Ripple Effect of New Rent Laws Feared for Outer Boroughs

NY Times, June 1, 1997
NEW YORK -- Tina Gilbertson pays $711.34 a month for a Greenwich Village walk-up with a bedroom smaller than some bathrooms, and she feels lucky to have it. But there are reasons -- the financial uncertainties of an acting career and a boyfriend she may one day want to live with -- why she might not stay long in the spartan apartment it took her six months to find.

So she takes a dim view of Gov. George Pataki's proposal to deregulate apartment rents when tenants move out or die. "Vacant apartments will be a lot more expensive, and I won't be able to afford anything else in Manhattan," she said. "Either I'd be trapped in this apartment, or I'd have to move out of Manhattan, maybe to another part of the city."

Talk like that is scaring people in the other boroughs, particularly Brooklyn and Queens, who fear that the governor's plan would mean a mass migration of people out of Manhattan into their neighborhoods, increasing the demand for housing there and pushing up rents.

In addition to letting the owners of vacant apartments charge whatever the market will bear, a policy known as vacancy decontrol, Pataki's proposal would deregulate the rents for all apartments whose residents earn $175,000 a year or more.

"It's not just that there's going to be a flood tide of people out of Manhattan," said Bernice Siegal, a board member of the Queens League of United Tenants. "These will be people who are used to paying higher rents, and many of them will have the ability to pay very high rents. You're going to see much higher rents out our way."

In the last month, that concern has become a regular topic among Democrats, who make up the majority in the state Assembly, as they plot strategy in the fight over rent laws that the state government has been obsessed with all year.

At first, the political debate focused largely on Manhattan, following the conventional wisdom that deregulation would push up rents most steeply in the southern half of that borough, where rents are already highest and vacancy rates lowest.

But as they begin to contemplate the ripple effect in their districts, legislators in the boroughs outside Manhattan have become more concerned about the governor's plan, stiffening the Assembly Democrats' resolve to maintain the current laws.

Assemblywoman Melinda R. Katz, Democrat of Queens, is among them.

"Thousands of people in Manhattan who cannot afford to live there anymore are going to start looking for nice neighborhoods in Queens and Brooklyn, they're going to end up taking the apartments that are there, and the rents are going to go up," Ms. Katz said. "A lot of the renters in my district are older and they're not that well off, and they won't be able to afford it."

To some degree, the effect is already under way. Rents in Manhattan rose sharply in 1996, as the vibrant economy increased competition for apartments there. Real estate professionals say that even before the fight over the rent laws began, higher rents in Manhattan had begun to lead to an increase in demand and prices for apartments in the more expensive neighborhoods of the other boroughs, like Forest Hills, Brooklyn Heights and Riverdale.

And tenant advocates charge that landlords have begun to raise rents this year, in anticipation of a boom brought on by deregulation, though no up-to-date figures are available on average rents.

Vacancy decontrol and luxury decontrol would have the greatest effect on Manhattan, analysts say, because it has the highest concentration of wealthy renters and rent-stabilized apartments, the ones that would be affected by vacancy decontrol. In Manhattan, 61 percent of the rental apartments are rent-stabilized, compared with 54 percent in the Bronx, 43 percent in both Brooklyn and Queens, and 19 percent on Staten Island.

At the same time, the other boroughs have a large number of unregulated units, where landlords can raise rents as high as the market will bear, even for long-term tenants. In Manhattan, just 17 percent of apartments are unregulated, but in Brooklyn it is 40 percent and in Queens it is 46 percent.

Florence Fisher, 63, who lives in Flushing, Queens, said that when talk of deregulation began in December, she and her neighbors did not think it would affect them much. But as the year has worn on, she said, and they have considered the consequences of Pataki's plan, their fear has grown.

"If I were living in Manhattan and I had to pay $2,000 to get a new place, I'd look to Brooklyn, I'd look to Queens," Ms. Fisher, who works for a housing preservation group, said. "Those people are going to be all over our neighborhoods."

And in Manhattan, it is not hard to find people, like Ms. Gilbertson, who are eyeing the other side of the East River.

Karen Norden says she has been thinking about leaving her one-bedroom apartment on the Upper East Side when her lease runs out in September, because the $977.60 monthly rent is too much for her. Though her home is rent-stabilized, the rent increases allowed by the city's Rent Guidelines Board in the last 10 years have outstripped inflation.

"If they do vacancy decontrol, there's no way I could afford another apartment in Manhattan," said Ms. Norden, a 37-year-old social worker. "So I'm either stuck here, in an apartment that's getting too expensive for me, or I move back to Queens. And if I move, I would never, ever have a rent-stabilized apartment again."

But experts are divided as to whether there is reason behind the fears.

Vacancy decontrol and luxury decontrol could not possibly displace enough Manhattanites to be more than a blip in the vast housing markets of the other boroughs, said Frank Braconi, executive director of Citizens Housing and Planning Council of New York, a nonprofit policy research group. "It would probably be fewer than 20,000 families absorbed into a market of a couple of million units," he said.

Part of the fear, he said, is based on an over-estimation of the effects of decontrol in Manhattan. While the apartments that have been true bargains would see large rent increases if they were deregulated, most, he said, would not.

Elizabeth A. Roistacher, a professor of economics at Queens College and the City University Graduate Center who has studied the rental market, agrees with much of Braconi's argument about the long-term impact of deregulation, but she argues that in the short run, there would be great turmoil.

"At first you'll see landlords asking for quite high rents," she said. "They will soon find that they often can't get them, so the asking prices will eventually come down. But those initial asking prices will cause tremendous dislocation, motivating people to move, to switch to ownership or to rent outside of Manhattan."

Peter Marcuse, a professor of urban planning at Columbia University, foresees dire effects from vacancy decontrol. "Within a few years, lower-income and middle-income people will find it nearly impossible to find affordable housing in the lower half of Manhattan," he said. "You'll see a huge exodus to the outer boroughs. The demand for housing there will go up sharply, and so will rents."

Copyright 1997 The New York Times Company