After Handshake Deal, Albany Has Trouble Writing a Rent Bill

New York Times, June 17, 1997
ALBANY, N.Y. -- After reaching a handshake agreement that would continue rent regulations for 1.1 million apartments but add substantially to the income of landlords, negotiators reported slow progress Monday in actually writing the deal into law. Without a bill ready to vote on, lawmakers went home without taking any action.

Legislative leaders and aides said none of the sticking points in drafting the bill threatened to unravel the deal, which could pass the Legislature and be signed into law by Gov. George Pataki on Wednesday.

The previous laws, last renewed four years ago, lapsed at 12:01 a.m. Monday, a prospect that 2.5 million renters in New York City and its suburbs had anticipated with dread for months. But legislative leaders said there would be no practical effect to a few days' expiration because the bill being drafted would be effective retroactively.

At 2 a.m. Monday, the governor and legislative leaders, looking haggard after a grueling series of talks that had begun at 10:30 a.m. on Sunday, announced an agreement that would maintain the current system of rent regulations while allowing larger rent increases for vacant units.

One of the primary aims of Republican leaders and landlords was to allow rents, which they said had been held artificially low by regulation, to rise toward market rates when apartments became vacant. They made some strides in that direction, and in that and other ways, the accord was the greatest gain that property owners have made in changing the system since the early 1970s.

Republican leaders failed almost completely to achieve their other main goal, to remove housing units from the regulation system. The agreement moves some apartments out of regulation, those renting for $2,000 or more, whose occupants earn $175,000 a year or more for two consecutive years, but officials said that provision would apply to only a few thousand of New York City's more than 1 million regulated units.

"It is a clear-cut victory for tenants, a straightforward repudiation of vacancy decontrol," said Billy Easton, executive director of the State Tenants and Neighbors Coalition, the tenant advocacy group.

Landlord groups declined to comment on the deal, though some individual owners expressed disappointment with it.

Senate majority leader Joseph Bruno said the most serious of the negotiating obstacles Monday was in the system of deregulating wealthy renters, or luxury decontrol. Since 1993, the law has deregulated apartments of renters who pay $2,000 a month or more and earn $250,000 or more in two consecutive years, and it has deregulated any vacant apartment with a rent ceiling of $2,000 or more. State leaders have agreed to lower the income limit to $175,000.

But Bruno wants the system revised so that renters above the income level would be deregulated as their rents rose above $2,000, even if the rents were below the threshold when they moved into their apartments. Democrats want the decontrol limited to people who pay $2,000 or more now, or who move into apartments costing $2,000 or more.

Democratic officials insist that the issue is not a serious one. A greater stumbling block, they said, is the language that would require tenants to continue paying their rents while disputes with landlords are pending in Housing Court, an issue particularly crucial to small landlords.

Democrats accused Republicans of changing some of the wording that had been agreed to on Sunday night, but would not elaborate. Currently, Housing Court judges often allow tenants to withhold rent when they are claiming misconduct by landlords, like harassment or failure to provide services, until the dispute is resolved. Landlords say that once a case is over, they often cannot collect back rent.

The agreement would require tenants, after a case has been adjourned twice, to resume paying rents into an escrow account controlled by the court until the case is closed, with strictly outlined exceptions. For people who live in buildings of 12 units or fewer, only the contested part of the rent would be paid to the court, while the rest would continue to go to the landlord.

"There is a lot of technical language," Assembly Speaker Sheldon Silver said of the slow-going process. "I don't think there is anything fatal."

The agreement keeps in place the current system that limits annual rent increases for continuing tenants in rent-stabilized and rent-controlled units. Those increases are set each year by New York City's Rent Guidelines Board; this year's increases, which have not yet taken effect, are 2 percent for a one-year lease and 4 percent for two years. Last year's were 5 and 7 percent.

The major change that the deal makes is to raise the rent ceiling on an apartment by at least 20 percent when it becomes vacant, compared with this year's vacancy allowance set by the Rent Guidelines Board at a maximum of 9 percent. This marks the most substantial loosening of rent controls since 1971, when the state enacted vacancy decontrol, which it rescinded three years later.

If the previous tenant had lived in the apartment eight or more years, upon vacancy, the rent ceiling would rise six-tenths of 1 percent for each year that the renter lived there, in addition to the 20 percent increase. For example, if the previous tenant lived in an apartment 20 years, the landlord would be allowed a 12 percent increase, plus the 20 percent.

This provision is intended to correct partially the wide disparities sometimes seen in rents of similar apartments. For decades, the regulation system has allowed rents to rise faster on vacancy, so that apartments that frequently turned over often have much higher rent ceilings than neighboring units that stayed in one family for many years.

For apartments that rent for $300 or less -- a relatively small part of the market that often consists of people who have kept an apartment for a very long time -- the ceiling would be raised on vacancy by $100, in addition to the other formulas. If the previous rent was between $300 and $500, the ceiling would rise by the formula -- 20 percent plus the longevity bonus -- or by $100, whichever is greater.

Pataki and Bruno said the combination of factors would bring three-quarters of all apartments to market rents the first time they became vacant. Democrats and tenant advocates disputed that, saying the compromise had prevented widespread, steep increases. Easton of the tenants' coalition said the market rates for most units would be 50 percent or more above current rents.

For apartments renting for well below market rates, the new system would clearly allow steeper increases, but it would not allow the doubling and tripling of rents that some units would have seen with vacancy decontrol.

At present, a wide range of family members and domestic partners can inherit a lease and its rent protections. The agreement would strip aunts, uncles, nieces, nephews and cousins of succession rights, and would limit inheritance to one generation. A second generation could keep the apartment and rent protections, but only by agreeing to pay the increased vacancy allowance.

The agreement also contains new criminal penalties for landlords who harass tenants in an attempt to get them to vacate apartments.