Radical Rent Reform Not the Answer to Affordable Housing
by Joseph Strasburg
May 07, 2019 | 2926 views | 0 0 comments | 232 232 recommendations | email to a friend | print

Radical reform to the state’s rent laws is not the solution to New York City’s affordable housing problem. Yet, that’s precisely the course being taken by Albany lawmakers as rent laws are set to expire next month. Proposed legislation would pull the plug on the only programs that provide rent-stabilized landlords with the resources they need to upgrade, improve and rehabilitate buildings and apartments for their tenants.

Landlords don’t upgrade apartments to raise the rent, but rather out of necessity because nearly 75% of the city’s rent-stabilized housing was built before 1947. The maintenance is constant and significant in older buildings – the overhaul of electrical, plumbing and heating systems, and replacement of kitchens, bathrooms, roofs, boilers, windows and facades.

Depriving landlords of rent increases generated by major capital and individual apartment improvements may sound like a win-win for tenants. But it has the opposite impact – and the detrimental effects of an across-the-board purge of these programs reaches deep into our Brooklyn, Queens and Bronx neighborhoods.

The following data (source: Urbanomics Oct. 2018 study report) puts into perspective the impact of landlord spending on neighborhoods, small business, jobs and city services:

• In 2018, landlords of rent-stabilized properties (without receiving tax breaks) spent $13.3 billion to maintain, improve and upgrade their buildings and individual apartments – with a total cascading impact on the city’s economy of $22.4 billion.

•  This $22.4 billion was equivalent to more than 25% of the city’s 2018 budget of $72 billion – and it included $3.7 billion in real estate taxes, in turn, used by the city for education, fire, police and other municipal services.    

• These upgrade and improvement expenditures in 2018 supported more than 180,000 jobs with an average annual salary of  $62,300 – or $12 billion in collective wages.

We witnessed the anger of New Yorkers against their elected officials for rejecting Amazon’s potential 25,000 jobs and $27 billion in tax revenue. Are Albany lawmakers willing to shut down this already established economic engine because they once again don’t like who’s driving it?

The collateral damage would be far more devastating because elected officials would be taking $22.4 billion from the pockets and neighborhoods of their constituents. It’s really a simple equation to understand:

Landlords would no longer have the programs that enable them to upgrade and improve their buildings and apartments, so the work dries up. The neighborhood businesses – contractors, electricians and plumbers, and appliance, hardware, paint and other supply stores, as well as food and other retail – lose business. Neighborhood residents lose their jobs, and without work, they can’t support their families or local retail.

In short, every neighborhood in our boroughs depends on the upgrades and improvements that landlords do to their buildings. Take that away, and you have abandoned buildings, boarded up stores, and long unemployment lines. According to the New York City Rent Guidelines Board and Dept. of Finance, the proposed legislation would result in an immediate $2 billion reduction in property tax revenue because when the work dries up, property tax assessments don’t increase.   

Repealing vacancy decontrol, eliminating major capital improvement and individual apartment improvement rent increases, altering preferential rents and constricting or repealing vacancy allowances would not address the affordability problem, make apartments more affordable, ease vacancy rates, or create a single new affordable unit. None of these radical proposals are supported by independent economic analysis.

A Citizens Budget Commission study concludes that these proposals would further protect the wealthiest, and not the poorest, rent-regulated tenants – and that the predicament of the tenants most in need would worsen and affordable housing stock would deteriorate. Why would lawmakers want to protect the 168,000 households living in rent-stabilized apartments with annual incomes of $100,000 to $200,000? (source: U.S. Census Bureau)

To protect the tens of thousands of low-income households, why aren’t lawmakers supporting the Senate-proposed Tenant Rent Increase Exemption (TRIE) bill? Modeled after the senior citizens (SCRIE) and disable persons (DRIE) exemption programs, rent-stabilized tenants with household incomes of less than $50,000 who use more than 50% to pay their rent would be exempt from rent increases.

Instead of pitting tenants and landlords against one another, lawmakers should be having a genuine, honest and collaborative dialogue about reasonable rent reform with the people who provide the bulk of affordable housing – the owners of 1 million rent-stabilized apartments. Maybe then lawmakers will realize that landlords aren’t the problem, they’re the solution.

Strasburg is president of the Rent Stabilization Association, which represents 25,000 owners of 1 million rent-stabilized apartments in the five boroughs.

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