Gentrification, Rising Rents and the City’s Changing Housing Landscape

David R. Jones, The Urban Agenda

This is interesting, but probably not very surprising: according to a report released last week, the black population in the city’s “gentrifying” communities – places like Central Harlem, Brownsville, Bedford-Stuyvesant and Morrisania, just to name a few --  declined by seven percent from 1990 to 2010.

For the purposes of this column, we’re defining “gentrifying” communities as those with predominantly black and brown residents, most of whom have low incomes, that have suddenly become attractive to white folks as prices in more upscale parts of the city trend out of reach.

As these communities became hip, gentrified - whatever you want to call it, local development followed and brought with it higher rents, Starbucks and fewer affordable housing options for black and brown folks of low and modest economic means. 

Oddly, the same report, by New York University’s Furman Center, seemed to downplay the effects of gentrification in changing the racial and socioeconomic makeup of these neighborhoods. Instead, the report argued that rapidly rising rents across the city, in gentrifying and non-gentrifying communities alike, were a larger problem impacting the city’s housing affordability crisis and therefore should be the focus of policy change.

The NYU report left open the question of what strategies to use to mitigate these escalating rents, which clearly have a disproportionate impact on low-income New Yorkers who typically pay more than 30 percent of their income on rent. My organization has some ideas on what can be done about this.

But before we get to those, consider this scenario:

Imagine a family, who together make $30,000 a year, living in a $1,000-a-month apartment in a gentrifying neighborhood. Their rent is 40 percent of their income. Now suppose they leave. Since the neighborhood is gentrifying, they may well be replaced by a new family with a much higher income – maybe one that can really afford to pay $2,000 for that same apartment.  And somehow the landlord will find a way to charge them that, or more.

Now imagine a household making $30,000 a year and paying $1,000 a month for an apartment in a persistently poor neighborhood. That’s still 40 percent of their income. But when they move, they will probably be replaced by a new family that makes about the same income. And that new $30,000-a-year family will pay something like $1,500 a month (because the landlord will raise the rent on vacancy, legally or otherwise) which is 60 percent of their income.

A primary tool driving rising rents and rent burdens

This is the mechanism that is leading to such severe rent burdens in the low-income parts of the city.

Specifically, we’re talking about the statutory vacancy allowance, or “eviction bonus” which allows an automatic increase of about 20 percent when an apartment becomes vacant and turns over to a new tenant. It is the primary tool used by landlords to pressure tenants into moving out of their apartments and then jacking up the rents during vacancy.

In a new report released this week, Community Service Society housing experts Tom Waters and Victor Bach determined that the vacancy allowance alone accounted for increases to stabilized rents in the city totaling $40 million per month over the last three years.

Another factor contributing to the increase is the spread of “preferential rent” leases, which specify a preferential rent to be paid during the term of the lease along with a higher registered rent which can become the basis for the rent charged upon lease renewal. This provision undermines the protection of rent stabilization by allowing large increases from the preferential rent to the registered rent at the conclusion of the lease term. And those increases in rent are compounded further by any increase allowed under the Rent Guidelines Board.

One million low-income New Yorkers live in regulated apartments

Rent regulated apartments are the largest source of housing for more than one million low-income households in New York. But since 2002, rents in the city have risen faster than incomes. For the bottom 20 percent of the population, rents have risen 30 percent faster than income.  As a result, the median amount of income that low-income tenants in the private unsubsidized market retain after paying rent was eight percent lower in 2014 than it was in 2005, after adjusting for inflation.

If we are to preserve this city as a place where people with a range of incomes can live and raise their families, then we must close loopholes in the state rent laws that permit deregulation and excessive rent increases to displace families and weaken our rent stabilization system. And that means putting pressure on Governor Cuomo and the State Legislature to strengthen rent protections for New Yorkers by eliminating the vacancy allowance and preferential rents.

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