Landlords are objecting to a newly created state agency designed to investigate landlords who violate rent regulation laws. They say the investigations “violate rules of due process and misuse subpoenas” to intimidate landlords who own small buildings, according to The Wall Street Journal.
Before the creation of the state agency, called Tenant Protection Unit, last year, the burden was on each individual tenant to take their landlord to court for violating rent regulation laws. There was no oversight of a pattern of rule breaking, and it would be difficult for ex-tenants to track whether landlords illegally deregulated apartments after they moved out. According to the Journal:
In its first year, the Tenant Protection Unit mainly conducted audits, looking at landlords who failed to file registration forms. It also asked landlords to document their spending on vacant-apartment improvements. In the past, landlords had to provide such documents only when a tenant filed an objection. The result, the unit said in a June news release, was to add back 20,000 apartments in 2,000 buildings to the rent-stabilized rolls. Landlords said much of that gain was because of clerical errors being corrected that didn’t change rents paid by tenants. Mitchell Posilkin, general counsel to the Rent Stabilization Association, a landlord group, said the review of renovations of vacant apartments was arbitrary and snared smaller landlords, who sometimes worked with contractors without formal record keeping. Tenant Marquetta Bell, a military veteran, said residents were concerned about an influx of new tenants from outside the neighborhood who were paying much higher market rents in apartments that were deregulated after renovation.
As reported last week, the Tenant Protection Unit is investigating a landlord with buildings in Crown Heights (above) and Flatbush who appears to be flagrantly violating the law. A tenant advocacy group in Crown Heights has complained about landlords in the area who they say kick out regulated tenants and illegally charge new tenants higher rents in regulated buildings.
Do you think landlords are being unduly burdened with requests for record keeping, or are they upset because the state is making it harder for them to break the law?
At a Rent Guidelines Board hearing Thursday, three Democratic mayoral candidates spoke in favor of freezing rents for regulated apartments. Usually, candidates for office do not attend rent hearings. Those in favor were Christine Quinn, Bill de Blasio, and John Liu, The New York Times reported. The recommendations come at a time of quickly rising market rents and sales prices throughout the City, particularly in Brooklyn. Last year, the board approved increases of 2 percent to 4 percent. This year they are considering higher increases: 3.25 percent to 6.25 percent for a one-year lease and 5 percent to 9.5 percent for a two-year lease. They are also considering an additional increase for those who currently pay less than $1,000 a month. The ruling will not affect market rate rents, only those in rent stabilized or rent controlled apartments. Do you think a freeze would help make housing in Brooklyn more affordable? Photo by Marie-Laure Even
The condos at historic Cobble Hill Towers are more than 30 percent sold, said David Kramer, principal of the Hudson Companies Inc., which is renovating parts of the property and handling the condo conversion. “We’ve been doing quite well with sales in the last three months. Partially because success begets success and partly because market is strong,” he said. Wells Fargo offers financing with 20 percent down; some current residents are unhappy FHA financing is not available, according to a Brownstoner reader. Hudson expects to reach the 50 percent sales mark and then get FHA financing sometime over the next 18 months, said Kramer. Current tenants of the rent-stabilized and rent-controlled complex, which is located at Warren, Hicks, & Baltic streets, have the option of continuing to rent, taking a buyout or buying their apartments. There is also a rent-to-buy option. The conversion had hoped to get a waiver and FHA financing before reaching 50 percent and is still pursuing that option, added Kramer. Because the units are small, most are priced at less than $400,000. The landmarked nine-building complex was designed by William Field & Son and built in 1879 by wealthy industrialist Alfred Tredway White as model housing for workers. The apartments are linked by external hallways and stairs, and originally featured common bathing facilities in the basement. Cobble Hill Towers: 30 Percent Buying or Being Bought Out [Brownstoner] Cobble Hill Towers Condo Plan Drops [Brownstoner] GMAP Photo by Hudson Companies Inc.
When the 18-story apartment building at 85 Livingston Street in Downtown Brooklyn (The Daily News calls it Brooklyn Heights but we suspect that’s just because it makes for a juicier headline) went co-op in 1989, about 30 rent-stabilized tenants opted not to buy their apartments. Now, these hold-outs contend, the building’s sponsor, Mark Teitelbaum, is unfairly seeking rent hikes as well as back rent for improvements that he made to the building back in 2004. Typically landlords of rent stabilized buildings are allowed to make certain upward adjustments in return for making capital improvements. In this case, detailed this morning by The Daily News, Teitelbaum is trying to raise rents by between $60 and $90 a month going forward as well as to collect money going back to 2004; the state Department of Housing and Community Renewal initially denied his request but recently reversed its decision on appeal. The tenants are almost all elderly and many of them are claiming health and financial difficulties. “At their core, the tenants’ primary objections are based on the impact of the increase rather than its supporting factual basis,” Deputy Commissioner Woody Pascal wrote. “However, DHCR must administer the increase in accordance with law.” Not surprisingly, politicians are expressing support for the tenants.
Today State Senator Daniel Squadron, along with other elected officials, including Manhattan Borough President Scott Stringer, are rallying to protest a court decision that jeopardizes tens of thousands of NYC residents under rent protection. The court decision in question allows landlords with J-51 benefits (a tax-incentive program through HPD for landlords, who in turn have to provide certain benefits to their tenants) to “retroactively” terminate and repay those benefits. In repaying the benefits, landlords can take away rent-stabilized apartments from their tenants, despite a previous court ruling involving Stuyvesant Town and Peter Cooper Village that said rent must be stabilized for the full term in exchange for a tax break. This means that about 4,000 apartments in 25 developments across the city in danger of losing rent stabilization. Independence Plaza North (IPN) residents are appealing the court decision threatening the rent in their building. Elected officials will speak to the wide effects of this particular court decision. They will hold the rally today, 11:15am, outside Independence Plaza North, near Greenwich and Duane Street in Tribeca. Check back here later today for photos.
Some local politicians, including State Senator Daniel Squadron, Assemblymember Brian Kavanagh, and City Council Speaker Christine C. Quinn, held a rally yesterday morning calling for the passage of state legislation to reform the Rent Guidelines Board, which will hold its annual vote on raising rents on rent-stabilized apartments starting this week. From the press release: “The legislation (S741A / A6394B), sponsored by Senator Squadron and Assemblymember Kavanagh, would require City Council confirmation of the Mayor’s appointees to the RGB, bringing necessary checks and balances to the system and making the appointment process more democratic. The bill would also make more New Yorkers eligible to serve as public members and ensure that diversified views are represented on the RGB by including new professions among those qualified for appointment. Qualification for appointment would include experience in public service, philanthropy, social services, urban planning, architecture, social sciences, non-profit, finance, economics, or housing; currently, only experience in finance, economics, or housing qualifies someone for appointment.” Here’s part of Squadron’s statement at the rally: “By requiring Council approval of appointments to the RGB and broadening qualification for membership, we can create necessary accountability, ensure a variety of voices are represented on the board, and better protect the affordability that has made New York the vibrant and diverse city it is today.”
This week’s “Big City” column in the Times by Ginia Bellafante tackles the rent-regulation debate du jour, the case that the Supreme Court is looking at concerning an Upper West Side couple that are challenging the fairness of the rent-stabilization laws that are keeping protecting in their building with below-market rents. Here are the two sides of the coin, based on data Bellafante presents:
“According to an analysis of the most recent city data, which date to 2008, by New York University’s Furman Center for Real Estate and Urban Policy, the median income of a New Yorker in a rent-stabilized apartment is $36,000 a year; in Manhattan, it is $50,000. …Of the city’s 1,063,000 rent-regulated units, approximately 41,000 are in the hands of households making $150,000 a year or more. …according to the city data, approximately 240,000 rent-controlled and rent-stabilized units are occupied by those making $15,000 or less a year.”
The piece ends with some food for thought that hits close to home: “It is easy to walk around a neighborhood like Cobble Hill in Brooklyn and never think about the extent to which rows and rows of beautifully preserved, untouchable low-rise brownstones contribute to the city’s perennial housing shortage. And, anyway, it’s a lot more fun to blame Faye Dunaway.” Wars Over Regulation of Rent Are Only a Sideshow [NY Times] Graph via City Realty
The Supreme Court is “taking a surprisingly serious look” at New York’s rent regulation laws, according to a story in the Journal outlining the legal precedents that a Manhattan couple are using to challenge the regulations and how the city and New York AG are defending stabilization. The back story: “James and Jeanne Harmon, the owners of an Upper West Side brownstone, are waging an underdog constitutional battle against rent rules forcing them to subsidize their tenants — including Nancy Wing Lombardi, an executive who pays about $1,000 a month for a one-bedroom unit and also owns a house in the Hamptons.” The Harmons say rent stabilization violates the “Fifth Amendment, which says the government can’t take private property for public use without just compensation.” The city and state argue that stabilization doesn’t actually constitute taking based on an earlier ruling that found that if you’ve already allowed tenants, “taking” isn’t involved. The Harmons are also making a due process claim: “arguing that the high court established 90 years ago that rent controls can’t be permanent but only a temporary response to a ‘catastrophic’ emergency. That, they say, was the upshot of a 1922 ruling, the last time the high court looked at the constitutionality of New York City’s rent controls.” And, finally, the couple is arguing that rent regulations are a “racket in which property owners and market rate tenants always lose,” but the state is countering that this sort of argument about policy aren’t relevant to the legality of the regulations. The Legal War Over NYC’s Rent Regulations [WSJ] Photo by shinsawbu
Governor Cuomo released the video above yesterday saying that if rent-regulation laws are allowed to expire next month, it would be a “crisis” for the state and that the laws need to be extended and strengthened. Cuomo says that “by current standards, it is estimated that over 130,000 more apartments could be lost to decontrol in the next few years.” City Room notes that the though the Assembly approved legislation last month that would extend rent regulations through 2016 and shift the luxury decontrol ceiling from $2,000 to $3,000 a month, “the issue has drawn little interest in the Senate.” Cuomo Releases Message Urging Stronger Rent Laws [City Room]
The cover story in this weekend’s real estate section of The Times takes a look at one of the most fascinating and contentious aspects of New York City real estate: Rent stabilization. On the one hand, the article profiles some people who say they wouldn’t have been able to afford to live in New York without rent stabilization and, on the other, it documents the frustrations landlords often encounter when trying to take buildings out of the stabilization program. We found this tidbit to be the most intriguing of the article: “[Steven R. Wagner], the lawyer, says big development companies usually figure the cost of buying out rent-stabilized tenants into the overall budget. But they are really just guessing. There is no telling how high a hurdle they will faceâ€”both legally and financially. He cited several cases in which the gap between the first offer made by developers and that accepted by tenants had been hundreds of thousands of dollars.” Any readers been on the tenant or landlord side of the aisle in a scenario where deregulation was being attempted? The Lucky Break of Rent Stabilization [NY Times] Photo by Listen Missy!