In the next two weeks, state lawmakers are expected to pass the most sweeping rent regulation reform package in decades.
It has the city’s real estate industry pining for the slightly older days, when Michael Bloomberg held court at City Hall and the knives weren’t out for multifamily landlords.
At a Thursday morning rent regulation panel discussion between industry players and local politicians, Councilmember Mark Levine said it was a myth that the progressive takeover of the City Council in 2013 stifled development.
“Even the valuation of multifamily housing continues to be robust,” he said. “There’s something to learn from all that, which is we can be a fairer city and continue to prosper.”
Real estate attorney Adam Leitman Bailey was blunt in his response.
“All of those things that Councilman Levine mentioned are not the result of this mayor or this council or this assembly,” he said to applause. “They’re the result of the years of Mayor Bloomberg and his administration. And as much as this administration is trying to rip those apart,” he continued, “we’re still hanging on by tethers.”
Leitman Bailey also said the current set of rent regulations, mostly passed between 1969 and 1974, are outdated. “The system is broken,” he said. “The system is dangerous. The system is a waste of time and money. It’s a horrible system.”
The panel took place at the Harmonie Club, with Marcus & Millichap’s Andrew Dansker serving as moderator. Other panelists included New York state Sen. Brian Benjamin, attorney Susan Baumel-Cornicello and Marcus & Millichap’s Shaun Riney.
The discussion was largely civil overall, although Levine joked that he and Benjamin showed up wearing bulletproof vests, and a remark from Benjamin about how Republicans had long been in control of the state Senate was met with applause.
Benjamin, who worked at the real estate firm Genesis before coming to the State Senate as a Democrat, repeatedly straddled the fence, saying tenants had to be protected from dramatic rent hikes, but also wanted to ensure that landlords were incentivized to invest in their buildings.
He also spoke of bad optics.
“Some landlords—in this room or not—have come to some of us and said, ‘Oh my god, if you pass these laws we’ll be broke and in the street,’” Benjamin said. “Meanwhile, they’ve got on the fanciest Ferragamo belt and shoes and everything else. You’ve got to think about the perception of what you’re doing, how you’re making your arguments, so that it doesn’t fall on deaf ears.”
With Democrats in complete control in Albany for the first time in years, New York’s rent laws are likely to see some significant changes. Gov. Andrew Cuomo has already expressed support for ending vacancy decontrol, and loopholes to rent stabilization laws that let landlords charge rent-stabilized tenants more money for upgrades, such as major capital improvements and individual apartment improvements, are at risk as well.
Baumel-Cornicello defended many of these current laws in the discussion, stressing that New York City contains a lot of very old buildings, and landlords needed to be motivated to improve them.
“You must keep incentives to an owner for upgrading properties,” she said. “Owners should be entitled to obtain MCI increases. Vacancy increases are needed.”
Riney said the shifting political winds on rent regulation have made some landlords second guess whether it will be sustainable for them to keep doing business in New York.
“They’re just like, ‘I need to get out of New York and buy me a property in Florida,’” he said.