Will New York’s housing stock be forever stuck in 2019? That could be the case with our statewide elected officials in Albany having rolled out permanent changes to New York’s rent regulations. I’ve detailed my concerns in a recent op-ed in the New York Daily News.
These new laws will never expire, which means, barring a herculean legislative effort – which Albany is not known for accomplishing - they will never be debated, discussed or changed.
There were some important gains made to protect tenants that I wholeheartedly agree with, such as: eliminating vacancy decontrol, reforming preferential rent, and implementing new targeted enforcement measures – all of which are long overdue.
However, the changes to the costs that can be recovered for Major Capital Improvements (MCI) and Individual Apartment Improvements (IAI) could very well lead our small regulated buildings down a path to financial and physical distress. In making the new laws permanent, Albany has put in place an inflexible system that can’t adapt to rising costs, changes in the market, or the needs of our State’s diverse communities.
As the head of a nonprofit lender whose mission is to provide financing for affordable and workforce housing, I am familiar with the delicate balance between maintaining affordability for renters, and the role that reasonable rent increases play in the economics of keeping a building in quality condition.
At CPC most of the rent stabilized housing we work with is made up of small buildings that are considerably older and in need of significant maintenance and upgrades to keep them livable for their tenants. Because the rents are held well below market, they don’t generate enough revenue to pay for those sorts of critical improvements without realistic IAI and MCI rent increases.
Rent increases for IAIs and MCIs help solve that problem by providing a stable and predictable increase to a building’s revenue, ensuring it can secure a loan (to do the repair work), as well as pay it off. The new legislation throws that entire equation out the door. With no assurance that an owner can reasonably raise rents to keep pace with rising costs of maintenance, lenders could be hard-pressed to provide financing.
Even more, lawmakers plan to expand these inflexible protections, designed for New York City, across the entire State. The Universal Rent Regulation provision is a New York City solution for a different set of challenges Upstate, and it could prevent long-struggling communities from attracting meaningful opportunities that could aid in their revitalization efforts.
I invite you to read and let me know your thoughts in the comments section below.