AOC’s $16.5B housing plan is really bad for real estate

The “Place to Prosper Act of 2019” is a part of a six-bill “A Just Society” package to address poverty, housing affordability and immigration

Alexandria Ocasio-Cortez (Credit: Getty Images)
Alexandria Ocasio-Cortez (Credit: Getty Images)

If AOC had her way, landlords would feel the pain. The big ones, anyway.

On the heels of Sen. Bernie Sanders’ $2.5 trillion housing plan, the firebrand New York congresswoman just released her own $16.5 billion plan on Tuesday, and it’s not pretty for institutional landlords.

Though any landlord with five or more properties would be subject to her overall housing proposal, Alexandria Ocasio-Cortez is really taking aim at “market-controlling landlords,” whom she defines as owners with more than 100 properties in a single metropolitan area, 1,000 rental units nationwide or rental units in three states.

“It’s time that we stop commodifying the housing market because it is not a speculative investment, it is a basic right for all Americans,” she said at a rally earlier this month.

Under her housing plan — which she said is premised on transparency, fairness and justice — large institutional landlords would have to provide quarterly data to the Secretary of Housing and Urban Development. The “market-controlling landlords” would have to disclose the median rent in their units, any vacate orders, copies of current leases, the identity of the landlord, and list the company’s three largest shareholders, she said.

It would be up to tenants to enforce these measures by filing civil actions, or state attorney generals to file in U.S. district courts for damages.

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AOC’s plan would include the lowest cap yet on annual rent increases for landlords with at least five properties. The “Place to Prosper Act” would limit increases to 3 percent of the average rent or the consumer price index, whichever is greater. The proposed rent cap is smaller than both the rent control measure passed by California last week — which would cap rent increases at 5 percent plus the consumer price index — and Oregon’s statewide cap of 7 percent plus inflation passed earlier this year.

AOC’s plan would also include a “good cause” eviction provision, versions of which have passed in California and Oregon, but notably failed in New York. In Ocasio-Cortez’ federal version, evictions would be restricted to cases where a tenant has not paid their rent for two months or landlord occupancy of a unit.

Ocasio-Cortez’ bill would not prevent states from enacting stricter limits on rent increases or placing additional obligations on landlords. The bill would also provide $6.5 billion for the next decade to fund tenants’ right to counsel for eviction proceedings, echoing a measure already in place in New York City.

The congresswoman proposed $10 billion over the next decade for lead abatement. In her own district, the New York City Housing Authority is embroiled in a lead-based paint crisis that led to the poisoning of hundreds of children between 2012 and 2016. A federal monitor was appointed earlier this year.

The bill also seeks to amend the Fair Housing Act and crack down on discrimination of tenants on federal rent subsidy programs. Under the proposed legislation, the definition of source of income as a protected class would be expanded to include Section 8 housing vouchers and social security benefits.

The bill would also make significant changes to mortgage-backed securities for landlords who repeatedly engage in tenant harassment or foreclose on 40 percent of their occupied properties. The proposal would prohibit federal agencies from issuing or purchasing securities backed by those landlords.

Check back in the coming days for more analysis on her plan.

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