Affordable Housing—A Crisis Ignored?

While affordable housing is a hot-button issue in many communities, nowhere is it more critical than downtown Manhattan. The numbers are frightening unless you’re a landlord.

Councilmember Margaret Chin was elected, in part, for her housing activism – as she had demonstrated in her primary constituency of Chinatown– to protect rent-regulated tenants.

Council Speaker Christine Quinn’s work has benefitted the community with her advocacy - supporting tenant rights in the face of landlord abuse and harassment.

Borough President Scott Stringer has promoted new affordable housing projects as they are negotiated, periodically, by the city. However, few other politicians have weighed in on this basic need. A dearth of housing advocacy is now critical and the increase in rental demand has accelerated in what is fast becoming a crisis downtown.

Lower Manhattan residents are slowly being “urged,” enticed, or litigated out of their apartments without any interference from their elected officials. From one million rent-controlled or rent-stabilized apartments, current statistics point to a bit over 800,000 that remain.

Due to the economic crisis, caused by Wall Street investment banks (see “The Sellout” by Charles Gasparino), liquidity began drying up in 2007 – and has not yet returned to pre-crisis levels. Some predict that, with the Eurozone problems and the inability to absorb the toxic mortgages securities still held by many banks (Citicorp, Bank of America, Wells Fargo), the problem could weigh down the economy until 2020. The problem with this reasoning is that A) Japan took the same do-nothing route as we now are and has been in recession for nearly two decades and B) lending for mortgages cannot resume on anything near a “normal” basis if banks cannot lend. When banks could count on the CDO market (mortgage bonds) to buy their paper, banks couldn’t make multi-million dollar loans fast enough. Now, they have to “eat what they cook.”

So, in view of the current financial markets – at least with respect to residential lending and personal loans – co-ops and condos are harder to finance. Which leaves rentals as the only option for finding a Manhattan apartment. The layoffs and downsizing among the ranks of commercial bank management, as well as investment bankers have further reduced the traditional source of apartment buyers. All of this points to the weak link – availability of rental apartments and the incentive for landlords to rid themselves of any regulated tenants any way they can.

The pressure on rent-controlled and rent-stabilized tenants has become intense. Some existing tenants are offered “buyouts” to leave their homes (some of whom have been in occupancy for 30 or 40 years) while others are litigated out of their apartments. Unfortunately, the incentive to “play” the legal process and the courts is great. A recent case, for example, is an action brought as a “holdover” (it’s not about non-payment of rent but about some claim of a lease violation) for an apartment in SoHo that has already generated legal fees of $250,000. And, that’s for an apartment with $3000 a month rent. Why? Because the current market rent in this loft building has escalated to $7000 per month in this environment of “super demand.” Further, because market rate tenants have few protections. While new tenants pay what the market will bear, they have no guarantees over how much their rent can be increased at the end of the lease – and no control over the length of the lease – or, even whether it will be renewed. They pay the most, take the most risks, and have the least peace of mind.

Landlords have little interest in the “soul” of Manhattan. Property owners often ignore the cultural history of Gotham, since it has no bearing upon the “return on investment;” and little relevance to the artistic fabric of Manhattan; no concern of the concept of a stable community, or its security. As a result, the object is to vacate any apartment; to evict any tenant who is not market rate.

The problem is that no one except landlords wants the massive disruption that would be caused by the wholesale dismantling of rent regulation. It would be tantamount to cultural genocide. It would also damage the fragile structure of housing supply and demand. The interim answer to this crisis is for the city to negotiate with developers for new stabilized apartments, confer more rights upon market rate tenants and do a better job of protecting existing stabilized tenants from unscrupulous landlords.

The major problem with the current rental housing market is that it is not a contract that is played on a level playing field. Landlords have adopted the Gordon Gekko rules. Greed and corrupt legal actions are the norm. While buyouts are legitimate, non-payment evictions are perfectly legitimate and raising rents or withholding new leases for market rate tenants is perfectly legal – corrupting the legal process and deceiving the courts is not. This type of abuse needs to be criminalized; then it would stop.

For politicians, there are several options and, for tenants, there are responsive options. The most productive effort in maintaining communities in Manhattan, for stability, economic growth, and security – is to vigorously support the regulated rent laws. While politicians are negotiating for new affordable apartments, tenants must support with their votes politicians who emphasize active enforcement of laws against abuse and harassment of tenants by landlords.

The courts cannot be used to litigate endlessly against any regulated tenant as a method of financial eviction. Five-hundred-dollar-an-hour attorneys for a landlord cannot be permitted to litigate for years in order to bankrupt (evict) a tenant in a holdover action for possession of an apartment.

Speaker Quinn must re-emphasize her support for tenants by increasing fines for abuse and harassment – and by stepping up enforcement. State Senators Hoyleman and Squadron, and Assemblymember Deborah Glick must issue joint statements in Albany that reinforce their commitment to rooting out these illegal attempts to corrupt or pervert the legal system stacked against tenants. And introduce legislation to criminalize abuse and harassment.

State Senator Daniel Squadron, who has done much to protect regulated apartments, needs to focus on the perversion of the courts – to prevent judges from unknowingly aiding landlords in attempts to financially devastate tenants. Community groups should be permitted to address the court in such cases.

And Councilmember Chin must address her constituency in SoHo as well as Chinatown and speak to the people publicly about this issue. She should also address Community Board 2 on this issue.

Finally, community groups and housing activists must make it known to politicians that this huge block of votes will decide who wins the next elections with 800,000 voters on your side, a commitment to eliminate abuse seems like a good political investment.

Will Quinn, Stringer, Thompson, Weiner, Liu, or De Blasio or another candidate submit a plan that raises the bar on stamping out abuse and harassment of tenants?

Perhaps. And move into Gracie Mansion as a result? Let’s hope so.

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