Posted on Tuesday, March 22, 2011
As legislators in Albany debate the future of the city's rent laws, a key provision of the law that has allowed landlords to deregulate at least 100,000 apartments may be up for a change.
Since 1993, state law has allowed landlords to convert vacant regulated apartments into market-rate units when their rents hit $2,000 a month.
Over the years, the real-estate industry has strenuously resisted efforts by renters' advocacy groups to increase that amount.
The battle has been renewed with rent regulations up for renewal for the first time since 2003. Only now, the dynamic appears to be changing: a major landlord group is signaling openness to hiking the limit.
"We are prepared to look at a higher number," Steven Spinola, president of the Real Estate Board of New York, a powerful lobbying group, said in an interview last week. "It depends what the rest of the package is."
Rent laws, which limit the ability of landlords to increase rents for about 1 million apartments citywide, sunset in June. If they're not renewed, landlords of these units will be able to raise their rents to market rates.
But that is not likely to happen.
In years past, when the laws have come up for renewal, the real-estate industry and Republicans sought to eliminate rent regulations entirely. But with Gov. Andrew Cuomo saying he supports rent regulation in some form, all sides in the debate have focused on how to extend the laws.
The extension of rent control also has become one of the bargaining chips in the broader battle in Albany over the budget. Democrats have pushed Mr. Cuomo to deal with the rent issue now, seeking to tie it to a property-tax cap favored by Republicans.
The real-estate industry cares deeply about the so-called vacancy decontrol provision with the $2,000 limit, given that a deregulated apartment can bring in thousands in additional revenue each year, particularly in Manhattan.
More than 97,000 New York City apartments were deregulated using vacancy decontrol between 1994 and 2009, according to the city's Rent Guidelines Board.
To be sure, talks on changes to rent regulations remain fluid and the deregulation limit could still stay the same given that some advocacy groups from both the tenant and landlord worlds resist any change.
There are also countless other provisions under discussion, according to people involved, including a push by tenants to add oversight and change formulas to slow deregulation. There's also an effort by the real-estate industry to reverse some recent judicial decisions with legislation.
The industry has directed millions of dollars in campaign contributions toward Mr. Cuomo and the Senate Republicans, and it is helping to buy advertisements to support the governor's budget.
Rent-regulation advocates have long sought to eliminate the ability to deregulate apartments altogether—an unlikely outcome—or in the least to raise the $2,000 cap in an effort to slow the rate at which landlords take apartments out of rent stabilization.
They have also pushed to change crucial formulas that allow landlords who invest in renovations on vacant apartments to deregulate when the rent is less than $2,000. Without changes to those formulas, the advocates say, an increase in the $2,000 limit would not have great effect.
With the population and property values rising, the number of apartments affordable to low- and middle-income New Yorkers has fallen in the past decade, and many housing advocacy groups have looked to maintaining the rent stabilization stock as a means of keeping affordability.
"Rent control and rent stabilization are especially important to the tenants who are most vulnerable to the housing shortage," said a report released earlier this month by Assembly Speaker Sheldon Silver and the Community Service Society.
Given that the $2,000 number was not indexed to inflation, the number of apartments deregulated has increased nearly every year since 1994, according to the Rent Guidelines Board.
Attempts in recent years to increase the $2,000 limit have fizzled. Gov. Eliot Spitzer sought to tie the limit to inflation, and last year Gov. David Paterson's housing commissioner proposed increasing it to $3,000.
But a 2010 proposal that would preserve regulation and raise the cap fell flat after many legislators and tenant advocates pushed for doing away with any ability by landlords to decontrol regulated units.
"I thought it was a good compromise," said state Senator Jeff Klein, a Bronx Democrat, who pushed for an increase in the figure at the time. "It didn't work out that way but it very well may happen now."
By ELIOT BROWN, The Wall Street Journal