After more than a year of pressure from tenants urging the repeal of the state’s vacancy-decontrol law, Gov. David Paterson has finally weighed in. In a bill announced May 26, he proposed raising the threshold for taking apartments out of rent controls from $2,000 a month to $3,000.
“We believe we’ve crafted a balanced measure that provides stability and certainty, tightens protections for tenants, will stem the loss of rent-regulated units and preserve affordable housing, and that has a legitimate chance of being passed in the legislature,” said State Housing Commissioner Brian Lawlor.
“It’s an outrage,” responded Michael McKee, head of the Housing Here and Now! tenant-rights coalition. “He [Paterson] has gone over to the dark side. He’s screwing everybody who used to be part of his base.”
“This bill will do nothing to slow down the loss of affordable rent-regulated housing,” Housing Here and Now! said in a statement May 26. “Nothing short of full repeal of vacancy decontrol, and reregulation of the 300,000 apartments we have lost in the last 16 years, will do.”
The bill, which would extend the state’s rent-regulation laws from 2011 to 2019, has three main provisions:
• Vacant apartments could still be decontrolled if the legal rent is $3,000 or more. That threshold would go up every year according to the increases set by the city Rent Guidelines Board. (Apartments already decontrolled would not be regulated.)
• It would establish some new protections against illegal overcharges. Owners taking apartments out of rent regulation would be required to file an “exit notice” with the state Division of Housing and Community Renewal (DHCR) and to tell incoming tenants that they can file an application with DHCR to make certain that the apartment was legally decontrolled.
• Landlords could decontrol apartments that received J-51 tax benefits once they reached the $3,000 threshold.
“This is what everyone in the industry thought the law was,” Lawlor said in a telephone press conference May 26, referring to the provisions regarding J-51 benefits. The state Court of Appeals decision in Roberts v. Tishman Speyer last October “completely threw the situation into disarray,” he stated; that ruling held that the owners of Stuyvesant Town/Peter Cooper Village could not take those tax breaks and then deregulate apartments in those buildings. The city’s law, the court said, was clear: J-51 benefits are specifically intended to help landlords renovate rent-stabilized buildings, so buildings receiving that money must remain under regulation.
About 40,000 apartments get J-51 benefits, Lawlor said. The proposed law would not overturn the Roberts decision for Stuy Town/PCV, he says. Instead, it would clarify the law: Apartments that were already rent-stabilized when they got J-51 benefits could still be deregulated, but those that became rent-stabilized only when they received J-51 benefits could not be.
That provision is likely intended to protect owners from lawsuits challenging deregulation in other J-51 buildings. State Sen. Liz Krueger (D-Manhattan) called it “completely unacceptable.” Letting apartments with J-51 designation be deregulated, she says, would overturn both the court decision and the intent of the law, just so landlords can get out of legal obligations.
“Why are we allowing taxpayers’ dollars to be given away if there’s no quid pro quo for the public good?” she asked.
Krueger added that the vacancy-decontrol changes do “not go nearly far enough.” Repealing vacancy decontrol has been the top issue on the tenant movement’s legislative agenda since Democrats won control of the state Senate in 2008. It passed the State Assembly in 2009, but was stalled in the Senate when Housing Committee Chair Pedro Espada switched to the Republican Party the day before a scheduled vote last June.
Under vacancy decontrol, landlords can easily get away with charging illegally high rents, McKee explained. “Ninety percent of landlords will just stop registering the apartment and tell tenants that it’s not rent-stabilized. People don’t file complaints because they don’t know they have a right to file, and because they assume the system is jigged against them,” McKee said.
That kind of fraud happens even when the apartment rents for under $2,000, adds Mario Mazzoni of the Metropolitan Council on Housing.
Lawlor defends the state’s record on enforcing the law against rent overcharges. In the last three years, the state DHCR has issued 2,100 orders requiring landlords to pay back rent and damages.
However, according to agency figures obtained by Housing Here and Now!, only about 2,000 tenants a year file overcharge complaints.
McKee said tenant groups will continue pushing for full repeal of vacancy decontrol. Senate Majority Leader John Sampson, he said, can “get 32 votes if he really wants it.”