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NY's Rent Reform Battle Has Just Begun

Protesters marched during a snowstorm in November to demand tougher rent protections.
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Protesters marched during a snowstorm in November to demand tougher rent protections. Scott Heins / Gothamist

”Oh my god, not there!”

That’s what Marlyn Gaston’s mother said, when Gaston told her she planned to move into Flatbush Gardens, five years ago.

Gaston assured her that the 59-building complex in central Brooklyn was increasingly safe and clean, not like it was in the 1990s, when it was dubbed “Front Page”—“because it was always on the front page of the newspaper,” she explained.

And even as recently as 2010, the owner of Flatbush Gardens, David Bistricer and his company, Renaissance Holdings Equity, was on the Public Advocate’s “watch list” of worst landlords, due to thousands of housing violations.

Gaston says that in her half-decade living in the rebranded Vanderveer Estates - which was once home to a teenage Barbra Streisand—it has become a great place to live in many ways.

“They cleaned it up. There's no garbage,” she said. “And I feel safe walking through here at night.”

But Gaston said those improvements have come at a steep cost. When she renewed her lease after her first year, she was shocked to find Renaissance increased her $1,200 monthly rent by $200 dollars, or 17 percent.

“We were, like, ‘What?’” Gaston said. “And they were, like, ‘Preferential rent.’”

There are about 300,000 apartments in the metropolitan area with preferential rents—a system that lets landlords rent out units at one price and then raise it to a predetermined “legal rent” when tenants renew the lease. That hike can be much more than would normally be allowed for regulated apartments, and many renters have no idea they’re in this system.

Preferential rent is one of several housing programs that Democrats in Albany have pledged to repeal or reform. But the high-priority quest for affordable housing promises to be more complicated and emotional than many other landmark legislative packages that Governor Andrew Cuomo and lawmakers have rushed through the statehouse with their new, unchecked majority.

Confronting them are economic forces of supply and demand in a metropolitan area where land, labor and tax costs are high—and in a state where the real estate industry has deep pockets supported by relatively lax campaign finance laws.

“Reforming and strengthening the rent laws really is going to be one of the defining issues of this session,” said Brian Kavanagh (D-Manhattan, Brooklyn), chairman of the State Senate’s Housing Committee. “This goes to the core question of whether people can move into a community, put their children in local schools, and expect to be able to continue to live there affordably over time and contribute to their community.”

Cuomo in his budget listed “repealing preferential rent” alongside “ending vacancy decontrol” and “limiting building and apartment improvement charges.”

Vacancy decontrol allows owners of rent-regulated apartments to convert them to unregulated, market-rate apartments once they reach a threshold around $2,800.

Many Democrats and tenant advocates say the current system that lets landlords increase rent after making improvements is flawed, because it doesn’t pay close enough attention to what work is actually being done and how much it actually costs.

“We often see either very basic repairs instead of improvements, or we see no improvements at all but a huge bump in rent,” said Judith Goldiner, from the Legal Aid Society.

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(Scott Heins / Gothamist)

Frank Ricci, from the Rent Stabilization Association, a local industry group representing 25,000 landlords and property managers, says they already have to document all improvements, and will oppose any bill that calls for greater scrutiny or reduces the formula for claiming rent increases from repairs and improvements.

“The problem with all this is that your government is trying to micromanage the checkbook of every owner of every building in the city, and that's just ludicrous,” Ricci said. “Buildings in New York City on average are 80 years old. When something breaks, the older the building is, the more money you need to fix it.”

One major provision that Cuomo did not mention altering—that Kavanagh and many Democratic lawmakers would like to see and landlords would live to prevent—is the roughly 20 percent automatic rent hike landlords are allowed to charge each time an apartment turns over.

Goldiner and advocates say that the bonus encourages landlords to try to push residents out, often by neglecting maintenance and repairs, to get higher rents and inch apartments closer to being deregulated.

Ricci and landlords say the bonus allows them to catch up on deferred improvements they’d like to make that they couldn’t recoup under current allowances.

“If an owner has no money to do upgrades, yet their expenses keep going up, there's just no way they can maintain that level of service level of quality that they're seeing now,” Ricci said. “I don't think anyone wants to see private housing in the city start looking like NYCHA housing, which has been the subject of neglect for many years.”

John Banks, from the Real Estate Board of New York, or REBNY, says he could see abolishing or capping the vacancy bonus or preferential rent, but it all depends on what the entire slate of proposals includes.

“The package needs to recognize that … in order to incentivize people to invest in their buildings, there needs to be sufficient revenue,” Banks said. “You can mix and match from columns A, B and C to get to that.”

Not surprisingly, Banks and Ricci staunchly oppose an even more expansive package favored by Goldiner and many Democrats. Proposals include expanding rent stabilization from the metropolitan area to the rest of the state, on an optional, ‘opt-in’ basis by municipality, and imposing various legal requirements on all landlords—both market-rate and rent-regulated—before they can evict tenants.

The real estate industry says it wants to share data with politicians and policy-makers to inform regulatory changes. Advocates worry that behind closed doors, lobbyists will persuade legislators to insert language into bills to dull their impact.

“Ten percent of all political contributions come from the real estate sector, and the more money that goes from real estate to the pockets of elected officials, the more watered-down bills you're going to have,” said Aaron Carr from the Housing Rights Initiative.

Recently, Cuomo and the legislature enacted a law to limit the amount of money limited liability corporations can donate to politicians, closing a loophole that other states and the federal government closed years ago. Any number of firms and individuals can be cloaked as an LLC, but in the campaign finance world, they have often been real estate developers.

But new limits imposed for the future won’t undo the many years of political spending.

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(Scott Heins / Gothamist)

Over the past decade, REBNY has donated $128,000 dollars to Cuomo, $205,000 to Senate Democrats and $509,000 to Assembly Democrats and spent millions more on county-level Democratic organizations and a Super-PAC called “Jobs for New York.” And that’s just REBNY. The Rent Stabilization Association and individual developers and landowners have donated countless millions more.

Cuomo adamantly denies campaign donations affect his decision-making.

"No donation of any size influences any government action—period," his campaign spokeswoman Abbey Collins told Gannett last year.

Kavanagh says he and fellow lawmakers will listen to everyone equally.

“I don't believe that campaign contributions or other financial inducements are going to have a role in what we do when we renew and strengthen the rent laws,” he said. “But, obviously I understand people's skepticism and cynicism.”

And donors, similarly, insist they don’t expect anything in return for donations. John Banks said the magnitude of REBNY donations has no correlation with how quickly lawmakers’ staff members answer his calls or meet with him.

“We participate, because we believe in what we do, and we want people to hear our position on issues,” Banks said. “There are bad actors on both sides but everybody I've ever dealt with on the public side has taken our call because they believe in the public policy.”

The owners of Flatbush Gardens, Renaissance Holdings Equity, donated $50,000 to Cuomo in 2014-2015. Company officials did not reply to repeated calls and emails seeking comment.

Told that the governor she voted for took money from her landlord, Marlyn Gaston said she wants to believe he’s on her side.

“I just hope he can see our pain.”

For much more on this story, listen to reporter Fred Mogul's WNYC feature here:

Fred Mogul is the Albany and politics reporter for WNYC. You can follow him on Twitter @fredmogul.

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