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Wanted: a Vision for Affordable Housing

Posted by Michael Gresty on June 11, 1997 at 22:41:15:

A contribution to the debate. Sent to the NY Times, whose reporting has been scandalously biased. Circulate as you think fit.
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Michael Gresty, May 9, 1997

The public debate that has developed since Republican Senate majority leader Joe Bruno announced last November his intention to ensure the demise of the half-century old state rent control and rent stabilization laws when they expire on June 15 has been so shrill as to render inaudible the few voices calling attention to the underlying issue - the question of affordable housing. To be sure, many of the points of view in the debate have referred in some way or other to this issue, but none has attempted to address it in all its complexity. There are so many factors affecting housing that serious thinking about solving the problem of the shortage does not produce good sound bites or good press, and above all, does not promise quick answers.
Most of the arguments against the existing laws, or advocating their modification, seriously ignore significant issues that have a bearing on the housing question, and many - some even well-intentioned - resort to specious logic to argue their points. For instance, there is the claim that sunsetting the laws will enable landlords to collect so-called “reasonable” (read: market-rate) rents, and thus increase their revenues. Some of the landlords say they will then be able to invest in renovating apartments and building new ones. This is disingenuous, since the present skewed rental market means that they should actually benefit from the current situation were they to build new apartments, not be disadvantaged by it. Moreover, there is little preventing them from borrowing funds to build - with or without subsidies - and some of them do. Thus the expiration of rent-control and rent-stabilization laws alone will not induce them to increase the supply of housing.
A few of the other arguments for decontrol made by the landlords and their allies invite greater scrutiny. Since landlords must mostly be making a profit on their investments now, and must have made their investments knowing full well what the parameters governing the rent-regulated market were when they did so, what reasonable justification can be made for the windfall they would receive if rents went up on average “only” 15%, let alone the more probable 50%, as they claim they would? And what argument for decontrol can be made by landlords of unregulated apartments, whose rents would fall to the new market median - supposedly, by their own estimates, somewhere between the current higher, unregulated averages and the current lower, regulated averages? Strangely, a lobby of landlords of unregulated apartments trying to protect their investments, which by this argument would be seriously threatened by deregulation, is voiceless in the debate.
Vacancy decontrol is often advocated as a ”reasonable” compromise in the dispute over the present laws. However, it was attempted in New York in 1971-74 and not only caused considerable social upheaval, but also failed to achieve any of the supposed benefits - new and improved housing, urban renewal, decline in abandonment and lower rents. In fact, decontrol further aggravated the housing crisis in every way.
Finally, the assertion that rent regulation is the cause of the housing shortage is baseless. History shows that the rent laws exist because of housing shortages, and not the other way around. They have always been enacted in response to a housing crisis, and when properly formulated, their calming effect has usually induced slow but sustained development, which is good for landlords and for tenants.
Now, the present rent regulation system is manifestly unfair. It is unfair because some tenants rights are protected in a way that others’ are not. This must be remedied - by extending protection to all tenants. Rent regulation is intended to serve a specific purpose: to induce a measure of stability into markets that are essentially volatile. In this respect New York is not comparable to just any city that has an unregulated market. It is only comparable to another metropolis - Paris, Tokyo or London, for example. Such cities are subject over time to severe extremes of pressure on their real estate markets, unlike smaller cities and towns. In order to maintain a degree of social stability, their rental markets must be regulated in some way. Regulation protects tenants from violent increases in rent that would force them to move or relocate when they have no wish to do so. Fair regulation should not be burdensome to administer and should ensure that while tenants are protected from dramatic increases, rents are adjusted to keep pace with annual inflation rates. Rent regulation of this kind is in force in some form or another in many major cities around the world such as Paris and London.
Discussions of rental housing are often confined to debates about the economics of development, management and rents. Economics may be a legitimate criterion for discussing housing, but it by no means accounts for all the issues. Housing is not merely a question of economics, housing is primarily about people and their lives and it lies at the core of social issues, along with freedom of speech and the rule of law.
Landlords’ concerns regarding housing are primarily entrepreneurial - they are generally investing to get a return, assessing and taking risks with their capital. They are rewarded, or not, for their wisdom in their decisions. Tenants, on the other hand, are not making investments. They do not own their apartments, they make improvements to them for their own use, and their rental payments only contribute to fulfilling their lease conditions - they do not bring a return. By the standards of the home-ownership market, renters are fools. They cannot even deduct some of their rent from their income taxes, like mortgage payments. But the rental market exists for tenants at every social level for all kinds of reasons - the need for a degree of mobility, temporary situations, lack of capital, lack of ability or inclination to purchase, desire or need to live in a community that they are unable to buy into, and, more often than not, a shortage of affordable decent housing to purchase. What this means is that tenants are not necessarily transitional - and that many remain renters for decades or generations, forming complex and rich communities.
Rent regulation means stability, not stagnation. Stable communities are able to engage in all kinds of activities social and economic that contribute to development. Strictly financial analyses distort the housing question by neglecting issues of community and culture. Social values and economic values must both be taken into account in addressing the problem underlying the current conflict - the need to formulate a good housing policy.
Affordable housing for purchase and rental is urgently required in New York City. This is the key issue - and if the debate could shift to this, something good might come out of the landlords’ lobbying and attack on the rent laws. The terms of the current debate - a calculated threat from the landlords’ allies in the senate and an equally hard-line response from the tenants’ associations - are a poor framework for the necessary discussion about housing, and are clearly forestalling it. It would be irresponsible to allow the current laws to expire without proposing a comprehensive long-term strategy for creating affordable housing - for purchase or rental - in New York, and without replacing them with permanent, better rent regulations which do not expire and which indefinitely set the rules for developing, managing and renting. The representatives in the senate, legislature and positions of leadership in state and local government, landlords, developers and tenants’ associations owe it to the people of this State to propose a coherent, effective and sustainable policy for housing and to calm the hysteria currently infecting discussions. Until such a policy for the production of housing and the protection of tenants can be devised, the present system of rent regulation must be maintained.
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