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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.
WOW...excellent post bmwguydc. You pretty much covered it all with your post. Now hopefully these lame Rent Stabilization advocates take the time to read your entire post, word for word, so they can FULLY understand how the system works. Remember that only longtime tenants really benefits from the cheap rent of being rent stabilized. New tenants moving into rent stabilized apartments are now paying or just about paying fair market rents despite being rent stabilized. If anything, they are probably paying a little more to compensate the loses the LL is taking from the longtime tenants paying peanuts for rent.
And its because of these long time tenants that the RBG issued a flat dollar increase on lease renewals instead of a percentage increase so they can hopefully catch up a little quicker to what the rent should really be. But of coarse, you have these lame LIBERAL Tenant advocates trying to gain the sympathy vote from the average person by calling the flat dollar increase a "poor tax" WHICH IT IS NOT!!!!!! They must think that they're still in the 1980's because the rents most of these people pay are consistent with rents for the 1980's and yet they have the NERVE to complain. It's like they live in their own little bubble, oblivious to what realty is.
Last edited by victorfox; 04-29-2010 at 07:51 AM..
The original intent of control and then stabilization was to protect housing for the middle-class when during a period of a housing shortage, Post-WWII, or actually in the 1940s before the end of the war, when new units could not be brought online due to diversion of resources and personnel for the war effort. It was designed to be a temporary measure, to prevent price gouging, which was similar to other controls over commodities during the war period. The original federally-mandated program was continued by the city and state, and has now morphed into the bureaucracy we now have that actually restricts supply due to a lack of development incentive. It's a self-defeating cycle, hence the need for reform, not expansion because the market is over-regulated as it currently stands.
There's also a movement afoot within the rent stabilization political movement to restrict, or try to eliminate, the vacancy increases, but that has not yet come to pass. That would create a provision that is similar to the inheritance clause, effectively mandating that a private owner is owning/operating public housing, with no benefits of said charitable contribution to society.
Other counties in the region are included, including Westchester, Nassau, and Rockland.
__________________
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)
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.
It would not be 800,000. You apparently overlooked a key point that I made:
"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."
Whether that would bring it down to 100, 200, or 400 thousand, well, we just don't know. The lobby against means testing would have to be quashed for us to find out.
I also want to point out that the increase in government spending for the subsidies would be offset, maybe more than offset, by the elimination of the HUGH expense in administering the RS system and other collateral expenses. In addition, city property tax revenue would increase.
Quote:
Originally Posted by bmwguydc
There's also a movement afoot within the rent stabilization political movement to restrict, or try to eliminate, the vacancy increases, but that has not yet come to pass. That would create a provision that is similar to the inheritance clause, effectively mandating that a private owner is owning/operating public housing, with no benefits of said charitable contribution to society.
bmwguydc,
You obviously have educated yourself well in the history, laws, and effects of the rent stabilization system. And your analyses in this thread reflect that. I just wish that the average New Yorker had even a fraction of your knowledge. If he did, the system would not exist in its present form, or at all. And as you explained, this would be to the benefit of the city's housing market. As you probably know, over the decades, housing expert after expert, in study after study, book after book, have explained the negative effects of government control on the NYC housing market.
I quoted your last remark, about "the rent stabilization political movement", because it is politics that goes to the heart of the problem of the continued existence of government control of the housing market. The political movement to which you're referring is a coalition of pro-regulation organizations groups who are well-organized, very loud, and thus very powerful. For political resons, they are always very careful to frame the issue as one that is strictly tenants vs. landlords. In reality, as those educated in the history, laws, and effects of the system know, it is an issue which pits the interests of a relatively small number of low-rent tenants against the interests of the general population of the city. The problem is that the pro-reg groups have done their job well, and the public, by and large, remains unaware of the effects of the system on them.
No improvement is possible until this awareness somehow gets instilled, because without that the politicians will do what they've always done - take whatever positions will get them more votes in the next election. And there are many more low-rent tenants (and they are focused one-issue voters) then there are owners of those low-rent apartments. In fact the political landscape now is worse than ever because the Democrats control all three entities of the State government. That's why the pro-reg movement is taking advantage of that landscape by trying to, as you mentioned, eliminate the vacancy increase. They are actually trying to do much more than that - they want to freeze the very gradual deregulation that has been taking place for the last seven years. Wait, not only that. They want to turn the clock back and REREGULATE all those apartments that have been removed from the system.
Look, we've made suggestions here on how to phase out the system and at the same time protect those who are most vulnerable through means testing. But none of it has a chance in hell of happening due to politics.
So the question is: How do we put more votes on the side of those who want to contructively deal with this mess???
It would not be 800,000. You apparently overlooked a key point that I made:
"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."
Whether that would bring it down to 100, 200, or 400 thousand, well, we just don't know. The lobby against means testing would have to be quashed for us to find out.
I also want to point out that the increase in government spending for the subsidies would be offset, maybe more than offset, by the elimination of the HUGH expense in administering the RS system and other collateral expenses. In addition, city property tax revenue would increase.
in your honest opinion, how many people do you think live in rent-stabilized apartments, but can afford market rate ones? do you really think most people in the city are doing that well? maybe its a possibility in manhattan and some parts of brooklyn but i really believe its not the norm. in my life all i see around me are people just TRYING to rent...not even own in NYC. cant even afford a rent stabilized apartment because of the wages.
__________________
"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
in your honest opinion, how many people do you think live in rent-stabilized apartments, but can afford market rate ones? do you really think most people in the city are doing that well? maybe its a possibility in manhattan and some parts of brooklyn but i really believe its not the norm. in my life all i see around me are people just TRYING to rent...not even own in NYC. cant even afford a rent stabilized apartment because of the wages.
Seventh,
You want my opinion about the financial means of these people? Well, my OPINION is not what's needed. Neither is yours or anyone else's. What we need are FACTS.
And the fact-finding has to be authorized by the politicians in the State Legislature. They will do that only if they are pressured by those of us who want to know the facts. Right now the pressure is being exerted by those on the other side - the pro-regulation lobby - to quash any means testing.
in your honest opinion, how many people do you think live in rent-stabilized apartments, but can afford market rate ones? do you really think most people in the city are doing that well? maybe its a possibility in manhattan and some parts of brooklyn but i really believe its not the norm. in my life all i see around me are people just TRYING to rent...not even own in NYC. cant even afford a rent stabilized apartment because of the wages.
It shouldn't be the LL's problem if someone can't afford to pay their rent. Thats the city's problem.
Why should a tenant's hardship become the LL's hardship?
Does the hardship of a person that can't afford groceries become the hardship of the supermarket owner? NO! The city steps in and issues FOOD STAMPS.
Does the hardship of a person that can't afford healthcare become the hardship of the hospital? NO! The city steps in and issues MEDICAID.
At the end of the day, these VITAL industries don't take a financial lost or charge less for their services. So why should LLs take a lost? Isn't shelter a vital part of survival? Yes, you have section 8 but not everyone qualifies. And the ones that don't qualify, the LL is forced to subsidize them out of their own pockets. It's like a charity or a handout. No difference. And we get nothing in return. No tax breaks, no expense freeze, no NOTHING. Yet the nerve of these damn tenant advocates calling LLs evil and greedy. All we want is fairness...thats all.
I have a question for everyone:
WHY SHOULD PRIVATE MONEY BE USED TO SOLVE A PUBLIC PROBLEM?
Someone please answer me that! It's totally unfair to LLs as they are SINGLED OUT and FORCED to SUBSIDIZE tenants that pay below fair market rent. How is that fair?
I think that the original intent of the law is quite different than the misapplication of it. It should be based upon a tenant, not tied to real property. If a tenant needs protection, and the landlord can either receive a voucher or write off the loss, compared to market rates. There's no reason to tie it to the property, since it could be easily handled without the red tape and regulation of a program such as section 8; hence why an audit of the current system is needed.
__________________
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)
It would not be 800,000. You apparently overlooked a key point that I made:
"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."
Whether that would bring it down to 100, 200, or 400 thousand, well, we just don't know. The lobby against means testing would have to be quashed for us to find out.
I also want to point out that the increase in government spending for the subsidies would be offset, maybe more than offset, by the elimination of the HUGH expense in administering the RS system and other collateral expenses. In addition, city property tax revenue would increase.
bmwguydc,
You obviously have educated yourself well in the history, laws, and effects of the rent stabilization system. And your analyses in this thread reflect that. I just wish that the average New Yorker had even a fraction of your knowledge. If he did, the system would not exist in its present form, or at all. And as you explained, this would be to the benefit of the city's housing market. As you probably know, over the decades, housing expert after expert, in study after study, book after book, have explained the negative effects of government control on the NYC housing market.
I quoted your last remark, about "the rent stabilization political movement", because it is politics that goes to the heart of the problem of the continued existence of government control of the housing market. The political movement to which you're referring is a coalition of pro-regulation organizations groups who are well-organized, very loud, and thus very powerful. For political resons, they are always very careful to frame the issue as one that is strictly tenants vs. landlords. In reality, as those educated in the history, laws, and effects of the system know, it is an issue which pits the interests of a relatively small number of low-rent tenants against the interests of the general population of the city. The problem is that the pro-reg groups have done their job well, and the public, by and large, remains unaware of the effects of the system on them.
No improvement is possible until this awareness somehow gets instilled, because without that the politicians will do what they've always done - take whatever positions will get them more votes in the next election. And there are many more low-rent tenants (and they are focused one-issue voters) then there are owners of those low-rent apartments. In fact the political landscape now is worse than ever because the Democrats control all three entities of the State government. That's why the pro-reg movement is taking advantage of that landscape by trying to, as you mentioned, eliminate the vacancy increase. They are actually trying to do much more than that - they want to freeze the very gradual deregulation that has been taking place for the last seven years. Wait, not only that. They want to turn the clock back and REREGULATE all those apartments that have been removed from the system.
Look, we've made suggestions here on how to phase out the system and at the same time protect those who are most vulnerable through means testing. But none of it has a chance in hell of happening due to politics. So the question is: How do we put more votes on the side of those who want to contructively deal with this mess???
I am either going to join or start a non-profit advocacy group that aims expressly at the bolded, sooner than later. From some rudimentary googling, it doesn't seem that there is a such one in existence. The Manhattan Institute might be the closest thing to one, otherwise, there is the guy who runs the urban capitalist blog.
The points made in this thread have basically been the conclusions I've been working towards (although, expressed more articulately than I ever could have) ever since I began to wonder why the heck rent/housing costs are so high in our metropolitan area. It all boils down to changing the way each side's political positions are understood, so that the "average New Yorker" realizes his interests are not directly opposed to those of landlords and developers.
in your honest opinion, how many people do you think live in rent-stabilized apartments, but can afford market rate ones? do you really think most people in the city are doing that well? maybe its a possibility in manhattan and some parts of brooklyn but i really believe its not the norm. in my life all i see around me are people just TRYING to rent...not even own in NYC. cant even afford a rent stabilized apartment because of the wages.
Right, it is difficult to pay rent for a whole lot of people. Solutions for this problem should aim at the market price of rent, because the benefits would fall evenly across the whole population and would require the government simply loosening controls, rather than affirmatively spending money on bureaucracy or building and managing housing.
Seventh,
You want my opinion about the financial means of these people? Well, my OPINION is not what's needed. Neither is yours or anyone else's. What we need are FACTS.
And the fact-finding has to be authorized by the politicians in the State Legislature. They will do that only if they are pressured by those of us who want to know the facts. Right now the pressure is being exerted by those on the other side - the pro-regulation lobby - to quash any means testing.
you are one of the few people on the board i enjoy debating with. with that being said...
for example, i live in a mitchell lama coop. every year i have to re-certify, and state me and my wife's income. for a program like rent stabilization, proof of income will never work because landlords dont look for that. i will say that the system must be modified but i am against abolishing it. it worked well in the 80s and early 90s, and now people want to get rid of it because of gentrification. every business goes through up and down cycles. look at toyota, probably one of the strongest car brands ever, now decimated because of their troubles. nobody is shedding tears for a landlord because they're not making money plain and simple. those are the breaks. my place is regulated by the state so we have some type of organization when it comes to monies.
__________________
"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
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