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Does Rent Control Help The Poor How Rent Control Drives Out Affordable Housing Anti Rent Control Bill approved law That great sacred cow Rent Control Finally, anti-rent-control view hits national media: 6 minutes Is Rent Control Heading For Extinction? Landlord with 241 violations jailed Crazy Judge Ruling made by Glendale California Pro Tem James Sadigh Two teenage girls sued for performing an act of kindness 75 Million Americans Pretending They Own Their Own Homes Jungle Juice Happy Apartment Manager
Does Rent Control Help the
Poor? The latest data show the poor get poorer and the rich get better apartments Peter Salins is chairman of the Department of Urban Affairs and Planning at Hunter College, and co-chairman of NY’s editorial board. Gerard Mildner is an adjunct faculty member in economics at New York University and Hunter College, and a doctoral candidate at NYU. This article is adapted from the authors’ forthcoming book, Scarcity by Design. One of the new hit movies of the fall season, Pacific Heights, is a rent-control horror film, in which Michael Keaton plays a deranged but clever tenant bent on terrorizing his yuppie landlords. No matter what he folds, spindles, or otherwise mutilates, they cannot get rid of him. The great mystery about Pacific Heights is not its plot, the general outlines of which are perfectly familiar to anyone experienced in the ways of rent control, but its location: It is set, for some reason, in San Francisco. This is obviously unrealistic: By all rights this movie belongs to New York City. By now every New Yorker can reel off rent-control horror stories, and yet rent control retains its political popularity. Why? Surely not just because many influential New Yorkers are tenants paying below-market rents. The more idealistic, and seemingly more persuasive, justification for rent control over the years has been that it makes housing affordable for the poor and working class. Isn’t doing right by the poor worth a few horror stories? But the horror stories, bizarre as they may seem, are not aberrations. The most distressing and consistent reality of rent regulation is what we might call the “all the wrong people” syndrome. With almost faultless precision the rent-regulation system bypasses, or hurts, those it was meant to help, and heaps most of its benefits on relatively privileged New Yorkers. The system does not help the poor; it particularly penalizes new New Yorkers, who have always been vital to the city’s economy; and it encourages landlords and tenants alike to behave in ways almost perfectly calculated to tighten the housing market still further and raise rental prices higher. There is no trade-off between horror stories and help for the poor; the help never comes and the horrors remain. The abiding sin of rent control is that it misallocates resources. It is a truism, for instance, that housing in New York is expensive. But the truism is not true. Housing in New York is cheap, or at least New York has lots of cheap housing, and average prices are reasonable. The problem is that the wrong people live in that cheap housing, while many others are stuck in housing they cannot really afford. In the last year for which data are available (1987), the median price (including utilities) for apartments in New York City was $395 per month. Fewer than 29 percent of apartments in New York rented for more than $500 per month, and only 8 percent of all units rented for more than $750 per month, according to a report authored by housing expert Michael A. Stegman and published by the city’s Department of Housing Preservation and Development. Nor have rents increased disproportionately in recent years. Allowing for inflation, rents in New York City are only 12 percent more expensive today than they were 15 years ago. Between 1975 and 1987, the median rent rose from $171 to $395, or 131 percent, while consumer prices in general rose 105 percent. Manhattan is the most expensive borough with a median rent of $408 and the Bronx the cheapest at $359. So much for the good news. The bad news is that after years of rent control, rents in New York bear little relation to tenants’ ability to pay. The best test of the relationship between housing costs and ability to pay is the rent-income ratio, or the portion of a renter’s income he spends on rent. New York’s median 1987 rent of $395 bears a healthy relation to the median 1987 renters’ household income of $16,000, yielding a rent-income ratio of .296. (Again the figures come from the city’s own Stegman report.) Theoretically, then, the typical family in New York should be spending 29.6 percent of its income on rent, within the 25-30 percent range recommended by home economists and federal housing officials. However, this statistical artifact—the median price divided by the median income—would be an accurate picture of the city’s housing market only if the rich were paying high rents and the poor low ones. That is not the case. The well-to-do, the great beneficiaries of rent control, mostly pay far less than 29 percent of their income for rent, while the poor are routinely confronted with rents they cannot afford. The city’s 1987 Housing and Vacancy Report examined the relationship of prices to income by dividing the renter population into ten different income classes and computing the average rent-income ratio for each class. The results clearly show that rent control has failed in its primary mission: • The typical household in the highest income decile of renters, with a mean household income of $62,012, paid an average rent of $672 per month, or 13 percent of its income. • A typical moderate-income renter household with a mean household income of $22,303, paid a rent of $446, or 24 percent of income. • A typical lower-income household with a mean household income of $14,127, paid an average rent of $338, or 33 percent of income. • A typical poverty-level household (in the second decile), with a mean income of $5,361, paid a rent of $259, or a backbreaking 58 percent of income. In other words, while the most affluent households in New York had an average income over 12 times the poorest, they paid only two and a half times as much rent. And these averages conceal even more glaring inequities: Some affluent families devote less than 5 percent of their income to rent, and many poor ones pay more than 70 percent. To be sure, nearly everywhere in America the rich spend a smaller percentage of their income on rent than do the poor. But nationally the disparity is somewhat smaller than it is in New York. The important point, however, is not that under rent regulation New York’s poor do somewhat worse than the rest of the country, but that they were supposed to do much better. If the net result of rent regulation is to make the rental market somewhat harder on the less fortunate, and easier for the rich, why have rent control at all? Because rent regulation helps “all the wrong people,” it dispenses its greatest benefits to Manhattanites. Only in Manhattan are regulated rents far below market levels. This is the conclusion of the most recent study to examine the geographical distribution of rent-control benefits, conducted in 1989 by Henry O. Pollakowski at Harvard’s Joint Center for Housing Studies. For the city as a whole, the mean rent for all unregulated apartments was only $44, or 15 percent more than the mean rent for regulated apartments. But in Manhattan’s better neighborhoods, rents for unregulated apartments ranged from $368 to $432 higher than comparable regulated rents. Excluding Manhattan, the mean rent-regulation subsidy was actually a negative $9, that is, rent-regulated apartments were, on average, entitled to rents $9 higher than the market price. The price-control “windfall” is largely a Manhattan—specifically, a Manhattan below 110th Street—phenomenon. Manhattan, outside of its remaining slums, is largely the redoubt of the well-to-do. The average household income of the “Manhattan core” in 1987 was $35,000, while that for the rest of the city was under $20,000. Only 13 percent of Manhattan-core families were in poverty, compared to 23 percent for the rest of the city, and most of Manhattan’s poor were living in pockets of inferior housing without large rent-control discounts. Why do wealthy Manhattanites reap most of the benefits of rent regulation? To begin with, to earn the maximum benefits from New York’s rent regulations, it helps to occupy an apartment for a long time (because landlords are permitted to raise rents more than usual when an apartment becomes vacant). Affluent professionals have greater job stability and can, in any case, manage to fake their continued occupancy if they move. Also, influence or good connections are helpful in the search for a desirable rent-regulated apartment. The result, as New York City developer Seymour Durst puts it, is that, “We’ve got plenty of low-income housing in New York. We’ve just got upper-income people living in it.” The Young and the Rentless That rent control helps the rich rather than the poor is the greatest perversity of the system, but not necessarily the one most damaging to the city’s economy or its future. The vitality of New York has always depended very substantially on newcomers, not only immigrants from overseas, but talented people from around the country who are attracted to New York by its great professional opportunities. As the nation shifts to an information economy, and human capital becomes the key factor in production, it becomes ever more important to keep New York a mecca for new talent. Rent regulation, however, is almost perfectly designed to punish newcomers. Rent regulation has kept vacancy rates low and housing scarce. So new New Yorkers have a choice between paying exorbitant rents for scarce (by national standards) unregulated apartments, or entering the frantic competition for even scarcer regulated apartments. And, as the young searchers soon learn, a controlled apartment may cost a new tenant a great deal more than the landlord gets in rent. When Elizabeth Green*, a 24-year-old secretary, moved to New York City, she knew that living costs were high, but assumed that she could find an apartment for $500. What Elizabeth found is that in Manhattan $500 does not rent an apartment any bigger than a closet. “When I came from Ohio,” Elizabeth recounts, “I expected my costs to be double, which they basically are. So is my salary. But my rent is over three times what I had paid before.” She pays $495 for her share of an apartment on East 91st Street, but for her, the cost of rent was just the beginning. * Her name has been changed. I went to a roommate service. Their fee was $250, including a membership fee of $35 and two payments of $62.50 after they placed me. Then there was the security deposit and the first month’s rent. So it cost me about $1,500)ust to move in.” The situation is even worse for newcomers who aspire to apartments of their own. Available studio apartments can fetch between $600 and $900 a month; one bedrooms in safe neighborhoods go for $1,000 and up, while two bedrooms can rarely be found for under $1,500. This is far more than the cost of comparable apartments in other major U.S. cities, even such high-demand ones as San Francisco or Washington, D.C. (Prices have softened a bit in recent months, but not much, and in any event a major recession is a high price to pay for a slightly less overpriced rental market.) There is an additional cost of finding an apartment in Manhattan: the broker’s fee. Because so few apartments are available, a broker is usually needed to get up-to-date information on all but the least desirable listings. Since a broker’s fee (which in some cases includes an illegal kickback to the landlord) runs about 15 percent of the first year’s rent, prospective New Yorkers may have to pay another $2,000 up front. Sublets, particularly of regulated apartments, often carry a similar cost: “key money,” the additional cash fee the new tenant must pay the old tenant to do the deal. One new Manhattanite recently told us a classic story: A sublet was available on the Upper East Side for the legal limit of 10 percent above the regulated rent, or about 60 percent of the market price. The catch? The winning applicant would not only have to pay a year’s rent in advance, but (in place of key money) would have to buy a $2,500 painting from the legal tenant, an artist. Add in the usual security deposit of one to two months’ rent and the first month’s rent and moving into an apartment can easily cost a new New Yorker $5,000. Five thousand dollars is a major hurdle for many prospective (and even longtime) New Yorkers. How many young workers are eager to move to New York, with all its taxes, crime, and congestion, knowing that they will have to come up with $5,000 just to move in? In the Warehouse As Moscow shoppers know, the worst result of price controls is scarcity, which New York’s housing market has in abundance. The best overall measure of the scarcity of housing is the vacancy rate. The official vacancy rate of New York’s rental housing—as reported by the most recent city-commissioned Housing and Vacancy Survey—is 2.5 percent, the lowest among major U.S. cities. The average vacancy rate for all U.S. cities is 5.7 percent, according to the U.S. Commerce Department’s most recent American Housing Survey for the United Stated. Chicago, so frequently compared to New York, had a vacancy rate of 7.5 percent. The official vacancy rate does not tell the whole story. That statistic is based on the number of apartments that are vacant and available for rent. Oddly enough, despite a tight housing market, New York has just as many apartments that are vacant but unavailable for rent. Why are so many unoccupied apartments kept off the rental market? Some are dilapidated or in abandoned or tax-foreclosed buildings, and hardly qualify as housing. But according to the Stegman report, a fairly large number-53,000, or 3 percent of all rental housing units-are perfectly habitable, if not downright desirable. Roughly half of these apartments are really already en route to occupancy, with executed leases or renovations in progress, and they should be counted in the available category. But the other 26,000 apartments are unavailable for two reasons: Their out-of-town tenants are holding onto them for occasional use, or their landlords are “warehousing” them, keeping them vacant for a future co-op conversion or some other deal more attractive than renting controlled apartments. (See Table 1). If all currently unoccupied apartments were put onto the rental market, New York’s vacancy rate would rise to almost the national average. In other words, much, if not most, of New York’s housing crunch is caused by landlords and tenants who keep existing, unoccupied housing off the rental market. Landlords and tenants in New York keep housing off the market because rent regulation makes it attractive to do so. Out-of-town tenants can afford to keep “pied-a-terres” only because rent control makes them so cheap. Surely the purpose of rent control was not to provide people with country or retirement homes a comfortable New York retreat. Likewise, warehousing apartments is extremely expensive. Only the truly awful option of renting at far below market to tenants who may never leave drives landlords to the extremes of not renting their apartments at all. Once again rent control makes “all the wrong people” do “all the wrong things. “ House Wrecking In 1939, three years before rent control was introduced, Tony Nuzzo’s* father managed to buy a five-story apartment building on Mott Street in Chinatown. Tony and his wife have been managing the building for his family since 1982. The rent regulated building is located in a prime location, but the Nuzzos are losing money and may have to walk away from it. “We have 35 apartments in the building, totalling 120 rooms,” he explains. “Twenty-two out of 35 apartments have rents of $100 or less per month, with the highest rent being $400 and the lowest $41.25 for a three-room apartment.” Rent regulations allow a 3 percent annual increase, less than inflation in most years. Tony works during the day as a steelworker and moonlights as a boiler repairman, in addition to working on the boiler in his own building. Tony is hardly the prototype of the greedy absentee landlord. Many of his tenants, who are by no means poor, pay only a tiny fraction of their income in rent. “I have one tenant who’s a union electrician, which means he’s making at least $20 an hour. His wife and his daughter work, and his rent is 55 dollars and 19 cents. I mean, he’s a nice guy and everything, but if I even try to raise his rent six cents a month, I would get such a squawk.” * The name has been changed. There are two ways Tony can avoid losing his building and maybe even make money on it. The current tenants can move out or die, allowing Tony to raise the rents to market levels (after which they will be governed by rent stabilization), or he can take the building co-op. But most rent-controlled tenants are very slow to leave. The system thus gives Tony enormous incentives to drive his tenants out of the building by cutting services or even by active harassment. Some landlords take that course, but Tony refuses to sink to that level. Instead he has tried to buy out his tenants, but rent control gives tenants a deal Tony cannot beat. “I offered them $20,000 each. I didn’t have it, but I offered it to them. They turned me down. If they had to go find a building on the open market at $1,000 a month, that would last them less than two years. I approached them about converting to condos or co-ops. But who would give you an insider price of $40,000 when they are paying $40 or $60 a month rent? That’s almost 100 years of rent. This situation is impossible.” Tony’s other option, which he also resists, but which history suggests will be forced on him, is to cut corners on maintenance in the hope his bank account will outlive his tenants. Thousands of small landlords like Tony, the sort of people who for generations were the bulwark of New York’s housing stock, have done exactly that: Again the wrong people forced to do the wrong thing. As a result, New York’s housing stock is in much worse shape than housing in other U.S. cities, large or small. The Federal Government’s American Housing Survey for the United States shows that New York City comes off badly by virtually every measure of housing quality, compared with cities in general and even with Chicago, another big city with an old housing stock and an underclass population. (See Table 2.) On every index of housing quality—all of which are related to maintenance-New York fares badly; twice as many apartments in New York have cracked walls, broken plaster, holes in the floor, and exposed wiring than other American cities. A quarter of New York apartments have broken heating systems, compared with less than 10 percent in other American cities. Even compared to Chicago, New York’s rental housing is badly maintained. The case that rent control is corroding New York’s housing stock is bolstered by data for owner-occupied housing, for which the differences between New York and other cities are much less than for rental units. (See Table 3.) In fact, on three of the eight indices of owner-occupied housing, New York shows up better than the other cities. In all cities owner-occupied housing is better maintained than the rental stock, but when rent regulations are imposed the discrepancies become much larger. The record is perfectly clear. Rent control does not help the poor; it heaps enormous benefits on those who do not need them, and worsens the lot of the vast ranks of the unlucky and the unconnected. It punishes the sort of landlords we need more of, it encourages good landlords to become bad landlords; and in the midst of a housing crunch it encourages tenants and landlords alike to hoard unoccupied apartments. Rent regulation, in short, does all the wrong things to all the wrong people. Providing decent housing for the poor is a noble goal, and there are sensible ways to go about it. Rent regulation is not one of them. Rent Control’s Last Gasp At long last, Albany is poised to liberate the city’s housing market—and New Yorkers will benefit greatly. At long last the seems at hand—something two generations of housing experts thought they’d never live to see. In Albany and elsewhere, the complex drama of achieving it—which will be filled with hidden machinations, unlikely bargains, and plenty of scare talk—has already begun. Senate Majority Leader Joseph Bruno, without whose support rent regulation cannot survive, has announced his willingness to let it die on the day in mid-June when it automatically sunsets unless renewed. Governor Pataki, on the record as opposed to rent control, has replied that phasing controls out may be better than ending them suddenly. The New York Times, somewhat unexpectedly, has given its editorial blessing to some sort of gradual demise, while New York City politicians have declared their determination to hold the line, knowing that for many of their constituents retaining controls is the only issue. When all the deal making is finally accomplished in Albany—when Assembly Democrats have offered up as yet unnamed concessions to Republicans in exchange for going easy on rent-control reform—some significant change is bound to emerge, but its precise shape is guesswork for now. That discontinuing rent controls is even on the agenda in New York is something of a miracle. Rent regulation has been a fixture of life in the city for decades, seemingly no less permanent than yellow taxis or the Knicks. No one thought it could ever be gotten rid of. So what happened? For one thing, the state has watched as one liberal redoubt after another—Massachusetts, California, Washington, D.C.—has eliminated or scaled back rent regulations in recent years, without creating the Dickensian misery predicted by the hysterical defenders of controls. As Boston Globe columnist Jeff Jacoby writes, “Remember the housing crisis that exploded in Boston after voters approved Question 9 [in 1994] and abolished rent control in Massachusetts? Remember the tidal wave of evictions, the masses of poor senior citizens kicked out of their homes? . . . Of course you don’t. It never happened. There was no crisis.” And there wouldn’t be one in New York either, as many of the city’s residents have come to realize. Moreover, it has finally dawned on many New Yorkers that rent controls, far from solving the city’s housing problem, are a prime cause of it. As New York’s Citizens Budget Commission has put it, “The most fundamental criticism of rent regulation is that it perpetuates the very problem it was designed to address: a housing shortage.” Indeed, with 1.1 million rent-regulated apartments, the city is a showcase for the distorting effects of controls: a minuscule vacancy rate, middle-class families trapped in apartments too small for their needs, wealthy retirees paying a pittance for three bedrooms, and virtually no new construction to relieve the strain and to upgrade the housing stock. Finding a decent apartment in New York City—and especially Manhattan—is a harrowing ordeal, and New Yorkers are fed up with it. The regulatory edifice responsible for this crisis started off innocently enough. In the late forties the city decided to continue wartime rent controls, fearing that prices would skyrocket in a market where no new housing had been built for half a decade. But the controls on existing apartments remained in place long after construction revived, so by 1969, rents for hundreds of thousands of new apartments, exempt from controls, far outstripped those of older apartments, still frozen at their 1947 levels. The City Council responded by imposing a somewhat more flexible system called rent stabilization on all rental units not covered by rent control. Today rent stabilization dwarfs rent control, covering over 90 percent of regulated apartments. Both sorts of regulation provide essentially the same benefits. In the first place, of course, they hold down rents. Since 1970, rent control has allowed a landlord to raise an apartment’s rent by 7.5 percent a year until hitting a “maximum base rent” well below the market price. Prices under rent stabilization are the domain of the Rent Guidelines Board, a body appointed by the mayor. Its determinations have fluctuated wildly over the years, but the overall effect has been to keep rent increases below the rate of inflation and, in the city’s best neighborhoods, far below market levels. Rent regulation also gives tenants a hefty bundle of entitlements. The most important of these, arguably even more valuable than the limits on rent hikes, is the right of tenants and their relatives to occupy their apartments for as long as they wish, whether their landlords want them to stay or not. This means that landlords have to get the permission of tenants or the state to do things with their property that they could do as a matter of course elsewhere, from performing renovations to tearing down their buildings or turning them into co-ops or condominiums. Rent regulation in New York still operates under the pretense of being a temporary, emergency measure. The law’s expiration every three years is supposed to give the State Legislature a chance to re-evaluate, but like clockwork the New York City Council proclaims that New York’s housing crisis endures. How does it know? Because for years now, the U.S. Census Bureau’s triennial survey of the city’s housing has found a vacancy rate of less than 5 percent, and this, according to a state commission, is “prima facie evidence of a continued ‘housing shortage.’” But rent regulation itself helps to create this dearth by putting an enormous damper on housing construction. Developers respond to economic incentives as any other business would, and when they look at rent control, they see a policy that cuts deeply into the profitability of rental properties and discourages affluent tenants with rent discounts from shopping around for the new apartments that developers would build. Why put up a new building under such constraints? Indeed, since the fifties housing construction in New York City has fallen steadily and precipitously. Before rent stabilization arrived on the scene in 1969, New York built 35,000 dwellings a year on average. In the early seventies, the rate dropped to 20,000 a year, and a decade later, to 10,000. So far in the nineties, housing construction has crept along at a dismal pace of fewer than 8,000 units a year, the lowest level since the Depression. This steady long-term trend defies simple explanation—the city’s general economic woes have certainly played a role, as have restrictive zoning, environmental, and building laws—but it confirms what every introductory economics textbook teaches about the effect of rent controls on the supply of housing. Rent controls also interfere with the dynamics of the housing market in more subtle ways. Because discounts under rent regulation increase the longer a tenant occupies an apartment, they create an incentive not to move that grows stronger over time. The result: little turnover in the housing stock. As the U.S. Department of Housing and Urban Development reported recently, “Even moderate rent-control ordinances reduce mobility noticeably, thereby leading tenants to occupy units whose characteristics are not well-suited to their current circumstances, such as family size and job location.” That’s why so many elderly singles in New York live in spacious apartments while families with two or three children live doubled up with friends or relatives. Rent regulation has also had perverse effects on the character of housing in New York. Its financial benefits have discouraged millions of New Yorkers from owning rather than renting their homes, leaving them with a homeownership rate of 28 percent, less than half that of Americans in other large cities. And the unqualified right of regulated tenants to stay put has made it impossible for owners to tear down their buildings when they are half empty or no longer financially viable. There’s only one avenue open to disgruntled landlords who want to get out of the housing business: abandonment—which explains why New York City has come to own 40,000 apartments and inherits an additional 5,000 to 10,000 units a year. What is perhaps most galling about rent regulation in New York is that the housing scarcity it generates affects the entire city while its benefits fall to a select few. Cocktail-party talk about movie stars who pay a song for luxury apartments isn’t so far off the mark. The greatest subsidies go to stable households living in desirable apartment buildings and neighborhoods, a class composed mainly of affluent whites, usually singles or couples, often elderly. At the same time, most poor and minority families, especially large households with children, don’t benefit in the least from rent controls. A number of studies have tried to figure out the full extent of this inequity, calculating the subsidy—that is, the difference between the maximum rent for a regulated apartment and the actual rent for a comparable unregulated unit—enjoyed by New Yorkers of different neighborhoods, races, and household sizes. Harvard’s Joint Center for Housing Studies discovered that Manhattan’s high-income neighborhoods and a few wealthier areas in Queens won the lion’s share of New York’s rent subsidies. In 1989 the typical discount on the Upper East Side, for example, was $432 a month, while in East New York and most of the Bronx and Brooklyn, the discount was actually negative, meaning that landlords were unable to find tenants willing to pay the maximum allowable rent. The consulting firm Arthur D. Little Associates estimated in 1986 that rent regulation in New York amounted to an annual subsidy of $754 million. White households received 95 percent of that sum, though they constituted only 56 percent of tenants; black and Hispanic households received just 2 percent. The study also found that one- and two-person households received 74 percent of the rent-regulation subsidy, while families with children got under 1 percent. Even for the lucky if undeserving few who reap its windfall, rent regulation comes at a steep but hidden price: decades of deferred maintenance and substandard services. As the HUD study concludes, “The benefits of rent control, from the tenant’s standpoint, are likely to decline steadily over time, as the quality of the unit deteriorates.” As a class, landlords are neither altruistic nor dumb, so they pass along the cost of rent regulation as best they can. The most recent Census Bureau data on housing conditions in New York City show that regulated apartments are far more likely to have serious maintenance problems: in 1993 the incidence of one or more serious defects in a building was only 7.4 percent among unregulated units but 11.7 percent among rent-stabilized ones and 17.6 percent among those under rent control. The trend in maintenance goes in opposite directions too. From 1987 to 1993, the incidence of defects among unregulated units fell by 35 percent while it stayed the same among rent-stabilized apartments and increased by 8 percent among rent-controlled ones. Fifty years of destructive housing policy are quite enough: it’s time for New York’s legislators to proclaim rent regulation a failure and end it. But how exactly should the coup de grâce be administered? The simplest way would be to follow Massachusetts’s example and allow controls to expire on a fixed date. Senator Bruno has proposed 1999; Charles Urstadt, housing chief under Governor Rockefeller, has suggested immediate abolition. But while it is true that such a clean break would make a big impression on New York’s housing market, giving both tenants and landlords an unambiguous economic signal and a schedule by which to make their future plans, going cold turkey would deliver an unnecessarily harsh shock, even if tempered by exceptions for low-income, elderly, and disabled tenants, as suggested by both Bruno and Urstadt. Instant decontrol may be a good cudgel with which to threaten Assembly Democrats, but even the most intrepid foes of rent regulation are unlikely, for good reason, to embrace it. Governor Pataki has endorsed a somewhat more humane and orderly approach to delivering the fatal blow: far-reaching vacancy and luxury decontrol. The state has tried both before, if somewhat tepidly. In 1971, Governor Rockefeller, at Urstadt’s urging, pushed through legislation that allowed all controls to lapse as apartments were vacated. When Rockefeller left office to become vice president in 1974, the State Legislature quickly restored a version of the status quo ante by passing the Emergency Tenant Protection Act, the law that currently governs rent regulation. During the triennial review of rent regulation in 1993, Albany did impose luxury decontrol on the city’s most expensive apartments, but with a laughably stringent standard—a monthly rent of more than $2,000 and a household income of over $250,000 (for two years in a row, no less). The most desirable way to phase out rent regulation would be to take something from each of these approaches: immediate vacancy decontrol, an income threshold of $100,000 for luxury decontrol (the furthest one can possibly stretch the definition of “middle income”), and termination of all controls in five years, with a Rent Hardship Board (as Urstadt would call it) to extend controls for hardship cases for another five years. A year ago, Albany insiders would have instantly dismissed even so moderate a proposal for deregulation. Phasing out rent control simply wasn’t on the table. But the political tides have shifted so profoundly that such an agenda is now squarely in the mainstream. True, such reforms would not liberate New York’s housing market overnight. In the five years before all controls disappear, a $100,000 income limit for luxury decontrol would only affect an estimated 35,000 apartments, or 3 percent of New York’s regulated rental housing. Vacancy decontrol over the same stretch of time would also make just a modest dent. Assuming that it would operate at roughly the same rate as vacated rent-controlled units have come under rent stabilization over the last two decades—about 7 percent a year—only 40 percent of the housing stock would be free of controls by 2002. Vacancy decontrol might quicken this pace by giving landlords an incentive to track down illegal tenants. Thousands of apartments now maintained as inexpensive pieds-à-terre (unlawful because only primary residences are subject to rent control) or illegal sublets would disappear from the regulated housing rolls. And vacancy decontrol should allow only a spouse to take over a lease, so that tenants of record can’t pass on controlled apartments as legacies to children, other relatives, or companions—a practice common today. Deregulation along these lines would also create an immediate boom in housing renovation in New York’s better neighborhoods, according to Dale Hemmerdinger, president of ATCO Prop- erties, a firm that owns and manages many luxury rental buildings in the city. Landlords would be able to get the market-level rents that deregulation would permit, he says, only if they thoroughly modernized their properties so as to match housing standards in the suburbs and other cities. They would have to reverse the under-maintenance that has allowed them to defray the costs of rent control. Over the course of the next decade, as controls disappear entirely and refugees from regulated apartments push up demand in the housing market, residential development would also revive. Empty-nest couples and widows who, under rent controls, rattle around indefinitely in the three-bedroom homes of their child-rearing years would move into newly available one-bedroom and studio apartments. The middle-income families and singles who now live in Manhattan’s best neighborhoods at bargain rents would settle for cheaper—and probably better—apartments in less fashionable parts of the city; and the young couples who under rent regulation now hang on to apartments poorly suited for raising families would become homeowners. If such forecasts come true even in part, deregulation would mean big dividends for the city’s economy. Housing renovation and construction might generate as many as 100,000 jobs and $500 million in tax revenues. And if New York provided housing that was better maintained and more fairly priced, it could attract more middle-income people to the city and hold on to those who have been leaving in order to escape their cramped, expensive dwellings. Who, then, stands against such obviously reasonable reforms? Who leaps to the defense of millionaires enjoying deep rent discounts? Who objects to a policy that allows widows to live out their remaining years in the secure enjoyment of their rent-controlled apartments? Look no further than the New York State Tenants and Neighbors Coalition, the noisiest and most influential of the state’s rent-regulation advocates—and a group increasingly on the defensive as its reactionary views clash with current thinking. In a recent interview Michael McKee, manager of the group’s rent-law campaign, took the view that no reform is good reform. Like other devotees of rent regulation, McKee does not distinguish between this or that beneficiary; the whole system serves the cause of “affordable housing” and “social justice,” and it stands or falls as a piece. Rich tenants get an undeserved windfall? It doesn’t matter, because low rents are a universal entitlement, akin to Social Security, says McKee. Rent controls cause scarcity and deterioration in the housing stock? He dismisses the notion with an ideological wave of the hand. Left to its own devices, he says, the marketplace inevitably exploits hapless tenants, subjecting them to “rent gouging” and “unjustified evictions.” McKee’s one soft spot shows just how distant he is from the real world of housing. He sympathizes with the complaint of small landlords that current rents are too low to make their buildings profitable. The law should assure them a “fair” return on their investment, he says. And what might that be? McKee suggests 1 percent over the long-term mortgage rate—an amount that landlords could easily make without the trials of running a building by investing in risk-free certificates of deposit. Thankfully, such views no longer prevail in Albany. Now, only the Assembly, with its Democratic majority, shares the advocates’ nonchalance about the harmful effects of rent regulation. So rent regulation in New York is finished, right? Not necessarily. In Albany, change of any kind—much less a monumental change like doing away with rent controls—never comes easily and seldom depends on the merits. Though fighting a rearguard action, urban Democrats are passionately determined to maintain the status quo. Republican senators from upstate and the suburbs have little to lose if they allow rent controls to die, but they haven’t much to gain either. As a result, the Senate may be willing to continue rent regulation in exchange for concessions from Assembly Democrats on issues like welfare reform, business deregulation, and further reductions in state taxes. Deferring across party lines to others’ regional interests, especially on hot-button issues, is a venerable Albany tradition. If the Senate refuses to participate in such horse-trading, the Assembly leadership may try to get its way by holding hostage the whole legislative docket, including the budget. In the end, only Governor Pataki can ensure the triumph of rent deregulation, and he too will have trade-offs dangled before him by desperate Assembly Democrats. To bolster the governor’s resolve, the opponents of rent regulation must convince the state’s opinion elite and the public at large that controls really are harmful, not just to New York City residents but to the economic vitality of the entire state, whose fortunes rise and fall with the city’s. If such a convergence comes about—if rent controls finally breathe their last—it would be an incredible watershed for New York. It would show that deal making need not scuttle every promising reform that dares to show its head in Albany. It would show that Governor Pataki is serious when he talks about transforming the state’s political culture. And, perhaps above all, it would show that reviving the New York City economy is not a lost cause.
How Rent Control Drives Out Affordable Housing
Anti-rent control bill approved Law would weaken East Palo Alto's controls That great sacred cow Rent Control Rent Control is a textbook case of Economic stupidity
Economists who have ventured into the alleged real world often quote
Princeton's Alan Blinder, who has formulated what he calls "Murphy's Law of
economic policy": "Economists have the least influence on policy where they
know the most and are most agreed; they have the most influence on policy
where they know the least and disagree most vehemently." It's flip and
cynical, but it's true. Finally, anti-rent-control view hits national media: 6 minutes A no-apologies anti-rent control view finally hit the national media. It was a 6-minute segment called “Home, Cheap Home” by John Stossel on the February 19 edition of the hour-long weekly TV news magazine “Prime Time Live,” hosted by Sam Donaldson.
Stossel cited Masterpiece Theatre host Alistair Cooke (who pays “less than a fifth” of the $10,000 a month rent his apartment would cost on the open market), the high-class brothel owner “Mayflower Madam” Sidney Biddle Barrows, former New York City mayor Ed Koch, supermodel Kim Alexis, singer Carly Simon, fashion designer Arnold Skazi (whose apartment was featured in “Architectural Digest” magazine), and actress Mia Farrow (whose apartment was featured in a Woody Allen film).
And the most
destructive consequence of rent control in Stossel’s view: abandoned housing.
“Acres” of it in New York City, Stossel said, as the camera panned across
blocks of abandoned brick row houses falling apart. The black economist
declaimed: “Short of aerial bombardment, the best way to destroy a city is
through rent control.” “Only 6% of people
getting rent protection were poor.” All in all, it was a solid, undiluted statement of the anti-rent control position in a national spotlight position, just as New York is seriously thinking of ending rent control this spring.
Spotted Owl, Snail Darter and... Rent Control
Landlord with 241 violations jailedBY PETE BOWLES courtesy of Newsday
A crazy temporary Glendale California Judge ruling raised a few eye browse in California court when a Glendale landlord brought a small claim against a tenant that had stopped paying their rent because the tenants stated they were trying to buy a house, the tenants simply decided they did not want to pay rent anymore and had systematically destroyed every part of the landlords townhouse causing thousands of dollars in damages.
Judge James Sadigh a temporary judge in the Glendale court system and an attorney with Moghaddami & Sadigh heard evidence from the landlord which consisted of 50 photographs showing everything from urine damaged carpets, destroyed kitchen and bathrooms, punched holes in doors, paint dispersed over concrete, trash, the unit looked like it had been vandalized stated the landlord.
The landlord also produced signed documents lease agreements warning letters and demand letters for unpaid rent and to cease damaging the unit and building along with a complete itemized daily history of events.
The tenants were even illegally sub leasing a room in the home and charging almost as much rent to the sub leaser as the landlord was asking for on the whole unit and the tenants were still not paying any rent to the landlord.
The tenants did not deny the damage nor did they deny the rent they owed, they simply stated the landlord said it was ok not to pay.
The landlord stated the tenants had a dog which had ripped the carpets and pets are strictly against the terms of the lease, the landlord produced a picture with a dog, the judge asked the tenants if that was their dog in the photo, the tenants looked at the picture and said the dog was on holiday and was being looked after temporarily, the wife then stated if you look in the background of the picture behind the dog that is my son and his friend why is this landlord taking a picture of my son? The tenant was basically trying to imply something sinister about the photo?
Judge Sadigh asked if they were present when the photo was taken, the husband said yes I asked him to look at the carpet that was ripped at the door, the judge said so you knew he was going to take this photo the husband said yes, but the wife continued to try and make it more sinister.
Judge Sadigh asked the tenants if they signed the lease the landlord had produced which outlined all damage must be paid for along with strict rent due, late fees and legal fee guidelines, one tenant immediately said yes, the judge then asked again are you sure you signed the agreement again the husband said yes, the wife then caught on as it seemed the Judge was encouraging a NO, the wife then said I am not sure the Judge said its Yes or No the husband said yes again.
The Crazy Ruling
Judge Sadigh then made his ruling that defied all real estate laws and after stripping the landlord of his legal rights, he stated to the landlord "You know when you purchase a building its called 'Buyer Beware' you knew there could be problems with tenants in a property when you buy real estate but you went ahead anyway and bought a building so therefore its called 'Buyer Beware' I award you zero dollars for the damage they caused and I award you zero dollars for the rent owed because again 'Buyer Beware'.
The landlord tried to object by stating but they owe rent we have a contract, the Judge stated "They told me you said that was ok not to pay rent", so when they gave up the unit that meant you no longer wanted the rent money owed" the Landlord stated he said no such thing and that is why he is in court and what about all the damage? The judge stated that's the risk you take when buying a building.
Judge Sadigh then stated again Buyer Beware case dismissed.
Latest response 'Judge Cover Up' results for complaint
NOTE: The Landlord stated he has filed a complaint with the Temporary Judge Program and will follow through, the landlord also stated that James Sadigh had no experience according to Sadigh's record with Real Estate Rental Laws in the Glendale area nor any other area, Buyer Beware has nothing to do with tenant leases and agreements, the judge is thinking of products structures and items, the landlord stated he had a bad tenant whom violated the lease and caused criminal damage, a full presentation of strong evidence and lease agreement was brought to the court room which the judge ignored the landlord felt the judge through out the case was trying to guide the defendant and looking for a way to throw the case out and seemed to be defending the tenant. The landlord followed the law and took the tenant to court to recover damages the law in this case was abused by the temporary Judge James Sadigh.
Note: According to Real Estate Lawyers the judge made an incorrect ruling and should not have quoted 'Buyer Beware', unless the Judge believes when you buy an apartment building tenants can destroy the unit and stop paying rent with no responsibility!, All contracts are transferred to the new owner when a building is purchased. Also prior law suits dismissed by plaintiffs 'Without Prejudice' do not make defendants of the law suit exempt from a future filing by plaintiffs. This judge seems to think it does!
***Latest Update after countless letters were sent out the Commission of Judicial Performance the Judge changed his story for one even worse stating you cannot sue tenants, now the court system is ignoring all letters being sent for an answer to the new crazy response by this Judge James Sadigh of Glendale California.
Re-print rights are granted for this story
Never Forget to Punish a Good Turn Index
Two teenage girls who were trying to perform an act of kindness for their friends and neighbors ended up being sued in court and were ordered to pay $900 for medical bills after one neighbor suffered an anxiety attack when they knocked on her door at 10:30 p.m. delivering homemade cookies. The
incident began July 31, 2004, when the girls, Taylor Ostergaard, 17, and
Lindsey Jo Zellitti, 18, decided to bake cookies for their neighbors and
friends as a surprise.
At one of the nine scattered rural homes south of Durango where they delivered cookies that night, a 49-year-old woman became so terrified by the knocks on her door around 10:30 p.m. that she called the sheriff's department. Deputies determined that no crime had been committed.
But Wanita Renea Young ended up in the hospital emergency room the next day after suffering a severe anxiety attack she thought might be a heart attack.
A Durango judge Thursday awarded Young almost $900 to recoup her medical bills. She received nothing for pain and suffering.
"The victory wasn't sweet," Young said Thursday afternoon. "I'm not gloating about it. I just hope the girls learned a lesson."
Taylor's mother, Jill Ostergaard, said her daughter "cried and cried" after Judge Doug Walker handed down his decision in La Plata County Small Claims Court.
"She felt she was being punished for doing something nice," Jill Ostergaard said.
The judge said he didn't think the girls acted maliciously, but it was pretty late at night for them to be out. He didn't award any punitive damages. Taylor and Lindsey declined to comment Thursday, saying only that they didn't want to say anything hurtful. Young said the girls showed "very poor judgment."
Just as dusk arrived a little after 9 p.m., Taylor and Lindsey began their deliveries. They didn't stop at houses that were dark. But where lights shone, the girls figured people were awake and in need of cookies. A kitchen light was on at Young's home.
Court records contain half a dozen letters from neighbors who said they enjoyed the unexpected treats. But Young, at home with her 18-year-old daughter and elderly mother, said she saw shadowy figures who banged and banged at her door. She thought they were burglars or some neighbors she had tangled with in the past, she said.
The girls wrote letters of apology to Young, with Taylor saying in part, "I just wanted you to know that someone cared about you and your family."
The families had offered to pay Young's medical bills if she would agree to indemnify the families against future claims. Young wouldn't sign the agreement. She said the families' apologies rang false and weren't delivered in person, so she brought the matter to court.
Remember a Good Deed should Never Go Un-punished 75 Million Americans Pretending They Own Their Own Homes Index Low Interest Rates Help Many Fulfill The American (Banker's) Dream Showing no ill effects from a weak economy, housing numbers released by the National Association of Realtors today showed that a record 75 million Americans are now participating in the mass self-delusion that they, and not their banks, actually own their homes. "Home ownership is the fulfillment of the American (banking industry's) dream, and we are proud to announce that more Americans than ever have been able to (help lending institutions) achieve that dream," said NAR President Richard Schicter. After putting 20 percent down on a $235,000 house yesterday morning, Minneapolis pediatric nurse Stephanie Doogan officially became the 75 millionth American to take part in the widely accepted fantasy. "Ever since I was a little girl, I've wanted to (deceive myself into believing I could) be a homeowner," said Doogan, 35. "Well, look at me now! Me, little Stephanie Doogan, I actually have a place I can call 100 percent (minus 80 percent) my own!" Across the country, other (people in denial concerning their status as) property owners expressed similar satisfaction. "There's nothing like taking a walk around your (bank-owned) house, then going outside and kneeling down in your (bank-owned) lawn and grabbing a handful of (the bank's) dirt to make you realize how precious (their) land is," said 28-year-old Matt Jackson, who('s bank) bought a $210,000 home on New York's Long Island last year. "It makes me feel as though I really have something that no one can take away from me (unless I miss so much as one mortgage payment)." Added Devon Knight, who recently thinks he purchased a condominium in Baltimore's Inner Harbor: "When I was renting an apartment, if the furnace went out, I had to get the landlord to fix it. But now, if the furnace goes out, I have to fix it!... hold on, I'm losing the illusion here... why is that good again?" "Equity," said Jay Harrington, Knight's mortgage broker at First Union. "Just remember, you have equity. And next to the right of every single American (major corporation) to have a say in who gets elected, that's the most sacred thing you can (pretend you) have." Contributed story found by a reader
Who Raised the Poo Flag? Index
The series of
incidents was originally thought to be some sort of protest against the
US-led invasion of Iraq. And then when it continued it was thought to be a
protest against President George W. Bush's
Legal experts say there is no law against using feces as a flag stand and the federal constitution is vague on the poo issue. Jungle Juice Happy Apt Manager Index
The manager of a Mid-City
apartment complex has been sentenced to nine months in jail for entering a
tenant's apartment and disrobing as the woman slept, the city attorney's
office said Tuesday.
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