Rent Reform Showdown

President Barack Obama promised change in the 2008 election and voters responded by giving him a decisive victory. In New York, voters also demanded change by giving the Democratic Party the majority in the state Senate for the first time in 43 years. The Senate’s former GOP boss, the silver-haired majority leader Joe Bruno, had resigned a few months before the election, leaving his helicopter rides and pimped-out SUV, and was indicted for corruption in January.

Bruno and the senate’s Republican majority had gutted the state’s rent-regulation laws twice in the previous 12 years, and refused to consider any measures that might have helped tenants. So the Democrats winning a majority — by a slim 32 to 30 margin — removed a roadblock to progressive change. Or did it?

On Valentine’s Day, 200 New York City tenants attended the Black and Puerto Rican/Hispanic Legislative Caucus weekend in Albany to push for vital rent reforms that would restore some housing protections and make the city more affordable. The Assembly passed a package of ten rent-reform bills Feb. 2. Those bills include measures that would limit landlords’ ability to claim occupied apartments for “personal use” and would repeal the “Urstadt Law” of 1971, which bars New York City from enacting any rent regulations stronger than the state’s. The Senate is expected to take up the bills in early April.

The top priority for the tenant movement, however, is repealing “vacancy decontrol.” Enacted in the 1990s, it lets landlords deregulate vacant rent-stabilized apartments if the rent can legally be $2,000 per month or more. (Rent stabilization covers buildings with six or more apartments built before 1974, or buildings where the owner accepted it in exchange for tax breaks.) Once an apartment is deregulated, there are no restrictions on rent increases and the new tenant has little to no housing rights. The bill to repeal vacancy decontrol, S. 2237, has 23 co-sponsors.

“This is about getting tens of thousands of apartments back into the hands of people who want to live in safe, decent and affordable housing,” said the bill’s chief sponsor, Sen. Andrea Stewart-Cousins (DWestchester).

“We have to get to the root cause of why landlords want to get rid of us — vacancy decontrol,” said Cathy Stephens, a Harlem tenant and member of Community Voices Heard. “With the same purpose that we got Obama elected, we need to put our efforts towards ending this law.”

Both sides expect a tough fight. “Real estate interests have poured a ton of money into Albany hoping to prevent exactly this,” says Dan Levitan of the Working Families Party. “It’s a battle for the soul of the Democrats. Whose interests do they represent, landlords or tenants?”

According to the New York Times, a group of “major real-estate developers, lobbyists and limited liability corporations,” anticipating a Democratic shift in the state Senate, gave more than $750,000 for the 2008 election. That is 15 times more than they gave to the Senate Democrats’ central campaign accounts for 2006. Those accounts are now controlled by Deputy Majority Leader Jeff Klein (Bronx-Westchester) and Majority Leader Malcolm Smith (Queens).

Last year, a slew of tenant associations and groups raised money and, more important, supplied people power to staff campaigns for Democratic state Senate candidates. Tenant groups, labor unions, gay-rights organizations and other progressives knocked on voters’ doors and called them from phone banks to help Democrats gain key seats in Long Island and Queens.

Ironically, because the Democratic majority is so slim, the state senators who have most benefited from that activism are four considered among the party’s most conservative: Jeff Klein, Carl Kruger (Brooklyn), Craig Johnson (Nassau County) and Pedro Espada Jr. (Bronx). Espada and Kruger were among the “Gang of Three” that threatened to vote with the Republicans until they were given rewards — in Espada’s case, being named chair of the Senate Housing Committee. Tenant advocates believe that real-estate interests gave the gang the go-ahead and wanted to send a message about rent reform.

“When you got 32 Democrats and you need 32 votes, one member can hold you up,” says Michael McKee of the Tenants Political Action Committee.

All four of these senators have rent-regulated voters in their districts, with 76,500 in Espada’s and 15,600 in Klein’s. Although there are rent-regulated tenants in Johnson’s Nassau County district, vacancy decontrol is generally seen as affecting mainly New York City, especially Manhattan.

When the Republicans controlled the Senate, the landlord lobby, led by the Rent Stabilization Association (RSA) and the Real Estate Board of New York, contributed millions of dollars to the GOP. The GOP-controlled Senate repeatedly blocked pro-tenant legislation passed in the Assembly. According to multiple sources, Senator Malcolm Smith approached the RSA before the election about donating more to the Democratic senatorial cause but was rebuffed. However, the RSA reportedly offered to settle $600,000 of state Senate committee debts from campaigns after the Democrats took control. Senate Democrats and Smith reportedly declined the offer, but Smith has not taken a position on repeal of vacancy decontrol.

Jack Freund of the RSA says he will not discuss the group’s campaign contributions. He argues that with the city financially strapped and dependent on real-estate taxes, now is “absolutely the wrong time” to impose regulations that would reduce landlords’ revenues. Vacancy decontrol and the other changes in the rent laws enacted in the 1990s, he says, “are the only things that have breathed life into the real-estate market” in the city. The prospect of deregulation has encouraged more investment in rental housing, he adds.

Tenant groups call some of those investors “predatory equity.” These are highly leveraged private equity firms that bought huge swaths of rent-regulated housing. Their business plan depends on gaining enough vacancies to jack the rents up to market rates. One such firm is Vantage Properties, which bought 48 Queens buildings for $300 million last year, according to the Real Deal.

Vantage tenant Nancy Encarnación says the firm is deliberately allowing living conditions to deteriorate to drive her and her neighbors out. “We don’t demand luxury, just a decent place to live,” she adds.

Legal Services New York claims that Vantage Properties’ profit model runs afoul of the law, because the only way to achieve such a large tenant turnover is by dubious means. It filed a lawsuit last year to curtail the firm’s practices.

The Stewart-Cousins bill would also re-regulate apartments that were deregulated after 1997 if their rent is below $5,000 (or $3,500 in Nassau, Westchester, and Rockland counties). According to Tenants and Neighbors, more than 100,000 apartments in the city have been deregulated by vacancy decontrol or condo/coop conversions. About 1 million apartments remain regulated, about half of the city’s rental housing stock.

“We need nine more senators to pass this bill,” Stewart-Cousins said. So far, 22 Democrats and one Republican (Frank Padavan, Queens) have signed on as cosponsors. The 10 Democrats who have not endorsed it include Smith, Klein, Espada, Kruger and Johnson.

Bennett Baumer, a New York City-based housing organizer, contributed to this article.

Reposted with permission from the Indypendent.

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