Rent Stabilization

AP via NBC: “The Supreme Court won’t hear an appeal that seeks to end rent stabilization laws in New York City. The high court on Monday refused to hear an appeal from James and Jeanne Harmon, who have lost earlier court attempts to get rent stabilization laws thrown out. The Harmons inherited a building with three rent-controlled apartments near Central Park on Manhattan’s Upper West Side. The Harmons say rent stabilization laws forces them to rent the apartments at rents 59 percent below market rate. They argue that by giving the tenants lifetime tenure with succession rights, the government has illegally taken their property. A federal judge and the 2nd U.S. Circuit Court of Appeals in New York City threw out their lawsuit. The high court refused to review that decision.”

Via City Room: “Mayor Michael R. Bloomberg signed a bill on Monday that extended the city’s participation in rent regulation for another three years by redeclaring a state of housing emergency, even as a challenge to rent regulation laws looms in the United States Supreme Court. ‘The Department of Housing Preservation and Development reports the vacancy rate in rental apartments to be at 3.12 percent, Mr. Bloomberg said at the bill-signing ceremony. That, he continued, is ‘well below the 5 percent rate at which the law requires that rent regulation be discontinued.’ The city has had a vacancy rate of less than 5 percent since the department began keeping track more than 40 years ago, which means it has been in a state of housing emergency for all that time. But critics of rent regulation argue that an emergency by definition must be temporary.”

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

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 face—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!