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try convincing the goverment to subsidize 1 million apartments that are currently under rent stabilization across the city...
I'm glad you made that point.
First of all, I don't know where you got the figure of 1 million. At the end of 2007 there were 836000 rent stabilized apartments in NYC. http://www.nydailynews.com/ny_local/..._frets_up.html Today there would be less. For argument's sake let's be generous and say there are about 800,000.
My main point is this: The number of apartments that would need to be subsidized would be considerably less than 800,000 because, as I said when I described the subsidy scheme, only those who can't afford it would be subsidized. In other words, those below a certain income limit.
How many in this group are below that income limit? We really don't know. Why don't we know? Because the pro-regulation lobby groups have strenuously opposed any survey of the incomes of rent-stabilized tenants. And why would they be opposed to that? Would it reveal something they don't want revealed? Of course it would. It would reveal that many of these tenants have incomes for which they could afford market rent. (And some of them I'm sure are quite well off). That revelation would be a political disaster for pro-regulation groups.
Let's put it like this: How would you feel if you're a hard-working tenant and you see that people with higher incomes than yours are paying a lower, government-controlled, artificial rent???? You might be a little upset. So the last thing the rent-stabilzed tenant lobbyists want is an income survey.
So given that the number of apartments involved is about 800,000, and given strict income eligibility limits, the figure would be much less than your 1 million.
The first step would be to buck those pro-regulation lobbies and take an income survey.
I'm glad you made that point.
First of all, I don't know where you got the figure of 1 million. At the end of 2007 there were 836000 rent stabilized apartments in NYC. Stabilized apartments down, frets up Today there would be less. For argument's sake let's be generous and say there are about 800,000.
My main point is this: The number of apartments that would need to be subsidized would be considerably less than 800,000 because, as I said when I described the subsidy scheme, only those who can't afford it would be subsidized. In other words, those below a certain income limit.
How many in this group are below that income limit? We really don't know. Why don't we know? Because the pro-regulation lobby groups have strenuously opposed any survey of the incomes of rent-stabilized tenants. And why would they be opposed to that? Would it reveal something they don't want revealed? Of course it would. It would reveal that many of these tenants have incomes for which they could afford market rent. (And some of them I'm sure are quite well off). That revelation would be a political disaster for pro-regulation groups.
Let's put it like this: How would you feel if you're a hard-working tenant and you see that people with higher incomes than yours are paying a lower, government-controlled, artificial rent???? You might be a little upset. So the last thing the rent-stabilzed tenant lobbyists want is an income survey.
So given that the number of apartments involved is about 800,000, and given strict income eligibility limits, the figure would be much less than your 1 million.
The first step would be to buck those pro-regulation lobbies and take an income survey.
for sake of argument, i will give u the benefit of the doubt.
try convincing the government to subsidize 800,000 apartments...how much money would that be to pay near market rate for each apt? not happening. and since you say at the end of 2007 there was 800,000 rent stabilized apartments, that means the amount of rent stabilized apartments are steadily decreasing...isnt that good for LLs?
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"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
I think the stabilization laws/some programs fall flat with regard to means testing. If they were restricted by income, that would be in the spirit of the program, and you would not have singles making well into mid six-figures occupying apartments that could be used for a family making the same income level. Now, before people start screaming socialism, in dictating where people can and cannot live, I am all for free markets; however, the programs were designed to provide for affordable housing, and that's a subjective definition that's directly related to family size and income, not a Robin Hood-philosophy whereby all owners/developers are characterized as greedy, just as not all tenants are not characterized as trying to get something for nothing.
Rent stabilization advocates actually want to push the maximum income higher, which already creates a true gap in affordable housing. If someone is benefiting from a restricted market, that's subject to government oversight, then there should be a sliding income scale, since a family of one or two making up to $175k is different than a family of four, five, or six, for whom I would think that a higher income could be allowable, but certainly not for singles/couples who want to hold onto a choice apartment when they can afford market rent.
But, the income level is rarely enforced as there's no real auditing procedure, which is also one of the abuses of Mitchell-Lama, where people qualify at their lower income and neglect to report a spouse's income, or report it at a second home, to defraud the system. Another trick is that they pull less than $175k in income out of a company that they own, to keep the stabilized apartment. And, even then, it's an arduous process of notifications and hearings when a landlord suspects that an AGI is over $175k, resulting in fees and a long process. That should be a requirement of living in a stabilized unit, IMO, that their tax return is automatically required to be supplied as proof that they meet the income restriction, which also should be revised to reflect family composition.
New buildings can be stabilized, even with rents over $2k, because the developer takes advantage of certain tax incentives. In fact, the prospect of stabilization keeps development of newer, middle-class housing that's not condo or co-op from being constructed because the sale price of the building would be diminished by the controlled market. That's why ultra luxury buildings with higher rents outpace non-regulated, and non-program middle class housing, though that's what the city needs as there is a shortage of decent, middle-class housing. The original intent of all of the programs/stabilization guidelines was to preserve middle-class housing, not to subsidize upper income residents who can creatively game the system, or to create an affordable housing shortage by wide variances in price between regulated/non-regulated units in the same neighborhood.
The mis-application of the resources and tax advantages that restrict smaller landlords who cannot portfolio-balance rent regulated and free market rent buildings disincentivizes said owners from buying additional buildings, or creating new housing, since they have to pay market rate carrying costs that can erode any profit from a particular unit. That's why some units that are not subject to regulatory oversight are much more expensive, on the same block, or even in the same building.
__________________
All the world's a stage, and all the men and women merely players: they have their exits and their entrances; and one man in his time plays many parts, his acts being seven ages.
~William Shakespeare (As You Like It Act II, Scene VII)
I think the stabilization laws/some programs fall flat with regard to means testing. If they were restricted by income, that would be in the spirit of the program, and you would not have singles making well into mid six-figures occupying apartments that could be used for a family making the same income level. Now, before people start screaming socialism, in dictating where people can and cannot live, I am all for free markets; however, the programs were designed to provide for affordable housing, and that's a subjective definition that's directly related to family size and income, not a Robin Hood-philosophy whereby all owners/developers are characterized as greedy, just as not all tenants are not characterized as trying to get something for nothing.
Rent stabilization advocates actually want to push the maximum income higher, which already creates a true gap in affordable housing. If someone is benefiting from a restricted market, that's subject to government oversight, then there should be a sliding income scale, since a family of one or two making up to $175k is different than a family of four, five, or six, for whom I would think that a higher income could be allowable, but certainly not for singles/couples who want to hold onto a choice apartment when they can afford market rent.
But, the income level is rarely enforced as there's no real auditing procedure, which is also one of the abuses of Mitchell-Lama, where people qualify at their lower income and neglect to report a spouse's income, or report it at a second home, to defraud the system. Another trick is that they pull less than $175k in income out of a company that they own, to keep the stabilized apartment. And, even then, it's an arduous process of notifications and hearings when a landlord suspects that an AGI is over $175k, resulting in fees and a long process. That should be a requirement of living in a stabilized unit, IMO, that their tax return is automatically required to be supplied as proof that they meet the income restriction, which also should be revised to reflect family composition.
New buildings can be stabilized, even with rents over $2k, because the developer takes advantage of certain tax incentives. In fact, the prospect of stabilization keeps development of newer, middle-class housing that's not condo or co-op from being constructed because the sale price of the building would be diminished by the controlled market. That's why ultra luxury buildings with higher rents outpace non-regulated, and non-program middle class housing, though that's what the city needs as there is a shortage of decent, middle-class housing. The original intent of all of the programs/stabilization guidelines was to preserve middle-class housing, not to subsidize upper income residents who can creatively game the system, or to create an affordable housing shortage by wide variances in price between regulated/non-regulated units in the same neighborhood.
The mis-application of the resources and tax advantages that restrict smaller landlords who cannot portfolio-balance rent regulated and free market rent buildings disincentivizes said owners from buying additional buildings, or creating new housing, since they have to pay market rate carrying costs that can erode any profit from a particular unit. That's why some units that are not subject to regulatory oversight are much more expensive, on the same block, or even in the same building.
kudos. however 1 thing i will point out since i own in mitchell lama is that every year we have to do a recertification of our income. so we have to report what we're making basically every year until we're dead or we move. if we eventually make over the amount we will pay a surchage based on how much more we make over the limit. now if people lie on the recertification is as good as anybody's guess...
__________________
"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
I won't even pretend to be familiar with the rental/real estate market in NYC. But wouldn't the wealthiest people in NYC be able to BUY their own apartments?
You all make good points for the abolition of RS in Theory. But explain to me why there isn't a wholesale abandonment of rent control apartment houses in NYC if the burden is so onerous for landlords? Doesn't it come down to bristling at the government for keeping a lid on how much money a LL can make on his investment? And isn't that investment, being residential real estate, possibly too risky to be left in the hands of what historically has been a class that don't necessarily have the best interests of renters in mind?
Do people game the system? Most certainly.
I won't even pretend to be familiar with the rental/real estate market in NYC. But wouldn't the wealthiest people in NYC be able to BUY their own apartments?
Well probably, but the article focused on people with apts in the $4-5k range who could just be families or 3 young dudes shacking up in a party pad. Not necessarily "wealthy people" like you're probably imagining.
Good to know, seventh, since I knew that in years past there were people who lived in Michell-Lama that had no business being there, as in someone who worked for a friend of my father's who had no business in one based upon income. He was eventually kicked out, but it took a few years to catch up with him, from what I have heard.
The rent stabilization game has morphed from protection into political activism, hence the wants to expand the coverage above $2k in rent and incomes over $200k. That's insane, since at market, people making $200k, can well afford to rent a place, though it may not be in the same neighborhood, but that's no reason to subsidize their living expenses. Now, if they were to go to a sliding scale, based upon household size, that would equalize the current stabilized markets, and give people the option of paying market rent, or vacating if they wanted to spend the lower amount.
There have been rent stabilization battles in high-end buildings, including The Apthorp, where the people in the fight were well able to afford market rents.
There actually was an abandonment of rent controlled apartments, which is why many parts of the city, perhaps most notably the South Bronx and Harlem, spiraled into decline. Stabilization provides for some ability to cover costs, but for a business enterprise that has a restricted profit potential for an investor, the ROI does not justify expanding middle-class housing, which is what the city needs. Under stabilization, the situations of total net loss for a building would be rare, but the profit might not exceed cost by a significant amount of money, making it difficult to be in the business of owning/operating housing in the city that's not at the luxury or government program level.
Regarding new development of middle-class housing, government programs form the basis for this development with incentives that include low cost/free land, tax reductions, and grants to spur development. There's a great need, yet no market response because of the limitations in place that create difficulties in the development phase, and in the management phase, the prospect of restricted ROI diverts capital to other investments that will pay a better return. It's not greed, but a business decision.
Granted, stabilization can be managed, especially if portfolio balancing occurs among buildings or units within the building, but the reduction in profit potential restricts the incentive/ability for an owner to reinvest in the property. That's why units are maintained to the minimum, in some buildings, whereas non-regulated units are more likely to be maintained/upgraded to a higher standard, even if the market does not bear a much higher rental price.
Say that utility costs increase 8% in a given year, based upon usage, in a stabilized unit. In a market system, the landlord could raise the rent to compensate, as everyone else in the city is paying, but for a stabilized unit, the RGB only approves a 4% increase. That means that on every stabilized unit, the landlord is compelled to subsidize the expenses for the unit, or to raise the costs in the non-regulated units to compensate, when everyone else in the city is paying the higher costs.
Smaller landlords feel the squeeze much more than large corporations, and the smaller landlords are the group that the city should be encouraging, IMO, as they are more likely to be owner-occupants or owner-managers. An owner takes better care of a building if they live there or visit on a daiy basis, and are less likely to tolerate neighborhood decline than those who are merely taking a profit from the investment each month. It's a better way of managing a community-based model for development and ownership to have multiple, interested, property owners who want to meet market demands as that's more likely to ensure a continunity of neighborhood upkeep; rather than having one disinterested party that operates multiple buildings and never sees the street upon which they are located.
With the number of units subject to regulatory oversight, an audit is necessary before any expansion of the controls of the stabilization program are implemented. $175k is more than enough income in NYC to be covered under any rent protection program, and if someone has to vacate a stabilized unit in Manhattan for a non-regulated on in Queens at the same price, then that's the reality of the market. Increasing the maximum income and monthly rental rates to protect people in higher income brackets is nonsense, since that's an artifical manipulation of the market to suit a constituency.
There's a large amount of the introduction of fear that landlords left unchecked will raise rents to unaffordable levels, but that would not happen because the market would not sustain it. True, for prime Manhattan areas, there would be increases, but it would only increase to a level that people would pay, which is not infinite. Then again, many who get the most visibility seem to be those with vested rental interest in prime buildings/areas at very low prices who want to maintain their tenancy at 1980s prices. An increase in the supply of middle-class units would also exert downward pressure on rents, as the supply came online, and would help to revitalize communities, but not based upon income restrictions. Costs would remain fixed, however, but we would not have the inequality of varying prices for similar units in the same building, or on the same block. The market would then dictate the expectations of a $1500 apartment, not that you have to pay $1500 to live in a $900 apartment because it's the only unit available that's not subject to an application process and government intervention.
There are some people who need stabilization, and I would not be in favor of wholesale elimination overnight, but reforming the system and closing loopholes would be high on my list. That way, new middle-class housing could be developed, and some affordable units set aside at the outset, that can be balanced within the portfolio of the entire building. And, for those currently in a building, who would fall under stabilization, and meet the requirements of means testing, they should be allowed to remain in residence, but not subject every unit in the building to the same control, and allowing the building's owner to write off the difference in price from their operating expenses, reducing the taxable profit of the rent roll.
__________________
All the world's a stage, and all the men and women merely players: they have their exits and their entrances; and one man in his time plays many parts, his acts being seven ages.
~William Shakespeare (As You Like It Act II, Scene VII)
Be you a grunt on section 8 or a developer with clown feces on your face, (Orin S. Wilf, president of Skyline Developers) whenever you take a handout from the government it is likely you will pull back a stump. The former condemned to a generational welfare recipient and the latter with RS for Unmentionables.
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