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Thread: As Rents Rise, So Does Deregulation

  1. #1

    Default As Rents Rise, So Does Deregulation

    November 16, 2003

    As Rents Rise, So Does Deregulation


    As the New York City housing market flourished in much of the period between 1999 and 2002, the pace of apartment deregulation quickened in the most desirable neighborhoods of Manhattan and market rents rose sharply in much of the city, especially in Brooklyn and Queens, where median rents exceed $1,000 for the first time in some neighborhoods.

    These are some of the highlights of a portrait of the rental market, drawn from an analysis of the New York City Housing and Vacancy Survey carried out in the spring of 2002 and recently released for independent analysis.

    Rent regulation has been a major force in the New York City real estate market for more than half a century, with rents of more than a million apartments still set by government regulations. That stock of rent-regulated housing is gradually eroding, however, with a loss of a minimum of 32,000 units, 3 percent, from 1999 to 2002, according to an analysis of the data.

    Moreover, in the most sought-after parts of Manhattan, below 96th Street on the East Side and 110th Street on the West Side, rents were sufficiently high at the time of the survey that nearly one in six units could be removed from regulation upon vacancy, while more than half could escape regulation after a moderate renovation by the owner. State law provides for the deregulation of any vacant apartment with a legal asking rent of $2,000 or more.

    Outside Manhattan, rent stabilization's ability to protect tenants from the vagaries of the market is also showing signs of weakening. The legal regulated rents have been rising and are often at or above the market rents for the same apartment, even though they remain significantly below the $2,000 threshold.

    In Brooklyn and Queens median market rents rose faster than regulated ones in the three years covered by the survey. But in the Bronx, regulated rents rose faster than market rents, leading to a situation in which many owners now say they can no longer collect the stabilized rent increases to which they are entitled because their tenants cannot afford to pay them.

    Though many New Yorkers continue to pay a large share of their income on rent, incomes rose even faster than rents in 1999 to 2002, softening the impact of the increases.

    The survey was established to determine the apartment vacancy rate under a law that would end rent stabilization if the vacancy rate exceeded 5 percent. At the time of the survey it was 2.94 percent over all. The survey is performed by Census Bureau every three years under contract to the city's Department of Housing Preservation and is the only large survey that tries to meticulously track housing patterns that include units' rent regulation status. The results were analyzed for The New York Times by Andrew A. Beveridge, a demographics expert and sociology professor at Queens College.

    The survey portrays changes in the many different housing markets in neighborhoods across the city. In the last decade the Lower East Side and Chinatown showed the largest increases in market rents in the city, cheering landlords and causing tenant advocates to raise concerns about the affordability of housing. The survey showed that median market rents in the neighborhood have more than tripled from $600 a month to $2,000 since 1993, and the median stabilized rent rose 85 percent since 1993, to $850 a month.

    Outside Manhattan, median market-rate rents were highest, at $1,100, in Bayside and Little Neck, Queens, and were at $1,044 in Park Slope and Carroll Gardens, Brooklyn. Median market rents of $1,000 were found in Brooklyn Heights and Fort Green, in Brooklyn; Forest Hills and Rego Park, Flushing and Whitestone, Hillcrest and Fresh Meadows, Sunnyside and Woodside, and Astoria in Queens. Bay Ridge was next with a median rent of $975.

    Of course, rents vary by location and apartment size. In Manhattan, the median three-bedroom market rate apartment had a rent of $3,400, compared with $900 for three-bedrooms in the Bronx and $1,000 in Queens. When computed across entire boroughs, market rate apartments with the same number of bedrooms had very similar rents outside Manhattan. A median two-bedroom was $800 in the Bronx, Brooklyn and Staten Island and $900 in Queens.

    But the sharpest distinctions emerge not at the neighborhood level or from borough to borough but between market rate apartments and stabilized apartments within Manhattan, and especially in the most expensive and sought after parts of the borough. The Manhattan market is central to the debate over rent regulation because of the large gaps owners call them subsidies, tenants call them benefits between market rate and stabilized apartments.

    "Rent regulation will end unless the laws are changed, and soon," said Michael McKee, the associate director of New York State Tenants and Neighbors, a tenant advocacy group. In Manhattan, he said, "Nine times out of 10, a vacant apartment is going to come back on the market unregulated."

    But Jack Freund, the executive vice president of the Rent Stabilization Association, a group representing owners, said he was concerned about a "bifurcated system" in which owners in Manhattan have "long-term occupied stabilized units that are well below market" while outside Manhattan, owners receive the right to increase rents that they cannot collect.

    Manhattan Trends
    An Elevation of Rent Levels

    Within the prime Manhattan market, the survey clearly documents the rapid run-up in unregulated rents in the waning days of the city's economic boom, a surge that has made a bargain apartment almost impossible to find.

    By 2002, three-quarters of all unregulated apartments in this market were rented or listed for more than $2,000, up from 57 percent only three years earlier. Only 1 in 10 rented for less than $1,200 a month.

    Median market rents increased from $2,034 a month to $2,400, a rise of 18 percent, and up to $2,500 in leases signed in the 15 months before the survey. Since then, asking rents for new leases in Manhattan have declined about 10 percent or more from the peak, brokers and building owners say, but is not clear whether this has led to a decline in rents for the average long-term tenant.

    Based on standard real estate benchmarks, a renter of a $2,500 apartment would require an income of $100,000 a year, and, indeed, the median income of new renters of unregulated apartments was $110,000, according to the survey.

    As market rents accelerated, the gaps between market and stabilized rents in these parts of Manhattan increased. The median rent on a one-bedroom market-rate apartment was $2,450 compared with $1,100 for a stabilized one, a difference of $1,350, or 55 percent. In the rest of the city the difference is far smaller, a $700 median for a market rate one-bedroom versus $661 for a stabilized apartment of the same size, a difference of $39, or 6 percent; the difference rises to $147 for a two-bedroom and $220 for a three-bedroom apartment.

    Stabilized Apartments
    Many Units Are Gone, But How Many?

    The weakening of rent regulation, through laws signed by both Democratic and Republican governors and adopted by the City Council to raise rents on vacant apartments and deregulate those with rents above $2,000, can be seen in a number of measures.

    The first is the count of stabilized apartments. An analysis of the housing survey estimates that a minimum of 32,000 rent stabilized units were removed from regulation between the previous survey in the spring of 1999 and the current one. This figure includes all occupied rent-stabilized apartments and vacant apartments available for rent. The 59,000 apartments still covered by rent control, an older regulatory system that now protects tenants in buildings put up before 1947 who have lived in their apartments since 1971, were not included.

    It has been all but impossible to come up with a method to estimate the effects of rent regulation and deregulation that owners and tenants can agree upon. Earlier this year the New York City Rent Guidelines Board put the minimum net loss of apartments through the high rent deregulation laws at 14,736 in the three years that ended in 2002. New York State Tenants and Neighbors estimated that 47,000 units were lost during roughly the same period.

    The Rent Guidelines Board found that during this period the number of apartments removed from rent regulation for other reasons were largely offset by apartments added to rent stabilization through government programs. The board tabulated apartments as lost to high-rent deregulation only if they were listed in records of the State Division of Housing and Community Renewal, which administers the rent-stabilization program.

    But the Rent Guidelines Board said that its figures were a floor the lowest possible number since many building owners may not have reported the deregulation of apartments to the state, and that the true number could be higher.

    The estimate of 32,000, although much higher, is also a conservative one, because between the 1999 and 2002 surveys, the Census Bureau changed the way it counted apartments: it used a sample from the homes canvassed in the 2000 census, which added more than 100,000 addresses that were not included in the 1990 census.

    This had the effect of increasing the count of all housing units in 2002, compared with earlier reports. As a result the actual number of apartments removed from regulation is probably larger than the estimate.

    The reduction in rent stabilized apartments is likely to continue as the relatively large rent increases authorized by the rent guidelines board 7.5 percent for a two-year lease and 4.5 percent for a one-year lease beginning last month work their way through the system.

    Under the current rules, vacant apartments are entitled to at least a 20 percent vacancy increase on a two-year lease (and more for low-rent apartments and those that have not turned over in at least eight years). This means that any apartment with a current rent of at least $1,667 could immediately be deregulated upon vacancy. This threshold could drop as landlords renovate apartments and pass the cost along to new tenants. An additional $32,000 in renovations would trigger the deregulation of a vacant apartment with a current rent of $1,000.

    As of 2002, the survey showed that almost 31,000 apartments nearly one in six of the 206,000 occupied, rent-paying stabilized apartments in the prime Manhattan market could be immediately deregulated upon vacancy and an additional 84,000 were renting for $1,000 or more and were within easy reach of deregulation. That would leave only 90,000 stabilized apartments, less than 40 percent of the 245,000 stabilized units in Manhattan in 1993.

    In the rest of the city, nearly 4,000 apartments were renting for $1,667 or more, according to the survey, and could be deregulated when the apartments next become vacant. An additional 70,000 were renting for $1,000 or more and were in striking range of deregulation, although owners are unlikely to invest money in improving an apartment if the market rents are too low to recoup their investment.

    The duration of tenancy in Manhattan apartments is longer than elsewhere in the city, as tenants are unwilling to give up their protected apartments. Tenures in stabilized apartments have begun to resemble those in the older rent control program, decades after that program started to be phased out.

    In Manhattan, 45 percent of stabilized tenants have lived in their apartments since 1993, compared with 38 percent in the rest of the city.

    In addition, median rents in stabilized two- and three-bedroom apartments in Manhattan are rising more slowly than in one-bedroom apartments, and are actually lower, as the bigger apartments turn over more slowly and owners are unable to collect vacancy increases. Median rents were $900 on a one-bedroom, $800 on a two-bedroom and $700 on a three-bedroom.

    Outside Manhattan
    Stabilized Rents Near Market Prices

    Outside Manhattan, rents were up significantly between 1999 and 2002 in some neighborhoods, including some middle-class communities. Median rents in Bay Ridge were up the most, by 44 percent, to $975, followed by Astoria, up 33 percent, to $1,000. Similar trends are seen in some improving neighborhoods. In Bedford-Stuyvesant, for instance, the median rent was up 30 percent, to $650, and in North Crown Heights and Prospect Heights, up 29 percent, to $775.

    But stabilized rents outside Manhattan are, on average, not far from market rents. In Queens the median stabilized rent is 89 percent of the median market rent. In Brooklyn, it is 84 percent, and in the Bronx, 83 percent. In Staten Island, according to the survey, median market rents and stabilized rents are about the same.

    In the Bronx, stabilized rents actually rose slightly faster than market rents between 1999 and 2002. David Waxenberg, a senior vice president at Norwax Associates, which owns 30 buildings and manages several hundred more, primarily in the Bronx, said that the high rents in Manhattan have brought new investment to other parts of the city, but he said renters from Manhattan have not yet crossed the river to the Bronx in search of lower rents.

    The State's Division of Housing and Community Renewal reported that in 2002, owners filed registration forms showing that about 81,000 regulated apartments in the city, an increase of 15 percent from the year before, were renting for less than the maximum legal allowed rent. But owners say these counts may far understate the issue.

    Arnold Goldstein, chairman of Samson Management, which owns thousands of apartments in Manhattan and surrounding boroughs, said that in the Bronx, where, for example, a three and a half room apartment on Pelham Parkway goes for $950, about 20 percent of his tenants pay rents below the maximum allowed under rent regulation.

    When he installs a new room or waterproofs a building exterior, the cost of these improvements are passed along to the stabilized tenants with rents below market, but "those at market don't get charged." On the other hand, he said, in Manhattan, market conditions dictated that he reduce one tenant's rent from $4,000 to $3,000 in a large Park Avenue South apartment after the market turned.

    Tenant advocates say the problem outside Manhattan is that stabilized rents have risen too high, through the 20 percent vacancy increases allowed by the state for a two-year lease. They fear that the rising stabilized rents will serve in the long run to undermine public support for rent stabilization.

    Janet Henne, president of the tenants association at the Marseille and the Brussels, two large apartment buildings on 67th Avenue in Rego Park, said her association believes that many three-bedroom apartments in the complex have reached the legal $2,000 threshold and are no longer protected, while other apartments that had once been occupied by a single tenant for years, are now turning over frequently, increasing the legal rents.

    But Edward Cortese, senior vice president for marketing at the Lefrak Organization, which owns the buildings, said the company has at most two or three apartments renting for more than $2,000 in Brooklyn and Queens. Despite the tenant fears, he said, "The deregulation issue seems to be focused more in Manhattan than the outer boroughs."

    The survey also documents a scarcity of low-rent stabilized apartments. The number of apartments with rents below $700 which would, in theory, be affordable to a household with an income of $28,000 fell by about 25 percent from 1999 to 2002; for the first time they make up less than half of the stabilized apartment stock. They are about a third of all apartments in Manhattan, Queens and Staten Island, half in Brooklyn and two-thirds in the Bronx.

    During this period, the rising rents at least for stabilized tenants were cushioned by rising incomes. The percentage of stabilized tenants paying more than half their incomes a standard measure of distressingly high housing costs declined, from 29 percent to 27 percent, while the percentage of market tenants paying more than half their income increased slightly.

    In the prime Manhattan market, 20 percent of stabilized tenants paid more than half their income for rent, compared with 23 percent in Queens and 28 percent in Brooklyn. In the Bronx, where rents are lowest, 34 percent pay at least half their income in rent.

    Michael H. Schill, a law professor at New York University and the director of the Furman Center for Real Estate and Urban Policy, said that in the city's booming economy in the late 1990's incomes were rising faster than rents, especially among low-income people who were able to find jobs.

    Even so, Mr. Schill, who is using the survey to prepare a report on housing in New York, said the high proportion of people, especially low income people outside Manhattan, paying 50 percent of their income for rent was a serious cause of concern. That may have only worsened as the economy slumped since the survey data was collected.

    "I would predict that the economic decline will make affordability problems more severe, because affordability improved with the booming economy," he said.

    Copyright 2003 The New York Times Company

  2. #2


    November 19, 2003

    Bit by Bit, Government Eases Its Grip on Rents in New York


    In New York City, where for generations government has played a uniquely ambitious role in helping people pay their rents, a fundamental shift is taking hold apartment by apartment, building by building.

    Three major programs, originally intended as temporary relief measures, are winding down: the city's vast rent-regulation system, which has guaranteed rent ceilings for tenants at all income levels for decades; the state's Mitchell-Lama program, which has helped keep rents down for low- and middle-income tenants for nearly half a century by subsidizing the construction of apartment buildings; and the federal Section 8 program, which has provided the same sorts of building subsidies on behalf of the poor.

    So far, only a modest number of tenants have been exposed to rents determined by the market, given the size of the programs. But tenants, landlords and housing groups say that the pace will accelerate in the next few years.

    In the decade since the State Legislature began loosening the city's rent regulations, 105,000 of the one million apartments under rent control and stabilization have lost those protections. Tens of thousands more units are expected in the next few years to reach $2,000 a month in rent, which allows their removal from regulation.

    Mitchell-Lama has lost about 17,000 of its 140,000 apartments as dozens of buildings have left the program; 11 more buildings, with a total of 3,000 units, are considering joining the exodus as their contracts expire, allowing owners to rent the apartments at market rates.

    In the last three years, Section 8 has shed about 2,000 of its 100,000 apartments as building contracts have expired, and federal officials say many more contracts will run out in the next two years. And several other programs that reduce rents or offer tax breaks to owners are on the verge of expiring as well.

    For landlords and free-market advocates, all of this is simply the comeuppance of a failed social experiment in which temporary aid turned into an entitlement, creating bewildering inequities in rents and discouraging construction of housing.

    For tenant advocates and their political patrons, however, these events signal something frightening: the passing of an era in which government believed that part of its essential mission, along with dispensing welfare checks and Medicaid, was helping to provide shelter, particularly in New York, where the cost of living is steep.

    Perhaps the poor and middle class will be pushed out of Manhattan in overwhelming numbers, as tenant advocates warn. Or perhaps the end of artificially low rents will encourage a new building boom, and supply will quickly catch up to demand, as free-market groups predict.

    However the changes play out, there seems to be little disagreement that a new New York is in the offing, shedding its longtime identity as a place whose rental-housing market a complicated thicket of regulations and politics is like no other in the nation.

    "All these things are happening at once," said Kathleen B. Cudahy, a spokeswoman for Laurence Gluck, the owner of Independence Plaza North, a Mitchell-Lama complex in TriBeCa that is leaving the program. "Everything is moving toward market-rate housing."

    City housing officials say that their role has not diminished. After all, Mayor Michael R. Bloomberg announced a $3 billion plan last year to repair, preserve and build 65,000 units of housing for poor and moderate-income residents, reversing City Hall's decade-long retreat from public investment in housing.

    Even so, the plan, called the New Housing Marketplace, leans more heavily on private developers than earlier programs; the city hopes to entice them by streamlining its rezoning, building-code and approval processes. The plan also reflects a consensus among housing officials and developers that the federal government can no longer be counted on to underwrite any bold new housing programs.

    "Certainly what's different now than 40 years ago is the federal government's perception of its role in housing development," said William Traylor, deputy commissioner for development at the city's Department of Housing Preservation and Development.

    Many of the housing programs were created in the 1960's and 70's. The rationale was that instead of just constructing public housing the traditional approach to housing the poor the federal and state governments would offer private developers tax breaks and other subsidies to build housing, in exchange for low rents.

    Many programs offered building owners the chance to get out of their Mitchell-Lama obligations after only 20 years, when they could begin renting their units at market rates.

    "The idea, then, was that as people worked their way out of poverty, the needs of these people would go away or substantially lessen after 20 years," said La Fonte Nesbitt, a lawyer at the Washington firm of Holland & Knight, which has an active housing practice. "But the need is still there."

    Some developers could have opted out of their contracts in the late 1970's. But many parts of the city were struggling, market rents were depressed and federal and state housing subsidies were more plentiful than now, said Michael H. Schill, director of the Furman Center for Real Estate and Urban Policy at New York University.

    How times have changed. The federal government's commitment to housing especially multifamily rental housing in cities has weakened. New York's surging real estate market has gilded neighborhoods that were once forlorn, making more areas attractive to developers. And some scholars say the city's demographic shifts have made its housing policy anachronistic.

    "It's skewed toward people who have lived in the city for a long time," said Peter Salins, an author of "Scarcity by Design: The Legacy of New York City's Housing Policies" (Harvard University Press, 1992) and a longtime critic of government regulation. "A lot of immigrants who are arriving are not entitled to these benefits, so the best thing we can do for them is to have a high volume of decent housing being built responsive to market interests."

    As these programs ebb, though, they are becoming a potent political issue because they affect New Yorkers in all income brackets. By far the most significant program undergoing change is rent regulation, which sets limits for half of the city's two million rental apartments.

    Since Albany began relaxing the rules in 1993, 105,000 rent-regulated apartments have gone on the open market or otherwise been removed from regulations, according to the city's Rent Guidelines Board, which readjusts the rents each year. (About 30,000 apartments have been added to the system voluntarily by owners in exchange for tax breaks, but usually at rents higher than $2,000.)

    In June, Albany extended rent regulations for eight years, allowing landlords to continue raising rents on vacant apartments and deregulating apartments with rents above $2,000 a month. In the most expensive parts of Manhattan, according to an analysis of city data by The New York Times, 115,000 of 206,000 rent-stabilized apartments are now renting for $1,000 or more, meaning that some are potentially within reach of deregulation over the next several years.

    Assuming that the State Legislature remains divided between the Democratic-led Assembly, which has backed tenant groups, and the Republican-led Senate, which has not, Michael McKee, associate director of Tenants and Neighbors, an advocacy group, estimated that 300,000 to 400,000 rent-regulated units could go off the rolls by the time Albany takes up the rent laws again, in 2011.

    "Clearly the real estate strategy is that when tenants come back in eight years, we will be smaller and less powerful, and they will likely at that point say, `Let it expire,' " Mr. McKee said.

    Critics of regulation say that the tenants' estimate is too high, but that it is time to end a policy that allows some people to pay artificially low rents in prime spots in Manhattan, while residents in other boroughs sometimes pay roughly the same for market-rate or government-subsidized units.

    "Manhattan is the most valuable real estate on the planet, and I see no reason why tax dollars should be going to make affordable housing on such fertile territory," said Vincent S. Castellano, a former member of the Rent Guidelines Board.

    Under Mitchell-Lama, begun in the 1950's to help the middle-class and working poor, about 140,000 units of both rental and co-op housing have been developed in New York City by the city and the state.

    Owners of at least 11 Mitchell-Lama developments are contemplating buying their way out of the program early, according to the city, joining the 43 Mitchell-Lama projects that have already pulled a total of 17,000 units out of the program. Although many Mitchell-Lama tenants are eligible for other subsidies, the New York City Independent Budget Office estimated in April that 2,130 households in buildings that may leave the program have no protection against steep rent increases.

    To call attention to that ticking clock, a group of about 30 tenant associations, unions and community groups started the Campaign to Preserve Affordable Housing last summer to lobby officials and stage rallies.

    Last month, Gifford Miller, the City Council speaker, held a public hearing on his bill to require owners of Mitchell-Lama buildings to give tenants earlier notice of buyouts. Not to be outdone, Mayor Bloomberg announced just hours before the hearing that he would submit legislation to Albany to extend rent-stabilization protections which typically apply to any development built before 1974 to 32,000 expiring Mitchell-Lama units built after that date.

    Mr. Bloomberg also proposed that building owners be given tax breaks to encourage them to stay in the program. But many owners feel that the breaks being discussed are not enough, and that the mayor is trying to change the rules just as they are about to reap the benefits of their participation.

    "A deal is a deal," said Frank Ricci, director of government affairs for the Rent Stabilization Association, a landlord group. "To change it now is just another reason why people don't like to develop in New York City."

    Mitchell-Lama provided the model for Section 8, which flourished in the late 1970's and early 80's. Its two best-known components are vouchers that allow low-income tenants to find and pay for their own housing, and subsidies for developers who construct housing at reduced rents in exchange for guaranteed profits.

    Since 1999, 20 Section 8 buildings have opted out of the program, according to the federal Department of Housing and Urban Development, and contracts for 42 more of these so-called project-based buildings are set to expire by 2005.

    One contract expiring in February is for 210 Stanton Street, on the Lower East Side. So residents, who now pay $150 to $1,800 a month, are organizing to make sure the contract is renewed.

    "I can't be optimistic because I know that people in this area are getting $3,000, $4,000 a month. It's a very powerful reason not to keep the building in the program," said Marie Christopher, president of the tenants' association. "But if this is Custer's last stand, then Custer has to pull out all the stops."

    HUD officials point out that the vast majority of building owners have decided to renew their contracts. Since 2000, an average of 272 buildings have renewed each year, though for shorter terms of one to five years.

    Several other tax programs are also running out of time.

    One popular program created in 1986, the federal low-income-housing tax credit, has been responsible, in part, for most of the rental units for low-income residents built in the United States in the last 15 years. Now, the first contracts powered by the tax credit are set to expire.

    Many have already been extended by another 15 years, but some groups involved feel that the tax credit is vulnerable to political pressures.

    Time may also be getting short for two other programs: HUD's rental assistance and rental supplement programs, which are similar to Section 8. They cover 72 projects with 33,000 units, most with 40-year mortgages. The first contracts expire in 2010, with the bulk scheduled for 2015 and 2016, and it is unclear what will happen then, HUD officials say.

    One local effort, a tax-exempt bond program known as 80-20, temporarily sets aside 20 percent of a development for units with rents below market rates. Some bonds expire in a few years, and it is unclear how building owners will respond, said Joseph Weisbord, staff director of Housing First! a coalition of civic, business and labor groups that has tried to bridge tenant and landlord interests.

    "Government has played this historic role in meeting the city's needs, and if we're chipping away at that in various ways and various levels, what happens then?" he said. "And in a market like New York City that's extremely tight, there's an ongoing concern about where is the next generation of people who need affordable housing going to live?"

    Copyright 2003 The New York Times Company

  3. #3
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    By Stefan C. Friedman
    June 16, 2004

    Representatives for landlords and tenants went before the Rent Guidelines Board yesterday to debate potential increases on rent-stabilized apartments.

    "There's no economic justification for any rent increase at all this year," charged Michael McKee of the pro-tenant group Tenants and Neighbors.

    But an official of the Rent Stabilization Association argued that the board's preliminary numbers of 3 to 5.5 percent for a new one-year lease and 5.5 to 7.5 percent for two-year leases wouldn't allow landlords to cover rising costs.

    Copyright 2004 NYP Holdings, Inc.

  4. #4


    April 2, 2006
    A New Chapter in the Face-Off Between Tenants and Landlords

    BURT HASEN sits in his downtown loft, a sketchbook nearby and trays of gnarled paint tubes at hand, contemplating the painful possibility, faced by thousands before him, that he will lose the rent-stabilized home and studio in Lower Manhattan where he has lived and worked for 32 years.

    Mr. Hasen's intricate maplike paintings were inspired by his years as a military engineer in the South Pacific during World War II, before he went to study art in Paris on the G.I. Bill. Now, at age 84, he and his wife, Mary, and his two neighbors in a 19th-century loft building at 7 Dutch Street find themselves in a different kind of campaign, facing ever-increasing pressures to move out of their rent-regulated apartments and lofts.

    The owner of 7 Dutch Street, which is just south of City Hall, has filed for permission to evict the residents so the building can be demolished. In one of the many seeming contradictions of the state's system of rent regulation, the work may qualify as a demolition, even though tenants say that the plans appear to call only for a renovation of the existing apartments.

    Mr. Hasen complains about the forces buffeting him and his neighbors. "How can they be so callous?" he said. "Compared to the masters of finance, artists are like little children. We live in a dream world. They live in the real world, and the real world is cash."

    Many thousands of older apartments have been removed from rent regulation over the years as rent laws were tightened. In 2002 through 2005, the total was 44,000 apartments, far more than in the entire previous decade, according to figures from the New York City Housing Vacancy Survey, which the Census Bureau conducts every three years.

    In the current real estate market, a 2,000-square-foot loft like Mr. Hasen's, which rents for only $850 a month, could sell for $2 million or more, and a new generation of building owners is stepping up the pressure on tenants in lofts and small rental buildings all over Manhattan to move out. Dozens of owners have filed applications with the state to evict tenants so they can demolish the buildings.

    Under state law, elderly people like the Hasens, who are long-term rent-regulated tenants, are protected from eviction if the owner wants their apartment for use by his own family. But they are not protected from eviction if the landlord gets approval to demolish the building.

    In many cases these are demolitions with a difference. There are no wrecking balls. Walls do not tumble in clouds of dust. The plans filed with the Department of Buildings do not call for new buildings. Instead, they look like alteration plans that the same owner might have filed for an ordinary condominium conversion of a prewar building. Sometimes entire floors are left intact. Tenants fear that if the landlords succeed with such evictions, hundreds more may soon follow.

    To spur the tenants to move, owners may begin to carry out the renovations of buildings long before their demolition applications are approved. Tenants are left to cope with dust and disruptions as walls of apartments around theirs are knocked down and rebuilt, destroying any vestige of the life they have known.

    At issue are differing interpretations of the language and intentions of the laws governing rent regulation. Tenant lawyers say that when the Rent Stabilization Law states than tenants may be evicted when an owner "intends in good faith to demolish the building," it means tearing down the building, not just altering it. But landlords contend that tenants may be evicted when only the interior is being changed, even if some floors are kept intact, or when the building is demolished in stages.

    So far, state regulators have usually sided with landlords, sometimes looking at questions of whether wooden subfloors, a small fraction of the cost of a renovation, are being demolished or maintained. Yet there is considerable uncertainty, since none of the recent cases have been tested in the courts. Even so, the number of demolition filings has risen sharply, according to lawyers for both landlords and tenants.

    In the past, there were a few cases a year, usually demolitions to make way for new buildings. Last month, state officials provided a list showing applications to evict 128 tenants from 53 buildings: 41 in Manhattan, 10 in Brooklyn and 2 in Queens. These do not include applications that have already been approved this year, are being appealed or are being contested in court.

    Sherwin Belkin, a partner in Belkin Burden Wenig & Goldman in Manhattan, said his law firm was handling more demolition applications than in the past, but he attributed that to the busy real estate market. "There is nothing dramatically new that is happening here," he said. "This is part of the balancing between tenant protections and private property rights."

    But Mitchell H. Kossoff, another landlord lawyer, said that if the tenants win this fight, "we might as well give all the keys in the city to the tenants."

    James B. Fishman, a tenant lawyer, said the new demolition applications were one more tool used by landlords to wear tenants down and persuade them to give up. "It's a war of attrition against tenants who don't have the stomach to fight back," he said.

    But what is driving the pressure on tenants, and making landlords more and more aggressive, is the strong condominium market, in which long-term investors looking for rental income are being routinely outbid by condominium developers, according to Thomas D. Gammino Jr., a commercial broker with Massey Knakal Realty Services.

    As buyers of buildings have become familiar with the techniques used to remove regulated tenants, Mr. Gammino said, the spread in prices between vacant and rent-regulated buildings has begun to decline.

    "It didn't make sense in years past to go through the trouble and brain damage of this, because you wouldn't get enough out of it," he said, referring to the demolitions. "For the first time in a long time, developers are willing to take on that risk."

    The Hasens' Dutch Street building was constructed in the 1880's on land owned for close to 200 years by the Reformed Protestant Dutch Church of New York (later known as the Collegiate Church). But in 2001, the property was sold for less than $1 million to Michael Greenburger, the associate director of acquisitions for Time Equities, a real estate firm founded and headed by Francis Greenburger, his uncle. (Time Equities affiliates own two larger buildings nearby: the one next door, at 15 Dutch Street, and the one behind it, at 20 Nassau Street.)

    Harumi Ando, a Japanese graphic designer and photographer who moved to New York as a boy, has lived and worked on the top floor of 7 Dutch Street since 1975. But just before Christmas 2001, Mr. Ando said Michael Greenburger offered to pay him to leave his apartment. Mr. Ando refused and soon was facing an eviction proceeding; Mr. Greenburger said he needed the apartment for himself.

    Although tenants on the second floor had moved out, Mr. Greenburger said he preferred the top-floor apartment in the five-story walk-up. Mr. Ando, then 59, hired a lawyer and fought back. Two years and $25,000 in legal fees later, Mr. Ando said, "I sort of won." Mr. Greenburger dropped the case. By then, Mr. Ando was approaching 62, the age when he could no longer be evicted under state rent laws.

    But soon after the suit was dropped, Mr. Ando, the Hasens and another tenant in the building, Barbara Mayfield, an artist and former producer for public television, were confronted with a new legal challenge: they faced eviction because the building was to be demolished.

    The building permit that Mr. Greenburger filed called for a "gut rehab of entire building, demolition of interior partitions," leaving the exterior and the configuration of the apartments unchanged.

    Ms. Mayfield said that she had studied the documents filed with the Buildings Department and that the latest plans did not list any plumbing changes on the second floor, which Mr. Greenburger had already renovated, stripping the walls bare and installing a new bathroom. "I don't see how this can be a demolition if they are not demolishing the second floor," Ms. Mayfield said.

    But Mr. Greenburger said that he stopped the renovations on the second floor when he filed the demolition application. And despite his experience in real estate development, he said he was dismayed by how long and costly it was to try to find a way to reach an accommodation with the tenants. "I'm trying to service my own needs while being considerate of the tenants in theirs," he said. "In this process, the lawyers always win."

    Landlords can get permission from the state to evict most tenants by submitting building plans approved by the city and proof of their ability to pay for the demolition. The physical state of the building is not a factor. And under a change adopted several years ago, tenants can submit papers opposing the landlord but are not entitled to a fact-finding hearing on the issue.

    (Rules covering the remaining tenants protected by rent control, an older rent-regulation system, are more complicated, especially in larger buildings with many tenants.)

    Under state law, owners are required to provide moving expenses and either an equivalent apartment in the neighborhood at the same rent or at a subsidized rent, or compensation in cash. But the compensation is based on the average rent per room across the city, not on rents in the more expensive Manhattan real estate market.

    As a result, a tenant like Mr. Hasen, whose open loft space rents for $850 a month, might be entitled to as little as $143 a month in compensation, or about $10,300 over six years. (The amount would be higher if the state determined that his loft constituted more than three rooms.)

    In contrast, rents for one-bedroom apartments in Manhattan now average $2,300 a month or $165,000 over six years, and Mary Hasen said that a one-bedroom apartment would not give them the room to store the scores of as-yet-uncataloged paintings and drawings in their loft.

    Mr. Greenburger said he had offered to pay the tenants "substantial sums" to move out, in excess of the required payments, and in some cases to subsidize their rents in other apartments, but so far no one has taken up his offer.

    From the landlords' point of view, many of these long-term tenants are fighting to protect an unfair perk spacious apartments whose rents are so ridiculously low that the tenants can afford country homes at the expense of the property owners.

    But these aging tenants also represent a link to an older generation of New York neighborhoods. Back in 1962, Diana Schneider moved into a fourth-floor apartment in a brownstone on West 75th Street, where she still lives and runs a small travel agency.

    But now she lives in the midst of a construction site, as the building's recent buyers, Alexander and Agapi Xenopoulos, convert the brownstone into a two-family house.

    Mr. Xenopoulos, a principal in Pax Associates, which runs the chain of Cafe Europa restaurants and Pax Food Stores, filed an application with the state to evict Ms. Schneider.

    As she has watched the building being restored around her, from renovated banisters to new flooring and trim work. Ms. Schneider's lawyer, Stephen Dobkin of Collins, Dobkin & Miller in Manhattan, has argued that the work could not be considered demolition if it could be substantially completed while she still lived there.

    But in an administrative review, Mr. Xenopoulos's lawyer, Mr. Kossoff, of Kossoff & Unger in Manhattan, contended that even if demolition of a building took place in stages over months or years, and was interspersed with construction work, it still was a valid definition.

    Mr. Kossoff said the state had rejected a claim of harassment by Ms. Schneider, who complained that telephone lines were cut and that heat and hot water were inadequate. "Such interruptions of services are virtually inevitable in the course of building renovations of the scale at hand," the state concluded.

    The state rent agency approved the demolition application, and the case now appears to be headed to State Supreme Court. In the meantime, Ms. Schneider bemoans the trauma of possibly losing her home of the last 43 years.

    "If you get rid of affordable housing, then you will lose the people the young people, the artists who are still learning who bring their riches to New York," she said.

    Margaret Streicker Porres has built a business out of buying, managing and restoring run-down landmarked buildings populated with rent-regulated tenants, and has taken on her tenants in five separate downtown rent-regulated buildings, with mixed results.

    Ms. Streicker Porres sees herself as preserving and rebuilding New York's older buildings for future generations. "Much of the housing stock in New York is 100-plus years old, and there does come a time upon which it becomes necessary to do significant rehabilitation," she said. "In order to do that, they do need to be vacant."

    Soon after she earned a master's degree in architecture and real estate development at Columbia University in 2000, Ms. Streicker Porres bought a property in Greenwich Village, and then filed proceedings against the rent-regulated tenants in the eight units.

    First, she unsuccessfully argued before state rent regulators that the apartments, in two small buildings on one lot, should never have been rent regulated in the first place. Then, though she already lived in the rear building, she filed suit to evict two tenants so she could move into their apartments in the front building and so she could have additional apartments for her brother and sister.

    Tenants said in court papers that the cases were a sham. They contended that since Ms. Streicker Porres's father is John H. Streicker, chairman of the Sentinel Real Estate Corporation a large real estate company that manages a portfolio of $5 billion in assets for institutional investors, including 50,000 apartments her siblings did not need her small apartments. But one by one each of the tenants settled, some signing confidentiality agreements. The last case was concluded only a few weeks ago.

    In the last year, Ms. Streicker Porres has sought demolition permits for four other buildings she owns or manages, one at 56 Barrow Street and three in Chelsea. She is a partner in a group that has bought nine town houses and small apartment buildings in Chelsea.

    On West 22nd Street, on a quiet block of town houses, tenants in at least five apartments in two adjacent landmarked buildings have joined together to protect their homes by opposing demolition and publicizing their plight.

    There is Douglas Farwell, an acting teacher and director who has a top-floor apartment with a double-height skylight at 327 West 22nd Street. One flight down, Patrick D. Milbourn, a portrait painter and illustrator, and his wife, Alyson, who plans restaurant trade shows, live in a one-bedroom apartment with a loft. Next door, there's Barry Berkowitz, a disabled plumber whose family once owned the building.

    Faye Rosen, a house painter who is Mr. Berkowitz's niece, has lived at 329 West 22nd Street for more than two decades. Across the hall, Rabbi Marsha Rappaport, an associate rabbi at an alternative synagogue, still lives in the apartment she moved into in 1972.

    "This isn't about the landlord," Rabbi Rappaport said. "It is about the whole feeling that the city is for the rich and the very rich. I feel they have a right to live, but so do we."

    While their landlord's renovation plans move through the city's Department of Buildings, the tenants are meeting together, sharing notes, hiring lawyers and preparing to challenge the evictions.

    Ms. Streicker Porres's eviction plans are far more advanced at an adjacent building, 331 West 22nd, which for many years had been a single-room-occupancy hotel, which typically serve poor and often older people. But there she has now reached an impasse.

    Last August, she obtained a building permit, and while her application to evict the tenants to demolish the building was still pending, she began interior demolition, tearing out walls and pipes.

    After a series of buyouts, including one with a tenant who had been the subject of a series of criminal complaints filed by Ms. Streicker Porres, a lone last tenant remained, Edwin Merrill, a former merchant seaman in his 70's and in failing health, with diabetes and heart trouble. He paid $153 a month for a room and a shared bathroom in the hallway, and he refused to leave.

    In order to get a building permit to renovate an S.R.O., owners must get a certification that they have not harassed tenants. But as construction began, the hallways and walls around Mr. Merrill's apartment were torn down. Molly Doherty, Mr. Merrill's lawyer and the project director of the West Side S.R.O. Law Project, said that pipes were removed, bathrooms damaged, sprinklers disabled and roof exits blocked, making his life difficult.

    Ms. Streicker Porres and Mr. Kossoff, her lawyer, said her contractors responded promptly to Mr. Merrill's complaints, and wherever possible, services were quickly restored. They blamed vandals for some of the problems. But in November, the city suspended the building's certificate of nonharassment, and work was stopped.

    In December, Mr. Merrill returned from a hospital stay and found the building in disarray. Access through the front door was made difficult by the construction of a new stoop, and there was no central heat or running water in the building. In an exchange of letters with Ms. Doherty, Mr. Kossoff acknowledged that there was little heat or water but contended that "incessant and unwarranted complaints" by Mr. Merrill had caused the problems because they had led to the stop-work order.

    Mr. Merrill agreed to move down the street temporarily, to another S.R.O. managed by Ms. Streicker Porres, and neighbors said that in the following weeks he moved back and forth between the two rooms.

    Rabbi Rappaport recalled seeing him sitting on a stoop near his old building, in the cold, waiting for someone, and brought him a cup of coffee to warm him up.

    On Jan. 13, Mr. Merrill died in his temporary room. His death was attributed to natural causes, Ms. Doherty said, but she wonders whether the stress and worry over the demolition and the relocation may have contributed to his declining health.

    Now administrative hearings are under way to determine whether the S.R.O. tenants at 331 West 22nd were harassed and whether Ms. Streicker Porres will be able to resume her renovations.

    Copyright 2006 The New York Times Company

  5. #5
    Disgruntled Optimist lofter1's Avatar
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    Quote Originally Posted by Kris
    A New Chapter in the Face-Off Between Tenants and Landlords

    ... ever-increasing pressures to move out of their rent-regulated apartments and lofts.

    ... evict the residents so the building can be demolished.

    In many cases these are demolitions with a difference... The plans filed with the Department of Buildings do not call for new buildings.
    This is a heinous new strategy by landlords, using an Orwellian twist of legal language where Alteration = Demolition in order to get around laws that protect tenants.

    While this practice is still being tested in the Courts and the outcome is not clear the NY State agency overseeing the initial Owner applications (DHCR -- Division of Housing and Community Renewal) has taken the position that words of law mean very little when it comes to those who hold the cash & power.

    One of the most noted cases of the Demolition ploy involves 131_Duane_St., a loft building which also houses City Hall restaurant and where the owner is playing the demolition card. The law firm representing the owner is Belkin Burden Wenig and Goldman ...

    Quote Originally Posted by Kris
    Sherwin Belkin, a partner in Belkin Burden Wenig & Goldman in Manhattan, said his law firm was handling more demolition applications than in the past ... "There is nothing dramatically new that is happening here," he said.
    Nothing "dramatically new"?

    Ha Ha Har Har -- an example of lawyer humor, I guess.

    It is indeed incredibly dramatic as it effects residents of the buildings involved -- as is outlined in the above article.

    Belkin Burden Wenig & Goldman is a very aggressive Landlord law firm that has notoriously pursued new angles to strip tenants of both rights and homes: One of that law firm's recent newletters contained an article -- gleefully titled Let's_Get_Ready_to_RUMBLE -- on how to use the demolition angle to get rid of long term tenants.

    So aggressive in its tactics is this law firm that one of its partners, Joseph Burden, was recently SUSPENDED for "conduct involving dishonesty, fraud, deceit or misrepresentation."

  6. #6


    On the other hand, any law that results in this sort of thing:

    In the current real estate market, a 2,000-square-foot loft like Mr. Hasen's, which rents for only $850 a month
    is indefensible. 2000 sq ft Chelsea loft for $850 per month? My wife and I had a small 1 bedroom apt in Chelsea for almost $4000 up until a year or so ago, and I bet it's a lot more than that now.

    To the extent that society thinks it has a problem with the cost of housing, that's something for society as a whole to fix, not something to stick onto an individual private landlord. Which doesn't mean that I'm defending any particular landlord action, but without rent stabilization laws we wouldn't have these issues.

  7. #7
    Disgruntled Optimist lofter1's Avatar
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    I bet that guy lived there before the owner bought the building.

  8. #8


    That's great, but what does that have to do with the basic fairness of some people living their lives out in 2000 sq ft for $850/month while the rest of us pay 5-10 times that much? Nothing. Why don't you address that?

    Elimination of rent control/stabilization would raise average rents paid in the Manhattan, but, by releasing huge additional supply onto the market, it would also drive down market rents -- which is what most of us have to deal with. All rent control/stabilization does is establish a class of favored insiders. How is that fair?

    Quote Originally Posted by lofter1
    I bet that guy lived there before the owner bought the building.

  9. #9


    ^ I agree with vc10.

    It's great if you're privileged to pay ten cents on the dollar, but it's not really fair.

  10. #10
    Disgruntled Optimist lofter1's Avatar
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    The tenant didn't set the rent. The rent is set by the law.

    "Fair"? Are tax rates "fair"? Are any of a number of things "fair"? Would it be "fair" to the ~1,000,000 NYers who legally live in RS apartments to suddenly up-end years of legal structure? Great for moving companies, but hardly "fair".

    If you want the RS laws changed then work your butt off -- it won't be easy.

    But perhaps there is no reason to do so as seemingly we've entered an era where the rule of law is ignored (witness the US Congress and POTUS regarding the War in Iraq, witness the Executive Branch and the FISA laws, witness the entire situation surrounding immigration, witness any number of instances regarding environmental laws, etc.).

    The reason I pointed out that this one individual probably lived in that building before the current owner bought it is two-fold:

    (1) In such a case the owner would have bought into a "system" and would now be trying to play that system to his own advantage via the re-working of regulations at a governmental agency (DHCR).

    (2) New owners of buildings which contain RS units have been much more aggressive in their pursuit of this Orwellian interpretation of "demolition".

  11. #11
    Disgruntled Optimist lofter1's Avatar
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    Quote Originally Posted by ablarc
    It's great if you're privileged to pay ten cents on the dollar ...
    Glad I'm not renting from you -- $8,500 / mth you'd charge me for that?!

  12. #12
    Disgruntled Optimist lofter1's Avatar
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    Quote Originally Posted by Kris
    From the NY Times:

    In the current real estate market, a 2,000-square-foot loft like Mr. Hasen's, which rents for only $850 a month, could sell for $2 million or more ...
    Look at the loft in question \/ (don't even bother looking at Mr. Hasen himself as he doesn't matter -- this is only about the money).

    There is No Way that that loft would sell for $2,000,000. Maybe after it had been renovated and a few hundred thou had been pumped into it. You know anyone with $2,000,000 who is going to buy this loft? They're paying that much for a similar-sized loft in newly renovated buildings with all the amenities -- something I doubt that Mr. Hasen enjoys, particularly with an owner who is set on getting him out.

    Angel Franco/The New York Times
    Burt Hasen is one of the tenants
    in a building in Lower Manhattan
    who could lose the apartments
    they have lived in for decades.

  13. #13
    Disgruntled Optimist lofter1's Avatar
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    The current owner, Michael Greenburger, bought the building in 2001:

    The seller was "The Minister, Elders and Deacons of the Reformed Protestant Dutch Church of the City of New York a corporation established by Royal Charter on May 11, 1696".

    Maybe if we want to talk about "fair" we should start with a discussion of non-taxed Churches (how did that tax-free law hold up all this time??) and the whole "Royal Charter" gifts of land.

  14. #14
    Disgruntled Optimist lofter1's Avatar
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    The rents for that building were set down in 2000 (under the law those rents were established based upon pre-existing leases):

    Decision - In the Matter of the Application of The Minister, Elders & Deacons of the Reformed Protestant Dutch Church of the City of New York


    In the Matter of the Application of The Minister, Elders & Deacons of the Reformed Protestant Dutch Church of the City of New York

    Loft Board Order No. 2494
    Docket No. LE-0203

    Re: 7 Dutch Street
    New York, New York

    IMD No. 10029

    Order: The Loft Board accepts the report and recommendation of Hearing Officer Frank Bermudez, dated February 3, 2000. The initial legal regulated rents for the units in question are determined to be as follows:

    Third Floor Unit $753.13

    Fourth Floor Unit $722.18

    Fifth Floor Unit $722.18

    The term for the rent for the subject units is September 1, 1999, through August 31, 2000.

    The Second Floor Unit is not subject to rent regulation because the owner, pursuant to MDL §286(12), previously bought it out.

    The Minister, Elders and Deacons of the Reformed Protestant Dutch Church of the City of New York, the owner of the subject building, is directed to register the Third, Fourth, and Fifth Floor Units with the New York State Division of Housing and Community Renewal.

    Furthermore, the owner is directed to provide Barbara Mayfield (Third Floor Unit), Burton Hansen ( Fourth Floor Unit) and Harumi Ando (Fifth Floor Unit) the residential occupants of these units with residential leases subject to the provisions regarding evictions and regulation of rent set forth in the Emergency Tenant Protection Act of 1974, pursuant to the terms set forth in the report and recommendation.

    Effective the date of this order, this building is no longer an IMD building, and is no longer under the jurisdiction of the Loft Board.

    Date: February 22, 2000

  15. #15


    Not sure what you're saying here? That "fair" isn't important? That it is important?

    Those who rent under RS/RC have benefitted from decades from under-market rents. Phasing it out therefore would still leave them as net beneficiaries.

    Quote Originally Posted by lofter1
    The tenant didn't set the rent. The rent is set by the law.

    "Fair"? Are tax rates "fair"? Are any of a number of things "fair"? Would it be "fair" to the ~1,000,000 NYers who legally live in RS apartments to suddenly up-end years of legal structure? Great for moving companies, but hardly "fair".

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