One of the main platforms on which Mayor DeBlasio got elected this year was his stated desire to provide more affordable housing in a city that oozes people with too much money and not enough places to spend it. That leaves a big group of citizens, those who don’t make big bucks, struggling just to keep a roof over their heads.
To his credit DeBlasio has pushed forward with the renovation of old buildings and plans for new. His programs look functional but will never happen fast enough for most. This isn’t the mayor’s fault; it’s just the way things are. There are a lot of interests pushing back against any program that tries to help those in need.
In his zeal to help the unfortunate people looking but unable to find affordable housing the mayor has loaded the Rent Stabilization board with his own appointees, obviously given them orders that they are to skin the landlords who have stabilized apartments in their buildings. In the spirit of full disclosure I must reveal that I am an owner of one such small building with three stabilized tenants and that I have had some very strong feelings about this practice even before it reached its current egregious extremes. I must also admit that in my case the presence of a couple of stabilized apartments makes very little difference to my bottom line. That is not to say that I couldn’t use a couple of thousand bucks more each month, in a building that regularly loses money.
But before we surrender to hysterics, let’s take a look at the rent control & stabilization programs and how they have affected the city.
The start of rent regulation in NYC came in 1943, which makes it the longest running such program in the country. It has undergone major changes or adaptations four times; 1950, 1962, 1969 & 1974. Reading through the various changes is an adventure in escaping boredom but there are two primary outcomes of all the various rent regulation laws in the city and both are inescapable.
First, rent regulation has allowed many who would otherwise be forced out of the city to remain here and flourish. Second, rent regulation has destroyed many middle class neighborhoods, changing them into slums, few of which have either recovered or begun to recover. Despite all this rent stabilization was almost working up until now. The egregious actions of the current rent board decisions threatens to return the city to the pre-1970 despair that enveloped it during that crime ridden, decaying time.
It is the feeling of this writer that affordable housing is a necessity in any city of even moderate size but especially in this one. The big questions are who should pay for it and how should it be achieved.
The Mayor’s plan to build or renovate existing buildings is an excellent one but his secondary plan of keeping rents below cost in small existing housing is a disaster and will eventually lead to the kind of crushing failure that the plan led to in places like the South Bronx, Cyprus Hills and the Upper West Side where in the 1950s, 60s and 70s, middle class housing collapsed under the burden of low rents that couldn’t support running costs, where housing was abandoned wholesale because it was cheaper for owners to just walk away than to try to maintain housing that cost way more to keep than to throw away. And where because of this condition, the tax base was almost destroyed and functioning building stock turned into decaying slums sites, suitable only for the homeless and criminal activities, the kind of individual building that can destroy an entire neighborhood.
First let me say that I am aware that there are plenty of greedy owners who do awful things to low rent tenants to get them out of their buildings and plenty of others who maintain their stabilized buildings in a criminal manner. But there are more who don’t, and there is no reason why they should have to be forced to support a government policy that the rest of the citizenry doesn’t, even if it is a good one..
No one forces the local grocery store owner to give free or reduced cost food to people who need it. The city doesn’t force Barney’s to cut the prices of their clothes to poor people. Tiffany’s doesn’t have a discount diamond day for the disadvantaged. So how come small business owners who happen to be in housing have to provide this service and since they do, how come they still have to pay top taxes?
Big building owners can afford, in many cases, to have stabilized tenants in their buildings because they have a broad rent base across which to spread their costs and especially any surprises in the form of repairs or replacements, that are the inevitable result of owning property anywhere. Small building owners have nothing to fall back on when something goes wrong in their buildings, mainly because for the most part they are running on no margin.
But, the city insists, and rightly so, that there has to be housing that is affordable. But is there really a shortage? If there is, how come there are properties like 66 Rockwell Place in downtown Brooklyn, which opened eighteen months ago and still has many vacant units, units that have remained vacant despite seriously low rents. Is it because the bureaucracy that runs the system can’t get out of its own way and get people into those apartments? So because of city inefficiency and incompetence, small building owners have to reduce their rents below market to provide space for those that can’t get housing being built specifically for them. Maybe, just maybe instead of stuffing the Rent Control Board, Mayor DeBlasio should be replacing the people in charge of renting that empty housing with the same job seekers, with which he’s stuffing the board. Maybe before the city makes small business owners responsible for its social services, it should do its job and run its social services competently.
You’re trying to provide adequate housing here but the petty bureaucrats that handle the applications won’t accept those applications if they arrive in large envelopes or by priority mail. Why? They also won’t accept them if the applicant has used white out. That’s ridiculous, as is the way the program is being run. Fix that, Mr. Mayor, before you take hard earned money from small business owners.
I am not involved in the real estate business in NYC so the only building history I can give you is my own. I bought my building, a six-story, 44’ wide townhouse on the Upper West Side, in 1970 for a song. The neighborhood was a disaster, due primarily to rent control. There were murders on the block the first year. The building had been an SRO and was literally falling apart. I learned later from the lawyer of the seller that he was in the process of abandoning it because he couldn’t make it pay. I gut renovated the building, rebuilt it and moved in along with eight brave tenants, a year and a half later. I was able to do this because of a city program that first fully and later partially exempted me from property taxes for 12 years. The first taxes I paid were in 1982. I paid twelve thousand bucks. I now pay over one hundred thousand more than that annually.
My eight rent stabilized tenants reduced their number to three over the years, due to turnover. Each of my stabilized apartments is currently paying more than a thousand dollars a month below market rates. My rent roll barely coves my property taxes, heat and water and I make up the rest of the costs.
I should add that I am not your standard stabilized building owner in that, as stated, I only have three units left and even if they were destabilized I would only raise the rent in one as the other two have been with me for many years and are in no position to sustain a large rent increase, but the other tenant can well afford to pay more and I could use the help.
If the city wants affordable housing and it should, why doesn’t the city pay for it and not the small business owners that own some percentage of the rent-stabilized property in the city. Why isn’t the burden spread over the entire tax base instead of just those few property owners? Even more logically, why doesn’t the city pay the landlords the difference between the market rents and the subsidized rents, or why doesn’t the city give small landlords a property tax deduction for that difference?
Allowing the situation to continue to exist as it is, or in fact, allowing it to worsen, which seems to be the aim of the current Rent Board decisions is just asking for a recurrence of abandoned buildings and mounting crime that we have historically seen as a result of the kind of affordable housing programs previously espoused by New York City. It’s time we finally did something intelligent regarding affordable housing. Come on Mr. Mayor, you started out with the right plan, the right intentions. It’s time to make affordable housing affordable for small landlords too; don’t blow it on the details.