Tuesday, March 3, 2015

LAST HOPE FOR MOM AND POPS IN NYC?

UPDATE: This recent Crain's article demonstrates the difficulty our small businesses face on a myriad of fronts. In this case, the city has consistently failed to protect manufacturing zones, so land prices have shot up. The business ultimately had to contract, which probably means job losses (though oddly, the article doesn't say). Similarly, when a landlord only offers a one or two year lease to a commercial tenant, that makes planning for the future virtually impossible. Without the ability to plan ahead, businesses can't expand or hire additional workers. Often, because of this state of limbo, they have to cut staff. The SBSJA would require lease renewals to be a minimum of ten years.

Over the summer, I reported about the latest revival in the City Council of the 'Small Business Jobs Survival Act' (SBJSA), a bill that's been kicking around in some version since the mid-1980's and initially championed by then-UWS member, Ruth Messinger. The *Villager newspaper has been one of the few media outlets consistently reporting on this issue over the last few years, including a vital explanation of history and the political context. I urge you to read this recent article

The bill would require arbitration between a landlord and a tenant to negotiate a fair lease for both parties, equalizing the currently lopsided relationship. As it stands now, commercial tenants have no rights whatsoever.

Significantly, it would definitively stop the rampant extortion by some landlords in order to grant a renewal--especially in immigrant communities. Even though this is technically already illegal, it's rarely been an issue about which law enforcement and elected officials have been particularly motivated to take action. In many ways, it's a perfect crime as few complain, especially immigrants.


It's been well documented local businesses contribute more to the local economy than franchises or chain stores do. But we often forget about those predominantly employed by them--immigrants, the under-educated and under-employed and even felons--and how these businesses have successfully served as a gateway out of poverty for many low-income families.


And by the way, many people don't realize this situation has also been a death knoll for countless arts and cultural groups, who have also been really affected by astronomical rents and rent increases.


Although probably about fifteen years too late to be truly effective, activists see the SBJSA as the only real way not only to save these NYC institutions, but also thousands of jobs. 

However, the chair of the Council's Small Business Committee thinks the answer is to have Albany subsidize landlords to not rent-gouge. Only in New York....  

But this plan has some key flaws. First, it's voluntary. Second, it relies on state action--not exactly a sure thing. It would not stop the extortion. Lastly, his idea would give landlords who have commercial tenants property tax subsidies, but apparently ignores the fact that most owners pass those taxes on to their tenants.


And, make no mistake--the fight has been and remains a real uphill battle. They are facing off against a litany of obstacles which include:
1-the power of big real estate;
2-the increasing suburbanization and homogeneity of NYC.

Small business advocates have little faith in the city's official representatives of their community, especially the agency for Small Business Services (SBS) and Business Improvement Districts (BIDS). That is critically important to understand how things have gotten so bad


BIDS are predominantly comprised of banks and property owners, who have a very different agenda than do commercial tenants. In fact, governing laws of BIDS mandate the majority of board members must be landlords. It's a blatant conflict of interest. So is the fact that SBS pushes its various loan programs with some of the very same lenders who sit on BIDS. 


Plus, banks themselves play a giant part in destabilizing neighborhoods because they considerably skew the rental curve upwards. Banks are willing to pay a lot more in rent so that most other tenants are simply priced out of the equation, and many landlords are singularly concerned with obtaining premium rents--not the character of a community or its needs.


And SBS is teaming with former employees from assorted BIDS and pro-development entities like the city's Economic Development Corporation or the state equivalent, Empire State Development. Both have been historically unfriendly to small businesses, particularly if large scale development projects are involved. Quite a few at SBS are Bloomberg-holdovers. 


In fact, of the executive staff listed on its website, I know of only one person with any direct experience owning a small business--and I know about that person from when I was writing my article. It's not even listed in her bio.


This point cannot be dismissed, though SBS staff have and do. Can you imagine say, the Transportation or Environmental Protection departments with almost no leadership having a background in those given fields? It would be completely unacceptable--so why is it permitted at SBS?


Well, one main explanation is the power of the financial and real estate sectors. They don't want to see the SBSJA passed because it would change the unfettered ability to speculate. It's in their best interest to keep SBS out of the hands of people who actually know something about owning or running a small business.


Interestingly, Council Member Bill de Blasio was an adamant supporter of the bill as a means to fight economic inequality--which as we all know, was a giant campaign theme for him in the mayor's race. It was actually former Council Speakers Vallone and Quinn who did everything in their power to quash it. Guess why? 

However, Public Advocate, mayoral candidate and now Mayor de Blasio all but ignored his own argument, eventually towing the popular status quo line that fines, fees and regulations are the biggest obstacles currently facing small businesses.


Certainly, these are sometimes significant issues, but it's the difference between problems versus complaints. Business owners complain about fees and fines, but realistically, they don't generally close down because of them. They do, however, close because of the epidemic of small businesses being unable to afford leases or aren't even given the option of renewing--that's a true problem.  At this rate, there will be no surviving independent small business left.

It's highly peculiar that for all of the divisions and programs at SBS, there's no emphasis on job retention, nor has it been something the mayor has made a priority. Job creation and training, sure. And the SBS will tell you that it offers pro bono legal advice to help commercial tenants but again, if these tenants have no rights to begin with, what good is any kind of legal advise? And this program is especially galling, in the face of what can only be construed now as willful inaction.


There's also an odd disconnect within the administration. The excellent commissioner for the Human Resources Administration, Steve Banks, told NY1 in an interview last year that their data analysis revealed a quarter of "clients" (nice Orwellian euphemism from the Rudy/Bloomberg days) who had utilized some kind of city employment program returned to the agency for assistance within a year. Banks said that given the $200 million spent on employment programs, "We need better results for people, we need programs that work." So clearly, as early as a few months into the de Blasio administration, they knew what existed was not solving the problems, with the ultimate goal of helping people out of poverty.

The NY1 anchor had enough wherewithal to follow up the line of thinking by asking what good job training is if there are no jobs to fill? But he didn't take that thought further in asking why aren't there the jobs, other than to recite the obvious post-recession explanation.

For what it's worth, Banks' job focuses on the social needs of the city, and doesn't include land use and development. In the NYC of the 21st century, these somehow appear to be mutually exclusive and distinct areas.


As one activist emailed me, how much of the answer rests with the "anti-small business /pro-real estate policy" of the mayor and "progressive" Council Speaker. Speaker Mark-Viverito can't be absolved, given the role the Council has played over the years to not pass this bill, and because there is no evidence she is doing anything differently. (It would be very interesting to see how many members of the Council's central staff--particularly in areas like the newly created Development/Land Use Unit--either previously worked for or left the Council's employ to work for a developer/real estate entity. I made two formal requests to the Council's press office regarding the unit's employees and their professional backgrounds, but was seemingly ignored.)

"Does NYC have a jobs crisis with the closing of all our small businesses? Does NYC have a wage crisis, with businesses unable to pay fair wages due to paying exorbitant rents?" the activist asked. In actuality, the email read, there are three crises going on simultaneously--the closings, the job losses, "and stagnant wages at the same time as sky high prices caused by exorbitant rents. Yet, no mention of any crisis by our government. That is Bloomberg 100%." 


The data appears to bear out this sentiment. Commercial evictions during this administration remain on par with the two previous. Updated data from Landlord and Tenant Court for all five counties obtained by the Small Business Congress (SBC) to include 2014 reveals the average monthly number of eviction warrants issued was 485 in 2012, 499 in 2013, and 491 for 2014 (up to August). 


Extrapolating from this data, the SBC estimates this translates into 900-1200 closings per month, and thousands of jobs lost. As I wrote last year, these numbers tend to be lower than the actual numbers because they don't include the businesses who just walked away without a fight.  


For many years now, I've said the beauty of this city was always that anyone could come here and adapt to the energies of what used to make it so unique. But since Giuliani decided to become the 'Mayor of Niketown' (as expressed by the genius of Fran Lebowitz) and his push to make the city "family-friendly" at the expense of everything else, our once incomparable home is now a place where suburbanites come and expect it to change for them, conditioned by tv shows like "Sex and he City" and musicals like "Rent," all in an effort to give their sheltered little lives some glamour and excitement. 


These people are comforted by suburban norms like the chain stores that populate their insulated existences--how else can you explain Domino Pizza's presence here? Many insist on having a car--even in Manhattan--when we have one of the world's best mass transit systems (if you aren't disabled).


Frankly, the New York New York Hotel Casino in Las Vegas has more authenticity than does this current version of the city.


In what really is the last ditch effort to keep long-established businesses around, the SBC will be holding a series of forums in each borough, and have sponsored a petition urging the mayor, speaker and council members to support the SBJSA. This is the link. All but two Manhattan members have signed on--the two representing the mid and UES.


And here is information for the first community forum, to be held in Manhattan on Thursday 3/5:



A Community Forum

Solutions to Save Small Businesses,
Art and Cultural Institutions5  7-9 PM


Judson Memorial Church


 55 Washington Square South


New York, New York 


Sponsored by:  The Villager and
Village Independent Democrats


Join your neighbors, local business people, and a panel of experts to discuss how we can save and protect the small businesses that are the lifeblood of our community and our city.  Landlords now have all the rights that determine the destiny of owners, their workers, and the character and culture of an entire community. 

Because the gateway to the American Dream has been locked, and government has given the key freely given to big Real Estate…let’s throw a life line and empower our struggling small businesses drowning in a sea of greed.


Two opposite pending legislations claiming to be the solution to save our small businesses are at City Hall and in Albany : 


One, a new resolution was introduced at City Hall calling upon Albany to pass legislation establishing a property tax credit for commercial landlords who ”voluntarily” limit rent increases upon renewal - incentives to not rent gouge.


The other in Council committee: the Small Business Jobs Survival Act, (S.B.J.S.A.). regulates lease renewal process giving rights to business owners to arbitrate fair lease terms and 10 year leases.


Which is the best solution?  Or is there a better solution? 


Let your voice be heard on taking real action to save our businesses, art  community, neighborhood’s identity, middle class and jobs. 



Log onto The Villager or VID website for more details.
*Note: It should be acknowledged The Villager has had a controversial relationship with former Speaker Quinn in the past. 

UPDATE: PA JAMES IS A SPONSOR, NOT PRIME SPONSOR.
-----
Coming soon: A Tale of One City, Part 2

Tuesday, February 10, 2015

A TALE OF ONE CITY, PT. 1

Last month, an article of mine ran dissecting the state-administered process known as 'Major Capital Improvements' (MCIs) for rent regulated apartments. The article is part of an ongoing joint series between City Limits and City&State on the 2015 housing affordability battles.  

The piece really raised the ire of some of the more independent tenants activists in the city. I was pilloried for including so many organizations who they perceive to be very much part of the problem. One of the most prevalent accusations over the years is that they have been co-opted and compromised by elected officials and individuals with personal agendas. Also, that they have provided cover or served as 'astroturf'' groups for former Council Speaker, Christine Quinn, to help perpetuate the lie she was committed to tenants rights. 


In my defense, I was forced into an untenable position as a journalist because the relevant state agency--the Division of Homes and Community Renewal (DHCR)--refused to grant any kind of interview or to respond to specific questions. I had to rely on whatever reports or analysis I could find to appropriately portray a picture about this highly dysfunctional, often unresponsive and capricious agency.

And regarding state dysfunction, it's been very interesting to read the post-arrest prognostications written about Sheldon Silver. They have ranged from "cultural" explanations to the realization that maybe Silver wasn't so progressive and tenant-friendly after all. One only has to remember what transpired over the 1997 rent law negotiations to know where Silver's loyalty has always been. For those reporters who are still referring to Silver as a one-time tenant ally, I recommend doing a little research. Even the 2003 negotiations were telling. 

As expected, the revisionism and whitewashing has already reached a fever pitch. Many are scrambling  because there are more than a few "activists" who have given Silver (and likewise, Quinn) the ability to talk out of both sides of his ass. More than a few are inevitably trying to protect their own reputations. 

Another key criticism stems from how many support mandatory inclusionary zoning (IZ), as featured in Mayor de Blasio's affordable housing plan--particularly among so-called progressives. I have seen some articles showing IZ can work in other cities, but not necessarily in the version advocated by the administration. This is what I wrote about IZ last year on Ethics Ain't Pretty.

One of the few things I remember from my time as an MPA graduate student is the concept of 'spillover effects,' the unforeseen consequences of public policy decisions, also known as unintended consequences.  It seems glaringly obvious that no one championing IZ here is considering, or concerned with, any such ramifications.

In fact, there's currently an ongoing debate about whether or not IZ would add in any meaningful way to the number of "affordable" units versus those generated by the 421a program. Some have even argued such programs result in a net loss of affordable housing.


Regardless, these endeavors usually result in two major outcomes:

1. Developers end up the big winners, and we still have a serious shortage of real affordable units;
2. Primary and secondary displacement of both residential and commercial tenants and the segregation of lower and middle income earners who are subsequently treated as second class citizens in their homes. Limiting access to amenities and poor doors are only a few examples.

The mayor's 'State of the City' address last week made it clear both IZ and 421a are both on the table.  This, despite what the de Blasio campaign posted on its website in 2013: "In 10 years, New York City has lost nearly as many affordable apartments as it has built or preserved. Gentrification, unscrupulous landlords, and the real estate lobby’s hold on government have pulled tens of thousands of apartments out of rent stabilization, and more are lost every year." 

Even with the mayor adding resources to target at-risk tenants in gentrifying neighborhoods, Tenant.net appropriately tweeted, "De Blasio's $36M for tenant legal help is too little, almost too late; only in rezoned areas, not throughout city, won't stop displacement."

The above link to the story about East Harlem demonstrates that given the city's abysmal track-record, will more money actually help? As it is, HPD can barely prove when a tenant is harassed by an owner---whether out of incompetence or lack of will. To be fair, HPD's inaction is only a part of the puzzle that is designed to make it as difficult as possible for tenants to prevail.

The department's great solution has so far been to embarrass slumlords by posting their names on its website. At last year's Council hearings to 'strengthen' the anemic Tenant Protection Act, HPD's representative testified the agency had no other solutions of any substance to combat tenant harassment and foster better landlord accountability. 

Moreover, it can't be ignored East Harlem is one of the neighborhoods singled out by the de Blasio administration for development. Who can fault my cynicism?

It's been almost a year since the mayor produced his affordable housing plan, albeit absent many critical details. Last week's speech did little to shed light on many of those areas.

But, because the ideological similarities between the current deputy mayor for housing and economic development and Bloomberg's development tsar--deputy mayor Dan Doctoroff-- are so striking, one important detail was underscored: there indeed will be little substantive change in housing policy between Mayors Bloomberg and de Blasio--at least, not where it IS NEEDED the most. 

-----
In case you missed it, news broke last night about the arrest of employees from HPD and the buildings department for "widespread housing fraud and bribery schemes." For the record, HPD and DOB are both notorious for being among the most corrupt, inept and poorly-run of all city agencies. Not surprisingly, property managers were found to pay off city workers in the face of serious code violations.  

These kinds of stories and arrests have been going on for years, whether it applies to buildings, elevators, construction safety etc., particularly as the last two administrations created a kind of wild west for development--emphasizing self-certification while cutting inspectors and regulations. 

Mayor de Blasio's housing plan also discussed some of those same goals, using similar buzzwords: Streamlining inter-agency coordination to simplify and expedite development approvals and permits:
"The City will convene a task force to solicit input from the industry and other stakeholders about how to consolidate and streamline the permitting and review process across agencies in order to reduce costs and avoid delays for developers." The plan also call for speeding up the ULURP and the environmental review process. 

If this vacuum of oversight continues to be widened as the system of checks-and-balances still remaining is further dismantled, don't expect a better outcome. These arrests are always a big show, but really, will anything change if the city's priority remains ensuring that it's easier for developers to build?
-----
Follow Ethics Ain't Pretty on Twitter #ethicsaintprett





Friday, January 30, 2015

OF MICE AND MEN: POLITICIANS, CORRUPTION AND REAL ESTATE

I would be remiss not to mention the recent arrest--and now replacement as Assembly Speaker--of Sheldon Silver. While the press is rightly having a field day, I fear the feeding frenzy is overlooking some really important subtext, most significantly, within the context of the massive power wielded by the real estate industry in this state and city. Almost everything leads back to real estate in New York.

Specifically, Silver's arrest should necessitate a re-examining of the state's 421a program and its ilk, which give private developers financial incentives to construct "affordable" housing. Like rent regulations, 421a is up for renewal this year, and as you can imagine, REBNY and the like are practically wetting themselves. I'm hoping U.S. Attorney Bharara follows up this arrest with arrests of the developers who are as guilty of corruption as any elected official. The great William Greider has written an interesting piece comparing the crimes committed by Silver with those committed by JP MorganChase CEO and super villain, Jamie Dimon.

Media accounts have cited that one of the cooperating witnesses in the case against Silver is developer Leonard Litwin of Glenwood Management. No matter how respected Litwin may be--or how nice a man he is according to the New York Times (though when the Times extols the virtues of a bigwig in real estate, it seems rather redundant)--the fact is that despite an influx of public money, Glenwood's WTC residential building only produced five percent affordable units, and Litwin has an extensive history of throwing money at legislators to get his way.

It also stretches beyond credibility Glenwood senior officials were unaware of the kickbacks to Silver via the use of a separate law firm. I also found it interesting the newspaper singled Silver out for how much he received over the years from Glenwood.  


According to press reports last year, Glenwood was Governor Cuomo's biggest donor, with $800,000 coming from 19 different LLCs since Cuomo first took office. In fact, this is all part of the Moreland Commission scandal. Commission members flagged such donations from real estate LLCS (Limited Liable Companies) exploiting a loophole in the law, before being shut down by the governor. There is no way I'm excusing Silver; it's just that the hypocrisy and double-standard is quite galling.


For the record, my beloved late grandmother lived in a Glenwood building on East 75th street, from around 1988-2003, when she died at 92. It's one of those behemoths--sitting over an entire block--that mark much of the area, guilded with excessive (and tacky) ornamentation like giant chandeliers and lots of glass to appear "luxury." It was all very bougie and wannabe, and generally appeals to the yuppie demographic.

My grandparents faced a housing emergency after my grandfather's health deteriorated and they were unable to move to Florida as had been planned. Having lived in the neighborhood since the 1960s, they preferred to stay near their friends and family. There was a pre-existing relationship between my aunt and someone in the Litwin family, which is where Glenwood came in. My grandparents also needed to have a doorman and elevator because of their ages. Ultimately, grandpa died in 1990.


The year before her death, my grandmother's stabilized rent was $2,222, while she lived on a fixed income of $40,000. That means more than 65 percent of her income was dedicated to housing costs. I'm not really certain to whom those 'affordable" units went, because she would have been an ideal candidate, and I'm sure her unit became market rate after her death.  


I'd be very curious to see an actual break down of which units in any Glenwood building are "affordable," to whom they are rented, and how the city and state ensure the units remain affordable--in exchange for the assorted tax breaks Glenwood has received over the years. Based on the way the NYCHPD functions (or doesn't, to be more accurate,) it would not be a shocker if an analysis revealed many of those units set aside no longer fell within the affordability guidelines, despite the rules. And that could apply to any developer who received this kind of corporate welfare.


The things I most remember about that building was how cheap it all seemed, including the construction--we could hear people ringing doorbells for other apartments when her door was closed, and noise consistently bled through the walls and ceiling. She lived on the ninth floor overlooking parts of Second Avenue, and while it is a busy thoroughfare, the windows did little to insulate her from the traffic's cacophony.


I also remember how much money she felt coerced into laying out every holiday season because of management's 'suggested' tips for the building's gigantic staff--most of whom she never knew. My grandmother was very fair, so even though it directly impacted her adversely, she wanted to ensure she did the right thing regarding the building's personnel.


However, management didn't exactly operate under the same standard. As has been the case for decades for regulated tenants citywide, she was not at the top of the management's to-do list regarding repairs or other work. I will say, however, the few members of the staff with whom I had regular interaction were very nice and definitely kept an eye out for her, for which our family will always be grateful.


By the way, Mayor de Blasio "officially" named Litwin to the city's DNC host committee, as reported today, though he was initially named in November. Litwin contributed almost $5000 to de Blasio's mayoral run. The NY Post wrote about Litwin, "He is known as one of the top political donors in New York 
ate — and has skirted around caps on campaign contributions by funneling millions of dollars in donations throughst more than 20 limited-liability companies controlled by Glenwood." Just the association you want to waive in people's faces to prove your administration has some kind of moral high ground.

Going back to Silver, his "temporary' replacement as speaker appears to be Bronx member and Democratic county leader, Carl Heastie. Aside from the fact that Heastie is considered a friend to real estate (and potentially, the Rent Stabilization Association), he is a selected party leader. While it is not illegal, to wear both hats as an elected official and party honcho simultaneously has not worked out well traditionally for the people of the empire state. 


Most recently--from Clarence Norman to Brian McLaughlin to Guy Velella--we have been let down time and again by individuals allowing party and personal business to supersede their responsibilities and duties to governing for all. Unfortunately, today's pervasive culture of corruption in Albany isn't limited to abuses by party leaders, but also includes senior electeds who often have close ties to party machinery. Most of these individuals could not have risen so high in the ranks without party backing--John Sampson, Malcolm Smith, Carl Kruger, Pedro Espada Jr... 

And as long as state legislators are allowed to "earn" additional income because their jobs aren't considered full-time--and then don't even have to fully disclose the source of outside income--we will never have a truly responsive government. It's difficult to imagine state legislators start with a $79,500 base pay, plus living expenses and lulus, and it's not considered full-time employment. (The New York City Council operates similarly, but those members earn even more!)


Though the days of Carmine DeSapio and Tammany Hall are technically long gone, the reform movement's struggle of the 1940's-1960's (in which my father was extremely active) have become utterly meaningless. For the most part, reform clubs are today's regulars. Sadly, I guess we have learned nothing from the Ed Koch-Stanley Friedman-Donald Mannes-Meade Esposito debacles.

Friday, December 19, 2014

Friday, October 24, 2014

NYC and Rent Regulations--a resurgence or the continuation of a slow death?

Has anyone else noticed that since Mayor de Blasio announced his affordable housing plan (AHP) last May--in which the benefits of saving and/or preserving rent regulated housing are extolled--more and more of such apartments appear to be under siege?

The plan explicitly says: The City needs to protect tenants in rent-regulated units more aggressively. We cannot allow landlords to harass tenants and drive them out of our rent-regulated housing stock. Keeping those units affordable is critical to our overarching goals of addressing inequality.

Yet, here are just a few examples between July and September of tenant harassment:

Harlem
http://www.nydailynews.com/new-york/uptown/uptown-lawmaker-tenants-file-10m-lawsuit-harlem-landlord-allegedly-hiking-rents-article-1.1942204

Pelham Parkway/University Heights
http://www.nydailynews.com/new-york/bronx/disabled-bronx-tenants-landlord-article-1.1943288

East Harlem

http://www.nydailynews.com/new-york/uptown/tenants-landlords-article-1.1596108

Inwood

http://www.nydailynews.com/new-york/uptown/exclusive-blame-tenants-inwood-slumlord-sez-article-1.1621913

Bushwick

Brownsville

http://www.nydailynews.com/new-york/brooklyn/tenants-wait-home-2012-fire-article-1.1897322?false

Upper West Side

http://www.nydailynews.com/new-york/uptown/uws-tenants-landlord-stellar-article-1.1902856

Flatbush

http://www.nydailynews.com/new-york/brooklyn/landlords-harassed-targeted-rent-stabilized-tenants-suit-article-1.1757051

East Village

http://ny.curbed.com/archives/2014/08/07/landlord_to_rentstabilized_tenants_you_all_need_to_leave.php

East Village, Little Italy, Lower East Side, Stuyvestant

http://www.nydailynews.com/new-york/exclusive-millionaire-manhattan-landlord-probed-force-tenants-article-1.1880709
This guy has notoriously been harassing tenants for almost 20 years!

East Village

http://www.nydailynews.com/life-style/real-estate/donald-trump-son-in-law-forcing-residents-east-village-building-tenants-article-1.1861391
Donald Trump's family gets in on his old act.

Chinatown, LES, East Harlem

http://sailthru.cityandstateny.com/4ea1b1d715b30dde9b3442b11o97c.ph/U75qsuYQg4qT-JWyB6169

Chinatown, LES
http://issuu.com/downtownexpress/docs/20140828_xcm_tvg_pg004_c4ef987fde2dd0

So, the question is, how seriously is the mayor and his inner circle of real estate insiders really taking the problem, and how strong is his commitment to the rent regulation system in general? The record has been decidedly mixed over the ensuing months.

It's already been mentioned here the AHP disappointed many affordable housing activists for what it didn't say in this area. Specifically, there was no mention of repealing vacancy decontrol, though de Blasio did advocate repealing Urstadt


There is no question the overall effect of vacancy decontrol has been devastating--which was its intent all along. And as owners are not obliged to notify any government agency when an apartment is decontrolled, it's impossible to quantify exactly how many units have been lost. According to tenants rights organization, Metropolitan Council on Housing, "Vacancy deregulation is causing the number of stabilized apartments to shrink by tens of thousands every year." 

Some 250,000 units were lost since 1994, according to the Rent Guidelines Board (RGB). In the RGB's report issued this year about changes in the regulated housing stock in 2013, high rent/vacancy deregulation accounted for the biggest reason units were removed, at 63 percent.

What's not so clear is if in fact NYC had home rule, would it really pass stronger tenant protections? Because, based on the actions of the last few mayors and City Council, that answer would not be a definitive 'yes.'

Then, consider this combined with the debacle at the RGB's final vote in June, where the mayor all but promised a rent freeze for stabilized apartments--especially during the campaign. At the last minute, two of his own appointees making up the majority instead approved a one percent increase on one-year leases, and 2.75 percent for two--modest increases yes, but following years of excessive ones. In a practical sense, a rent freeze wouldn't have made a huge difference except symbolically, after so many years of landlords raking in giant profits enabled by the city.


It was widely speculated the reason for the last minute change came down to interference from deputy mayor for housing and economic development, Alicia Glen. Given her background (see prior entries), it's hard not to see this as a tacit message to the Real Estate Board of New York (REBNY) and the like, that they will still get their way.  

What's really curious is how the renewal rate approved for two-year leases ended up almost three times what was approved for a one-year renewal.

Some post-vote analysis speculated the machinations occurred behind Mayor de Blasio's back. Regardless, the mayor is ultimately responsible as it was his appointee, so it must reflect back on him. If in fact those reports are true, how can he stand for such insubordination? If they aren't, and the mayor was aware what Glen was doing, then we must infer the rhetoric was meaningless.

Plus, the three individuals singularly responsible for implementing the affordable housing plan are all well connected to the real estate industry. They are also rich. That would be Glen, City Planning Commission Chair, Carl Weisbrod, and Housing Preservation and Development (HPD) Commissioner, Vicky Been. That's not to say one cannot be wealthy to understand the acute affordable housing shortage, or to be sympathetic (but not empathetic.)


But to have all three so economically advantaged demonstrates a stunning tone-deafness, a disconnect within the de Blasio administration. After all, Glen openly celebrated bringing yuppies to Harlem. Has any one of them ever known what it's like to worry about paying the rent? Because I have, as have many people I know throughout the city. That's where empathy might have come in handy....

Incidentally, several sources (both inside and outside government) have confirmed to me Been isn't exactly working out in her new job. "She is in over her head," at least two people told me. Apparently, despite Been's background in academia, and writing about housing policy, she isn't necessarily equipped to actually implement it.

Recently, the mayor signed a bill essentially intended to 'shame' landlords guilty of harassing tenants, by publicly posting their names on HPD's website--which seems rather meager. But the problem itself is very real. Even the pro-landlord, pro-real estate New York Times wrote, "Such efforts have been on the rise in gentrifying neighborhoods of the city where market-rate rents have soared and some landlords try to engineer vacancies to make room for higher-paying tenants."


As expected, a flak from the Rent Stabilization Association 
(RSA) said it would do little more than taint and “vilify” property owners and “curry favor with the tenant movement,” which is just laughable. “Should a tenant have their name published for failing to pay rent?” he added.

Possibly a valid point, if all things were equal,  and if it weren't for reality. Just a few of the major constant obstacles facing tenants include
the dysfunctional and underfunded state housing agency that has years worth of backlogs, the city's overburdened housing court, and the lack of money or political will to better assist tenants through public legal services. Simply put, landlords have a disproportionate amount of power and say on both the city and state levels regarding policy, oversight, enforcement and accountability.

And anyway, this already happens--through the tenant blacklist , which isn't solely based on tenants who are in rent arrears. It can be any tenant sued by a landlord in housing court for any reason--legitimate or frivolous--and it's much more encompassing than HPD posting the names of the minuscule number of owners who are found guilty of harassment.

An important gage of how serious such laws are is to see how the real estate lobby reacts. One veteran tenant activist told me REBNY or the RSA put in "token objections for the media's sake, but that's essentially all they do." An examination of the transcript before the City Council's Housing and Buildings Committee in April revealed no registered opposition or testimony from landlord or real estate groups during the anti-harassment hearings. I checked with the committee chair's office just in case, but they never got back to me. 


Furthermore, the 2008 'Tenant Protection Act' (TPA) on which this law is based, was already considered pretty weak, and it should never be forgotten that its driving force was former Council Speaker, Christine Quinn. Next to Peter Vallone, big real estate didn't have a better friend or protector. So, it stands to reason nothing really harmful or with teeth could ever have passed the Council.

Maximum fines are doubled from $5,000 to $10,000 but minimum fines remain at $1,000, and a judge isn't compelled to fine even the minimum amount. Many simply don't, and some don't even fine owners at all. Frankly, even the new fine levels and the reluctance of many judges to appropriately penalize such bad actors means it's still cheap enough to keep harassing tenants as part of the cost of doing business. Between the anemic oversight and gross underfunding of both the city and state agencies tasked to oversee these issues, the odds are greatly stacked in favor of landlords. They can, and often do, get away with such behavior, and if they are caught, the repercussions are generally inconsequential. 

As several witness revealed at the hearing--many from various free legal service organizations--there's more economic incentive than ever before to get tenants to vacate, especially seniors and other long-term tenants. The longer someone has lived in an apartment, the more likely a landlord will want them out, because the rewards are so great, thanks in part to the 20 percent vacancy bonus permitted. Couple that with something called a 'longevity' bonus, which allows owners to calculate greater increases based upon how long a unit was occupied, and even a bonus for apartments renting for less than certain amounts, and voila, the rent exceeds $2,500 and the apartment becomes destabilized. And as mentioned, there's so little oversight to verify a landlord acted legally, why wouldn't one simply fake it?

People whom I've interviewed, as well as some of the aforementioned witnesses, discussed the growing plague of 'predatory equity,' a particularly sleazy form of real estate speculation. We've seen it over and over again--some investment group obscenely overpays for a building, while leveraging equally ridiculous amounts. When they figure out they can't make the kind of return they anticipated, well, it's always bad for tenants. Think the Pinnacle Group

And even with both laws, harassment is still considered difficult to prove. HPD's representative revealed at this hearing only 44 cases initiated out of 3200 since the 2008 TPA were substantiated by the agency. "2195 are discontinued, dismissed or withdrawn," and another 608 were settled, often without the tenant's consent or understanding, reported HPD's associate commissioner for enforcement and neighborhood services. Furthermore, she said, "It is unlikely that a property owner will settle if the settlement includes admitting harassment."

A landlord can still haul a tenant into housing court for literally no reason. If the tenant doesn't appear, there is a very real risk he or she could lose their home. However, if the owner doesn't appear--or even send a representative--there is no downside to the landlord, or even a potential cost. Sometimes, a tenant can be liable for an owner's legal fees if the case is determined frivolous, but rarely is it the other way around. At best, only about 10 percent of tenants at housing court appear with an attorney, while 90 percent of landlords do. That doesn't even take into account time and the amount of work a tenant is forced to take off to appear in court, while that's all part of the job for landlords. 


As John Fisher from Tenant.net wrote, "One real problem is getting to the point where a finding of harassment may be made. The vagaries of the definition of harassment has always been a stumbling block, and from what I've seen, still is. While the 2008 law spelled out the definition in a bit more detail, in many instances, obtaining a finding has to do with proving landlord intent, and that is very difficult to do.... and even put(s) the burden on the tenant. The result can be years of litigation at great expense to the tenant."

The newer version of the anti-harassment law doesn't address these chronic inequities. HPD's response when queried about other measures or policies the administration might currently be considering to stop tenant harassment and increase landlord accountability is interesting. "We are starting to look at other options to discuss." This isn't exactly a new problem! "So we don't have... anything substantive  to put on the table for you today, but this is definitely a work in progress." Astounding. 

This sense of ambivalence from the administration is not completely unexpected. As noted, there's the problem of who his closest advisers are, particularly when it comes to land use matters--which are ultimately tenant issues. 

It is also extremely telling the AHP does not call to make newly created affordable units rent stabilized, focusing only on current apartments. The RGB credited other affordable housing programs (which are actual subsidies or tax incentives) like 421a and 420c for adding rent stabilized units, so the overall net loss was smaller. But under the mayor's favored program of mandatory inclusionary zoning (IZ), there was nary a reference. Don't get me wrong--I'm not a fan of paying developers off for anything. It's just that given de Blasio's stated support of rent regs, I expected him to advocate adding units, both because he believes it to be the right thing to do, as well as to help strengthen the system, overall.

There's also the perennial problem that when it comes to rent regulations in general, local media has consistently done an appallingly poor job explaining what exactly they are, how they work, and whom they most benefit, and the overall narrative has been anti-tenant for decades. Does anyone recall the Daily News used to run a tenant advice column in the 1980's?

After all these years, there are still reporters who can't distinguish between rent control and rent stabilization, either because they are too lazy to make the effort, or for more cynical reasons. Remember, most of the dailies have real estate holdings, and some of the newer journalism venues and online sites are unabashedly biased in favor of this all-powerful industry. Often, the funding behind the venture comes from real estate pockets. Unfortunately, even some of the old journalistic stalwarts have lost their way, as well.


Rent regulations continue to be described specifically as subsidies. They aren't. Dictionary.com defines 'subsidy' as: a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like. Yet, no money is actually ever exchanged, paid, lent, borrowed, transferred etc. 
And in fact, rent regulations are among the most effective and cheapest affordable housing programs in the history of NY State, in part because the biggest expense is administrative overhead.

But for the approximately two million tenants now living in regulated apartments, there is the very real possibility of being priced out. Between regular RGB increases and the ever expanding number of loopholes which also permit owners to add on to the rent, even so-called affordable regulated units are quickly becoming unaffordable for many New Yorkers. Examples are increases from Major Capital and Individual Apartment Improvements, which are in perpetuity, and something called 'preferential' rent.

Without telling you any details regarding the size of my apartment, or where it's located, my own rent has increased between 80-90 percent in about 20 years. I can assure my income has not grown comparably. How many other items have increased by such drastic proportions over the same time period? College tuition, gas prices, and healthcare costs come to mind, and all three are the result of shady practices committed by at least one greedy actor.

Another very important element of rent stabilization in particular usually ignored by the media is the automatic right to a lease renewal; the few remaining rent controlled apartments don't have leases. This is absolutely critical. If you are a good tenant, there should be no reason you are denied the stability of not only having a sense of your upcoming (inevitable) rent increase, but also that a new lease will be forthcoming when it's time.

Think of it from the perspective of a market rate tenant: you spend money on a broker, then pay first and last month's rent, as well as a security deposit. That's usually thousands of dollars. Then, after a year or two, your apartment's or building's owner simply decide you are no longer an acceptable tenant, or perhaps your rent is increased by 50 percent, and you can't afford to remain. All that money you've already spent, and all that time searching, is gone in a flash, due to greed or capriciousness. How is that fair?

There's potentially some reason to be optimistic. Several tenant organizers with whom I spoke for a separate article were all reasonably hopeful about next year's rent renewal fight in Albany. For the first time in 20 years, they at least have an executive who is not openly hostile to rent regulations, as was the case with Mayors Giuliani and Bloomberg--both of whom did their damnedest to ensure wildly excessive increases totally out of proportion with actual owner costs. In particular, much credit and praise was given to de Blasio's Albany lobbying team. At least, it seems, smart and effective people are in place for 2015. That has to count for something.
-----------
Something else to consider which apparently has gone virtually unnoticed: Recently, Goldman Sachs' Urban Investment Group--of which Glen was head for years--announced it will help provide $75 million dollars in equity in a joint venture that will leverage $250 million in new residential development. That's more than three times a return on their outlay. 

At the very least, this gives the appearance of a conflict of interest. Glen may not benefit from this deal in the short-term, and in fact had to cut financial ties with her old firm to take her current job. However, as the article about her largess discusses, Glen's, "stock portfolio overflows with "GS" funds, like the "GS Tax-Advantaged Global Equity Portfolio," in which she has holdings of more than $500,000," so there's a probability she'll benefit from these investments in the long-term. And does anyone really believe she will never discuss with any of her former colleagues--even casually--city plans for neighborhood or infrastructure improvements, and the like?

It's like a form of insider trading, or how the old boys' network used to work on male-only golf courses. Remember that comment about yuppies in Harlem? That can easily translate into a "wink wink, nudge nudge--know what i mean?" (Bad Python pun intended: Glen's mother officiated at Eric Idle's wedding in 1981, I was told at the time.)

Even if this is completely kosher across the board, the role of the UIG just underscores the interdependent relationship between the permanent government and the real estate industry in New York. Just business as usual. And that's the least 'progressive' thing we could ever see.