N.Y. Senate Leader Vows End to Rent Control

New York Times, December 6, 1996

NEW YORK -- Staking out a position at one end of what promises to be a pitched battle, the Republican leader of the state Senate on Thursday proposed to do away with almost all rent regulation by mid-1999.

Sen. Joseph Bruno, the Senate majority leader, all but dared the Democratic leaders of the Assembly to stand in his way, stating that if they do not work with him to phase out rent regulation, he will simply allow the current rent laws, which cover about 1.2 million apartments, nearly all of them in New York City, to expire next June 15. Without an extension of the law in some form, all landlords would be free to charge whatever the market would bear when current leases run out.

While his comments may be just the opening position in haggling that will likely last the length of next year's legislative session, Bruno showed how serious he is about rent deregulation three years ago, when he helped push through decontrol of certain high-rent units, the first major change in the system in a generation.

Bruno said he would block an extension of the law, allowing it to expire, or "sunset."

"When a law sunsets, it sunsets all by itself," Bruno, who is from Brunswick, in Rensselaer County, told the annual meeting in Manhattan of the Rent Stabilization Association, the largest landlords' group and a powerful political fund-raising and lobbying force. "You don't need the Senate, you don't need the Assembly, you don't need the governor. That's the framework in which we're going to work."

And he asserted Thursday that he was not just posturing. He predicted that Assembly Speaker Sheldon Silver, a Manhattan Democrat, would hold the state budget and any legislation dear to Republicans hostage in an effort to try to save rent regulation. Bruno said he would pay that price.

Three major landlord groups have contributed more than $700,000 this year to state lawmakers' campaigns, mostly to Republicans, and that figure does not account for contributions from individual landlords. The largest beneficiary was the Senate Republican Campaign Committee, controlled by Bruno, which received $174,000.

Tenant advocates, who argue that deregulation would price hundreds of thousands of families out of the housing market, predicted Thursday that any wholesale retreat from rent regulation would make it open season on Bruno and his allies in the 1998 elections.

"The Republicans are going to lose a lot more seats if they do something like this, not just in New york City but in suburban counties, too," said Billy Easton, executive director of the New York State Tenants and Neighbors Coalition.

Of Bruno's insistence that he is inflexible, Silver said, "I think in the course of the next six months, there's a lot of give and take." He has resisted any significant retreat from rent regulation, saying Thursday that it would create "a city of the very poor and the very rich."

In a meeting Thursday with the editorial board of The New York Times, Bruno cast Silver as one pole in the coming debate, with himself -- "as far opposite as I can get without saying on June 16, you're totally decontrolled."

But, as Silver noted, the opposition to Bruno's plan extends to his own party. Gov. George Pataki, who has worked hard to expand his political base in the city, and Republican members of the Senate from the city and its suburbs have expressed some unease with an outright abolition of rent regulation. Thursday, Pataki released a statement citing a need to "move toward a market system while continuing protections for senior citizens, the disabled and those on fixed incomes," but he declined to comment directly on Bruno's plan.

Mayor Rudolph Giuliani, a fellow Republican who has no direct role in the fight but could influence the debate, said Thursday that he supports the current system. "I think we have struck a reasonable balance in New York City with our rent regulations, our rent increases," he said. "I think New York City should be left to make this decision for itself."

Under Bruno's plan, any unit that became vacant after June 15 would be completely decontrolled. Luxury decontrol, which now applies to any apartment that rents for $2,000 a month or more whose occupants have annual incomes of more than $250,000 for two consecutive years, would be expanded. And all units would be decontrolled in 1999, or when their leases expired, whichever came later. Only protections for low-income elderly and disabled renters would remain.

Bruno indicated a willingness to compromise -- and only a slight, grudging one at that -- only on his proposal for a two-year span between the expiration of the current law and the end of rent regulation.

And he said it does not matter how much he is undercut by fellow Republicans because he holds the trump card, in the looming prospect of a June 15 end for all rent regulations. "I don't need any votes," he said.

Asked if he had discussed the matter with Pataki, Bruno said: "I informed the governor. It was a monologue. He listened."

Rent stabilization applies to about 1 million apartments in New York City, and rent control covers an additional 100,000. Each sets a maximum rent for an apartment and limits annual increases, but rent control has generally kept rents much lower than rent stabilization. There are 60,000 rent-stabilized apartments and 15,000 rent-controlled apartments in suburbs of New York City and in several upstate cities, with the heaviest concentration in Westchester County.

During the recession of the early 1990s, market forces pushed down rents, and landlords were often unable to get the maximum rents for vacant rent-stabilized units. Since then, surging demand for housing has combined with a supply that has been shrinking for more than a decade to push rents higher.

Predictably, the two sides to the debate disagree vehemently over who benefits from rent regulation, to what extent, and what its elimination would accomplish.

The Rent Stabilization Association points to a 1992 study that it commissioned by a Harvard economist, which found that rents for regulated and unregulated comparable apartments are essentially the same, except in Manhattan below 96th Street, and so deregulation would not affect the average rent. Even in the lower half of Manhattan, it states, deregulation would raise rents an average of just $50 a month.

By contrast, a Tenants and Neighbors Coalition study found that unregulated rents were one-quarter to three-quarters higher than regulated rents in the same neighborhoods. "Why would the landlords be fighting this so hard unless they stood to make a huge profit?" Easton asked.

Bruno contends that rent regulation has inhibited apartment construction and rehabilitation, contributing to the housing shortage and ultimately driving up rents. Easton notes that landlords are already free to build unregulated apartments. The senator says wealthy and upper-middle-class tenants benefit most from rent regulation; the Tenants and Neighbors Coalition cites figures showing that the poorer residents are, the more likely they are to live in rent-regulated buildings.

What is clear is that the impact of deregulation would vary enormously, not just neighborhood by neighborhood but tenant by tenant. In some buildings, new renters pay several times as much as their more tenured neighbors. And income levels -- particularly in more expensive neighborhoods -- can also vary sharply.

Copyright 1996 The New York Times Company