David R. Jones (137830)
David R. Jones Credit: Contributed

The New York State legislature made history this month by significantly strengthening rent control and rent stabilization in New York City and the suburbs, allowing local governments from the rest of the state to opt in to rent stabilization for the first time, and creating a long list of new rights for tenants across the state. They even made the rent laws permanent, putting an end to the epic battles between landlords and tenants every four to eight years the rent laws periodically sunset.

This is the signature achievement of the newly empowered leadership of New York State Assembly Speaker Carl Heastie of the Bronx and Senate Majority Leader Andrea Stewart-Cousins of Yonkers. For decades the fate of the rent laws was settled in three-way negotiations between the Governor and the Assembly and Senate leaders, and there was always at least one Republican ally of the landlords at the table.

But after the defeat of most of the Independent Democratic Caucus, a group of state senators that allied with Republicans, landlords no longer had a Republican Senate leadership to help them stave off efforts to strengthen the rent laws. What’s more, this year the new Senate leadership joined Assembly leadership in sidelining Governor Cuomo and shaping the rent bill on their own – a historic break with the “three men in the room” style of legislating. Now for the first time there were two leaders in the room, a man and a woman, both black.

The results of this new regime will bring great benefits to low-income renter households in New York City and across the state. More than 290,000 families with incomes less than twice the federal poverty threshold live in rent-stabilized and rent-controlled housing – that’s more than in public housing, private federally subsidized housing, and Mitchell-Lama housing, plus tenants with federal Section 8 vouchers combined.

The new law does away with the main mechanism for deregulating apartments and thus ensures that the system will survive into the future. It also reverses a destructive change from 2003 that negated the effects of rent regulation for hundreds of thousands by allowing large increases from “preferential rents” to higher legal rents.

Rent regulation is primarily a consumer protection rather than an affordable housing program, but it also helps make housing more affordable and prevented tenants from being displaced by rising rents, especially as neighborhoods gentrify. In recent years, the affordability benefit has been undermined by excessive rent increases during vacancies – based on the “vacancy bonus” provision that allows for large automatic increases on every vacancy, plus additional increases that are based on apartment improvements.

CSS research has found that increases during vacancy account for 62 percent of all rent-stabilized rent increases above inflation and that the typical share of income that low-income tenants spend on rent increased from 40 percent in 2002 to 52 percent in 2017.

The new law will significantly slow this trend by eliminating the vacancy bonus and curtailing individual apartment improvement-based increases to a level that is in line with the normal rate of return for other investments. It also makes similar reforms to rent increases based on building-wide major capital improvements, which can hit individual tenant households hard and lead to displacement. It makes the increases temporary and reduces them to a level in line with the normal rate of return.

This will make our housing system more affordable while also responding to criticisms from the real estate industry that landlords need a financial mechanism to make reasonable and necessary improvements. Small landlords will continue to have the means and incentive to improve their buildings. The new rules will give landlords a return on investment of about five or six percent. Combined with landlords’ interest in preserving their extremely valuable underlying assets, this provides more than enough incentive to make these improvements.

The law will also reduce another important hardship for tenants – unaffordable security deposits and application fees. CSS’s Unheard Third survey has found that 72 percent of low-income households do not have the savings to meet a one-time cost of $1,000, making security requirements that often top $2,000 a significant burden.

The package includes many other improvements to the rent regulation system –including long-sought relief for rent-controlled tenants, many of whom have been hit with annual rent increases far higher than those allowed under rent stabilization. And it has important provisions for tenants outside New York City, including the ability for more local governments to opt in to rent stabilization and vitally important new protections for residents of manufactured housing.

The new law does not cover every housing issue, and CSS will continue its efforts to enact Good Cause Eviction protections statewide, create a Home Stability Support rent supplement for tenants facing homelessness, and provide much-needed capital funding to deal with deteriorating conditions in NYCHA and many of the state’s other public housing authorities.

But this does not take away from the extraordinary achievement of the State Senate and Assembly and the chambers’ leaders in winning agreement to this historic rent regulation reform bill.

David R. Jones, Esq., is President and CEO of the Community Service Society of New York (CSS), the leading voice on behalf of low-income New Yorkers for more than 170 years. The views expressed in this column are solely those of the writer. The Urban Agenda is available on CSS’s website: www.cssny.org.