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A Move to End Rent Control Sparks Big Apple Battle Royal

One of America's last bastions of below-market rents may fall

Stepping between a New Yorker and his rent-controlled apartment just isn't done.

In a city where the average Upper East Sider now pays almost $2,000 a month for a cramped, one-bedroom apartment, rent-controlled units are hoarded, traded surreptitiously, and passed from generation to generation like family heirlooms. Divorced couples have continued living together rather than give up their below-market digs.

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But this hallowed institution is now under siege from upstate New York lawmakers, and downstate city dwellers are outraged.

"People already have enough trouble paying their rents," says Hilda Chavis, a retiree who lives in a rent-stabilized apartment in the Bronx. "Where does Joe Bruno expect us to go?"

Joe Bruno is the blunt, powerful state Senate majority leader who's thrown down the gantlet. A self-made, upstate millionaire and avowed free marketeer, the Republican lawmaker is threatening to let New York's rent control laws expire on June 15, unless supporters agree to a phase out.

"Rent regulations are the single greatest impediment to creating new housing opportunities," Senator Bruno says, noting that New Yorkers should move to wherever they can afford to live, "like everybody else in the world."

Nationwide, rent-control laws are being challenged and rolled back. Last year, California limited its cities' and towns' ability to stabilize rents. In 1994, Massachusetts residents voted to abolish rent control and the last units were phased out in December.

So far, neither the predictions of doom nor the promises of abundant affordable housing have come true in either state. But housing experts say the impact will be felt in the future, especially when combined with the federal government's continued cuts in housing programs.

"Overall, we're now concerned most about the long-term loss of affordable housing," says Patricia Canavan, housing policy adviser to the mayor in Boston. She notes that Boston rents have jumped 14 percent since 1995.

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In New York City and the surrounding counties, more than a million apartments are rent-controlled or rent stabilized. They account for about one-third of the city's housing stock. The vast majority of the tenants are middle class.

World War II legacy

Rent-control laws went into effect here after World War II when returning GIs faced an acute housing shortage and deep price gouging. The "emergency" regulations have been renewed almost every two to four years since.

"Without rent controls, you'll have an unbridled housing market that will make today's housing crisis look like a picnic," says Michael McKee, head of the New York State Tenants and Neighborhood Coalition's campaign to defeat Senator Bruno.

Advocates argue rent controls ensure economically diverse and stable neighborhoods. Without it, they warn, hundreds of thousands of tenants will be displaced, disrupting communities and increasing homelessness.

Opponents counter that rent controls actually exacerbate the housing crisis by creating false shortages that drive up unregulated rents, stifle housing development and cause the current housing stock to decay.

"If a person has a rent-controlled apartment, they've got an incentive to keep it off the market," says real estate attorney John Delmar, who admits he held onto an $88-a-month, one-bedroom unit for nearly 30 years.

The low rent did allow him to go to afford law school. Nonetheless, Mr. Delmar now says its time for rent control to be phased out.

"If you take any kind of rent or price controls off, there would be a momentarily large increase in some units, but under classic economics, as more units become available, prices will eventually come down," he says.

A study done for a city-based landlord's association found the average rent-controlled apartment would increase 13 percent. But in some of the tonier neighborhoods, prices could jump as much as 50 percent.

Bruno is proposing immediate vacancy decontrol, which would allow rents to increase to fair market value when a tenant leaves. After two years, he'd phase that out and completely deregulate most units, leaving protections only for senior citizens, the disabled, and low-income people.

Bruno has also called on the city and the state to loosen up what he calls New York's "punishing housing procedural review" in order to stimulate the development of more affordable housing.

GOP rent money?

But tenants' advocates contend that's just another sop to landlords who've funneled more than $200,000 into Republican campaign coffers.

"Their entire rationale is that if you free the private sector from the shackles of regulation they'll start building tons and tons of affordable housing. That's sheer nonsense, utter baloney," says McKee. He notes that an early 1970s experiment with rent deregulation led to such large rent hikes and outrage that the Republican governor and Republican-controlled legislature reimposed rent regulations after only three years.

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