[NYtenants-online] NY Tenants Online 5/22/03

[Tenant]

NYtenants Online/TenantNet                                 5/22/03
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IN THIS ISSUE ...

1. Editorial
2. The Stealth War (City Limits)

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Rant on Rent

Rent-Controlled apartments these days are a 'Naturally-Occurring Retirement 
Community' or NORC. Except in extremely limited circumstances, no new 
rent-controlled units have been created since the early 1970's and only 
about 50,000 remain. In a few years, this could be the fate of rent 
stabilized units, now numbering around one million.

Vacancy Decontrol -- first implemented by the state legislature on a 
temporary basis in 1993, made permanent by Peter Vallone in New York City 
Council in 1994 and finally given real teeth by Sheldon Silver in the 1997 
Rent Wars -- have given landlords what they always wanted: the effective 
decontrol of Manhattan. See the Crains NY Business article, 'Landlords Snap 
up Apartment Buildings' at 
http://tenant.net/pipermail/nytenants-online/2003-May/000201.html

Tenants can rant and rave all they want about Pataki and Bruno, but the 
simple fact is that in a state that counts five Democrats to every 
Republican, the Democratic Party has failed tenants and affordable housing, 
either by lack of leadership, lack of ideas or by design (or all three). 
The absence of a meaningful two-party system in New York guarantees that 
those who might be Republican party members in other states, will run under 
the Democratic label just to get elected. Even those who once came from 
activist roots and altruistic motives, find themselves 
going-along-to-get-along ... joining the Big Boys' club ... in order to 
move up in the Democratic Party machinery and higher elected office.

Among those, in our view, is Assembly Speaker Sheldon Silver. In 1997, 
while tenants were entirely focused on Pataki and Bruno, Silver cut the 
back-room deal that left tenants in the miserable condition we now find 
ourselves. It could easily happen again as many tenant groups are unwilling 
(despite their private complaints) to buck the pied pipers of Tenants & 
Neighbors, essentially operatives of the Democratic Party - and as such 
unwilling to push the Democrats into taking effective action.

We've heard the deal may have already been cut for a straight extension of 
the rent laws. It's no skin off the backs of Pataki and Bruno who haven't 
risked their political capital this year, and who are content with their 
landlord consitutents that rent stabilization will continue phasing out.

And it is also no skin off the back of Sheldon Silver and his Assembly - 
many of who will continue to show up at local community meetings and swear 
their love and allegience for tenants, and they will stay in power, which 
is what it's really all about. Silver will go in the back room around June 
15th. You'll hear some rummblings, some rumors, some false starts and some 
deal-breakers -- all designed for copy for NY1 News reporters who can't 
distinguish between rent stabilization and lotto. Maybe around 2:15 AM 
they'll emerge from that back room and Silver will tell tenants he tried 
his best and that he was up against the firm resolve of tough Republican 
negotiators.

And from that queue, Tenants and Neighbors will march around the capital 
again, like they did in 1997, and again declare victory.

The next day you'll discover that vacant unit down the hall is now 
decontrolled and renting for $3,000 (and the new tenant will blame you for 
his high rent) and there's a MCI application in your mailbox.

============================================================
THOSE DUPLICATE NEWSLETTERS - again

Our last newsletter also had some problems with duplicate newsletters, but 
we were watching this time and shut it down when it appeared the system was 
going to recycle the list. We think it might have something to do with our 
aging server, system resources and the mail agent (sendmail) used by 
unix/linux servers. We tried a mailing on our Hellskitchen list and 
temporarily shut down the web server, thereby freeing up resources and it 
seemed OK, so we'll continue to watch it closely.

============================================================
THE STEALTH WAR
City Limits
June 2003
By Robert Neuwirth

The laws that keep housing affordable for more than 2.5 million New Yorkers 
expire this month. Governor Pataki says he wants to keep rent regulations 
alive. That's why tenants still have plenty to fear.
--------

So far, no one's making a huge amount of noise--not the landlords, not the 
tenants. Despite a few rallies in support of New York's rent laws, the 
decibel level has been decidedly low. But anyone who thinks there's not 
much at stake in the renewal of rent regulations this year ought to go to 
Queens.

There, in the bedroom borough far from the gentrification battlegrounds of 
Manhattan and Brooklyn, the new frontier in the battle over rent 
regulations is taking shape.

Consider, for instance, the Brussels and the Marseille, two buildings on 
67th Avenue in Rego Park. This twin-building development, built 41 years 
ago by developer Samuel LeFrak, might not seem a likely candidate for high 
rents. It's far out in Queens, after all, a long subway ride from 
Manhattan. But Janet Henne, president of the Bru-Mar Tenants Association, 
reports that at least two-dozen apartments--5 percent of the 485 units in 
the two towers--are no longer rent-regulated. Taking advantage of 
provisions in state law, the landlord has jacked up rents for those 
apartments beyond $2,000 a month, exempting them from New York's rent 
stabilization mandates.

"People really don't believe it's happening in Queens," says Henne, who 
moved into the complex 40 years ago and has lived there ever since. In the 
last few years, she says, "I have seen rents rise from $600 to more than 
$2,000. All of the three-bedrooms and many of the two-bedrooms here are 
already that high."

The rent jumps appear legal--a combination of increases the owner could 
make when apartments became vacant, rent hikes for renovations, increases 
for "major capital improvements" on the elevators and the boiler, and more. 
To Henne, they signal a move to pull the building out from the rent 
stabilization system. "They're definitely trying to get out from under rent 
regulations," she charges. "They've said so."

Henne's landlord can deregulate apartments thanks to a change in the laws 
developed by the City Council in 1993 and extended by the state in 1997, 
after a frantic last-minute deal in Albany that supposedly saved the 
regulation system [see "The Victory That Wasn't," page 21]. Now, once the 
rents on stabilized apartments hit $2,000 a month, landlords can remove 
them from rent regulations--a phenomenon called vacancy decontrol.

Today, the average stabilized rent in Manhattan has vaulted beyond $1,000, 
and landlords no longer see a $2,000 rent as the Holy Grail. Now, it's well 
within reach. "The $2,000 issue sent my practice through the roof," says 
tenant attorney Sam Himmelstein. "It creates this tremendous incentive for 
landlords to phony up evictions, and my practice has tripled."

Ten percent of all rent-regulated tenants--100,000 households--move each 
year. And this, tenant advocates say, means that landlords can easily use 
legal means to thrust rents throughout the city beyond $2,000 and thus get 
apartments out of the stabilization system. "Every apartment that becomes 
vacant in Manhattan, and many larger apartments in the boroughs, are in 
danger," says Judith Goldiner, a staff attorney with the Legal Aid Society.

The New York State Tenants & Neighbors Coalition estimates that 99,000 
apartments have been deregulated over the past 10 years because their rents 
rose beyond $2,000--and the group sees the trend accelerating.

Landlords scoff at this number. "I think that's an exaggeration," says Dan 
Margulies, executive director of the landlord lobby known as the Community 
Housing Improvement Program. He suggests that 40,000 to 50,000 high-rent 
apartments have been deregulated over the past decade.

All the numbers are estimates, because landlords don't have to get approval 
or even file a notice to remove the high-rent apartments from regulation. 
The Tenants & Neighbors figure is an extrapolation from U.S. Census data 
showing that the number of unregulated apartments in rental buildings has 
increased that much. The group argues that since most new buildings are 
co-ops or condos, or are part of the rent regulation system because they 
have received city tax incentives, this growth in the number of unregulated 
units represents the net loss due to vacancy decontrol.

The landlords don't offer any statistics to back up their estimate. But 
even supposing Margulies' number is correct, the impact is still 
huge--50,000 apartments is approximately 5 percent of all rent regulated units.

Given the mounting evidence that seemingly small changes in rent laws have 
had massive consequences in the real estate market, you might expect both 
landlords and tenants to be staking big claims as the rent laws come up for 
renewal. Six years ago, the last time rent regulations were set to expire, 
the verbal volleying was at fever pitch for months. Landlords and tenant 
groups were highly mobilized, and both mounted high-profile advertising 
campaigns. For the most part, the press echoed the landlords' claims that 
the rent laws were a curse on the city. And the final political deal--which 
folded rent regulations into New York State's budget package--was passed in 
such a rush that most state legislators didn't even have time to read the 
bills they were asked to approve.

This time around, it's as if landlords, tenants and politicians have all 
fallen into a black hole. No more rancor and clamor. No more gnashing and 
snapping. The hot button issue of six years ago has gone cold fusion.

Governor George Pataki, quizzed by reporters back in February, said, "I 
don't see any need for any dramatic changes"--though he suggested the 
possibility of some "minor changes to be made here or there." He added that 
he believed the law as amended in 1997 "has worked very well."

Ditto for State Senate Majority leader Joe Bruno. His staff told reporters 
that Bruno--who once vowed to "end rent control as we know it"--did not 
want to do anything to disrupt the system in 2003.

Indeed, landlords and tenants, who almost never agree on anything, concur 
on this: things are unnaturally quiescent. "We're not on the radar this 
year," says landlord lobbyist Margulies. "It's an issue in our own minds 
but not in Albany's. I think we really do have a budget crisis and we have 
a war on. And both are distracting."

Michael McKee, who heads rent regulation campaigns for the Tenants & 
Neighbors group, suggests that things are quieter because the Republican 
rhetoric has been more reasonable. There's a tenant action day planned in 
Albany on May 13, and McKee suggests tenants have a good chance to win back 
some of the items lost in 1997. "We're going into negotiations in a better 
position," McKee says. "The renewal is a given. The laws are going to be 
extended."

"There's not that much going on," adds tenant activist John Fisher, who 
runs TenantNet, an internet-based information service. But unlike McKee, 
Fisher finds the silence profoundly disquieting. He's concerned that the 
more conciliatory words coming from Albany have sucked the wind out of 
tenant organizing.

And he may have reason for his fear. Just because Albany seems relaxed on 
the rental front right now doesn't mean that landlords have given up their 
desire to end rent regulations. They're just willing to do it gradually. 
"Our goal is vacancy decontrol," says Jack

Freund, executive vice president of the Rent Stabilization Association, a 
landlord group. "But we've never said, 'End the rent laws immediately.' 
We've said, 'Phase them out.'"

This year, landlords are looking for some behind-the-scenes changes. "We'd 
like to see the vacancy decontrol concept extended," says Freund. Margulies 
gets more specific: he'd like to see the high-rent trigger for vacancy 
decontrol lowered to $1,750, perhaps with a phase-in to $1,500 over the 
next few years.

Hearing this, tenant attorney Himmelstein offers a terse response: "There 
go Brooklyn and Queens."

New York's rent regulations are actually two programs--rent control and 
rent stabilization. Rent control, which was designed to keep families of 
desperate veterans in their homes during World War II, is gradually phasing 
out. Today it limits rent hikes on just 52,000 apartments. As each 
controlled apartment becomes vacant, it floats to market rent and then 
joins the second program, rent stabilization.

In addition to increases governed by law, stabilization cushions tenants 
from displacement by guaranteeing them an automatic one- or two-year 
extension every time their lease comes up for renewal, and gives them 
certain rights in court. All buildings constructed after 1974 are exempt 
from rent stabilization, unless a developer received certain types of 
public financing.

Approximately 1 million apartments are rent stabilized, which makes rent 
stabilization by far the most important affordable housing program in the 
city. By comparison, housing projects provide 243,000 low-cost apartments 
across the five boroughs.

The rent laws must be renewed every few years by the state legislature 
because they are nominally emergency regulations--and thus must be 
triggered by a finding of a housing emergency. Though the laws affect only 
certain buildings in New York City and in Nassau, Westchester and Rockland 
counties, this also means they must win the backing of upstate Republicans. 
The current rent laws are due to end on June 15 unless renewed by the state 
legislature and governor.

In February, the Assembly passed a strong bill that would extend the 
regulations and remove the most egregious change endorsed in the 1997 
bill--vacancy decontrol of higher-rent apartments. But it's what they call 
in Albany a "one-house bill"--it's supported by the Democrats who control 
the Assembly, but not by the Republicans who dominate the Senate, and not 
by the Governor.

Like most business in Albany, the rent laws will be negotiated in whatever 
passes for a smoke-filled room these days. And that means that three people 
will ultimately decide the fate of a million downstate apartments.

"When the deals get struck, at this level and magnitude, there are only 
three players," says State Senator Liz Krueger, a Manhattan Democrat. She's 
referring to Pataki, Bruno and Assembly Speaker Sheldon Silver. "The list 
of trade-off issues is enormous--and only those players know what they are 
holding out for."

In 1997, when the rent laws were part of the negotiations over the budget, 
the dealmaking became so frenzied that the laws actually expired for four 
days before the extension bill was passed. Earlier this year, it looked 
like it might be déjà vu all over again.

But in late April, that didn't seem likely. The Assembly and Senate 
hammered out a joint budget deal. Pataki declared he would veto it. And 
rent regulations were not part of the debate. "As far as I know, there has 
been no substantive discussion with the Senate involving rent regulations," 
says Jonathan Harkavy, chief of staff for Assembly housing committee chair 
Vito Lopez.

If the rent laws don't turn out to be part of the horse-trading for the 
budget, the Democrats will lose an issue they can use as leverage to get 
Republicans to come on board. Lopez suggests that Republicans have other 
legislative needs--such as bills to facilitate the cleanup of toxic 
brownfields, or certain upstate tax proposals--that the Democrats can hold 
hostage to force Republicans to accept the rent laws.

Judith Goldiner, the Legal Aid staff attorney, is conflicted about the 
possibilities. "I don't think it's a good thing for the rent laws to be 
tied up with this budget," she says. "But I don't know how much power the 
Assembly has without it."

What's more, Goldiner says, she's not sure why tenants are trusting Pataki 
and Bruno to come through on the rent issue: "Personally, I think you rely 
on George Pataki and Joe Bruno to your peril."

Following the disaster of 1997, one tenant group has decided to take on 
Pataki and Bruno from inside their own party. Tenants & Neighbors has 
targeted four key Republican and Conservative Party districts in and around 
New York City for its maximum efforts. It has led organizing campaigns in 
the districts of State Senators Martin Golden of Brooklyn, Serphin Maltese 
of Queens, and Long Island's Dean Skelos and Michael Balboni.

The idea is to get these downstate right-wingers to put pressure on the 
leadership in Albany to extend the rent laws, and it's a campaign that 
McKee maintains is working. "There are 15 Republican state senators with 
rent regulated apartments in their districts," McKee says. "Tenants are 
getting clobbered by rent increases and harassed. Landlords are being much 
more aggressive. Republican senators are hearing from their tenants and we 
believe this will put more pressure on Bruno."

Of course, McKee is not the only one trying to influence the Republicans. 
The landlord lobby is working its magic too, using campaign contributions. 
Last year alone, the Rent Stabilization Association poured more than a 
quarter of a million dollars into state Republican and Conservative party 
coffers--and that doesn't include contributions to individual candidates.

After prodding by McKee's group, several downstate Republicans did 
introduce two pro-tenant rent regulations bills in the State Senate this 
year--one that would extend the system and another that would eliminate 
vacancy decontrol. Republican leadership, however, has kept the bills 
bottled in committee.

To end the Senate stalemate, Krueger made a procedural move to force a 
vote. That was when a funny thing happened. Even the Republicans who 
supported the rent laws rejected bringing them to the floor. Instead, they 
accused Krueger of grandstanding.

"This is childishness," says Senator Frank Padavan, a Republican from 
Queens and one of the sponsors of the pro-tenant legislation. "It's 
political nonsense, plain and simple. To stand up on the floor of the 
Senate and say you want your bill voted on: I've been there 31 years and 
I've never seen anything like this create something positive. It's silly." 
Padavan says an issue like rent regulations needs "a three-way negotiation" 
between the Assembly, the Senate and the Governor--and that no political 
posturing will make that happen faster.

"Hell, yes, I was grandstanding," Krueger replies. "I desperately want to 
get this to the floor for a debate and vote."

It's because of the perverse nature of Albany politics--where supporters of 
rent regulations wind up, in effect, voting against bringing them up for a 
vote--that some tenant activists distrust the Tenants & Neighbors strategy 
of lobbying the downstate Republicans to put pressure on the upstate 
Republican leadership.

"If tenants dwell only on Pataki and Bruno, it won't work," asserts 
TenantNet's Fisher. "You have to ask, 'Who can really make it happen? Of 
the three men who will make this decision, who can make it better?' The 
answer is Sheldon Silver. Tenants are not focusing appropriately on the 
Democrats."

Fisher believes that to win any improvements in rent regulations, the 
Assembly Democrats, led by Speaker Silver, are going to have to threaten to 
kill some pet Republican projects. He worries that Democrats won't play 
true political hardball unless tenants push them--by making noise and 
letting the Democrats know that there will be a price to pay for any 
givebacks to landlords.

This strategy dispute shows a key difference between the tenant tactics in 
1997 and the way things are working today. In '97, tenants maintained a 
united front. Today, various groups, including, in addition to Tenants and 
Neighbors, Legal Aid, Metropolitan Council on Housing, and community-based 
tenant organizations, are working more independently. It remains to be seen 
whether this approach is a winner or will wind up diluting tenant clout in 
Albany.

For tenants, Goldiner says, the lesson from 1997 ought to be aggression. 
"The landlords went for the jugular and we didn't," she says. One of her 
big worries is that the rent laws will be extended, but at the 11th 
hour--and that changes will once again be slipped in without tenants 
knowing. This year, she wants tenants to be involved in the negotiations. 
"In 1997, the landlords were in the room. You've got to be there, and 
you've got to try to get into the room," says Goldiner.

Another wild card this year is the role of New York City Mayor Michael 
Bloomberg. In late March, he quietly signed the city extension of the rent 
laws. But his administration has not taken a position on the key 
issue--whether to repeal the high-rent vacancy decontrol made state law in 
1997. "Quite frankly," says Krueger, "I don't hear Mayor Bloomberg saying 
he wants this." Across the aisle, Padavan also says it's key for the Mayor 
to take on the vacancy decontrol question. "He's preoccupied on the 
budget--as he should be--and his focus is not on rent regulations," says 
the veteran Republican from Queens. "But we certainly need the Mayor to 
speak out on this issue." A spokesman for the Mayor did not return phone 
calls seeking comment.

So, for now, the hush persists. If the Armed Forces were naming it, perhaps 
this year's rent war would be called "Operation Enduring Silence." Tenants 
can only hope it's not the silence of the lambs.

SIDEBAR: The Victory That Wasn't

It was around 2 a.m. on Monday, June 16, 1997 when Assembly Speaker Sheldon 
Silver walked up to the microphones in Albany to announce the deal that 
saved rent regulations. He had gone into negotiations a man alone, and he 
emerged with a striking victory--or so it seemed.

Governor George Pataki and Senate Majority Leader Joseph Bruno had made no 
secret of their desire to wipe out the rent regulation system. To 
counteract the Republicans, Silver had helped broker a renter-labor 
coalition that became an effective lobbying force. And when tenants went 
public with a television advertising campaign, Silver's fingerprints were 
on the fundraising.

But it only took a few days for the triumphal glow to wear off. Silver's 
deal had sounded too good to be true--and it was.

• By extending the laws for six years, Silver allowed Republicans to remove 
the rent fight from the political calendar, placing the renewal in a year 
when Pataki would be safely installed in his second term and no state 
officials would be up for re-election.

• In the fine print of the extension, landlords won deregulation of 
apartments renting for more than $2,000 a month. So-called high-rent 
vacancy decontrol is not new--a decade ago, the legislature introduced it 
for all apartments that had reached that level prior to October 1993 and 
then became vacant. A subsequent city law made vacancy decontrol permanent 
and ongoing--the same arrangement Silver accepted statewide in 1997.

• The extension also granted landlords an automatic 20 percent rent 
increase any time an apartment became vacant. "Sometimes landlords report 
three vacancies in a year," asserts Legal Aid attorney Judith Goldiner. 
"They can raise the rent 60 percent that way without putting in a dime." 
For instance, if an apartment renting for $700 turned over three times, the 
landlord today could legally charge $1,200, without making any 
improvements--and that doesn't include the annual rent increases granted 
under the stabilization program. The latest study from the Rent Guidelines 
Board shows that while some operating costs are going up, so are landlords' 
profits: An average landlord's net operating profit from rent stabilized 
apartments is 44 cents on every dollar of rent, up 10 percent from six 
years ago.

• The deal Silver cut also reversed a legal precedent that allowed courts 
to consider old rent overcharges in the process of calculating the legal 
rent for an apartment. Today, if a rent overcharge remains unchallenged for 
four years, that illegal rent becomes the legal rent. Landlords are 
required to register their rents every year, but tenant activists say that 
in the wake of this change many owners have decided they're better off not 
filing their rent information with the state. Now, when tenants want to 
prove they are being overcharged, in many cases they find there's no 
evidence on file with which they can make their case.

• The package required that tenants who withhold rent must pay it into an 
account supervised by the court--effectively making it impossible for 
tenants to go on rent strike without going to court first. This provision, 
however, proved wildly unpopular among judges, landlords and tenants alike, 
and has rarely been implemented.

The victory, it seemed to many tenants, was actually a sell-out--and 
Silver's been taking heat for it ever since. TenantNet's John Fisher still 
feels betrayed. Proclaims Fisher, "Sheldon Silver, despite what everyone 
says, is not a friend of tenants."

--RN

SIDEBAR: Banned in Boston

The sky won't fall. That's the argument landlords make about ending rent 
regulations. And for a time, it seemed that evidence from Massachusetts was 
confirming that contention.

Boston, Cambridge, Brookline, Waltham and Lowell all had some form of rent 
control for several decades. That was wiped out in 1994, when landlords 
eked out a 51 to 49 percent victory in a statewide referendum. The result: 
Rent regulations were banned across the state.

Initially, the result was not dramatic. "Rents went up some at first," says 
Lew Finfer of the Organizing and Leadership Training Center, a consortium 
of six community groups. But then came the dot-com boom, and rents zoomed. 
"In poor and working-class neighborhoods, to have people paying $1,500 a 
month is not unusual. And a few years ago it would have been half that."

And rents have not dropped despite the deep depression in the economy. 
"Despite the decline in the economy, people haven't seen rents fall--except 
at the high end," Finfer says. And, he adds, "There's been a completely 
parallel increase in home and condo prices."

Steve Meacham, an organizer with City Life/Vita Urbana, notes that the 
gritty neighborhoods he works in have been hit by the overheated market as 
well. In working-class Matapan, tenants in one building got hit with a $400 
rent increase, bringing their monthly rent for one-bedroom apartments to 
$1,100.

"I could give you case after case after case," he says, noting that even 
apartments in areas overrun with drugs are getting too pricey. "The market 
doesn't work. If there's one thing that's been shown from the last eight 
years, it's that."

Last November, Boston Mayor Thomas M. Menino proposed a slimmed-down rent 
control plan that would have allowed tenants to appeal rent hikes, but it 
was defeated in the City Council. This year, Cambridge tenants are 
collecting signatures to put a somewhat weakened form of rent regulations 
on the ballot in November.

But Finfer suggests that the outlook is dim for a return to rent 
regulations. "It would be very hard politically," he says. "Local passage 
is possible, but it requires the approval of the state legislature and 
governor." He pauses a moment to consider New York's prospects, with rent 
regulations up for renewal this year. "It's grim out here," he says 
finally. "Hug your kids and hold onto your rent control." --RN