- Chairman Vito Lopez said that he endorsed the Andrea Stewart-Cousins / Gary Pretlow bill, A.7811/ S 5284. That bill is far better (from tenants' perspective) than his original bill. The Stewart-Cousins/Pretlow bill would put ALL developments - regardless of when built - into rent stabilization on leaving Mitchell-Lama or Section 8, with "unique or peculiar circumstances" increases, and is retroactive. This is great news for us - although not great enough until the bill is actually passed. But since Lopez had not supported the bill earlier, this is progress.
- Those in the know suggested that there is a good likelihood of this (or a similar) Mitchell-Lama bill getting passed this term.
- HPD Commissioner Shaun Donovan commented on the problems of overleveraging - or "predatory equity", including the displacement of tenants, decrease in maintenance and even abandonment. Read all about overleveraging and Stellar Management's owner, Larry Gluck, in The Real Deal article, "Luck of the Gluck."
- Assembly Member Linda Rosenthal asked DHCR to keep a database of owners who evict rent regulated tenants on the claim the owners want to live in those apartments - and then buy another building and another and do the same thing.
- Assembly Member Hakeem Jeffries suggested that DHCR & HPD look into whether brand-new "luxury" housing - much of it vacant - could be used for tenants displaced by its construction.
Testimony of Sue Susman, president, Central Park Gardens Tenants' Association
New York State Assembly's Committee on Housing
December 4, 2008
As president of the Central Park Gardens Tenants' Association, I thank Chairman Vito Lopez and all of the members of the Assembly's Housing Committee and Mitchell-Lama subcommittee for the opportunity to testify before you today.
We are here today because of the economy:
As we read in yesterday's New York Times, and as stated earlier today by Commissioners Van Amerongen and Donovan, the lack of money is hurting the construction of affordable housing throughout New York City.
As we know from our friends and neighbors, it is hurting individual tenants who are finding themselves jobless or on reduced hours and lower pay. In my building it means that a tenant who has just lost her full-time job is posting notices in the building to sell everything she owns to pay the rent. It means that I received calls in November from tenants in my building asking for referrals to free tenant lawyers. It means that saving Mitchell-Lama and other affordable housing is more important than ever.
It also means that landlords, like Larry Gluck of Stellar Management, who bought our building and others at inflated prices with inflated dreams of profit, find themselves defaulting – as at the Riverton Apartments in Harlem – or having to figure out ways to oust rent regulated tenants. After all, free market tenants – three or for unrelated individuals who have to share an apartment – are often the only ones who can even temporarily afford the higher rents that pay Stellar's mortgage. In our building there is a lot of turnover as new tenants find they cannot in fact pay those rents. But the rent rolls of regulated tenants cannot meet that bill.
Of course, costs are not a "do-or-die" problem for rental buildings that remain in Mitchell-Lama. As you know, there are tax abatements, the owners' return on investment is guaranteed, tenants pay a minimum to accommodate those costs, and those who can afford more pay more. Once the landlords' investment return and costs (including the mortgage payments) are covered under Mitchell-Lama, there is no rent increase. Landlords' books are open to the supervising agency which makes the determination. That is not the case with rent stabilization (at least not unless there is a change), and I urge that any bill concerning Mitchell-Lamas not abandon both the sliding scale aspect and the open books. We have all seen the costs of economic deregulation, and they aren't pretty.
Mitchell-Lamas were and have been uniquely successful as affordable housing, as ethnically mixed housing, as a stable based for new neighborhoods.
So, given the economy and the developments' success, saving them is crucial.
There are different ways to do it, among them barring owners from taking buildings out of Mitchell-Lama if the rent rolls of existing tenants would not support the building's costs under the prospective mortgage. Another way, given the current housing emergency, would be to extend the period during which a building must remain in Mitchell-Lama. A third, already in effect to some extent, is to provide funding for repairs to rental as well as Mitchell-Lama co-ops at low rates with a mandatory extension of time during which the development must stay in the program. And I'm sure you have other possibilities in mind.
But there are already thousands of apartments that have been taken out of Mitchell-Lama. What happens to those? – and when I say "those" I really mean "ours" since my building is one of the many taken out of Mitchell-Lama.
Owners of the pre-1974 buildings, those that automatically go into rent stabilization, have applied to raise the initial rent stabilized rents to market rate. Relying on their interpretation of the "unique or peculiar" clause of the Emergency Tenant Protection Act, they have challenged DHCR's excellent regulations in repeated court actions.
Tenant associations have joined the cases in order to ensure that our voices be heard – and that is costly. Our association is spending some $30,000 a year in legal fees, and that is with splitting the cost with other buildings.
And tenants in developments built from 1974 on are in even worse shape, having no protection other than what they might be able to negotiate – as landlords foster dummy tenant associations, refuse meeting space to the actual associations, and otherwise hinder real
We need a statute that will protect us now. The Central Park Gardens Tenants' Association has joined Tenants & Neighbors, Housing Here and Now, the P.I.E. Campaign and many, many other groups – all in the New York is Our Home campaign – to support the Andrea Stewart-Cousins / Gary Pretlow bill (formerly known as A.7811/S.5284) that will:
1. COST THE STATE NOTHING, so the taxpayer gets a bargain and affordability can be maintained.
2. APPLY TO BUILDINGS REGARDLESS OF THEIR DATE OF CONSTRUCTION: By
making rent stabilized all developments being removed from Mitchell-Lama and project-based Section 8, and barring "unique or peculiar circumstances" increases, tens of thousands of units of affordable housing would remain affordable. That serves the explicit purpose of the 1974 Emergency Tenant Protection Act: to sweep tens of thousands of unregulated apartments into rent regulation and to keep apartments affordable.
3. BE RETROACTIVE: As I speak, tenants in 24 developments removed from Mitchell-Lama are involved in or affected by litigation concerning "unique or peculiar circumstances" increases. And thousands of tenants in post-1973 buildings are flailing about for a safety net. So we need a statute that is retroactive. If it is not retroactive, it will not help us. And the value of a non-retroactive statute diminishes to zero as more and more developments leave Mitchell-Lama.
One bill, A.7811 / S 5284, proposed by Assembly Member Gary Pretlow and State Senator Andrea Stewart-Cousins in the last term, provided for such coverage and retroactivity – so that tenants whose buildings did not enter rent stabilization on leaving Mitchell-Lama would enter
it now at their current rents.
4. NOT PENALIZE TENANTS: I am aware of one proposed bill putting only post-1973 buildings into rent stabilization without "unique or peculiar" increases. Aside from the failure to protect the pre-1974 buildings, that bill would penalize tenants who, though they know they
are unqualified, must apply for Section 8 enhanced vouchers or face an immediate market-rate rent increase. It seems to me that is playing with the purpose of Section 8 and using taxpayers' money for landlord profit. Such money might be better used in a tax abatement to encourage landlords to keep developments in their respective programs, or for investment in existing and future affordable housing.
5. BE SIMPLE: I know that Chairman Lopez, a long-time supporter of affordable housing, is also a long-time supporter of simple bills. The bill that my tenants' association supports is very simple: It puts all buildings leaving Mitchell-Lama or Section 8 projects into rent stabilization without unique or peculiar increases, applies retroactively and prospectively, and costs the state nothing.
On behalf of the Central Park Gardens Tenants' Association, I urge that this Committee endorse and promote this bill that the entire New York City tenants movement supports. We need your help.
Copyright Susan D. Susman, 2008