Testimony at Hearing on Extending the Rent Stabilization Laws

Thomas J. Waters

Testimony of Tom Waters
Housing Policy Analyst, Community Service Society
Hearing on Extending the Rent Stabilization Laws and Related Matters
New York City Council Committee on Housing and Buildings

 

Thank you for this opportunity to comment on the vital importance of rent control and rent stabilization laws for low-income New Yorkers. The Community Service Society is an independent nonprofit organization that addresses some of the most urgent problems facing low-wage workers and their communities here in New York City, including the effects of the city’s chronic housing shortage.


Rent control and rent stabilization are fundamentally a response to this chronic shortage, which creates a severe power imbalance between tenants and landlords. The primary purpose of the laws is to prevent landlords from exploiting this imbalance to impose exorbitant rent increases and arbitrary evictions. This is a matter of simple justice, even before we consider the effects of rent regulation on affordability. It alone should be a sufficient reason for this committee, the City Council, and the mayor to extend the laws as they are authorized to do under state law.


The rent laws are also an important complement to the city’s economic development activities. When the public purse and public authority are used to promote economic development, all New Yorkers should benefit. But too often, economic development leads to rent increases, and only those who can pay the increased rent can share in the benefits. Those who cannot pay are harmed by the publicly supported development, because they are either displaced or subject to severe household budget pressures. While rent control and rent stabilization are not a complete solution to the negative side effects of economic development policy, they do ameliorate displacement pressures, and this provides another important reason for the city to extend the rent laws in the interest of justice.


The Community Service Society is particularly interested in the effects of rent control and rent stabilization on housing affordability for low-income people. The rent laws are not a true affordability program, and in fact most rent-regulated tenants pay unaffordable rents, defined as rents of more than 30 percent of household income. This is confirmed in the city Department of Housing Preservation and Developments’ preliminary findings from the 2014 New York City Housing and Vacancy Survey, which show a median rent burden of 33.1 percent for rent-stabilized tenants and 35.5 percent for rent-controlled tenants.


Nevertheless, the rent laws do improve affordability for regulated tenants to an extent that is quite important for low-income households, even though it falls far short of the affordability of public or subsidized housing. Because the preliminary findings from 2014 do not treat affordability separately for different income levels, we must use the 2011 HVS, but unfortunately there is no reason to doubt that the pattern from four years ago still holds.


In 2011, the median rent burden for low-income rent-regulated tenants, defined as those with incomes below 200 percent of the federal poverty line, was 47 percent, compared to 51 percent for unregulated tenants. These tenants would clearly have more affordable rents if they lived in public housing or in subsidized housing subject to the “Brooke Amendment” rent cap of 30 percent, but the 4 percent difference in rent burden remains acutely important. In 2011, the per capita residual income for regulated tenants, that is the amount of money per household member left over after paying rent, was $378, compared to $333 for unregulated tenants. That is $12.60 a day versus $11.10 a day – a 14 percent difference.


This is in fact a tremendously important policy effect on affordability, especially when you consider that there are more than 400,000 low-income rent-regulated tenant households in this city. That is 40 percent of the city’s low-income population. This analysis comes from CSS’s 2012 publication, “Making the Rent: Before and After the Recession,” which is available at our web site, www.cssny.org.


The message is that rent regulation is an important piece of the city’s housing affordability picture, but the affordability it provides still falls short of what the city needs. This is only partly because rent regulation is a system of rent and eviction protections, conceptually distinct from a true affordability program. The problem is also partly caused by more specific defects in the details of the laws, which often stem from pro-landlord amendments that have been made to the laws as they have been renewed over the years.


Unfortunately, as you know, state law precludes the city from making changes to address these defects. But I hope that many of you will join the tenants, neighborhood activists, and advocates who will be seeking solutions to these problems at the state level this year, and I urge you to pass the resolutions before you today that contribute to this cause.


Several of the resolutions before you today would significantly improve the affordability effects of the rent laws by limiting excessive rent increases upon the vacancy of an apartment. At present, landlords have a very free hand to raise rents during vacancy through the statutory vacancy bonus of about 20 percent and by spending money, or by claiming to spend money, on individual apartment improvements. These increases go far beyond what is necessary to ensure that needed improvements are made, and they are the major engine of deteriorating affordability in many neighborhoods. I commend you for focusing attention on this issue through resolutions.


You also have worthy resolutions before you that address excessive rent increases during tenancies through reform of the major capital improvement and preferential rent provisions of the rent stabilization laws, as well as resolutions supporting relief for rent-controlled tenants and those in former Mitchell-Lama buildings. Your resolution on vacancy decontrol addresses the major threat to the survival of the city’s system of rent regulation as a whole. We must not allow rent regulation to erode until it becomes a socially stigmatized residual program for a handful of people. As a broad-based program focusing on fairness rather than subsidy, rent regulation has an important place in our city’s housing policy system. I urge you to pass all of the resolutions on today’s agenda.

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