Tenants in Albany on Friday (Photos courtesy of Housing Justice for All)
By Sabina Mollot
On Friday, the governor signed the most tenant-friendly package of rent regulations the state has ever seen, including the repeal of vacancy and high-income deregulation, the end of vacancy bonuses and much stricter limitations on major capital improvement (MCI) and individual apartment improvement (IAI) rent increases.
As for what this means for tenants, most notably there will be adjustments to stabilized tenants’ rent, said Assembly Member Harvey Epstein. MCIs, which previously could be no higher than six percent of a tenant’s rent, will now be no higher than two percent. They will also be eliminated after 30 years instead of being paid in perpetuity. If tenants have signed a lease with a preferential rent, that amount, when the lease is renewed, will now only be allowed to climb as high as the rent increase voted on by the Rent Guidelines Board. Previously it could have gone as high as the maximum legal rent (often a difference of hundreds of dollars).
Additionally, while this doesn’t impact current tenants, tenants moving into an apartment won’t have nearly as much to pay in IAIs, which will now be limited to $15,000 each, and only three units will be eligible over a 15-year period. The increase would also last 30 years instead of remaining permanent. Tenant blacklists will also disappear and there will also be more protections available for tenants fighting an eviction. Additionally, any conversions to co-ops or condos must be non-eviction plans. Tenants who want to file overcharge complaints will now have longer to do so, six years instead of four.
There has been a looming reported threat from the real estate industry to sue the legislature over the newly signed regulations, but Epstein, who was previously an attorney with the Urban Justice Center before becoming elected, said he didn’t think such a suit would stand a chance.
“I think the law is strong and defensible and I believe it will withstand any legal challenge,” he said.
Michael McKee, spokesperson for TenantsPAC, agreed, but said there was no doubt there would be litigation.
“There will be, though their chances of winning are slim,” he said. “But they have so much money they don’t care.”
McKee added that the 74-page-long piece of legislation, which went into effect as soon as Governor Cuomo signed it, is most significant because it takes the speculation out of real estate investing.
“These last 25 years, with the weakening of the rent laws, it allows speculative landlords to move in,” said McKee. “That’s over now. There’s no vacancy decontrol. No longevity bonus. MCIs will be based on need, not speculation, not a business model that relies on displacing people. They don’t have the mechanisms.”
Still, he said owners will still see profits on MCIs, just not as much as before. “Under the old MCI law, they saw returns of 20 percent. With the new law, they’ll still see a return, but it will be six percent. So they’ll just have to live with it.”
McKee credits the legislation’s passing to the work of tenant activists, including the Stuyvesant Town-Peter Cooper Village Tenants Association, not only for rallying for stronger rent laws as they consistently have over the years but for helping to turn the Senate blue. “Without that, it wouldn’t have been possible,” said McKee, adding that he wondered what the Blackstone Group would do at Stuy Town now.
“They were going to turn 7,000 (units market rate after the affordability deal with the city expires) and preserve 5,000,” he said. “I don’t see how they’re going to deregulate any of them.”
Assembly Member Harvey Epstein with other legislators and tenants in Albany on Friday
State Senator Brad Hoylman said that while tenants didn’t get everything that was asked for (such as the total elimination of IAIs and MCIs and universal rent control), the new laws laid the groundwork for more tenant protections statewide.
“We have broken the stranglehold of the landlord lobby,” he said.
But John Banks, the president of the Real Estate Board of New York, warned the legislation will just make the city’s affordability crisis worse.
“The harmful impact of this legislation will be profound for New York City’s economic future,” he said. “There are many losers including small property owners, contractors as well as tenants. This legislation will keep rent lower for some, but also significantly diminish housing quality and lead to less tax revenue to pay for vital government services. It will worsen the city’s housing crisis. The construction of future affordable units will slow, if not end altogether, the housing vacancy rate will worsen and nothing will have been done to make it easier for those who struggle to pay their rent. There was a path to responsible reform that could have protected tenants as well as owners, jobs and revenue, but Albany chose not to take it.”
The New York State Association of Realtors expressed mixed sentiments, saying it had concerns about the “geographic expansion” of regulations, arguing there is no housing crisis outside the city. This was in reference to change in the law that would allow upstate municipalities to establish rent regulation.
“We believe these new rent regulations will stifle real estate investment and slow the development of further affordable housing across New York State,” the group said.
However, the association added it was pleased the law doesn’t include a “good cause eviction” clause as had been initially proposed.
Prior to the legislation’s signing, which was long expected due to the strong Democratic majority in the State Senate as well as the Assembly, lawmakers gave testimony throughout the day on Friday about the hardships of tenants in their districts. Some upstate legislators expressed disappointment the package of bills didn’t do more for tenants in rural areas, including mobile home residents who own their homes but are nonetheless vulnerable to evictions when large, out-of-state companies buy the land where their homes are located. However, lawmakers representing the city spoke overwhelmingly about constituents who’ve faced unfair evictions, steep rent increases that ultimately resulted in evictions, and harassment that makes tenants feel they must move, coupled with an inability to move due to the high costs of doing just that.
On the new legislation, called the Housing Stability and Tenant Protection Act, Assembly Member Linda Rosenthal said, “This year we are saying to the landlords, your money doesn’t count. You have no friends here. We’re making sure that going forward (tenants) don’t have to live under threat of harassment.”
Assembly Housing Committee Chair Steven Cymbrowitz concluded the testimony in his chamber when he said, “We were hearing from tenants, people who were really hurting, asking us, begging us to help them and I think we did that. We met with everyone. Every single stakeholder who wanted us to meet, we met.”
The rent regulations have been cheered by AARP, who said it will go a long way to help New Yorkers age in place.
“This is a tremendous victory for older tenants in New York City and across the state who depend on affordable rent and reliable housing to age and retire in the communities they love,” said AARP New York Director Beth Finkel. “Housing costs are a major concern for many of our 2.5 million members across the state and older New Yorkers who struggle to afford food, medicine, utilities and other necessities.”