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July 11, 2006
Bushwicker Makes Top Ten Landlord List
July 5, 2006 -- David Melendez owns a swath of dilapidated, vermin-infested, crime-ridden slums hidden on a forgotten block of Jefferson Street in Bushwick. The surrounding area is gentrifying, and just a few blocks away from Melendez's buildings, new condos are selling for six figures. In contrast, rats rule the apartments of Melendez's mostly Mexican and Ecuadorian tenants, and drug addicts get in through the unlocked doors, using the hallways in which to get high, while the tenants' infants struggle to sleep through unheated winters. Melendez's four buildings at 253, 255, 258, and 260 Jefferson have a total of 473 pending code violations. He appears to be in no rush to fix them: HPD has recently made 49 emergency repairs to those buildings and charged Melendez $23,029.
More on the link...
NYC's 10 Worst Landlords [Village Voice]
Comments
yeah rent control and rent stabilization really works out great for everyone. The landlords, motivated only by ROI, have all R taken away from their I, the taxpayers pay the city to force their lifeless hands at every turn, tenants live in squalor and spend their lives navigating kafka-esque legal hell, and the market-rent neighbors in nice condos get second-hand smoke from these long festering sores in their backyard. Genius! Lets expand the system!
Posted by: Anonymous at July 11, 2006 9:25 AM
9:25: while I don't dispute the logic, one has to laugh (to avoid crying) at the irony of eliminating rent control in response to owner neglect, thereby rewarding the owners at the expense (in terms of wholesale evictions) of the tenants who suffered from the neglect.
Posted by: anon at July 11, 2006 9:32 AM
I think that rent stabilization works okay. I don't think it's the best solution. Obviously the landlord has very little incentive to fix complaints. However, with the recent trend in renovations it is possible for the landlord to increase a rent quite a bit over the course of a year or two. Those who are established tenants probably lose out the most. People who haven't been in the apartment that long benefit the most since the apartment probably has been newly reno'd to increase the rent. I think it's important to impose some kind of rent control because otherwise the city rents would skyrocket and no one would be able to rent here. Even worse, without any regulation at all, most owners might even prefer to sell for higher profits, causing the entire market to become saturated with wealthy property owners. It's a tough thing to balance, and I think rent control is the best band-aid solution we can come up with.
Posted by: cobblestoner at July 11, 2006 10:21 AM
How do you know that Melendez isn't getting a return on his investment, anonymous 9:25? Just because he says so? If owning a poorly maintained--or even a properly maintained--rent stabilized building is such a financial drain, at least one landlord would be willing to open his or her books and prove it.
Posted by: OhComeOn at July 11, 2006 10:24 AM
Look at Boston. They eliminated rent control and rents actually went down for a few years, and are only stabilizing now. Rent stabilization is working out sofar in NYC, especially in the outer boroughs. Manhattan will always be different.
Posted by: djr at July 11, 2006 10:26 AM
Just out of curiosity, where did it say the apts were rent control. If the apts are rented to Mexicans and Ecudorians - who are most likely recent arrivals in NY they prop. aren't getting rent controlled apts. Rent control is pretty much a dinosaur in NYC. Initial comment was just a stupid rant.
Posted by: Anonymous at July 11, 2006 10:33 AM
Let's perpetuate the myth that "rents would skyrocket" w/o rent control.
No, rents would go DOWN. If all of the NYC apartment stock was available at market rate, there would be enough stock to create competition in pricing and the average cost for all apartments would go down. Landlords would have incentive to fix their buildings up, since people would not be living in a run down building simply because they were under rent control.
Sure a single person that had been hoarding a 3 bedroom rent controlled place long after their kids had moved out, would no longer be able to live in a three bedroom, and would need to move to a 1 BR or Studio.
Tons of other cities have free market rents, and their rents are way lower then NYC. I'm talking about NORMAL rental units, not the gold plated, marble encrusted luxury rentals.
DUMP RENT CONTROL !
Posted by: Anonymous at July 11, 2006 10:34 AM
lose rent control: gentry
keep rent control: pleebs
and so it goes.
I wish there was a picture of this guy. He lives on my street. I'd like to chastize him every day for being another slumlord phuck horrid enough to make a top 10 list.
Posted by: Anonymous at July 11, 2006 11:03 AM
Is it reflective of the area? There's a lot of poorly maintained houses in Bushwick.
Posted by: Julie B at July 11, 2006 11:47 AM
From 10:34...
"Let's perpetuate the myth that "rents would skyrocket" w/o rent control."
Ok. Let's talk about myths.
"No, rents would go DOWN. If all of the NYC apartment stock was available at market rate, there would be enough stock to create competition in pricing and the average cost for all apartments would go down."
This is simply wrong. Apartments that are rent-controlled already are competition for market-rate apartments. If the market rate units dropped below the pricing of rent controlled ones, people would move into market rate.
Let's be honest for a second. It's tough in an internet discussion, I know, but let's live on the edge.
Rent control represents a policy decision which shifts value away from property owners to property renters. You can argue about the merits of said policy but the truth of its effect is inescapable.
Now, you can argue that it does not deprive a new property owner of value. Because when a property comes onto the market, the fact that there's a rent-stabilized tenant living in the building significantly depreciates the purchase price. You're making an investment on a place which has a smaller return. So you make a smaller investment.
But this idea that somehow average rents would go DOWN is only feasible if one believes that rent-stabilized units are being priced above what they would be in a competitive market. Which, I think is fair to say, is an absurd assumption.
"Landlords would have incentive to fix their buildings up, since people would not be living in a run down building simply because they were under rent control."
This is probably true. Although what is also probably true is that the people who live in rent-stablizied buildings (or at least a significant portion therof) would still live in destitute housing that doesn't get fixed up. It would just be more out of sight in poorer neighborhoods.
"Sure a single person that had been hoarding a 3 bedroom rent controlled place long after their kids had moved out, would no longer be able to live in a three bedroom, and would need to move to a 1 BR or Studio."
And your empathy is apparent.
"Tons of other cities have free market rents, and their rents are way lower then NYC."
Talk about blaming the victim. This is like saying, "Tons of areas not near factories with air filters have much cleaner air than areas near factories. So we should take off the air filters."
Higher rents in NYC is due to the fact that you have 8 million people trying to cram themselves into one island and some surrounding neighborhoods. It's mitigated by rent control, not caused by it.
"I'm talking about NORMAL rental units, not the gold plated, marble encrusted luxury rentals."
Whatever.
"DUMP RENT CONTROL !"
Up with rationality.
Posted by: Mateo at July 11, 2006 12:23 PM
Is Bushwick really going to gentrify?
Posted by: Julie B at July 11, 2006 12:41 PM
One of Melendez' tenants in the story is paying $1200 a month to live in that hellhole. I hardly think that is chump change, and is a lot of money to come up with each month, especially selling food on the street.
While one could argue (although it is by no means a good excuse) that his run down building comes solely from not making enough money from his rent controlled tenants, if he is collecting $1200 from many of them, he's doing well enough to fix the building. No one should have to live in those conditions.
Yesterday's Brownstoner posts included a piece on LPC and the city citing people for failure to maintain. Where does that come in in these cases? In the case of a landlord like Melendez with several properties in the same condition, can't he be made to sell at least one in order to fix up the others? Socialism - sure, but we are talking about substandard living conditions of fellow human beings. New York City shouldn't be on par with the slums of Calcutta or the favelas of Rio.
Posted by: CrownHeightsProud at July 11, 2006 1:15 PM
One thing that's very often overlooked in these discussions is the fact that many newcomers to NYC, whether from overseas or elsewhere in the U.S., are not paying regulated rents. Usually simply because they don't know about the rent stabilization law (and landlords sure don't tell them).
I had next door neighbors in Williamsburg - newcomers from Pennsylvania - who were paying $1,400/month for the pretty much the same apartment that I was paying $900 for. When I asked them what their legal rent was they gave me a very strange and quizzical look. They eventually showed me a one page "lease" document that specified the $1,400/month rent, gave the landlord the "right" to raise their rent at will and evict them if he wanted to, and was just a total joke.
I would imagine that this problem is even worse for people who don't speak English and may be very afraid to fight the landlord and to go to the law and the courts.
I don't believe for an instant that the "worst" lanlords, like Mr. Melendez, aren't making a healthy profit off of their buildings. Often, as I described, by charging rents above the legal rents. The days of landlords being forced to not maintain or abandon buildings due to low rent rolls and plunging property values are long gone in the city. If guys like Melendez weren't making a profit in the landlord business now, why wouldn't they sell their buildings, which have without question increased in value enormously over what they paid for them?
Instead we get the same lowest investment possible for the highest possible return scenario that would be true whether or not there is such a thing as rent stabilization, and will continue in this crowded city as long as the authorities remain unable, or unwilling, to enforce the laws.
Posted by: Woodside Al at July 11, 2006 2:11 PM
Interesting that everyone understands the public policy problem so well, but thinks the solution is to get rid of rent control/stabilization.
This would, indeed provide appropriate incentives for landlords like Melendez to make improvements, but at the cost of throwing our poorer neighbors onto the streets - a violation of a strong public policy interest.
The problem is that we are forcing Landlords to pay for a PUBLIC interest - providing cheap housing. The government's job. Why not require the government to provide tax breaks or actuall subsidies to landlords that maintain rent stabilized properties?
Posted by: ian at July 11, 2006 2:24 PM
Ian,
In essence they do have tax breaks because Real Estate tax is based on value of prop - and value of property is based on rent roll.
And there are incentives - rents can be raised beyond usual rent increases for MCI - major capital improvements.
Also keep in mind that any new construction is not under any control/stabilization unless landlord seeks special tax breaks and voluntarilty enters system.
So I fail to see how deincentive to build new rentals if program (rent stab/control) is voluntary.
You are free to build what you want and charge what you want.
Posted by: Petebklyn at July 11, 2006 2:33 PM
Don't get me wrong - I am radically against landlords like Melendez. I simply mean to point that it is strange that individuals, rather than society (in this case, New York City) should bear the financial burden of what is clearly a public good. The public should bear that burden.
The perverse incentives that these situations give rise to is incredibly well documented.
Posted by: ian at July 11, 2006 2:34 PM
Ian-
It would only be landlords who bought their properties prior to 1974 (the last time I can find that new units were put under rent stabalization) who can be said to bear the financial burden. Anyone who bought after that bought with the knowledge that their investment was subject to rent control. So to remove it would actually be an unexpected windfall for them.
It's no different than buying a house that's on a toxic waste dump and then getting upset because your ground is polluted. It's built into the price at the point of transfer. So no, private individuals (at least, most) are not subsidizing a public good. They are, rather, getting the proper return on the investment which they made.
Do they wish it was more? I'm sure. But are they really justly entitled to more? Not really.
Posted by: Mateo at July 11, 2006 2:52 PM
Aren't landlords part of the PUBLIC as well? What's wrong with them having certain responsibilites under the law to their tenants for the privilege of owning property here and profiting off of it and them?
As has been pointed out, landlords buying pre-1974 buildings know going in that they are subject to stabilization. It's just part of owning a building in NYC, renting in NYC, and being a memebr of the public in NYC. Yet I don't see anyone being forced to be a landlord, nor do I see folks running away from buying and operating these buildings.
Posted by: Woodside Al at July 11, 2006 3:02 PM
That makes sense. Thanks.
Posted by: ian at July 11, 2006 3:03 PM
Mateo's comment makes sense. If you buy the buildings knowing you are subject to the rent stabilization, then presumably, this is reflected in the price you pay for the building.
However, if you purchased pre-1974, then you had stabilization imposed on you by subsequent law. (Mateo, correct?) If this is true, then it is effectively a "taking" - the government depriving you of the value of private property for public good. This is totally permissable, Al, but when the value of you property is decreased by the government, it should compensate you for that.
I totally agree that landlords are members of the public, but this misses my point. Individuals shouldn't be forced to provide cheap housing without an offsetting compensation. Now, if people do it voluntarily, this is an entirely different story - as Mateo pointed out.
As to whether landlords are able to prey on their tenants, this seems clear enough - and an empirical question, rather than a policy question. Whether the incentives are set up in such a way that this is their "best" option is to maintain their properties, this is policy question. Right?
Posted by: ian at July 11, 2006 3:15 PM
Ian-
Correct. If the gov't changes the rules on you which diminishes the value of your asset after you have purchased it it's classified as a, "regulatory taking" which is prohibited without just compensation by the Fifth Amendment and Supreme Court precedent.
And also correct that whether or not it is an efficient and proper way to structure a public interest goal is a policy question.
Posted by: Mateo at July 11, 2006 4:16 PM
We must not forget Joe Mannino...he has to be in the top 15 worst landlords...
Posted by: ArtVandelay at July 11, 2006 6:14 PM
See: http://www.cato.org/pubs/pas/pa-274.html
"Although rent controls are widely believed to lower rents, data I have collected from eighteen North American cities show that the advertised rents of available apartments in rent-regulated cities are dramatically higher than they are in cities without rent control. In cities without rent control, the available units are almost evenly distributed above and below the census median. In rent-controlled cities most available units are priced well above the median. In other words, inhabitants in cities without rent control have a far easier time finding moderately priced rental units than do inhabitants in rent-controlled cities.
This is because tenants in the regulated sector tend to hoard their apartments, forcing everyone else to shop only in the shadow market. Thus, rent control is the cause of the widely perceived "housing crisis" in rent-controlled cities".
-by William Tucker CATO Institute.
Posted by: Arsenic and Old Lace at July 12, 2006 10:37 AM
I'd be careful about citing anything from the Cato Institute especially where ideology is inserted for inference.
Look at the above.
(A) Advertised rents in cities with rent control are higher than advertised rents in cities without rent control.
(B) Available rental housing in rent-controlled markets is higher than the median rent versus the unregulated cities and unregulated medians.
Point (A) is a cause-and-effect problem. Are the rents higher than they otherwise would be because of rent control or is rent control a policy implmentation to control rising rents? The author provides no answer.
Point (B) is a similar one. Rent-stabilized apartments are going to be under market pricing. So if you just count rents (which is what a median represents) you will find, unsurprisingly, that the other apartments are priced higher. Not an amazing insight, really.
I can't claim to be really familiar with this guy, but he seems to have a handle on things and his methodology looks ok: http://www.manhattan-institute.org/html/cr_34.htm
He projects that completely deregulating the New York housing market would result in an average increase of $8 a month in rent, city-wide. Now, he's generally against rent stabilization, it seems, and argues that it is bad policy as it unduly benefits some people at the expense of others but he does NOT arrive at the conclusion that rent control = higher rents.
Which, if you think about things, if rent control = higher rents then tenants should be arguing for its abolition and landlords for its preservation. Which doesn't seem to be how it normally shakes out.
So watch out for inference and innuendo. Particularly when it comes from Cato.
Posted by: Mateo at July 12, 2006 12:19 PM
"He projects that completely deregulating the New York housing market would result in an average increase of $8 a month in rent, city-wide."
That hardly qualifies as rents "Skyrocketing" (per post by: cobblestoner).
And what about all the associated costs of enforcing Rent Regulations? How much tax payer money does NYC spend to keep regulations (that were supposed to be temporary back durring WWII) enforced. If rent control were eliminated, the money spent (running the regulations) could put into housing assistance voucher (or some sort of program) for the people that TRULY need help with their rent.
That way individual landlords would not have to subsidies peoples rent, and new comers to NYC would not be shut out of a program that only benefits those who were luck enough to land a rent controlled/rent stabilized apartment.
per http://www.manhattan-institute.org/html/cr_34.htm
"Report finds that rent stabilization provides little benefit to residents of the outer boroughs and the lower and middle-income neighborhoods of Manhattan, while providing a substantial subsidy only to the residents of the relatively affluent areas of Lower and Mid-Manhattan....
...in the long run, direct government assistance along with deregulation is the favored alternative. Given that rent regulation disproportionately benefits tenants in affluent areas, direct financial assistance to poor and elderly renters is preferable to simply regulating rents."
And note: I'm a renter, not a landlord. I have lived in a stabilized apartment, but for the last 15 years have been in a market rate apartment. In those 15 years, I had only 2 rent increases of 10% each (both to compensate for higher fuel costs). My landlord only raised rent when THEY had to, not because a law said they had to raise the rent.
If I was living in a rent stabilized/controlled apartment I would have had a larger cumulative % increase in rent.
per: http://www.manhattan-institute.org/html/cr_34.htm
"Between 1993 and 1999, the median monthly rent of stabilized housing citywide increased 24%, while the median rent of unregulated housing increased only 17%."
And what was the Rent Board 2006 increase? Over 7% I believe.
Rent Controls are not helping all the people they should help, and they should be eliminated in favor of program that provides assistance for ALL poor/elderly NYC residents.
Posted by: Arsenic and Old Lace at July 13, 2006 9:21 AM
There are undoubtedly a large number of bad landlords in New York City. One would think that the Voice could find them and write about them instead of playing patty cake with non profit groups, rabble rousers and local politicians. Every year it comes out with its 10 WORST LANDLORDS, not to do a service to the public but to sell newspapers. The Village Voice is of course, known for its propensity toward attention grabbing headlines and lurid photographs and this article is no different. All one has to do to take its measure is to look at who advertises and pays their bills. Maybe what is needed is an article about the 10 WORST NEWSPAPERS in terms of how many X rated ads offering illegal services they have. Back to the issue at hand, we could perhaps all agree that HUD is the country’s number one worst landlord; that’s a given. However, without speaking for the rest, they really missed the mark by naming Steven Kessner. You can chalk it up to a reporter losing her objectivity and allowing herself to be led around by the nose by a tenant group with a hidden agenda.
Although the article pays lip service to Kessner’s claim that overcrowding apartments is the issue, it is glossed over and buried in the details, for instance, the photo in the article of mold on a tenants bathroom ceiling. What is not being said is that if 20 people live in an apartment with one bathroom, each showering once or twice a day, the ceiling never dries and mold grows. There is nothing that a landlord can do to prevent that except to try and reduce the occupancy load in the unit. Steven Kessner is trying to do that and has opened himself up as a target for the politically connected non profit groups that support the undocumented alien population in New York. Isn’t it strange that all of the articles written about Kessner cite the same couple of tenants? Although this article mentions that he has almost 60 buildings in East Harlem with over 1200 units, Kessner’s inclusion in the article is based on two tenants in two buildings. The Voice reporter makes sure to mention that Steven Kessner has over 3,000 HPD violations. Again, she fails to mention that these violations are spread over 60 buildings or that most of them have been abated but are not removed from record because the city inspectors can’t gain access to the apartments. Nor does she mention that a majority of the violations that are left are in overcrowded apartments. The article starts off by quoting Steven Kessner as saying “I fix it, they break it.” However, it fails to back up that quote with the evidence that was given to the reporter, instead, using alleged conditions in a couple of apartments to build a case for a two tier portfolio of trophy buildings and buildings dedicated to unfortunate immigrants. The conclusion of this article was written first and the rest was then filled in. Shame on the Village Voice. How about this for your next article....NIGHTMARE TENANTS that destroy apartments and then insist that the landlord has an obligation to repair them.
Posted by: Len at July 20, 2006 12:52 PM
Victor Caletre has been deported. That is hard to do in New York city where illegal aliens have as many or more rights than its legal citizens. Generally speaking, you have to commit a crime. Caletre, along with his partner in crime, Juan Haro, was a founder of the sham organization Movement For Justice in El Barrio. This organization’s claim to fame is its captive reporter, Albor Ruiz, who writes biased, distorted and untruthful stories for the Daily News under the guise of reporting the news. They are further supported by another sham organization, Housing Here and Now, which has its own gang of reporter lap dogs. They have tapped into an activist writer for El Diario whose daughter has written the same kind of rhetoric for the Village Voice. Shamefully, they also have a New York City Councilwoman in their pocket, East Harlem’s Melissa Mark Viverito, the wealthy German socialite, who lives in a $1,000,000 townhouse, masquerading as an Hispanic from the neighborhood, and whines about gentrification. In his article about alleged abusive landlords, Ruiz seeks to characterize the Movement’s fight against landlord Steven Kessner as a Samson versus Goliath type of battle. The reality is that the Movement for Justice in El Barrio is a gang of thugs who are victimizing their own people. Housing Here and Now is no more than an outlet for rants against landlords in general. What Caletre and Haro are doing is enabling illegal immigrants to be crowded into small apartments like herds of sheep. While Victor Caletre was falsely crusading against Steven Kessner, he was renting an apartment from him, in which he did not live. Instead he in turn rented his small two bedroom apartment to nine adults who paid him rent. In ranting and raving about abusive landlords, these organizations are seeking to divert attention from their shameful pursuit of the almighty dollar. Steven Kessner, who is one of the victims here, has only been attempting to clean up his building and reduce the unlawful overcrowding. Since that would have an adverse impact on the pocket books of the people who are preying on these unfortunate immigrants, they are desperately trying to stay in business, any way that they can. Victor Caletre is out of business. Hopefully, Haro will be soon, Steven Kessner will win his fight against illegal overcrowding and the media circus will end, or at least move on to villifying someone else.
Posted by: Concerned citizen at November 16, 2006 2:40 PM
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