silver's plan, but he found it surprising that landlords would not consider it a fair solution.

"For a lot of apartments, what this would mean would be a doubling of the normal increase when a vacancy comes, a 100 percent increase in the increase," Easton said. "I think that's pretty extreme, and that they have rejected it shows just how far they want to go. What would they consider fair? A 500 percent increase?"

The refrain from small and big owners alike on Sunday was that the plan offered by Silver also did nothing about the myriad rules and restrictions under the rent laws that they claim are strangling them, allowing tenants to wage rent strikes and fight evictions for years.

"There are a whole slew of other issues here that nobody seems to care about," said Joseph Strasburg, president of the Rent Stabilization Association, the city's largest landlords' group. "The point of full vacancy decontrol would be to get us out of all this paperwork and needless rules. This would be just putting in another layer."

Privately however, landlords conceded Sunday that they could accept as a fallback a system under which the rent on a vacant apartment rises to market level and then the apartment is placed under regulations again for the next tenant, providing limited rent increases until the next vacancy.

But many owners held out little hope that such a plan would emerge from the negotiating table in Albany, because it would cause rents in Manhattan to rise more steeply than in other boroughs. And the political motivation for Assembly Democrats, they charged, was to protect Manhattan voters at any cost.

"I'm beginning to think," Ms. Wang said, "that this is not about reality anymore."