For the first time in the past two decades, sweeping rent-regulation reform seems close to becoming a reality.
Without the hurdle of a Republican majority in the Senate, both houses seem determined to make changes to programs long-favored by landlords, including vacancy decontrol and Major Capital Improvements. Still, whether these revisions will be implemented as written remains to be seen. Neither Mayor Bill de Blasio or Gov. Andrew Cuomo have backed the elimination of MCIs or Individual Apartment Improvements (IAIs), instead pushing for amendments to the programs.
Ahead of the first of four hearings on proposed reforms on Thursday, Senate Housing Committee Chair Brian Kavanagh sat down with The Real Deal to discuss how he’s thinking of the potential changes. He said the Senate is just beginning to hash out what these reforms will ultimately look like.
“Saying people are cheating [these programs] is one thing, saying there’s an effective regulatory solution is another,” he said. “So we’re going to have to be looking to see which of these provisions could be enforced and whether that’s the direction we want to go, as opposed to just repealing outright.”
There’s some discussion right now around the idea that MCIs could be reformed rather than eliminated. Will that hinge on changes to how the state’s Homes Community and Renewals enforces those programs as well?
The first point to note is that just in the budget we passed, we added funds for 94 additional positions at HCR in the Office of Rent Administration and the Tenant Protection Unit. Landlords have lobbied in the past against the TPU being funded at all, so it’s never been mentioned in the budget until now. It has been a complaint about HCR that they are not responsive, from landlords and tenants and everyone who deals with them. We are hoping that that additional infusion of resources will help them be more responsive.
We will be looking at the provisions that we’re considering reforming or eliminating with an eye toward how enforceable are they now and how enforceable can they be made.
What are you hearing from landlords in terms of what can be done to reform these programs?
They are emphasizing what they perceive to be the importance of these provisions rather than identifying ways that they could be improved or reformed. So they are suggesting that it should not be repealed.
Do you think that’s something that will come later, as we saw with the pied-à-terre tax?
You should ask the landlords that. As the housing chair, it’s my job to take meetings with everybody, and I have done so… but I can’t speculate on how they will proceed with negotiations.
Do you think the good cause eviction bill will be passed this year?
It is certainly in the mix of things we’re discussing. I’m a sponsor of that bill, and I hope we do some strong version of it. With respect to the rent laws, most of these issues are well-trod territory. Good cause is new for a lot of folks. So, it’s making sure everyone understands it, how it would work, and figuring out how it should apply in New York is something that we’re only beginning to work on.
Do you think that the fact that it was billed as a foundation for universal rent control will be a hurdle?
I don’t worry too much about the words people use to frame these things. It’s not rent control in the traditional sense, where the rent of an apartment is set irrespective of who’s living in the apartment. Good cause doesn’t extend beyond the current tenancy. It gives tenants a right to renewal and a reasonable increase. When that tenancy’s over, it would start all over again. It’s not as aggressive, but it does potentially cover many many more units.
What about the fact that this package of bills has been referred to as “universal rent control”? That’s not really what they are.
There’s a universality to it. The great majority of tenants will be protected by the package that they have proposed. It’s nearly universal, certainly, whether universal rent control is the best label for it, is up to the advocates.
Are there any other housing-related bills you think should be getting more attention?
Owner’s use exception. This is a provision of the current law that allows owners and their families to take apartments that are currently rent regulated from the system in order to live in them. And it has been the subject of some fairly prominent stories that I consider abuses of the provision. It’s very difficult to enforce, and it is a substantial loophole. It is not numerically as significant as vacancy deregulation, but I think it’s worth taking a look at.
What do you think of CHIP’s proposal to implement means testing, or ensuring people who meet certain income thresholds are the ones living in regulated units?
We’ve had a version of means testing [luxury decontrol] for a long time. But the big thing is that it’s hard to understand why the result of any means testing you do should be deregulation of the apartment. If landlords really want to kick people out of their homes because they make $200,000, there’s no logical reason why the unit should not then be available to someone else within the regulatory system.
A big part of landlords’ argument against the elimination of these programs is that it will lead to decline in housing stock. Do you think that will happen?
I don’t believe the stakes are that high. Nobody’s trying to bankrupt all the landlords in the city or the state for that matter, but at the same time, we are operating in a context where the landlords and the lobbyists have actively pressured the legislature, particularly through the Republican majority in the State Senate in prior years, to ensure that these giant loopholes remained in place, and as a result some very bad behavior has gone on on the landlord side. Landlords now come to us saying, we’re reasonable people just trying to do the right thing. And again, I don’t subscribe for a minute to the notion that every landlord is a terrible person who is abusing the law, but many many people are abusing the laws so that makes it tougher to make laws that are intended to deal with the well-intentioned, reasonable people.
Should reforming property taxes be part of this broader discussion?
There has been a pattern in recent years of linking the recent laws to other elements, like most notably, the 421a tax reduction. I think the logic of that went back to the dynamic of the Assembly having one set of interests and the Senate having a really different set of interests. It was viewed as a mechanism to get the various parties to the table. The last time we renewed 421a, they were decoupled. This is complicated enough without trying to resolve long-standing thorny questions.