The Daily Dirt: Hey, hey, ho, ho, rent control has got to … stay?

Landlords lost another court challenge to rent stabilization.

In the latest setback to the legal effort to deregulate housing, a Manhattan judge dismissed a lawsuit by owners, ruling that they “knowingly entered a highly regulated industry” and therefore their constitutional rights were not violated by New York’s Housing Stability and Tenant Protection Act of 2019.

It is undoubtedly true that today’s owners were not around when their buildings were initially thrown into rent regulation. But that fact alone does not make any regulation of their units constitutional. For instance, if lawmakers lowered the rents to $1 a month, the vast majority of judges would call that a “taking.” The question is how much of a rent limit is constitutional.

Another certainty: Regulation can lower rents — and value — for a given building. I will pick one at random: 285 Quincy Street, a rent-stabilized building in Bedford-Stuyvesant. It’s big — 32,000 square feet, with large units, according to a listing. The property is near the G train and Herbert Von King Park. It has 21 units and just sold for a mere $2.5 million. That’s what a single two-bedroom apartment costs at One Prospect Park West.

True, the latter is a new, luxury dwelling with park views. But the price difference is astonishing. Regulation has pushed the value of 285 Quincy down to just $119,000 per unit, which means it could be profitable even with low rents.

This is a reminder of the power of regulation, not an argument for rent control, which is a winners-and-losers system too complex to get into here. But regulation could be the reason that many of the Quincy Street units are empty. Sometimes regulated rents are too low to justify bringing units into livable condition. In this case, the seller might have kept units empty to boost the sale price: In rent-regulated buildings, where a tenant can stay for decades, buyers prefer empty units. That’s why the listing boasted “significant vacancy.”

Is it possible to stop discrimination against tenants bearing Section 8 vouchers?

Yesterday’s Daily Dirt described the lawsuit against landlords and brokerages for allegedly hanging up on apartment hunters who mentioned Section 8 vouchers.

In New York City buildings of three or more units, discrimination based on tenants’ source of income is illegal. But some landlords have been rejecting Section 8 tenants since Congress authorized the program in 1974. Can this entrenched behavior be stamped out?

I have a friend who worked at his mother’s brokerage in Sheepshead Bay in the early 1990s. I still remember him telling me of the futility of showing certain apartments to prospective tenants with Section 8. He knew which landlords would take Section 8 and which would not — and also which ones would not rent to Black people.

Not showing a unit would be illegal, he said. So they went through the motions.

But showing apartments, even when rejection seems certain, helps to stamp out discrimination. Over time, presented with enough Section 8 or applicants of color, even racist landlords might change their ways.

But the incentive to discriminate makes progress harder. Brokers working on commission only get paid when the home they show is rented or sold. The financial model encourages steering of renters and buyers to homes that — in the broker’s conscious or subconscious mind — they are more likely to get.

What we’re thinking about: Would a non-commission-based compensation model for brokers help to end discrimination against prospective tenants or home buyers? Send a note to eengquist@therealdeal.com.

CLOSING TIME

Residential: The priciest residential closing recorded Tuesday was for a townhouse at 12 East 69th Street in Lenox Hill at $59 million.

Commercial: The most expensive commercial closing of the day was for an auto-body shop at 400 West 219th Street in Inwood at $16 million.

BREAKING GROUND

The largest new building filing of the day was for a 5,475-square-foot residential building at 37 Meserole Street in Williamsburg. Jiali Zeng of Sunny Tsang LLC filed the permit application.

NEW TO THE MARKET

The priciest residence to hit the market was a condo unit at 1010 Park Avenue on the Upper East Side at $9.8 million. Brown Harris Stevens has the listing.

—Research by Orion Jones

A thing we’ve learned…

The term “fee simple ownership” has its roots in feudalism. Knights and other workers held land in exchange for work they did for their overlords, who protected them. These relationships were referred to as a “fiefs,” from which the word “fee” is derived.

Elsewhere in New York

— Mayor Bill de Blasio says New York City is on track to reach its goal of 5 million Covid-19 vaccinations by late June, the Wall Street Journal reported. Last week, more than 370,000 vaccines were administered. The mayor reportedly asked President Joe Biden to “cut out the middle person” — a.k.a. Gov. Andrew Cuomo — and deliver vaccines straight to the city.

— A poll by Siena college found that 35 percent of New York voters believe Cuomo has committed sexual harassment. Another 24 percent do not believe the allegations, and 41 percent of those surveyed are undecided.

— Rep. Mondaire Jones of Westchester and Rockland counties is calling for a federal investigation of the Mario M. Cuomo Bridge, the Times-Union reported. The Democratic congressman wrote a letter to Transportation Secretary Pete Buttigieg asking him to investigate claims that the structure’s contractors “covered up” faulty bolts.