Report from Albany
March 9, 2011
By Liz Krueger, NYS Senator
This June, New York State’s rent regulation laws are once again up for renewal. I'm working closely with advocates to ensure that these laws are both renewed and strengthened. While not perfect, New York State's rent regulation system is by far our largest and most important affordable housing program. It enables more than 2.5 million people, the vast majority of whom are moderate or low-income to live in safe and affordable housing.
Rent regulation helps counteract the destabilizing effects of the abnormal market conditions in New York City where the housing shortages are so severe that the vacancy rate for rental housing is less than three percent. Therefore, in order to keep hardworking, middle income residents in New York and maintain healthy, stable communities we must continue and expand upon our rent regulation system.
I believe that given the political realities we face in Albany the simplest way to achieve this goal is through inclusion of rent law renewal in the budget. Including renewal in the budget will make it much more difficult for upstate Senators who either don’t understand or are unsympathetic to the issues facing tenants to interfere with the process. Because the budget will include many issues of greater local importance to them these Senators will be much less likely to make the fight against rent law renewal the key issue in the budget battle.
My conversations with Governor Cuomo lead me to believe he is open to this idea, and recently I wrote him a letter outlining what I see as the key goals for improving the rent regulation system. We cannot settle for a mere renewal of the rent laws, as the current system entails seeds of its own destruction. The key reforms that I believe are necessary to preserve rent regulation over the long term include: the repeal of vacancy decontrol, the reform the Individual Apartment Improvement (IAI) and the Major Capital Improvement (MCI) systems and the return of local control over rent regulated housing.
The repeal of vacancy decontrol is the most critical action the State can make to restore the integrity of the rent regulation system and protect affordable housing. Vacancy decontrol is the system by which regulated apartments can become unregulated when apartments are vacated and through improvements made by the landlord to the unit, the rent reaches $2000. By creating a dollar threshold at which vacant apartments are automatically deregulated, vacancy decontrol creates a strong incentive for owners of regulated units to abuse loopholes in the law to increase rents to this amount. All too frequently, actions taken to reach the decontrol threshold include illegal rent increases, aggressive tenant harassment, frivolous eviction cases and the withholding of basic services to pressure regulated residents to vacate their homes. While exact numbers are not available numerous studies have revealed that nearly 300,000 apartments have been lost due to vacancy decontrol. There is simply no way to end these abuses and stop the loss of tens of thousands of affordable homes each year unless we repeal vacancy decontrol.
Two of the most frequently abused loopholes in the rent regulation laws are the IAI system, which allows owners to obtain increases based upon improvements to individual apartments; and the MCI system, which permits building owners to raise rents for building wide improvements. While it is reasonable to provide adequate incentives to encourage building owners to preserve and improve their property the systems currently in place are overly generous and invite fraud.
The IAI system enables landlords to permanently increase monthly rents by 1/40th the cost of total renovations, and is particularly susceptible to deception because there is no proactive regulatory oversight or even a requirement for landlords to document expenses. The only oversight of IAIs under current law results from tenant initiated complaints to the State housing agency. However, this oversight mechanism is inadequate because most IAIs are imposed based upon improvements made while apartments are vacant; new tenants are highly unlikely to question the rent they are paying or to investigate the condition of the apartment before they moved in. As a result, IAIs are rarely challenged and provide a mechanism for unscrupulous building owners to illegally increase apartment rents by hundreds or thousands of dollars by exaggerating their renovation costs or even without doing any renovations at all. In fact, a 2009 study conducted by the Association for Housing and Neighborhood and Housing Development concluded that the 1/40th loophole is one of the central factors in the loss of affordable housing in New York.
The MCI system is not as frequently abused as the IAI system, because some procedural safeguards are in place the current laws governing MCI increases still provide overly generous compensation to building owners. The existing MCI system has led many landlords to inflate costs and apply for multiple MCIs for unnecessary construction simply to permanently raise apartment rents above the decontrol threshold. Under current law, MCI costs are passed onto tenants in perpetuity even after the actual costs of the improvements are recouped by the building owners.
Finally, we must restore New York City's right to home rule over the more than a million rent regulated apartments located within its boundaries. Home rule is a cherished principle in New York State under which localities are able to control local, critical issues that directly affect their residents. While communities across the State face a range of housing difficulties, the housing market in New York City is unlike any other. New York City’s local government is in the best position to understand and address the conditions created by this market. Currently, however because of “Urstadt Law” passed in 1971, New York City is powerless to deal with the housing crisis within its borders. The New York City Council strongly supports the repeal of the Urstadt Law and has repeatedly passed Home Rule messages calling for local control. In a year when our State government is looking for any way to provide mandate relief and empower local governments it makes perfect sense to provide New York City with the freedom it needs to more fully control its housing policies.
If we truly want to maintain the economic vitality and diversity of our City and State, we must do all we can to ensure an effective rent protection system. In the coming weeks, I will be doing all I can to convince the Governor and legislative leaders to renew and strengthen rent regulation. However to be successful I will need the help of advocates and tenants from my district and across New York City. Please join me at an upcoming Tenants Town Hall (details are below) to discuss the status of the rent laws and find out how you can get involved in current organizing efforts. Even if you do not live in a rent regulated apartment, this legislation does affect you. It allows many of your friends, neighbors, family members and local shop workers the opportunity to live in this great City. Without rent regulation our City will forever change and not in a way any of us want.