State to target “frankenstein” apartments in rent law regulations

HCR head indicated changes will be made in state regulations

Feb.February 05, 2020 06:15 PM
RuthAnne Visnauskas (Credit: iStock)

RuthAnne Visnauskas (Credit: iStock)

The state’s housing regulator plans to target “frankenstein” apartments — the primary remaining strategy for landlords to jack up rents on regulated units.

Homes and Community Renewal Commissioner RuthAnne Visnauskas indicated Wednesday that the agency will issue new regulations on the application of the new rent law sometime in the spring.

The regulations will address the practice of combining vacant rent-stabilized apartments in order to achieve a one-time rent increase.

Assembly member Linda Rosenthal referred to these units as “frankenstein” apartments, a term coined by The Real Deal last summer. During a legislative budget hearing on housing, Visnauskas would not elaborate on what the agency plans to do about them.

The commissioner also addressed reports that landlords are keeping apartments vacant following the passage of the new rent law in June. Visnauskas said the agency doesn’t have a full picture of apartment warehousing in the wake of the rent law change and likely won’t even when landlords file apartment registrations in April.

The agency head said she had read media reports of landlords keeping apartments empty and said if owners are doing so, they likely are hoping the rent laws will be changed this year.

“Landlords can keep apartments off the market if they so choose,” she said.

But she expressed doubt that owners would forgo collecting rent, saying, “We don’t perceive that people would make uneconomic choices.”

Keeping a unit vacant, though, allows for it to be combined with an adjacent one that becomes vacant, which under the law allows the landlord to decide the new rent. The other avenues to change rent-stabilized units to market rate have been closed.

Rent increases from major capital improvements and individual apartment improvements have been capped and limited to their actual costs. Landlords are otherwise constrained by the modest hikes allowed annually by the Rent Guidelines Board, although they can raise preferential rents to the legal limit when a tenant leaves.

Visnauskas also gave an overview of HCR’s Office of Rent Administration. In its last budget, the state gave the agency funding to add 94 staffers. She said by March, 75 of them will have been hired. She cautioned that some 30 people have retired from the agency, so it will take a while for the benefit of new employees — who don’t necessarily have as much experience as those who left — to be realized.

When Rosenthal asked why the state’s proposed budget doesn’t increase funding for HCR’s tenant protection unit — Gov. Andrew Cuomo penciled in the same $5.5 million — in light of the changes to the rent law, Visnauskas said she did not expect the unit’s volume of work to increase. She noted that with the new law, there are fewer apartments leaving regulation for the TPU to track.

Legislators repeatedly asked why additional funding for the New York City Housing Authority wasn’t included in the budget this year. Visnauskas pointed to the long-delayed $450 million that the state released at the end of the year and the lack of an agreement to free up another promised $100 million. However, she could not say who is negotiating the release of those funds.

Visnauskas also would not commit to a position on whether certain units at Stuyvesant Town–Peter Cooper Village should remain rent-stabilized once the complex’s J-51 tax abatements expire this year.

Some of those units will remain regulated under the city’s agreement with owner Blackstone to keep 5,000 apartments in the complex affordable for 20 years, but there is no consensus on whether the new rent law mandates that the remaining units stay regulated even once the tax break expires. The commissioner said Wednesday that the issue is under consideration.

Assembly member Yuh-Line Niou asked whether Visnauskas would support the elimination of another tax break, 421a (now known as Affordable New York). The commissioner would only say that the break has been a “major stimulus for the production of affordable housing” and the consequences of ending it would need to be considered.

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