March 20, 2003

THE FIFTY YEAR EMERGENCY

By James Eugene*

Imagine that a condition exists which impacts negatively upon a city and many of its citizens. In order to ameliorate the impact, the city with the permission of the state passes a law depriving other citizens of the full use of their property because that condition constitutes an emergency. Obviously in order to address the emergency condition, you would expect both the city and the state to take measures in order to remedy the emergency condition, and you would expect the emergency to be temporary.

Now imagine that the emergency condition continues to exist. Some years it is better, other years it is worse. Not only that, but over much of the time of the existence of the emergency condition, only two areas of the city are consistently impacted by the emergency. However, over the years, the emergency remains in effect for the entire city.

Now imagine if the government, a body you would expect to take remedial measures, does the exact opposite. It takes measures that, in fact, make matters worse. Oh, yes, it does make these changes in the name of public safety and the like, but it discounts the fact that these measures actually ensure that the emergency remains. In the meantime, many citizens loses millions of dollars, dollars they could have possibly used themselves to help resolve the emergency situation.

Now finally imagine that this emergency condition has existed for over fifty years.

I would guess that by now you are either mad at the failure of government to address the problem or have determined the subject of this piece. If you are mad, you are wondering "how can this go on" and "this is not American." If you have determined what I am writing about, you are thinking, "rent control is nuts."

By rent control, I really mean rent regulation. Rent regulation consists of rent control, which practically froze rents in place for lucky tenants, and rent stabilization, which limited rents by limiting increases. In either form, rent regulation eliminated market controls from vast portions of the real estate market and placed government regulation in its stead.

Rent regulation began as primarily rent control in the late 1940's and except for one three year period in the 1970's, it has remained in effect. Every three years the emergency must be recertified through the use of a Housing and Vacancy Survey conducted by the City's Department of Housing Preservation and Development ("HPD"). If the City's housing vacancy rate is less than 5%, an emergency is deemed to exist and the City, with the permission of the State, can continue to allow rent regulation to stay in place.

Rent stabilization was an attempt by the powers that be to limit the negative and unfair impacts of rent control, so that the rents could rise, but only in amounts permitted by a Rent Guidelines Board (which purportedly has tenant and landlord appointees). The Guidelines Board meets annually in one of the most bizarre and stupidly entertaining political dances that exists in politics anywhere in America. The Board conducts multiple hearings to discuss increases and what they would be. These hearings attract scores of landlords, who claim to be fighting for the economic health of their buildings, and scores of tenants, who claim to be fighting the bastions of greedy landlords.

To truly describe the mood, let's just say that I am always surprised each year that there are no deaths at these hearings. Each year, after the Board sets the rate increases for one and two year leases on rent stabilized apartments, there is much wailing on both sides on how biased the Board was in favor of the other side. If you are not involved in this process, it seems like one big joke. If you are involved in this process, you characterize it as no less than a struggle for the free world.

But the problem with this whole scenario is that it has gone on entirely too long, and government sees no reason to change the process. Despite tenants' complaints of landlord bias, the process is really biased in the tenants' favor because at its core, rent regulation is biased in the tenants' favor. The constitutionality of rent regulation has been long established, but constitutionality does not make rent regulation good public policy. In fact, by failing to take measures to correct the emergency and by taking measures that exacerbate the problem, government has failed both the landlords and the tenants.

In most instances where a true emergency exists, governments take massive measures designed to end the emergency quickly. Does over fifty years count as quick?

City officials will point to all their affordable housing programs over the past fifty years. But, let's think about that for a second. They are good programs, yet clearly not enough. Not only that, but many of these affordability programs gave their recipients a feeling of entitlement.

If a young couple gets a government subsidized three bedroom apartment, raises a family there, loses occupants because their children grow up and then has only one or two people left, does the government relocate them to a smaller unit? God forbid! Let others suffer with inadequate housing or no housing, we cannot take away that person's memories by having them move to another place! Thus, some seniors live in large subsidized units, while young families live in smaller, tighter units. (And remember, you and I are subsidizing this inefficiency.)

And not all areas of the City experience this "emergency". In normal real estate markets (right now is not necessarily normal, but what I am about to say still remains true in parts of the City), rent stabilization is only really helping tenants in Manhattan. In major areas of the City, landlords cannot obtain the highest rents allowed under rent stabilization and they charge less than the legally maximum allowed rent. Thus, let's face it, rent stabilization exists for a group of privileged Manhattan residents. The last time I checked, there was no God-given right to live in Manhattan.

Moreover, look at our City's housing and zoning regulations. We have not made it easier to create housing in the past fifty years. We have made it harder. When some Queens neighborhoods got mad in the 1980's because builders were tearing down single family homes and making multi-unit dwellings instead, the Queens Borough President led a successful charge to stop this by creating a gimmick known as "contextual zoning". In other words, make sure housing does not get built. You may constantly hear how areas are "downzoned" so that less housing is built, but rarely do you hear about an area being "upzoned" so that more housing can be built and alleviate the emergency.

And let's not forget about the City's building codes. New York City has the most complicated building code in the world. And each year, new requirements get piled on. Each requirement adds a cost to creating affordable. But would the City ever think of reforming codes so housing became cheaper? Well, the only real attempt at this is being done right now by Mayor Billionaire with his plan to adopt the international building code. But I am sure that after the labor unions get through with this, well, let's just say we will be lucky if the cost of housing remains the same.

And there is one last factor to consider in all of this. The City's Buildings Department may be the most ineffectual agency in the City. Understaffed, under professionalized, bureaucratic, political and now the object of the Administration's corruption police, the Building Department could be characterized as slow, but that would be charitable. And in building housing, time is money. So the Buildings Department actually contributes to the lack of affordable housing in New York City.

Because I know that these things need to be corrected for the emergency to end, you would think that the City does as well. Yet, no action gets taken. So can rent regulation really be considered an emergency if no one does anything to address the emergency? I don't think so. Moreover, if the City's overall housing and building measures actually contribute to the emergency, does it have the moral right to continue to claim that there is an emergency? You be the judge.

This strange political dance will continue this year. You will see rent regulation continued for three more years (maybe more). The Governor, the State Legislature, the Mayor and the City Council will all go along with it (lest they upset major constituencies). And so the fifty-year emergency will continue its unstoppable movement to becoming the sixty-year emergency. If it weren't so tragic, it would be a joke.

I never hear about layoffs of State employees, only local ones. Why do we never hear about Governor Patacuomo cutting his staff? Or either house of the State Legislature?

Would a cut in political staff at the State level really matter? We are considered to have the worst political set-up in the nation. We have not passed a State budget on time in how long now…. I must confess I have lost count… then again is anyone counting any more.

Maybe a cut in political staff would be a good thing in Albany. Maybe it could lead to real progress by cutting roadblocks. Maybe it would force someone to actually lead. Oh sorry, I forgot. We are talking about Albany.

Before the election, I told some people that I did not think there was much of a philosophical difference between the two major gubernatorial candidates. And I still think that is true. But one thing in McCall's favor is that at least he would have started fresh. He cut have cut programs, delayed tax cuts, not been beholden to a past philosophy, and, given the failure of various interest groups to support McCall, beholden to as many interest groups as Patacuomo. This fresh start occurred in New Jersey under Governor Jim McGreevey and in Nassau County under County Executive Tom Suozzi, both Democrats. Hindsight is, unfortunately, 20-20.

* James Eugene is the pseudonym of a veteran of NYC government affairs. Inside The Big Apple will appear exclusively on the Empire Page. If you want to send tips or column ideas to James Eugene, email them to jameseugene@empirepage.com.