Bleak House: Finding Seven



The State's rent regulation laws are of vital interest not only
to tenants and landlords but should be to DHCR, the agency which
must administer them, as well. The laws impose duties and
mandates upon the agency and to a great degree dictate the
specific actions DHCR must take in its day-to-day operations.

If particular statutory requirements pose burdens in carrying out
the Division's general mandates, DHCR officials are in a unique
position to identify those obstacles and suggest legislation
which could eliminate them. DHCR staff who work with the State's
rent regulatory laws on a daily basis have a unique and valuable
vantage point from which to suggest positive changes which would
improve the system and make its provisions fairer and easier to
deal with for both owners and tenants alike.

In order to propose bills to modify rent laws, DHCR must get the
Administration to support its proposals and then work to get them
enacted into law. When it comes to landlord/tenant laws, however,
both the Administration and DHCR have chosen to remain largely
absent from the legislative arena.

Too Hot to Handle?

During the 1987 legislative session which is now drawing to a
close, DHCR and the Administration did not submit a single
proposal to the Legislature dealing with any aspect of the rent
regulatory system. Previous years have seen little more activity.

In 1985, DHCR and the Administration submitted a handful of bills
dealing with rent regulation statutes and then made virtually no
efforts to get any of them enacted into law. In 1986, DHCR
actually withdrew the most comprehensive proposal it had
submitted the previous year, a bill to make uniform a number of
penalties and procedures which DHCR must now administer in
different ways depending upon whether an apartment is rent
stabilized or rent controlled. The bill had the potential for
making DHCR's enforcement of the rent regulatory laws easier by
standardizing various enforcement actions used by the agency.

In 1986, DHCR hired three consultants, (in addition to the
consultant discussed earlier who dealt with other issues) and
used their work product to propose a comprehensive set of
recommendations to the Governor to consolidate and strengthen the
State's rent regulation laws. Five months after the report's
transmittal to the Governor, however, the Administration has not
endorsed or repudiated any of its recommendations or indicated
any timetable for doing so. We are not aware of whether the
proposals are in fact being considered at all.

Why have DHCR and the Administration chosen to play such a
limited role in seeking legislative changes in the rent
regulatory system which DHCR administers? In a recent interview
with Dave Hepp of public television's Inside Albany, Commissioner
Eimicke said the Governor had focused his energies on pushing for
more money to build housing but had not played an active role in
seeking legislation to reform the rent regulation system because
of the difficulty of getting such legislation passed. From the

     Commissioner Eimicke: You only have so much capital and
     if it's clear from the outset that you're not going to
     get anywhere, I don't think it's practical, I would
     never advise him [the Governor] and I haven't advised
     him to jump into a situation when there's no hope of

     Dave Hepp: Doesn't a situation like that really call
     for spending some capital and being a leader? The
     situation is terrible, right? I mean you just told me
     that on a scale of one to ten, the housing situation in
     New York is a three.

     Commissioner Eimicke: Right, and I also told you that
     rent regulation had very little to do with that housing
     crisis. It's a very marginal impact. So it's a wrong
     place to focus your energies and in fact, the Governor
     [has] focused his energies where it should be, which
     was getting money for housing.

There is no doubt that the development of programs to increase
the supply of affordable housing is tremendously important and
that the Administration has been active in recent years in
developing a number of important initiatives to meet that goal.
The functioning of the rent regulation system, however, also has
a tremendously important effect on the lives of millions of New
Yorkers. The committees thus found Commissioner Eimicke's
advocacy of a position of non-involvement by the Governor in
issues affecting the rent system disturbing.

Landlord/tenant legislation, particularly legislation involving
the rent regulation system, is among the most politically
volatile subjects which the Legislature must consider. But while
Commissioner Eimicke may believe that sitting on the sidelines
makes the most sense politically, it is reasonable to conclude
that such a strategy may also contribute to the continuing
inequities and inefficiencies of the rent regulation system.

DHCR and the Administration are in a unique position to push for
changes in the State's rent regulation laws for two reasons.
First, as was noted earlier, DHCR officials and staff are the
parties best equipped to know what statutory changes would
improve the efficiency of the agency. Given the problems
documented in this report, the importance of enacting such
changes cannot be overestimated.

Second, given the fact that the Assembly and Senate are usually
at odds on issues of rent regulation (the Assembly seeking to
increase tenant protections and the Senate seeking to lessen the
restrictions on owners which those protections necessitate), the
Governor is in a unique position to bring the two sides together
and use his office to support changes in the system which might
benefit all concerned. These twin opportunities for enacting
positive changes in the rent regulation system have remained
largely unutilized by DHCR and the Administration. Perhaps partly
as a result, the statutes DHCR administers have seen little
change since 1983.

Sufficient Funds to do the Job?

Other than its underlying statutory authority, the major limiting
factor on DHCR's ability to administer the rent program is the
amount of money it is given to run the system. DHCR and the
Administration have not expressed dissatisfaction with the more
than $60 million the Legislature has provided to DHCR thus far.

The Administration has proposed providing DHCR with less in its
executive budgets than the agency requested initially. The
Legislature in turn at various times has both cut the
Administration's proposed rent regulation appropriations and
added to them. DHCR officials on a number of occasions have said
privately and to the media that they could do a better job with
additional funds, but at the same time have both failed to spend
monies appropriated by the Legislature and consistently
maintained in official public statements that existing budgets
have provided them with sufficient resources to run the system. A
number of examples are illustrative.

As was noted earlier, the Legislature provided a special $350,000
appropriation to DHCR in April of 1986 to hire additional
attorneys and support personnel for the Enforcement Bureau. DHCR
waited six months before even requesting authorization to utilize
the funds and by February of 1987 had not yet spent any of them.

The Executive Deficiency Budget passed in March of 1987 contained
a cut of $593,000 from the FY'86-'87 appropriation originally
provided by the Legislature to run the rent administration
program. (The Deficiency Budget is annually submitted by the
Administration at the conclusion of the April-March fiscal year
in order to bring appropriated funds in line with actual

When asked at budget hearings in February of 1987 whether the
proposed DHCR rent administration budget for the fiscal year
beginning April 1, 1987 was adequate to allow DHCR to properly
run the rent regulation program, Commissioner Eimicke responded
that the budget was "very tight" but that, "I'm confident we can
manage within the resources we have." A letter from Assemblyman
Grannis to the Governor in March of 1987 asking if any of the
serious DHCR administrative problems which had been revealed at
the Assembly's hearings could be remedied with additional funds
elicited no response.

The preceding chronology of budget statements and actions reveals
one of two things: either the Division has enough money to do its
job properly and statements to the contrary are merely excuses
for the agency's poor performance, or the Administration and
DHCR, in official public pronouncements, are not being completely
forthright about the agency's needs. If the former is true, DHCR
will have to look to changes other than additional appropriations
to improve its operations. If the latter, the Administration and
the agency should let the Legislature know how much is needed to
get DHCR's house in order.

Quiet grumblings, and unsubstantiated claims from DHCR officials
about the need for more money without a consistent public
position on the need for additional funds will never get DHCR the
money it needs to properly operate the system. As with the
statutes DHCR administers, the Administration and the agency
should act forcefully to seek the funds they need in the budget
process, or stop complaining that more money would help each time
another agency failure is exposed.

The New York City Rent Stabilization Code -- Almost Two Years In
The Making

DHCR has faced additional difficulties because until May 1st,
1987, it did not have an updated Code of administrative
regulations defining the specific rules landlords and tenants
must follow in dealing with the rent regulatory system.

The Omnibus Housing Act of 1983 retained the requirement that the
Rent Stabilization Association (RSA), a landlord trade group,
promulgate amendments to the New York City Rent Stabilization
Code. The Code is the body of administrative regulations which
define the provisions of the New York City Rent Stabilization
Law. The pre-1983 system for amending the Code, left in place at
the insistence of the Senate majority in the Omnibus Housing Act,
authorized the RSA to amend the code subject to the approval of
the City's Housing Department (HPD).

In 1984, the RSA submitted a proposed set of Code amendments to
implement the changes made by the Omnibus Housing Act. The
proposed revisions, however, were so blatantly biased in favor of
the real estate industry and contrary to law that the City
rejected them outright. The Legislature then enacted legislation
which transferred the authority to promulgate Code amendments
jointly to DHCR and HPD. The Governor vetoed this legislation
because it did not provide DHCR with the sole authority to amend
the Code. The following year, legislation was passed which
eliminated HPD's official involvement. DHCR finally got sole
authority to promulgate changes in the Code on August 2nd, 1985.

The Legislature and public had hoped and expected that the
updated regulations would be adopted shortly thereafter. DHCR had
known for months that it would be given the authority to
promulgate Code amendments and was well aware that its
constituents were facing great difficulties in dealing with an
outdated Code which did not reflect the current Rent
Stabilization Law. Inexplicably, DHCR waited over eight months
before submitting a draft Code for public comment. During public
hearings in April of 1986, Commissioner Eimicke promised that the
new Code would be adopted "within 45 days." DHCR instead waited
another full year before adopting the final version of the Code.
which became effective May 1st, 1987.

Why the long wait? Part of the reason may have been that waiting
made the most sense politically. Both tenants and owners raised
vigorous objections to every Code draft circulated by DHCR. But
over time, the political storms engendered by the new Code grew
quieter as advocacy organizations became numbed by months of
delays. By the time the Code was finally adopted, the initial
protests from owners and tenants, while still keenly felt, had
ceased to be a major issue for either the media or the
Legislature and DHCR could finally adopt its Code without major
political cost.

The absence of an updated Code has contributed to the chaos of
the rent system because neither tenants, owners or DHCR have had
a consistent set of rules to go by in seeking to comply with the
statutory requirements of the Rent Stabilization Law. But while
the new Code may eliminate some of these difficulties, many of
its substantive provisions may also impose new administrative
burdens on DHCR. This is because the Code attempts to resolve
many of the difficult policy issues DHCR was required to grapple
with by authorizing the agency to decide a number of types of
issues on a case-by-case basis within broad, discretionary

The agency will be given new authority to set rents, determine
whether apartments are subject to regulation, authorize the
modification of required services, authorize new terms in
tenants' leases and decide apartment succession rights cases with
fewer specific standards, in many cases, than were provided in
previous versions of the Code. Given the difficulties DHCR
experiences in adjudicating its already large caseload, the
agency's ability to effectively administer these new grants of
authority remains a matter of great concern.