Real estate bids good riddance to good cause eviction … for now

Albany spent the end of its legislative session pushing through items that had become unexpected priorities — and rendered good cause eviction, which was once expected to be a hot-button issue into an afterthought.

Left-wing activists were in no position to protest, given that legislators were busy passing an abortion-rights package in anticipation of the repeal of Roe v. Wade and gun restrictions in response to the Buffalo and Texas mass shootings.

Despite a superheated rental market, and advocates’ push for new tenant protections following the expiration in January of the statewide eviction moratorium, good cause never gained traction.

The legislation, a primary worry for the real estate industry this session, would have granted perpetual lease renewals and placed a soft cap on rents by offering tenants a legal defense if their rent rose by over 3 percent or 1.5 times the inflation rate, whichever was higher.

The bill’s failure was a blow for groups like Housing Justice For All, which has rallied relentlessly to pressure the legislature to pass it.

Cea Weaver, the group’s campaign coordinator, called Albany’s refusal to enact good cause “a moral failure.”

“Tomorrow, state lawmakers will go back to safe and healthy homes in their district,” Weaver said in a statement Thursday. “Meanwhile, hundreds of thousands of New Yorkers will be up late, terrified that they’ll face a rent hike so high it will amount to an eviction.”

For landlords, who launched a $1.4 million lobbying effort to stop the legislation, it was a major victory — not just for themselves but, they say, for affordable housing.

Community Housing Improvement Program executive director Jay Martin argued that the bill would have exacerbated the housing crisis by further limiting supply.

The group predicts the legislation would devalue rental properties, the argument being that landlords cannot finance repairs without raising the rent, and longer tenancies would drain the already shallow pool of affordable units.

“We thank the members of the state legislature for hearing our concerns and engaging with us to find better solutions to the affordable housing crisis facing New York,” Martin said.

Cause of death

An autopsy of the policy shows that a combination of failed deal-making and lopsided lobbying power likely led to its failure.

Heading into the end of the legislative session, preventing good cause eviction and extending the 421a tax break, a huge abatement for new apartment buildings, were the top issues for real estate.

The abatement is set to expire on June 15 and as a result, financing for future mixed-income development has already dried up.

Legislative chatter this spring was that landlords and tenants might trade the passage of one policy for the other so that both sides went home with something.

But that quid pro quo never materialized.

“The short answer is yes, that was on the table,” said Weaver. “The longer answer is 421a and good cause are not very good trades for each other politically.”

In part, that’s because the real estate interests fighting good cause aren’t equally invested in the extension of 421a. Good cause affects landlords and 421a affects multifamily developers, but many landlords are not developers, which reduces leverage for a policy trade-off.

Moreover, as Weaver noted, some of good cause’s fans were rooting for the demise of 421a, which they see as providing developers with a huge handout in exchange for precious little low-income housing.

Plus, good cause’s greatest opponents within the legislature are upstate Assembly members, according to Weaver, whereas 421a only affects city development.

“The trade was really something that felt like it was being floated by the city of New York maybe as a Hail Mary to get 421a [to pass],” Weaver said. “But from my perspective, the politics were never really there for that type of deal.”

How big is your lobby?

Housing Justice For All also attributed the policy’s failure to politicians catering to “a small set of wealthy landlords,” according to Weaver, an implication that campaign contributions carried the most weight in this fight.

In May, a poll of 1,001 voters commissioned by Housing Justice For All showed three-fourths of respondents were concerned about the cost of renting an apartment and 67 percent were in favor of good cause. Those polled in New York City showed even greater support.

Good cause advocates also highlighted a survey of City & State subscribers in May that showed 69 percent of 588 respondents supported the tenant protection.

Those are not the kind of polls that sway a legislature, however, and the landlord lobby mocked them.

“You guys are doing press releases on anonymous surveys sent to political insiders,” Jay Martin replied to a Legal Aid Society tweet regarding the City & State findings. “I filled this thing out 3 times myself. It was completely unscientific, no objective sample. Do better,” he said.

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Meanwhile, lobbying expenditures showed how much fighting bills such as good cause is worth to real estate.

Data compiled by Housing Justice For All in conjunction with LittleSis, a database that tracks powerful people and organizations, found the Real Estate Board of New York, the Rent Stabilization Association and CHIP spent nearly $20 million from 2018 to 2021, including $7.7 million on lobbying. About 61 percent of the landlord groups’ lobbying outlay was in 2019, when rent stabilization was overhauled in tenants’ favor.

Sen. Julia Salazar introduced the good cause legislation in early 2018 and a year later supporters tried to fold it into the rent reform, but lawmakers excluded it.

A spokesperson for Homeowners for an Affordable New York, a group backed by REBNY, RSA and CHIP that funded real estate’s campaign against good cause, downplayed the report as “hastily pieced together.”

What’s next

The end of the regular legislative session means the good cause eviction bill is shelved until January. Weaver, speaking a few days after the bill failed, said the hit to renters may be devastating.

“I get calls every day from people whose rent is going up $100, $200, $400, $500 and simply have no negotiating power,” she said. “Not having good cause over the summer when countless leases are going to expire, it’s going to have a dramatic impact on New York’s renters.”

Nonetheless, the tenant leader says 2022 will not be the end of the road for the good cause campaign.

Weaver said Housing Justice For All is regrouping and plotting a strategy for 2023. It’s also waiting to see how a lawsuit challenging good cause’s enactment by the city of Albany last summer shakes out.

The suit, filed by landlords and real estate firms in November, alleges that the legislation violates state laws that limit local government’s regulation of rent and evictions, the Times Union reported. It also claims that the stripping of landlords’ right to decline a new lease amounts to a physical and regulatory taking without just compensation, a violation of the Fifth and Fourteenth Amendments.

If landlords win a repeal of good cause, it could jeopardize similar laws passed in other municipalities over the past few years, including Poughkeepsie, Newburgh, Hudson and Kingston.

That would also derail the city-by-city approach Housing Justice For All has adopted to build support and awareness for the state legislation. (New York City can’t adopt a local version of the bill: The 1971 Urstadt Law forbid it from enacting stricter rent rules than those imposed by the state.)

Still, some municipalities are pushing for stronger renter protections in response to the incredibly tight market. Kingston, for example, is considering adopting rent stabilization, which state law allows if a locality’s vacancy rate dips below 5 percent. The Hudson Valley city just determined its vacancy rate is 1.57 percent and could stabilize rents at 1,200 units.

Meanwhile, in a symbolic gesture (given the City Council’s nearly unanimous support for rent regulation), RSA last week called on the New York City Council not to renew the city’s rent stabilization law.

RSA President Joseph Strasburg said the city’s housing shortage is being “greatly exaggerated” by tenant lobbyists, citing a decline of 300,000 city residents through summer 2021.

But anyone who has listed or applied for a decent apartment in the city recently knows renters have since returned in force. The question now is whether tenant activists will be able to capitalize on that to rebuild momentum for good cause.