04 Apr 1997 Repealing Rent Control in New York City
The Small Property Owner
Jeff Jacoby, The Boston Globe
Meanwhile, even the press is coming out on the side of the landlords. John Stossel of ABC news had a probing expose on abuses. And, on March 16, The Washington Post ran a stinging story on the hypocracy of the “toniest tenants” in Manhattan.
To understand what it is like for women living in New York City, you need to read “Rent Regulation and Gender Gaps” by Dr. Adrian Tiemann, president and founder of P.O.W. (Property Owning Women, “still prisoners of World War II”). In this powerful feature, case studies and economic data point to the horrible inequities which tortuous rent control laws in New York City have imposed upon women owners for more than half a century. The real agenda of rent control is privilege as the politicians protect a corrupt system in this vote-rich city.
*The Small Property Owner is a monthly award-winning newsletter published by the American Association for Small Property Ownership (AASPO), a non-partisan, non-profit organization located in Washington, DC. AASPO provides real estate professionals with information on the effects of public policies, taxation, and government regulations on property ownership and real estate investments.
Reprinted from The Small Property Owner, January 1997
Rent Regulation and Gender Gaps
Adrian R. Tiemann, Ph.D. If you heard that a company was deliberately discriminating against older and minority women, driving them out of business, and conspiring with large competitors to seize their property, you would probably call the ACLU. Yet, this has been the norm in New York City for 50 years. Its tortuous rent laws drive out the very women upon whom it relies to house the fastest growing segments of its population: recent immigrants, indigenous poor, and the city’s creative and artistic youth.
How do these women compare with other small building owners? They comprise 20% of the class and over 50% of its rooming house owners. With annual earnings 60-65% of men’s and lifetime savings half that, they are at the bottom of a relatively poor heap: 30% of all small building owners earned under $20,000 in 1985 and nine percent earned under $10,000. 60 percent had only one building, and over a third bought it primarily as a home. Their income is 64% and their expenses are 108% of the average because their buildings are “old.” They pay higher real estate taxes but have higher vacancy rates and collection losses. They rent more units for less than $400 monthly because 25% of their tenants receive public assistance yet only 9% of the owners get rent subsidies. (Stable, advantaged Manhattan is the worst offender.)
These women are in a bind. They cannot get funding for capital improvements, and are prohibited from withdrawing SRO (single room occupancy) units from the market. (SROs are commonly known as rooming houses.) If a unit is unoccupied for thirty days, the owner of a 10 unit building could amass fines of $90,000 and serve six months in jail. Such draconian laws assume that all owners are venal. These laws are really unauthorized taxation.
Sadie, a retired schoolteacher-owner, was summarily cuffed when her tenant claimed he had been illegally evicted. Did the police check whether the lock had been changed? Did they give her a hearing? No. New York’s finest shoved Sadie into a squad car, took her to central booking, threw her into a holding pen and held her overnight. A colleague finally persuaded the police that it was a mistake and she was released only after agreeing not to sue them for false arrest. Civil rights are not for everyone, it seems.
Women owners are exploited by savvy tenants who rent cheap apartments for convenience, knowing that women lack the funds to litigate. Means-testing would end this abuse, but that is only available for public housing and high income decontrol. If the city really wanted affordable housing, it would screen those who pay under 15% of their income for housing. The real agenda is privilege.
Deadbeats are major offenders against women, knowing that only 1% of them will ever be evicted. As a “defense,” they make complaints. Since the law assumes that these are justified, the owner’s Bill of Rights is suspended in any hearing. Also lost: rent during litigation, legal fees, and taxes that paid the tenant’s legal aid lawyer!
Meaningless regulations, minuscule “violations” and delays in approvals for building upgrades hurt women. Major Capital Improvements rental increases are capriciously granted. None of one woman’s $50,000 qualified. Why maintain and upgrade!
Proposals to help small buildings are consistently defeated by tenant activists and profitable owners. They have received zero increases while profitable building obtained 2-4% raises and 10.5% vacancy increases. Sexism rampant!
Women reel under these restraints. Residing in their buildings, they face danger daily without hazard pay. One owner’s enraged tenant, a professional, bit her and then filed harassment charges! Another was thrown down the stairs, breaking her arm. But in New York, only landlords can commit harassment. Women get no orders of protection against violent tenants.
The toll in stress-related illness is incalculable. Jean X not only lost her buildings and nearly her sanity, but will have her salary garnished far into the future because advocates helped tenants seize her buildings. Horrifyingly, the city cooperated in this populist charade.
The abysmal results: (1) declining housing despite nationwide booms, (2) growing foreclosures, (3) static housing stock, (4) egregious rents in new housing and low base rents in old housing which are driving small owners to bankruptcy. New York City in 1995 spent $322,626 per building it had to reclaim from abandonment. Not bad for a bureaucracy that cost taxpayers $7.8 billion dollars.
The upshot? In 1995, each city resident paid $246 for rent regulation. Everybody suffers: the rock-solid dairyman in the Finger Lakes as well as the freeloader’s neighbor down the hall are picking up the rest of the tab for the funky digs of a well-heeled star in Manhattan who has a “great deal” on an apartment.
Research shows that on average, only about 15% of direct aid money goes to the needy. Do you suppose even one percent of this grand $7.8 billion sum helps anyone but the privileged? If you do, sell your fairy tale to Walt Disney.