( CITY COUNCIL CITY OF NEW YORK - - -x TRANSCRIPT OF THE MINUTES of the STATED MEETING - - - - - - -x March 21, 1994 Start: 1:30 p.m. Recess: 4:45 p.m. City Council New York, New York BEFORE: MARK GREEN, PUBLIC ADVOCATE ·-~ RAYMOND M. DANYO 171 EAGLE STREET BROOKLYN, NEW YORK 11222 (718) 383-8465 ( 2 1 THE PUBLIC ADVOCATE: 2 This is a recessed Stated Meeting. 3 seats. 4 important ceremony. 5 Mr. Speaker. 6 SPEAKER VALLONE: 7 10 Thank you very much, Mr. We have some very important presentations to make today. Just before we start the formal meeting, I 11 want to make sure minutes are taken here so this is entered 12 in the permanent record. 13 ~ There is a very Public Advocate. 8 9 Will people take their I want to first recognize several people and 14 ask my colleagues and you, Mr. Public Advocate, to grant the 15 privilege of the floor, starting with the Chief of 16 Detectives, Joseph Borrielli; Assistant Chief John Hill; 17 Assistant Chief Commanding Officer, Manhattan Detectives, 18 Kenneth Gussman; Deputy Inspector, Brooklyn, William 19 Gardella; Deputy Inspector, Manhattan Detectives, Charles 20 Luisi; Captain, Manhattan Detectives, Joseph Mottle; 21 Lieutenant, Commanding Officer, Manhattan South Homicide, 22 Robert Gibbons; Lieutenant, Manhattan Detectives, Paul 23 O'Connor; Lieutenant, Commanding Officer, Brooklyn South 24 Homicide, Robert Azzinari; Sergeant, Brooklyn, Detectives, 25 Kenneth Bowen, and Sergeant, Manhattan Detectives, John (' 3 1 2 Mullally. We also have Detective Edward Brown, 3 4 Detective Joseph Cruz, Detective William Glynn and Detective 5 William Powell. We also have present Rabbi Spielman, Chair of 6 7 the Crown Heights Jewish Community Council and William 8 Rappfogel, Metropolitan Council on Jewish Poverty. I would ask, Mr. Public Advocate, that the 9 10 names that I read be given the privilege of the floor. 11 THE PUBLIC ADVOCATE: 12 I would ask the Clerk to please read the 13 official communication to the City Council. (Whereupon, the Clerk read Official 14 15 So ordered. Communication.) 16 (Applause.) 17 SPEAKER VALLONE: On behalf of all of my 18 colleagues, we make present this proclamation and it was 19 voted and adopted by every member of the City Council here. 20 We thank the four of you for what you did in 21 helping to heal one of the most difficult and bloodiest 22 events that have happened in our great town. 23 24 25 You helped bring healing and diligence. You make us all proud. On behalf of all of my colleagues, we present ( 4 1 2 you with this proclamation. RABBI SPIELMAN: 3 I wanted to add to the words 4 that were mentioned before that as far as Crown Heights is 5 concerned, we have been through and are continuing to go 6 through some extremely trying times. 7 to us the fact that the diligence of these officers and all 8 the officers and the teams that they represent have 9 successfully solved this crime. 10 Thank you. 11 (Applause.) 12 SPEAKER VALLONE: 13 It is very comforting Thank you, Mr. Public Advocate. I thank the Police for coming and making this 14 15 city a little bit better than it was and, hopefully, a lot 16 better in the future. Mr. Public Advocate, we will be in recess 17 18 until the Council's Buildings Committee is over. 19 Thank you very much. 20 (Whereupon, at 2:30 p.m., a recess was 21 taken.) (Whereupon, at 3:00 p.m., the Stated Meeting 22 23 24 25 resumed.) THE PUBLIC ADVOCATE: of the March 16th Stated Meeting. This is a continuation ( 5 1 2 Will the Clerk please call the roll. 3 (Whereupon, a roll call was taken.) 4 THE PUBLIC ADVOCATE: 5 I would like at this time prior to the 6 Invocation that we have a minute of silence in memory of the 7 two priests who were run down, Reverend Father Demitrios 8 Frangos and the Very Reverend Father Germanos Stavropolos. 9 A moment of silence, please. (Whereupon, a moment of silence was 10 11 observed.) 12 THE PUBLIC ADVOCATE: 13 (Whereupon, the invocation was given.) 14 THE PUBLIC ADVOCATE: 15 THE CLERK: 16 Thank you. Intro 220. A local law in relation to amending the rent stabilization laws and rent control laws. I 17 SPEAKER VALLONE: 18 THE CLERK: General order. Resolution 144, determining that 19 a public emergency requiring rent control in the City of New 20 York continue to exist. 21 SPEAKER VALLONE: 22 THE PUBLIC ADVOCATE: 23 24 \ A quorum is present. 25 Coupled. Discussion on the general order calendar. SPEAKER VALLONE: Council Member Michels has asked that Intro 220 be set aside for separate discussion as I ( 6 1 2 well as 144, prior to roll call. THE PUBLIC ADVOCATE: 3 4 Weiner. COUNCIL MEMBER WEINER: 5 6 7 Council Member Thank you, Mr. Public Advocate. I call your attention to Resolution 222, 8 sponsored by myself, Berman and Foster. The resolution 9 reaffirms the Council's longstanding commitment to and 10 support for Jerusalem as the eternal and undivided capital 11 of the State of Israel. 12 The reason we are addressing this today is 13 because you might have read this past Friday that the United 14 Nations dealt with a resolution and language that refers to 15 Jerusalem as being the disputed territory or occupied 16 territory, something our government never believed. 17 What is disturbing is that resolution was 18 considered section by section. 19 abstain from voting. Our representatives chose to 20 It is very important as we discuss these 21 issues -- and they are watching very closely around the 22 world -- that we recognize the terrible things that have 23 happened in Israel over the past months are not a reflection 24 of the government of Israel. 25 of radicals that seek to destroy it. They are indeed a reflection ( 7 1 2 THE PUBLIC ADVOCATE: 3 Are there any objections to immediate 4 Thank you, Mr. Weiner. consideration? 5 SPEAKER VALLONE: 6 Does Council Member Millard wants to be 7 We will vote on it later. recognized? 8 COUNCIL MEMBER MILLARD: 9 SPEAKER VALLONE: No. I would ask for a roll call 10 on Resolution 144, determining that a public emergency 11 requiring rent control in the City of New York continues to 12 exist and will continue to exist after April 1, 1994. 13 I urge an aye vote on this bill. 14 THE CLERK: 15 COUNCIL MEMBER ALBANESE: 16 THE CLERK: 17 COUNCIL MEMBER BERMAN: 18 THE CLERK: 19 COUNCIL MEMBER CLARKE: 20 THE CLERK: Cruz. 21 (No response.) 22 THE CLERK: 23 (No response.) 24 THE CLERK: 25 COUNCIL MEMBER DEMARCO: Albanese. Aye. Berman. Yes. Clarke. Yes. Dear. DeMarco. Aye. ( 8 1 DiBrienza. 2 THE CLERK: 3 (No response.) 4 THE CLERK: 5 COUNCIL MEMBER LASHER: Yes. 6 THE CLERK: Dilan. 7 COUNCIL MEMBER MALAVE-DILAN: 8 THE CLERK: 9 COUNCIL MEMBER DUANE: Lasher. Duane. Yes. Eisland. 10 THE CLERK: 11 (No response.) 12 THE CLERK: 13 COUNCIL MEMBER ELDRIDGE: 14 THE CLERK: 15 COUNCIL MEMBER ERISTOFF: 16 THE CLERK: 17 (No response.) 18 THE CLERK: 19 COUNCIL MEMBER FISHER: 20 THE CLERK: 21 COUNCIL MEMBER FOSTER: 22 THE CLERK: 23 COUNCIL MEMBER FREED: 24 THE CLERK: 25 COUNCIL MEMBER FUSCO: Eldridge. Yes. Eristoff. Yes. Fields. Fisher. Yes. Foster. Yes. Freed. Yes. Fusco. Yes. Yes. ( 9 1 2 THE CLERK: Harrison. 3 COUNCIL MEMBER HARRISON: 4 THE CLERK: 5 COUNCIL MEMBER HENRY: 6 THE CLERK: 7 COUNCIL MEMBER KOSLOWITZ: 8 THE CLERK: 9 COUNCIL MEMBER LEFFLER: Yes. Henry. Pass. Koslowitz. Yes. Leffler. Yes. 10 THE CLERK: Linares. 11 (No response.) 12 THE CLERK: 13 COUNCIL MEMBER MARSHALL: 14 THE CLERK: 15 COUNCIL MEMBER MCCABE: 16 THE CLERK: 17 COUNCIL MEMBER MCCAFFREY: 18 THE CLERK: 19 COUNCIL MEMBER MICHELS: 20 THE CLERK: 21 COUNCIL MEMBER MILLARD: 22 THE CLERK: 23 (No response.) 24 THE CLERK: 25 (No response.) Marshall. Aye. McCabe. Aye. Mccaffrey. Aye. Michels. Aye. Millard. O'Donovan. Ognibene. Yes. ( 10 1 2 THE CLERK: Pagan. 3 COUNCIL MEMBER PAGAN: 4 THE CLERK: 5 COUNCIL MEMBER PINKETT: 6 THE CLERK: 7 COUNCIL MEMBER POVMAN: 8 THE CLERK: 9 COUNCIL MEMBER POWELL: Aye. Pinkett. Pass. Povrnan. Aye. Powell. Yes. 10 THE CLERK: Rivera. 11 COUNCIL MEMBER RIVERA: 12 THE CLERK: 13 COUNCIL MEMBER ROBINSON: 14 THE CLERK: 15 COUNCIL MEMBER ROBLES: 16 THE CLERK: 17 (No response.) 18 THE CLERK: 19 COUNCIL MEMBER RUIZ: 20 THE CLERK: 21 (No response.) 22 THE CLERK: 23 COUNCIL MEMBER SPIGNER: 24 THE CLERK: Stabile. 25 COUNCIL MEMBER STABILE: Yes. Robinson. Yes. Robles. Aye. Rosado. Ruiz. Aye. Sabini. Spigner. Aye. Aye. ( 11 1 2 THE CLERK: Warden. 3 COUNCIL MEMBER WARDEN: 4 THE CLERK: 5 COUNCIL MEMBER WATKINS: 6 THE CLERK: 7 COUNCIL MEMBER WEINER: 8 THE CLERK: 9 COUNCIL MEMBER WHITE: Aye. Watkins. Aye. Weiner. Aye. White. Aye. 10 THE CLERK: Williams. 11 COUNCIL MEMBER WILLIAMS: 12 THE CLERK: 13 COUNCIL MEMBER WOOTEN: 14 THE CLERK: 15 COUNCIL MEMBER CRUZ: 16 THE CLERK: 17 COUNCIL MEMBER DEMARCO: 18 THE CLERK: 19 (No response.) 20 THE CLERK: 21 COUNCIL MEMBER LASHER: 22 I would like to explain a conflict that I Aye. Wooten. Yes. Cruz. Yes. DeMarco. Yes. Ognibene. Lasher. Aye. 23 have with respect to this legislation and the next bill that 24 is going to come up today, 220. 25 With respect to these items, I would like to ( 12 1 2 inform this body that I am the owner of an interest in a 3 four-unit building, 26 units, which are rent-controlled and 4 my wife as the owner of a six-unit building, which is a 5 rent-stabilized building. 6 I vote aye. 7 THE CLERK: Ognibene. 8 COUNCIL MEMBER OGNIBENE: 9 THE CLERK: Aye on 144. Pinkett. 10 COUNCIL MEMBER PINKETT: 11 THE CLERK: 12 COUNCIL MEMBER ABEL: 13 THE CLERK: 14 SPEAKER VALLONE: 15 THE PUBLIC ADVOCATE: Aye. Abel. Aye. Speaker Vallone. Aye. By a vote of 45 in the 16 affirmative, none in the negative, the resolution is 17 adopted. We will now move to debate. 18 We will now move 19 to Intro 220. 20 first be allowed to speak and the last speaker will be the 21 Committee Chair, Council Member Spigner. COUNCIL MEMBER MICHELS: 22 23 Council Member Michels has asked that he Thank you, Mr. Speaker. 24 This is a sad day for the people of this 25 city, especially those that live in multiple dwellings. ( 13 1 This is the first time that I can remember -- 2 and I 3 and I have been in this body for over sixteen years 4 cannot recall in this city's history that we passed or were 5 about to pass a bill that contains vacancy decontrols. This bill is an extension of the rent 6 7 control, rent stabilization. However, within it contains 8 the seeds of destruction, poisoned seeds of destruction of 9 all rent control, all rent stabilization in the city at a In order to 10 time when we only have a vacancy rate of 3.44. 11 do away with rent control, rent stabilization, the law says 12 you must have a vacancy rate of 5 percent. 13 We have been asked not to tamper with this 14 very delicate law by no less than the Director of Housing 15 for the State of New York, who begged us not to tamper with 16 it. He said that the first impact of the high 17 18 rent, high income provision of the act are yet to be felt. He then went on to say the permanent 19 20 exemption of the high rent luxury decontrol that we are 21 voting on today is a great incentive for owners to encourage 22 vacancy. 23 apartments where the owner would then set a so-called fair 24 market rent even if no improvements are made. 25 This particularly true with rent-controlled He said that while most owners are ( 14 1 2 law-abiding, there are certainly some unscrupulous owners 3 who act to evade the rent laws by attempting to obtain their 4 vacancies by engaging in harassment. 5 6 7 8 9 Further, if their rent comes to $2,000, there will be harassment of tenants. What I am asking for is an extender so there is an ability to study the consequences of the 1993 law. I urge you to vote no on 220. 10 Thank you. 11 THE PUBLIC ADVOCATE: Before calling on 12 Council Member Eristoff, let me explain that the debate and 13 discussion on the floor is among the members, not between 14 the gallery and the floor. 15 resist the impulse of commenting out loud. So I would ask the gallery to 16 Council Member Eristoff. 17 Would Council Member Eristoff yield for a 18 19 20 21 question from his colleague? COUNCIL MEMBER ERISTOFF: I will allow my colleague to ask a question. COUNCIL MEMBER FUSCO: My question is this: 22 as to the specific regulation that is being passed today, 23 does the rent regulations as they presently exist, does this 24 encourage those rich tenants to hold on to apartments while 25 they maintain homes on Long Island and Connecticut? ( 15 1 COUNCIL MEMBER MICHELS: 2 Studies have been 3 made that indicate that those people who have summer homes 4 and are permanent residents, they pay their state income 5 tax. They don't pay the New York City resident's tax. As a result, the landlord can then take over 6 7 their apartments and say that they are not permanent 8 residents. COUNCIL MEMBER ERISTOFF: 9 10 comments of Stanley Michels. 11 anti-Manhattan bill. I want to echo the This bill is, in essence, an Let's make not mistake about it. I want to first commend central staff for the 12 13 fastest print job in world history, where we have a 14 pre-printed agenda showing the bill has been reported out of 15 house. 16 This bill does nothing of the kind. Instead, 17 the bill helps property owners who have the fortune to have 18 so-called wealthy tenants as tenants. 19 the incidents of housing distress is not non-payment of 20 rent, but sewer and water rates and high property taxes that 21 are not addressed. 22 The real culprits in We had testimony last week which, I felt, 23 very well established the fact of the correlation between 24 distressed properties and high property taxes was very high. 25 These rent laws protect the market. They are ( 16 1 2 not designed to help individuals. 3 thousand dollars sounds like a lot of money. 4 apartments in the $1,500 range, if you use the 4.5 percent 5 inflation factor over the next fifteen years, it would bring 6 apartments over $2,000. THE PUBLIC ADVOCATE: 7 8 When you got Thank you, Council Member. 9 Council Member Millard. 10 COUNCIL MEMBER MILLARD: I rise to oppose 11 this legislation for the very simple reason that a lot of 12 the people who are going to support this legislation will 13 make the argument that we should have a free market, let the 14 market rule. One thing you have is the possibility of 15 16 bankruptcy not just of landlords but also the tenants. This bill goes beyond what Albany has done. 17 18 Albany says that if your rent is $2,000 or more as of the 19 day that bill was passed, then if you make $250,0000 at any 20 time in the future, no matter how much inflation is, if the 21 rent goes over $2,000 a month, then these provisions kick 22 in. 23 \ A thousand dollars or two It is the Council that provides the incentive 24 not only to harass existing tenants. It provides an 25 incentive only to rent to people who either are presently ( 17 1 2 making a quarter of a million dollars a year or you as a 3 landlord believe that some day they will soon make over 4 $200,000 a year. 5 I would ask you to vote no. 6 THE PUBLIC ADVOCATE: 7 COUNCIL MEMBER OGNIBENE: 8 If we can get pass the demagoguery going on 9 here, this law only applies to people making $250,000, who Thank you. 10 live in apartments that rent for more than $2,000 and those 11 are the apartments that deregulation applies to and for the 12 other apartments that rent for more than $2,000 and only if 13 they are vacant. What we are trying to do here is not give 14 15 rent subsidies to the wealthy who live in the districts of 16 those that stood up here today and have spoken against it. 17 I think you ought to know that. It applies only to people that make a quarter 18 19 a million or more or with apartments that are more than 20 $2,000 per month. 21 not be destabilized until they are vacant. For those rents over $2,000, they will As far as the harassment issue, we have a 22 23 myriad of regulations that protect tenants from harassment 24 form landlords. 25 \ Ognibene. THE PUBLIC ADVOCATE: Council Member Pagan. ( 18 1 COUNCIL MEMBER PAGAN: Colleagues, we are hear 2 3 as legislators to do what is right for everyone within the 4 city; not to play rhetoric or favoring one group over 5 another. Before anything else, we have a 6 7 responsibility to invest our resources well. Let's look at 8 the facts. Every one of 9 the bills that were submitted to this body to be considered Not everybody is happy with 220. 10 included the same extensions to rent control and rent 11 stabilization. Those who are advocating the defense of a 12 13 subsidy for people making a quarter of a million dollars in 14 the city, shame on you. Colleagues, this is about equity. 15 It is 16 fairness. 17 York City residents that should have it in the first place. 18 220 will eliminate a luxury subsidy to those New Since when are these advocates shielding 19 themselves with the small property owners? 20 Since when? 21 Remember that. 22 I urge you to vote for 220. 23 Thank you very much. 24 THE PUBLIC ADVOCATE: 25 Council Member Linares. Thank you. ( 19 1 COUNCIL MEMBER LINARES: 2 3 Thank you, Mr. Public Advocate. I stand here to basically urge my colleagues 4 5 to examine very closely their conscience as they make this 6 decision. I think that what we have here before us is a 7 8 smoke screen. 9 approach a decision like this and weigh it carefully, not 10 I think the responsibility of this body is to rush into it and then face the consequences. We saw that experience take place in 1971 11 12 when there was deregulation and they had to rush to again 13 regulate because we saw what it was happening to our 14 neighborhoods. I think 220 today is marking the beginning of 15 16 the end for stable communities. 17 owners, are the ones who are being taken for a ride with 18 this bill. This is the beginning of the end for those 19 20 who voted today in favoring this legislation. I urge the members in good conscience to vote 21 22 The small fish, the small against 220. 23 Thank you. 24 THE PUBLIC ADVOCATE: 25 Eldridge. Council Member ( 20 1 2 COUNCIL MEMBER ELDRIDGE: 3 This bill particularly .affects people that I 4 represent. 5 questions. It is troubling to me and it raises very serious My colleagues have expressed their opinions 6 7 that this is the beginning of decontrolling and 8 destabilization of apartment rents. I agree with that. I agree also that we do need to look at the 9 10 whole picture and this piece of legislation that comes to us 11 at the last minute, I believe it is ill-thought and 12 ill-conceived. For any of you who represent districts that 13 14 have apartments where people are now paying $1,200 or $1,400 15 a month are threatened because tenants are being told, 16 instructed how to make major capital improvements and raise 17 the rent. 18 It is not where wealthy people live. It is 19 where two professional working people live with children and 20 it is a needed place for them to live in. 21 you may have read about the migration of African-Americans 22 who have reached a level of affluence who are moving back to 23 the city because it is easier for them to live. 24 25 \ Thank you. Over the weekend We are losing not only their leadership participation in government in the city, but we are losing r· 21 1 2 the taxes we get from their incomes. I believe that this bill threatens the 3 4 stability of the west side whre 60 percent of the citizens 5 live in rental apartments. I believe that this legislation is driven by 6 7 the landlords who are building new apartments, who have 8 empty apartments and are trying to rent them at $3,000 and 9 want to move people out of rent-stabilized apartments. I believe they are the same people who come 10 11 to you for tax exemptions and insensitive overdevelopment 12 and I believe that it is time for the whole Council to look 13 at the whole picture. We don't mind giving money to large 14 15 corporations who pay millions of dollars in salary. 16 that is not viewed as making the wealthy_ pay their share. 17 But you can't wait to dump on what we consider to be middle 18 class people earning an income and working hard and paying 19 $2,000. 20 are interpreting it. 21 that. 22 That is not luxury housing in the sense that you I think you had better understand I wish that you would support us sometimes in 23 our effort to make this city livable for people who 24 contribute to it as much as they do. 25 Somehow Thank you. ( 22 1 2 THE PUBLIC ADVOCATE: 3 Council Member DiBrienza. 4 COUNCIL MEMBER DIBRIENZA: Actually, I am 5 interested in the nature of the bill as to whether or not 6 the question before us as Council Members can be divided so 7 that many of us who are interested in extending the rent 8 stabilization rules could vote for that and then those of us 9 who have trouble with the luxury decontrol aspect either 10 because of the arguments made in part by Council Member 11 Michels or in part by Council Member Eldridge or by other 12 members here. I don't know if it is possible, but my 13 14 recollection of the rules and my understanding is that THE PUBLIC ADVOCATE: 15 I am told that it is 16 one bill. 17 have to be done in advance and that as of now it cannot be 18 divided. 19 I am told that such a request to divide would It is one bill, one vote. COUNCIL MEMBER DIBRIENZA: I am suggesting 20 that we amend the legislation, which I am suggesting in a 21 motion to divide the question to conduct two votes on the 22 same piece of legislation. 23 \ Thank you. COUNCIL MEMBER WEINER: Is it not the case 24 that the only question on the table is that we are to 25 approve or disapprove this bill? ( 23 1 THE PUBLIC ADVOCATE: 2 3 request is out of order. You can continue with your remarks on the 4 5 substance of the bill. Council Member Freed had asked to be 6 7 Council Member, your recognized. 8 One moment. 9 Council Member Eristoff. 10 COUNCIL MEMBER ERISTOFF: 11 COUNCIL MEMBER OGNIBENE: THE PUBLIC ADVOCATE: COUNCIL MEMBER ERISTOFF: I would like to withdraw the motion to recommit. THE PUBLIC ADVOCATE: 18 19 Council Member Ognibene, you are out of order. 16 17 I move to lay his motion on the table. 14 15 In light of the very interesting comments of my colleague from Brooklyn -- 12 13 Quiet in the Chambers. The motion is withdrawn. 20 Council Member Freed has the floor. 21 COUNCIL MEMBER FREED: 22 I am not sure people understand that, first, Thank you. 23 this bill shouldn't be called the luxury decontrol, the part 24 that deals with people's income over $250,000, but the real 25 death knell of rent stabilization is going to be the ( 24 1 2 decontrol of any rent that reaches $2,000 a month at any 3 time, which is what this bill does. What this bill does is perpetually decontrol 4 5 apartments as they reach $2,000 a month. 6 who is in place at the time reaches $2,000 a month, they 7 stay in place. 8 is decontrolled. When they leave the apartment that apartment Two thousand dollars a month may seem like a 9 10 Whenever a tenant lot to some people, but in Manhattan is not unusual. Furthermore, it doesn't deal with the size of 11 12 the apartment. 13 four kids, it is almost beyond doubt that it is going to be 14 an apartment that is somewhere close to $2,000 a month. 15 If you happen to have a family of three or Additionally, it does not deal with the fact 16 that your apartment currently rents for $1,400, $1,500 and 17 if your landlord decides to put in major capital 18 improvements, whether the apartment needs it or not, your 19 rent adjustment just went up to $2,000. 20 Please understand that there are a lot of 21 people in Manhattan who are doubled up. 22 apartments where you got two or three college students, 23 professional people, just trying to make it, who are paying 24 close to that amount of rent. 25 THE CHAIRPERSON: There are a lot of Thank you. ( 25 1 2 Council Member Fusco. 3 COUNCIL MEMBER FUSCO: 4 I rise as one of the key prime sponsors of this bill. 5 I have heard words like smokescreen, working 6 people, affordable housing and this is the beginning of the 7 destruction of rent control, rent stabilization, which would 8 have a terrible impact on low income members of our society. 9 Well, that is based on the smoke screen being 10 cast on this Council. It is also an insult to this Council 11 because the majority of the members who represent those 12 constituents, so-called individuals who say it is a smoke 13 screen. There is no way that the Council members of 14 15 this Council, including the prime sponsors of this 16 legislation, and those who voted in committee for this 17 legislation, would permit that to happen. 18 they would permit affordable housing to be taken away from 19 low income people. THE PUBLIC ADVOCATE: 20 21 22 23 24 25 There is no way Thank you, Council Member. At this time the chair recognizes Council Member DiBrienza. COUNCIL MEMBER DIBRIENZA: again, understand your ruling. I would like to, 26 1 There are several sections to this item 2 3 4 before us. There are several distinct sections. I want to be able to -- many people might 5 vote on the parts that are less controversial perhaps 6 differently than others. 7 8 9 I want to know the basis of your ruling or suggestion that I cannot move to divide the question. THE PUBLIC ADVOCATE: Your request to amend 10 the bill, it could have been done prior to its introduction 11 and debate and discussion today. 12 Therefore, the Chair ruled against you. 13 COUNCIL MEMBER DIBRIENZA: If in fact I 14 sought to have some portion of this bill not voted on at 15 all, I might understand why wouldn't be amended. 16 But since under this proposal the entire bill 17 would be voted on, just simply two votes, I fail to 18 understand the ruling. 19 I don't want to belabor this. 20 THE PUBLIC ADVOCATE: 21 22 Council Member DiBrienza, you are asking a fair question. I don't want to belabor this body. If you 23 want to vote on any different resolution than 220, either 24 add or subtract a section, you would had to have submitted 25 it beforehand and in writing, an interpretation based on ( 27 1 2 Robert's Rules of Order. 3 The Chair recognizes Council Member Eristoff. 4 COUNCIL MEMBER ERISTOFF: 5 make the motion to recommit to the committee. COUNCIL MEMBER OGNIBENE: 6 7 I would like to I call the question. 8 I move to table his motion. 9 The rules say that a motion takes precedence 10 over a motion to recommit. THE PUBLIC ADVOCATE: 11 12 There will be a vote on the motion to table. 13 SPEAKER VALLONE: 14 This is a motion to table the motion to 15 16 17 18 19 20 21 Point of order. recommit. I urge my colleagues to vote yes. This is a non-debatable motion. THE PUBLIC ADVOCATE: Roll call, please, on the motion to table. We will have a roll call on the motion to table the recommittal motion. 22 Will the Clerk call the roll. 23 THE CLERK: 24 COUNCIL MEMBER ALBANESE: 25 THE CLERK: Albanese. Berman. NO. ( 28 1 2 COUNCIL MEMBER BERMAN: 3 THE CLERK: 4 COUNCIL MEMBER CLARKE: 5 THE CLERK: Cruz. 6 COUNCIL MEMBER CRUZ: 7 THE CLERK: 8 (No response.) 9 THE CLERK: Yes. Clarke. Pass. Yes. Dear. DiBrienza. 10 COUNCIL MEMBER DIBRIENZA: No. 11 THE CLERK: 12 COUNCIL MEMBER DEMARCO: 13 THE CLERK: Dilan. 14 COUNCIL MEMBER MALAVE-DILAN: 15 THE CLERK: 16 COUNCIL MEMBER DUANE: 17 THE CLERK: 18 COUNCIL MEMBER EISLAND: 19 THE CLERK: 20 COUNCIL MEMBER ELDRIDGE: 21 THE CLERK: 22 COUNCIL MEMBER ERISTOFF: 23 THE CLERK: 24 COUNCIL MEMBER FISHER: 25 THE CLERK: DeMarco. Yes. Duane. No. Eisland. Yes. Eldridge. No. Eristoff. No. Fisher. Foster. Yes. Yes. ( 29 1 \ . Yes. 2 COUNCIL MEMBER FOSTER: 3 THE CLERK: 4 COUNCIL MEMBER FREED: 5 THE CLERK: 6 COUNCIL MEMBER FUSCO: 7 THE CLERK: 8 COUNCIL MEMBER HARRISON: 9 THE CLERK: Freed. No. Fusco. Yes. Harrison. Yes. Henry. 10 COUNCIL MEMBER HENRY: Yes. 11 THE CLERK: 12 COUNCIL MEMBER KOSLOWITZ: 13 THE CLERK: 14 COUNCIL MEMBER LASHER: Yes. 15 THE CLERK: 16 COUNCIL MEMBER LEFFLER: 17 THE CLERK: Linares. 18 COUNCIL MEMBER LINARES: 19 THE CLERK: 20 COUNCIL MEMBER MARSHALL: 21 THE CLERK: 22 COUNCIL MEMBER MCCABE: 23 THE CLERK: 24 COUNCIL MEMBER MCCAFFREY: 25 THE CLERK: Koslowitz. Yes. Lasher. Leffler. No. No. Marshall. No. McCabe. No. Mccaffrey. Michels. Yes. ( 30 1 2 COUNCIL MEMBER MICHELS: No. 3 THE CLERK: 4 COUNCIL MEMBER MILLARD: 5 THE CLERK: 6 COUNCIL MEMBER O'DONOVAN: 7 THE CLERK: 8 COUNCIL MEMBER OGNIBENE: Yes. 9 THE CLERK: Millard. Pass. O'Donovan. Yes. Ognibene. Pagan. 10 COUNCIL MEMBER PAGAN: Yes. 11 THE CLERK: 12 COUNCIL MEMBER PINKETT: 13 THE CLERK: 14 COUNCIL MEMBER POVMAN: 15 THE CLERK: 16 COUNCIL MEMBER POWELL: 17 THE CLERK: 18 COUNCIL MEMBER RIVERA: 19 THE CLERK: 20 COUNCIL MEMBER ROBINSON: 21 THE CLERK: 22 COUNCIL MEMBER ROBLES: 23 THE CLERK: 24 COUNCIL MEMBER ROSADO: 25 THE CLERK: Pinkett. Yes. Povman. Yes. Powell. No. Rivera. Yes. Robinson. Pass. Robles. Pass. Rosado. Ruiz. Aye. ( 31 1 2 COUNCIL MEMBER RUIZ: No. 3 THE CLERK: 4 COUNCIL MEMBER SPIGNER: 5 THE CLERK: Stabile. 6 COUNCIL MEMBER STABILE: 7 THE CLERK: 8 COUNCIL MEMBER WARDEN: 9 THE CLERK: Spigner. Yes. Yes. Warden. Yes. Watkins. 10 COUNCIL MEMBER WATKINS: Yes. 11 THE CLERK: 12 COUNCIL MEMBER WEINER: 13 THE CLERK: 14 COUNCIL MEMBER WHITE: 15 THE CLERK: 16 COUNCIL MEMBER WILLIAMS: 17 THE CLERK: 18 COUNCIL MEMBER WOOTEN: 19 THE CLERK: 20 COUNCIL MEMBER CLARKE: 21 THE CLERK: 22 COUNCIL MEMBER MILLARD: 23 THE CLERK: 24 COUNCIL MEMBER ROBINSON: 25 THE CLERK: Weiner. Pass. White. Yes. Williams. Yes. Wooten. Yes. Clarke. Yes. Millard. No. Robinson. Weiner. No. I I 32 1 2 COUNCIL MEMBER WEINER: 3 THE CLERK: 4 COUNCIL MEMBER ABEL: 5 THE CLERK: 6 SPEAKER VALLONE: 7 THE PUBLIC ADVOCATE: 8 9 10 11 12 Abel. Aye. Speaker Vallone. Aye. The motion to table the recommittal motion of Council Ognibene has won, 31 to 15. At this time, we will continue the debate and discussion on Intro 220. Council Member Spigner, I believe, is the last one to speak. 13 COUNCIL MEMBER SPIGNER: 14 I would only say that this has been a long Thank you. 15 afternoon, long day. 16 made have been adequately addressed except, perhaps, the 17 issue of the amount of money that the City of New York 18 currently spends in manning and operating its in rem stock. 19 All of the points that could have been The number is $140 million, just for 20 operating expenses, not to take into consideration the loss 21 of real estate taxes and the water bills which, I am told, 22 adds to the figure. 23 24 25 \ Yes. We are talking about $6,000 per year in addition to the rents that are collected. It does not factor in the cost of renovating ( 33 1 2 those buildings that have been taken in rem. 3 tremendous amount of money. It's a We have in place rent regulations for fifty 4 5 years and in that fifty years all we have to show for it is 6 vacant lots, abandoned buildings and foreclosures and an in 7 rem rate that is astronomical. It is a disincentive for people to purchase a 8 9 building or invest in them or maintain them. It is clear to 10 me that it's irresponsible to continue down the same 11 slippery slope. This bill is not a bill that taxes poor 12 13 people. I shed a tear as I listened to the emotional appeal 14 for people who make $250,000 a year. That is really sad. The average rent in New York City is less 15 16 than $600 per month, between $550 and $600. 17 survey shows that. The latest The passage of this bill does not address the 18 19 small home owner, the small property owner. 20 that, but we couldn't get the vote. 21 support in the Committee for the measure that would have 22 given a 25 percent rise in rate on vacancy for twenty units 23 or less. 24 25 We want to do There was not enough We couldn't pass that bill. This bill does not break people who are making a quarter-million dollars. They have options. They ( 34 1 2 can either stay where they are or they can move to some 3 vacant luxury apartment that is in the City of New York. Quarter-million dollars is still a tremendous 4 5 amount of money. 6 dollars as opposed to the need of the City of New York to 7 try and balance a budget where there is a gap of $2.4 8 billion, the tax generated from this increase is not a lot. We are told that it will generate 9 10 approximately $100,000 the first year and $200,000 the 11 second year based on the taxes that will have to be paid on 12 the new rental. However, even $100,000 is a tremendous amount 13 14 of money. As it relates to harassment, there are 15 anti-harassment measures on the books. 17 that if someone is harassed, there are adequate and ample 18 measures 19 that can address and assist people who are being harassed. 21 22 \ My experience is 16 to various funding programs and other services So, harassment, in my opinion, is not a 20 ( When you look at the quarter-million problem. If it is a problem, we have to address it. In so far as the question of the rent that is 23 now $1,200 or a $1,900, the likelihood that will be raised 24 to $2,000 I think is rather remote given the rent stabilized 25 apartments and vacancies. They are only entitled to 5 ( 35 1 2 percent in rent-controlled apartments -- 3 percent. 3 So I urge a yes vote. 4 (Applause.) 5 COUNCIL MEMBER ELDRIDGE: 6 I have two questions. Do you believe that the 17,000 properties 7 8 that are ready to go in rem are properties where there is 9 now a rent of $2,000 a month? COUNCIL MEMBER SPIGNER: 10 As it relates to the 11 17,000 properties, I don't where they are. 12 what condition they are in. I don't know All I know is we have in central management 13 14 41,000 units, which cost us $140 million annually, which 15 does not factor in ~he cost of taxes, water and sewer rates. THE PUBLIC ADVOCATE: 16 If there are no other 17 speakers at this time, the Clerk will now call the roll on 18 Intro 220. 19 THE CLERK: Albanese. 20 COUNCIL MEMBER ALBANESE: 21 THE CLERK: 22 COUNCIL MEMBER BERMAN: 23 THE CLERK: 24 COUNCIL MEMBER CLARKE: 25 THE CLERK: Cruz. No. Berman. Aye. Clarke. Yes. 36 1 COUNCIL MEMBER CRUZ: 2 3 May I be excused to explain my vote. There has certainly been an issue that I 4 5 listened to very carefully and I listened to the debate very 6 carefully. I happen to have a lot of Mitchell-lamas in 7 8 Parkchester. When I hear that there are people opposed to 9 explaining the why's and where's of their income when these 10 tenants living in Mitchell-Lama have to, I find that 11 inequitable, certainly unfair. My first concern about the stabilization is 12 13 that I have been assured as my colleagues have been that 14 there are extensive protections. 15 I vote aye. 16 THE CLERK: 17 COUNCIL MEMBER DEMARCO: 18 THE CLERK: 19 COUNCIL MEMBER DIBRIENZA: 20 25 DiBrienza. THE PUBLIC ADVOCATE: Member. May I be excused You may not, Council You spoke. COUNCIL MEMBER DIBRIENZA: 23 24 Yes. to explain my vote? 21 22 DeMarco. I debated on the motion. THE PUBLIC ADVOCATE: In the spirit of 37 1 2 fairness, Council Member, you can speak to the issue. COUNCIL MEMBER DIBRIENZA: 3 4 say before casting this vote that what could have been a 5 clearer vote for everyone interested in the record of this 6 occasion, I can only cast one vote. The portion of the bill that extends rent 7 8 stabilization, I am in favor of. The portion of the bill that says if two 9 10 things exist, $250,000 and $2,000 rent, you are right, you 11 pay more. 12 There is another portion of the bill that 13 says if an apartment goes to $2,000, it will ultimately fall 14 victim to vacancy decontrol, that section I am opposed to. 15 Having said that, I vote no. 16 THE CLERK: 17 COUNCIL MEMBER WATKINS: 18 I\ I simply wanted to Watkins. Thank you for allowing me to cast my vote now. 19 I vote aye. 20 THE CLERK: Dilan. 21 COUNCIL MEMBER MALAVE-DILAN: 22 THE CLERK: 23 COUNCIL MEMBER DUANE: 24 THE CLERK: 25 COUNCIL MEMBER EISLAND: Aye. Duane. No. Eisland. I would like to ask 38 1 2 permission to reopen the vote on Resolution 144, so I can 3 cast my vote, please. 4 Yes. 5 And on 220, I vote no. 6 THE CLERK: 7 COUNCIL MEMBER ELDRIDGE: 8 THE CLERK: 9 COUNCIL MEMBER ERISTOFF: Eldridge. No. Eristoff. No. 10 THE CLERK: Fisher. 11 COUNCIL MEMBER FISHER: 12 THE CLERK: 13 COUNCIL MEMBER FOSTER: 14 THE CLERK: 15 COUNCIL MEMBER FREED: 16 THE CLERK: 17 COUNCIL MEMBER FUSCO: 18 THE CLERK: 19 COUNCIL MEMBER HARRISON: 20 THE CLERK: 21 COUNCIL MEMBER HENRY: 22 THE CLERK: 23 COUNCIL MEMBER KOSLOWITZ: 24 THE CLERK: 25 COUNCIL MEMBER LASHER: As before on 144, I Pass. Foster. I vote aye. Freed. No. Fusco. Yes. Harrison. Yes. Henry. Yes. Koslowitz. No. Lasher. ( 39 1 2 have the same possible conflict with respect to my wife 3 owning a six-unit building, which is rent-stabilized, and 4 having a four-unit building that is rent-controlled. 5 With respect to the bill, I vote no. 6 THE CLERK: 7 COUNCIL MEMBER LEFFLER: 8 I would like to speak to how people have conveyed this to me. The people that have spoken to me about this, 9 10 Leffler. who care about this issue, don't want this bill. 11 Why? 12 They fear harassment. People who are in the 13 area of $1,200 feel that they will be pressured to get out 14 so their rents can be raised. Maybe there are laws on the books, as Mr. 15 16 Spigner said, but too many people feel that it is just on 17 the books. 18 I think where there is an incentive, you will get it. This is the real world. Harassment does exist. 19 I vote no. 20 THE CLERK: Linares. 21 COUNCIL MEMBER LINARES: 22 THE CLERK: 23 COUNCIL MEMBER MARSHALL: 24 THE CLERK: 25 COUNCIL MEMBER MCCABE: No. Marshall. No. McCabe. I would like to ( 40 1 2 explain my vote. I think the bill before us is misleading. 3 4 think it causes a great sense of distrust between ourselves 5 and tenants in the City of New York. 6 I vote no. 7 THE CLERK: 8 COUNCIL MEMBER MCCAFFREY: 9 I would like to be Let me say that those who end up in advocate 11 positions today, that if the bill were to pass it will be 12 the end of rent control and rent stabilization are pandering 13 to a mistruth. 14 15 \ Mccaffrey. temporarily excused to explain my vote. 10 I I The Chairman of the Committee himself acknowledged what the reality is. 16 I vote aye. 17 THE CLERK: 18 COUNCIL MEMBER MICHELS: 19 THE CLERK: 20 COUNCIL MEMBER MILLARD: 21 THE CLERK: 22 COUNCIL MEMBER O'DONOVAN: 23 THE CLERK: 24 COUNCIL MEMBER OGNIBENE: Aye. 25 THE CLERK: Michels. No. Millard. I vote no. O'Donovan. Aye. Ognibene. Pagan. ( 41 1 \ Aye. 2 COUNCIL MEMBER PAGAN: 3 THE CLERK: 4 COUNCIL MEMBER PINKETT: 5 THE CLERK: 6 COUNCIL MEMBER POVMAN: 7 THE CLERK: 8 COUNCIL MEMBER POWELL: 9 THE CLERK: Pinkett. Yes. Povman. No. Powell. No. Robinson. 10 COUNCIL MEMBER ROBINSON: 11 THE CLERK: 12 COUNCIL MEMBER ROBLES: 13 THE CLERK: 14 COUNCIL MEMBER RUIZ: 15 THE CLERK: 16 COUNCIL MEMBER SPIGNER: 17 THE CLERK: Stabile. 18 COUNCIL MEMBER STABILE: 19 THE CLERK: 20 COUNCIL MEMBER WARDEN: 21 THE CLERK: 22 COUNCIL MEMBER WEINER: 23 THE CLERK: 24 COUNCIL MEMBER WHITE: 25 THE CLERK: Yes. Robles. Yes. Ruiz. No. Spigner. Aye. Yes. Warden. Aye. Weiner. Yes. White. Williams. Aye. 42 1 2 COUNCIL MEMBER WILLIAMS: 3 THE CLERK: 4 COUNCIL MEMBER WOOTEN: 5 THE CLERK: 6 COUNCIL MEMBER FISHER: Wooten. Yes. Fisher. Counsel to the 7 Council has advised me to disclose the law firm of whom I am 8 counsel represents both tenants and landlords and may 9 represent parties that lobby on this. 10 No one in the firm has spoken to me. 11 I vote aye. 12 THE CLERK: 13 COUNCIL MEMBER ABEL: 14 THE CLERK: 15 SPEAKER VALLONE: 16 Abel. Aye. Speaker Vallone. May I be temporarily excused to explain my vote. I compliment my colleagues on both sides. 17 18 This is a very important issue for the people of the City of 19 New York. I think this debate is healthy for both 20 21 \ Aye. sides. 22 I want to record to indicate that the State 23 Legislature enacted a law concerning apartments for $2,000 24 and $250,000 income. 25 remove the date of October 1, 1993. All that the City Council did was to That is all. ~ r 43 1 It did not affect rent control in any way, 2 3 shape or form other than the removing of the date 4 I vote aye. 5 THE PUBLIC ADVOCATE: 6 The Clerk informs me that by a vote of 28 in Thank you. 7 the affirmative, 18 in the negative, Intro 220 passes this 8 Chamber. 9 10 11 We will move to supplemental introduction and reading of bills. SPEAKER VALLONE: At this time I ask that 12 immediate consideration be given to the resolution by 13 Weiner, Berman and Foster, reaffirming the Council's 14 long-standing commitment to and support for Jerusalem as the 15 eternal and undivided capital of the State of Israel. 16 We move to immediate consideration. 17 THE PUBLIC ADVOCATE: 18 (No response.) 19 THE PUBLIC ADVOCATE: 20 Hearing none, all those in favor say aye. 21 (A chorus of ayes.) 22 THE PUBLIC ADVOCATE: 23 (No response.) 24 THE PUBLIC ADVOCATE: 25 Any objections? consideration is adopted. All opposed say no. The immediate ( 44 1 SPEAKER VALLONE: 2 3 immediate considerations. We wish our colleagues of the Jewish faith a 4 5 That concludes the very happy Passover. 6 Council Member Foster wishes to speak. 7 COUNCIL MEMBER FOSTER: 8 Mr. Public Advocate, may I remind my 9 Thank you. colleagues that on Wednesday of this week, the 15th, in the 10 Chambers here we will be celebrating Greek Heritage Month, 11 Independence Day. All Council Members are invited. COUNCIL MEMBER ERISTOFF: 12 I would like to 13 take the personal privilege of drawing this body's attention 14 to the fact that my mother, Nancy Eristoff, was appointed 15 Chairperson of the Museum of Natural History. 16 Thank you 17 SPEAKER VALLONE: 18 The next Stated Meeting will be March 30th. 19 Thank you very much, Mr. Public Advocate. 20 THE PUBLIC ADVOCATE: 21 The Stated Meeting is concluded. 22 (Whereupon, at 4:45 p.m., the meeting was 23 24 25 adjourned.) --------- -- -~ -- ---------- - - - - - - - - --------- 45 1 CERTIFICATION 2 3 4 STATE OF NEW YORK 5 COUNTY OF NEW YORK 6 7 8 9 I, RAYMOND M. DANYO, a Shorthand Reporter and Notary Public in and for the State of New York, do hereby 10 certify that the foregoing ip a true and accurate transcript 11 of the within proceeding. 12 I further certify that I am not related to any 13 of the parties to this action by blood or marriage, and that 14 I am in no way interested in the outcome of this matter. 15 IN WITNESS WHEREOF, I have hereunto set my 16 17 18 19 20 21 22 23 24 25 hand this 8th day of November, 1994. 46 1 2 C E R T I F I C A T I O N 3 4 5 6 7 I, RAYMOND M. DANYO, a Shorthand Reporter and 8 Notary Public in and for the State of New York, do hereby 9 certify the aforesaid to be a true and accurate 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 transcription of my stenographic notes. , , ~ ' , - EmP.rgcncy Procurement in accordance with N.Y.C. Charter (Section 45) which requires the City Council to provide a ·sritt2n transcript through the use of stenograpr,tic services for a stated meeting, committee meeting or he:2ring. .HE CITY COUNCIL ~ CITY OF NEW YORK ------------------------------------------x THE TRANSCRIPT OF THE MINUTES of the COMMITTEE ON HOUSING AND BUILDINGS ------------------------------------------x Cll ::i: March 10, 1994 a: 0 u.. ~ () City Council Council Chambers New York, New York 0 ICl) a: w Cl) 5 ' '4, I ·{ \ B E F O R E : Archie Spigner 0 st 0 LO .;, LO Chairperson N 6 0 ~ 0. ::::, 0 a: Cl >Cll SECTION 2 OF TWO-BOOK TRANSCRIPT a: 0 () w :c I- \,), Linda Bayles 737 Garden Street Hoboken, New Jersey 07030 1 (' COMMITTEE ON HOUSING AND BUILDINGS COUNCIL MEMBER MICHELS: 2 180 I ' l l be sort of 3 brief. 4 in the rent stabilization and maybe rent control is to 5 have, to probably self-destruct, but that was only in 6 the event we reached that five percent. You're right, the rent regulation that was put 7 MR. J. FREUND: 8 COUNCIL MEMBER MICHELS: 9 And you never will. And we will if the economic circumstances are correct and if housing co :; a: 0 u.. 10 can be built, and housing can be built since getting 11 the rent subsidy or any type of benefits, you can do it 12 without rent regulation. 13 to make. ~ (.) 0 t:; a: w (/) :5 .,. 0 14 So that is one point I wanted The other thing you have to understand too 0 "',;, "' C\I 6 0 "? But if 15 is you're talking about loss of tax revenue. 16 you bring up those rents to such an extent that people, 17 with the cost of schools, they want to move out of the 18 city and move to Westchester or New Jersey and because 19 of the schools and the rents are going to move out, 20 you're going to lose your whole middle class. Cl. ::i 0 a: (!) > co a: 0 (.) w J: ..... 21 MR. J. FREUND: Let me suggest to you that 22 people are not moving out of the city because rents are 23 too high but because there are not enough tax revenues 24 to support the services, the education, the telephone 25 services, the police, the sanitation in the streets 1 COMMITTEE ON HOUSING AND BUILDINGS 2 that people have come to expect. 3 that deprives the city of the real estate tax revenue 4 and I ' l l tell you here again that real estate tax 181 If we have a system 5 is the single largest source of local tax revenue, you 6 mentioned COUNCIL MEMBER MICHELS: 7 That's something 8 that we agree with and we think that we're going to be 9 discriminated against. There's a meeting of the minds 10 between the tenants in those buildings and the 11 landlords. 12 high and there should be some equalization. 13 problem with that. We think that the real estate taxes are too I have no But the other thing is the fact that 14 15 you're talking about people are not leaving because of 16 rent increases. 17 the way you want, then people are going to be moving 18 out. 19 You're right. MR. J. FREUND: But if you can increase Let me under the 20 decontrol scenarios, or the proposal for 25 percent 21 vacancy decontrol, I think it is a very deep 22 misunderstanding of the housing market, and the way 23 property owners think to assume that if you put a 25 24 vacancy cap or vacancy allowance on that, all rents 25 upon vacancy will rise 25 percent. \ This is not the L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 case. 3 182 There is a housing market out there. 4 There are market conditions, There are limitations and 5 property owners are in the business of maintaining good 6 tenants, they are not in the business of encouraging 7 rapid turnover, which is a costly process, by the way. 8 They will want to maintain tenants. 9 a good rent paying tenant in New York City today, And if you've got ID :::!; a: 0 u. 10 you're going to want to maintain that tenant. 11 not raise the specter of So let's ~ 0 ~ (/) a: LU ~ 12 COUNCIL MEMBER MICHELS: I think you're 13 right, but the temptation of that dollar is going to be 14 so great. 15 with the condominiums and condos because they were 16 tempted by the dollar. And the landlords ran helter-skelter to go 0.. :::) 0 a: C!) 17 MR. J. FREUND: If we didn't haven't rent ~ a: 0 0 18 regulation they would not have been tempted LU J: I- 19 COUNCIL MEMBER MICHELS: They would be 20 tempted anyway, even the most optimistic 21 MR. J. FREUND: Council Member, I think 22 it's common knowledge that co-op conversion was seen as 23 an escape hatch 24 25 COUNCIL MEMBER MICHELS: that that's not true. I'm not saying But if you didn't have rent 1 COMMITTEE ON HOUSING AND BUILDINGS 2 regulation they still would have done it because they 3 were making much more money under those conditions MR. J. FREUND: 4 5 183 I don't disagree with that. COUNCIL MEMBER MICHELS: 6 Now you ask about 7 harassment because of vacancy decontrol. 8 vacancy decontrol. 9 find a lot more We don't have But I guarantee you you're going to it's not fair to ask them now ID ::i: a: 0 u. 10 because they don't have the situation for harassment. :,.: () 0 I- MR. J. FREUND: 11 (/) If I may clarify, the a: w (/) :s 12 fact is we do have vacancy decontrol in 421-A 13 buildings, in J-51 buildings, without one incidence of 14 harassment that I'm aware of it. 15 without a significant harassment problem that I'm aware 16 of. 17 is, is that it does not happen. So we do have that. We have vacancy and The evidence, as small as it D. ::::, 0 a: (!) >ID a: 0 () COUNCIL MEMBER MICHELS: 18 The legal w J: I- Please, that 19 principle of de minimus goes in here. 20 isn't what we're talking about here. 21 about housing in areas which are fairly well-to-do 22 421 a 23 MR. J. FREUND: You're talking No, sir, you have fifteen 24 to 20,000 units coming out of rent control 25 to a fair market rent situation. You have an going 1 L COMMITTEE ON HOUSING AND BUILDINGS COUNCIL MEMBER MICHELS: 2 3 the DHCR. As determined by So it's not an open market thing. MR. J. FREUND: 4 184 It certainly provides for 5 a substantial rent increase which the owner is entitled 6 to because with very low rents 7 entitled and does often accomplish a large increase in 8 rents, a significant and substantial increase in rents, 9 moving from rent control to rent stabilization, and I'm so the owner is CD :; a: 0 u. 10 not afraid to admit that, but it does not result in 11 tenant harassment. 12 a year. :.:: u 0 ti And that's fifteen or 20,000 units a: w ~ 13 ~ COUNCIL MEMBER MICHELS: And also because 14 the landlords well very know that the rent controlled 15 tenant is very well protected. 0 II) .;, II) N 6 0 ~ a.. 16 MR. J. FREUND: That's exactly the :::, 0 a: (!) That is what's going to prevent tenant 17 point. 18 harassment under any decontrol >CD a: 0 u w :r I- 19 COUNCIL MEMBER MICHELS: 20 into another ballpark. 21 decontrol. You're saying complete MR. J. FREUND: 22 But you're going Pass more anti-harassment 23 laws, do what you need, Stanley, protect those tenants 24 from 25 COUNCIL MEMBER MICHELS: There's no amount L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 of money for us to be able to pass to get inspectors to 3 protect from harassment, the unscrupulous landlords are 4 out to harass senior citizens and others. 5 temptation of the dollar is there, there's no amount of 6 money that is going to protect them. 185 Once that One final question I would like to ask 7 8 you. Would you go to the State Legislature, because it 9 is unfair not to tell people that it needs state Ill :i! a: 0 u. :.: 10 legislation, the rent subsidies for people, you need 11 state legislation on that. 12 the state and say we support that legislation? (.) 0 t;; Are you prepared to go to a: w U) ::s 13 14 a. MR. J. FREUND: Absolutely, we'll go up there hand in hand with you. 15 COUNCIL MEMBER MICHELS: 16 CHAIRPERSON SPIGNER: Thank you. Thank you, :) 0 a: C!) 17 gentlemen. >Ill a: 0 (.) 18 Excuse me, Council Member Marshall. 19 COUNCIL MEMBER MARSHALL: w J: I- You sparked a On a rent controlled vacancy, how is the 20 question. 21 rent increase determined to move on to rent 22 stabilization? MR. J. FREUND: 23 It's not a short answer, The statute says you're allowed to 24 Councilwoman. 25 obtain a fair market rent upon the vacancy of a rent -------- t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 controlled apartment. 3 sets a formula, a guideline for what this fair market 4 rate should be. 6 a: 0 Generally speaking MR. J. FREUND: 7 al ::!; The Rent Guidelines Board also COUNCIL MEMBER MARSHALL: 5 186 I can tell you, for 8 instance, that the RGB guideline I believe was 40 9 percent above the maximum collectible rent, something 10 on that order. IL :,:: (.) 0 I- m a: w rn ~ 11 COUNCIL MEMBER MARSHALL: 12 existing other rents in the building? MR. J. FREUND: 13 14 16 No, that would be before the rent controlled rents, in essence. COUNCIL MEMBER MARSHALL: 15 a.. Does that mean In other words, what is accepted as the rent level? ::) 0 a: Cl ina: 0 (.) MR. J. FREUND: 17 Yes, what is collected as 18 the rent controlled level. The formula varies from 19 year to year as to whether it's the maximum. 20 very complex system. 21 into the oddities of the rent control system. w :I: I- 23 I think you could give me some general idea. MR. J. FREUND: 24 25 I don't know that we need to get COUNCIL MEMBER MARSHALL: 22 It's a asking. I'm not sure what you're t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 COUNCIL MEMBER MARSHALL: 187 I asked in a 3 rent controlled apartment that becomes vacant, that 4 apartment will not go to rent stabilization. 5 the new rent level determined? 6 involved in coming up with the new rent figure? MR. J. FREUND: 7 How is What are the factors An owner will attempt to 8 look around the market, see what comparable apartments 9 are going for, and he is entitled to get that type of 10 rent for a comparable apartment. 11 call in normal parlance a fair market rent. 12 13 That's what we would COUNCIL MEMBER MARSHALL: Considering what you're calling fair market, that's a considerable jump. 14 MR. J. FREUND: Yes, that's exactly my 15 point. 16 does not lead to any notable number of instances of 17 harassment. It very often is a considerable jump and it 18 COUNCIL MEMBER MARSHALL: 19 a number of instances in my district. MR. J. FREUND: 20 21 24 25 I'm sure you could, and we certainly would not condone any instance. 22 23 I could show you COUNCIL MEMBER MARSHALL: I know that you wouldn't. MR. J. FREUND: be one or two bad apples. There are always going to 1 L COMMITTEE ON HOUSING AND BUILDINGS 188 DHCR, I believe on an annual basis, 2 3 probably does determine a handful of c!ses of actual 4 harassment. 5 that those cases are all in the instance of a rent 6 controlled vacancy. It does and will happen. I don't know 7 COUNCIL MEMBER MARSHALL: 8 A rent ~ontrolled apartment owner is really living 9 rather dangerously, they are, because they are under a 10 lot of pressure, except in areas where there are other 11 tenants in the building. I'm from Queens. al ~ a: 0 u.. ~ (.) 0 !;; But they're at risk. a: w Cl) :5 ..,. "'.;., "' "' 0 12 Thank you. 13 CHAIRPERSON SPIGNER: 14 Council Member Ognibene. 0 15 COUNCIL MEMBER OGNIBENE: I just wanted to 6 0 "i' ~ a. :::> 0 a: C!l 16 clear that up. 17 that was being rented, six rooms for a hundred dollars 18 under rent control, when it became vacant the rent 19 would go then to whatever the fair market is, let's say 20 $500. 21 increase won't be imposed on any existing tenants. 22 tenants would pay $400 or $500 because that was the 23 fair market rent, 24 under rent control it is something else. 25 MR. J. FREUND: For instance, if you had an apartment >al a: 0 (.) w J: I- For you the increase would be $400 but that so nobody is being harassed. And The tenants in the rent New 1 COMMITTEE ON HOUSING AND BUILDINGS 2 controlled apartment, what usually happens is that 3 instead of fairness applying, some cousin who is living 4 in California moves in and that $100 rent is unfair 5 because the person never lived there and the rent 6 controlled tenant has been living there for 30 years, 7 saving $300 and $400 a month and usually walks away 8 with $200 or $300 of money that should have gone to pay 9 the rent and support the other people that are working 10 hard. COUNCIL MEMBER MARSHALL: 11 12 189 There's a difference between $100 and $400. COUNCIL MEMBER OGNIBENE: 13 It's clear 14 between what is fair equity and just, that's the 15 difference. 16 17 18 19 20 CHAIRPERSON SPIGNER: Council Member Eristoff. COUNCIL MEMBER ERISTOFF: Thank you very much, Mr. Chairman. Mr. Freund, just one brief question. We 21 had some testimony earlier from Mr. Collins of the Rent 22 Guidelines Board stating that a number of housing 23 scholars have concluded that rent regulation is not a 24 source of distress. 25 high property taxes are the primary source of distress. Those scholars have concluded that 1 COMMITTEE ON .HOUSING AND BUILDINGS 2 190 Focusing on the high property taxes 3 element of that, would you and your organization be 4 prepared to join with tenants in a unified effort to 5 finally seek just taxation for Class 2 properties? MR. J. FREUND: 6 There's no question that 7 the property tax burden on Class 2 properties as a 8 whole is an inequity compared to Class 1. 9 point that Tim Collins was trying to get to was to I think the 10 point out that smaller rent regulated properties, those 11 of less than 20 units, bear a disproportionate tax 12 burden, even within Class 1, that even within the class 13 they are more highly assessed and pay more taxes per 14 unit than a larger building 15 COUNCIL MEMBER ERISTOFF: Because they 16 don't have the money, for instance, to hire a lawyer 17 who specializes in tax certiori or something like 18 that. 19 MR. J. FREUND: Maybe that they do not 20 have the knowledge or sophistication or the ability to 21 hire a tax lawyer to go down to protest those high 22 levels of taxes. 23 assessment practices, but I believe Mr. Collins when he 24 says that these smaller buildings are 25 disproportionately burdened with real estate taxes, and I'm not quite sure what it is about L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 we need to address that in some way. COUNCIL MEMBER ERISTOFF: 3 191 It just seems to 4 me that we have now isolate an issue or a problem upon 5 which both sides of today's hearing can agree upon and 6 really work toward some reform, not only the global 7 issue of Class 1 versus Class 2, but also the 8 micro-issue of assessment practices within each 9 class. ID ::; a: 0 10 MR. J. FREUND: We would love to work with lL :.:: (.) ~ Cl) 11 you on decreasing the real estate tax burden on Class 2 12 properties, in particular on the smaller buildings. 13 That is not the issue before this committee today. a: w Cl) ~ 0 What we would like to see you do today is 14 'd" 0 "',;, "'6N 15 address those issues which are in your power to deal 16 with right now and that is the issue of the rent 17 regulatory system, the rent laws which everyone to some 18 extent also acknowledges are a problem. 19 of the problem, the part of the problem that you can 20 deal with today. 21 about. 0 ~ ~ 0.. :, 0 a: C!) >- ID a: 0 (.) They are part w :i: I- 22 That's what we are here talking We can agree on property taxes, we can We will be 23 study it, we can work towards a solution. 24 glad to sit down with you on those issues. 25 do something about these rent laws today that are But let's L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 restricting rental housing, restricting the economy of 3 the City of New York and denying housing opportunities 4 for a wide range of New York residents. COUNCIL MEMBER ERISTOFF: 5 192 I understand 6 that's your position. 7 afternoon and I really haven't heard anything that is 8 conclusive that supports the notion that rent 9 regulation is the source or a major source of distress. 10 But I have been sitting here all And this testimony by Mr. Collins is 11 extremely compelling. 12 looking at this for a very, very long time and I tend 13 to believe him because he's really backed it up with 14 some hard numbers. 15 heard a great deal of data supporting your position 16 today. 17 His researchers have been With all due respect, MR. J. FREUND: I haven't Well, we will certainly 18 provide you with counterpoint to every piece of 19 argumentation provided by Mr. Collins. 20 an ongoing debate. 21 that the increase in operating costs to rent ratios 22 that Mr. Collins cites there, that these are totally 23 harmless, that it's okay for buildings to operate at a 24 90 percent operating ratio to rent situation, I mean, 25 that's just not possible. This has been We do not, for instance, believe t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 193 2 I will not take, as I indicated before, I 3 will not take an hour here to counter every one of Mr. 4 Collins' points. 5 Collins is the executive director of the Rent 6 Guidelines Board. 7 stand constitutional challenge, it must be demonstrated 8 that in fact there is no harm from rent regulations. But let me make this point. Mr. For this rent regulatory system to I would say that Mr. Collins is not a 9 10 disinterested observer in this process, that his job 11 and the existence of the Rent Guidelines Board and the 12 existence of the entire regulatory system hinges on the 13 fact that you can demonstrate that that system does not 14 do economic damage to rental properties in New York. 15 We believe it does, we believe we have 16 provided numbers each year to the Rent Guidelines Board 17 and prior years to the City Council to demonstrate the 18 economic damage directly created by our system of rent 19 regulation. 20 COUNCIL MEMBER ERISTOFF: I doubt it. But maybe you 21 can back up your point. But we are given 22 to understand that the state is now undergoing a 23 causative review, have empowered a commission to look 24 at all of these issues, and won't report until the end 25 of next year. It seems to me that we would be treading L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 on very dangerous ground by anticipating the results of 3 that report by taking some precipitous action today. 194 4 Doesn't it stand to reason that the City 5 Council should do nothing other than to keep in place 6 what the state enacted without any further weakening 7 amendments and we can look forward to the results of 8 that commission? 9 infinite wisdom advance beyond something that we don't Should the City Council in its al :ii a: 0 10 even know what the results will be? 11 little I mean, it seems a IL :.:: (.) 0 ti a: w 5 ..,. 0 12 MR. J. FREUND: 13 your sincere concerns on the issues here. 14 suggest to you that if you had been as concerned about 15 this as the last time the City Council extended the 16 rent laws, you would have urged that the issues should 17 have been studied and by now you would have had the 18 answers. Councilman, I appreciate Let me 0 LO J, LO N 6 0 "i' - Q. ~ 0 a: C!l iiia: 0 (.) w J: I- 19 This issue has been studied to death, 20 quite frankly. 21 there right now. 22 you and I will probably never agree on many of these 23 issues here, although we may agree on real estate 24 taxes. 25 I think any answer you want is out There is going to be disagreement and But the simple response is not we need t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 more study, we need to look at something other than 3 rent regulation. 4 problem, it is necessarily part of the problem. 195 The rent regulation is part of the Let me give you a little for-instance 5 6 here, and I don't want to go astray but I think it's an 7 adequate analogy here. 8 tried to re-regulate cable rates, the immediate result 9 was that the poor people on cable paid more for the When the federal government 10 basic service and the rich folks on cable paid less for 11 their premium channels. 12 Now having discovered that that's what 13 happened, the Congress is backing their 14 see whether they can re-regulate and rewrite those laws 15 to do away with some of the unintended consequences of 16 their regulatory intervention, their price 17 intervention. 18 can't intervene in a market, whether it's a housing 19 market, a cable market or any other market, you can't 20 have longstanding price controls without having some 21 negative consequences. You can't, let me suggest to you, you This is Economics 101. 22 CHAIRPERSON SPIGNER: 23 COUNCIL MEMBER ERISTOFF: 24 25 well, to Okay, thank you. Thank you very much. CHAIRPERSON SPIGNER: Moving along 1 COMMITTEE ON HOUSING AND BUILDINGS 196 COUNCIL MEMBER ERISTOFF: 2 I just wanted to 3 say thank you for your testimony and I take your 4 comments as well intentioned. 5 disagree and I think the members of the committee will 6 also disagree with you. 7 ought to focus on property taxes as one of the major 8 causes of the housing distress and let's just work 9 together 10 11 I just happen to But I nonetheless think we CHAIRPERSON SPIGNER: Your point, Council Member, is made. 12 Thank you, Mr. Freund and Mr. Ricci. 13 Moving along, Harriet Cohen, representing 14 Manhattan Borough President Ruth Messinger. 15 COUNCIL MEMBER MICHELS: Mr. Chairman, 16 Harriet Cohen of the Borough President's office had to 17 leave. 18 in the record and told me to tell you and to make a 19 representation to the committee that Ruth Messinger, 20 the Borough President of Manhattan, supports Intro 215 21 and Resolution 144 and opposes all of the other 22 resolutions. However, she left me some testimony to be put 23 CHAIRPERSON SPIGNER: 24 Helen Daniels, the Black and Latino 25 Property Owners Coalition. Thank you very much. 1 L COMMITTEE ON HOUSING AND BUILDINGS Identify yourself and we'll be happy to he 2 3 197 hear your testimony. MS. H. DANIELS: 4 My name is Helen Daniels, 5 the chairperson of the Black and Latino Property Owners 6 Coalition. 7 providing me the opportunity to come this afternoon to 8 speak before you. 9 And I want to thank you, Mr. Chairman for As stated, I represent the Black and 10 Latino Property Owners Coalition. 11 formed to represent the interests of minority property 12 owners in New York City. 13 their particular interests were not being addressed by 14 state and local government officials. 15 The coalition was The organizers felt that The goal of the coalition is to provide 16 another voice, especially at the legislative level, for 17 home and property owner ~elief. 18 legislators that there are many property owners in 19 minority communities who desire relief from onerous 20 regulations, taxes and administrative practices, we 21 hope to attract the attention of legislators who may be 22 able to provide the critical votes necessary to 23 effectuate overdue changes. 24 25 By informing I am here today to let the Legislature know that minority ownership of New York's rental 1 COMMITTEE ON HOUSING AND BUILDINGS 2 housing is growing. 3 nearly 27 percent of recent purchasers of rental 4 properties. 5 rental buildings, generally manage their own buildings, 6 collect the rents and do some janitorial and 7 maintenance work themselves. 8 are largely located in minority occupied neighborhoods, 9 which are often categorized by deteriorating housing 10 198 Blacks and Latinos constitute Most of the minority owners own smaller Minority owned buildings conditions and many city owned structures. As property owners who live in the 11 12 community, we understand that one of the most 13 oppressive and recurring problems facing tenants is 14 exorbitant rent increases. 15 rent regulations were enacted to help keep these rent 16 prices down. 17 We also understand that However, the underlying premise of these 18 controls was that the property owner would be 19 protected. 20 be allowed a fair return on investment or at least the 21 ability to maintain the property and break even. 22 Unfortunately, under the rent control laws, this has 23 not been the case. 24 25 Even with regulation, an owner would still Rent control has not benefitted the tenant or the small building owner/landlord. The reason for L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 this is housing codes, pro-tenant abatement remedies 3 and 40 years of emergency and non-competitive rent 4 regulations have combined to make it impossible for the 5 small owner to maintain and operate rental property. In 6 far too many cases, this situation has forced owners to 7 abandon their properties or cause the properties to go 8 in rem. 9 199 I would like to share with the committee a 10 story that comes to mind. 11 a brownstone in Harlem. 12 Each paid between $10 and $12 weekly, which added up to 13 $128 in total monthly rental income. 14 the rent to $25 weekly for each tenant. 15 took the owner to court and the tenants won. 16 were reduced to the original amounts by the court. 17 Moreover, the owner was required to pay all court 18 costs, fines and tenant overcharges. 19 It is a story of an owner of The owner had three tenants. The owner raised The tenants The rents As a result, the owner could not pay 20 taxes, maintenance costs and other expenses. The owner 21 lost the property. 22 landlord and raised the rents to $250 monthly per 23 tenant and unit. 24 building, the rents were again reduced to the original 25 amounts. The City of New York became the When the owner reclaimed the If the city needed that much to carry the L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 building, then why didn't the owner? 3 exempt from all housing regulations and the owner was 4 not. 200 The city was The hearings you are conducting serve to 5 6 review the future .of rent control. 7 like to recommend vacancy decontrol for properties of 8 20 units or less. 9 increase rents only on vacant units, while the occupied The coalition would This would allow the owners to 10 units continue to be governed by rent control. 11 are allowed to set fair rents to cover our basic needs, 12 we can preserve needed housing in our communities. 13 If we By preserving housing, we preserve 14 neighborhoods and ensure that every New Yorker has 15 equal access to housing. Thank you so much for allowing me to come 16 17 before you. 18 CHAIRPERSON SPIGNER: Thank you very much. 19 We've heard several of the previous 20 speakers make reference to the fact that in some areas 21 of the city that property owners are not able to 22 collect even the rent regulated rents. 23 about the rents at $10 and $12. 24 rooms, right? 25 MS. H. DANIELS: Now you talk That would be for That's rooms, yes. 1 L COMMITTEE ON HOUSING AND BUILDINGS CHAIRPERSON SPIGNER: 2 201 Do you know of 3 owners in your group, Latino and African American 4 property owners, that are unable to, in their 5 buildings, to attain the rent regulated limits? MS. 6 H. DANIELS: Yes, I do. We find that 7 throughout the members, and I say my membership is 8 citywide and I do have members that are in the process 9 now, the building is already in rem because of the low 10 rents they are they were collecting and unable to 11 collect higher rents in order to just meet the basic 12 necessity. 13 CHAIRPERSON SPIGNER: 14 MS. H. DANIELS: 15 CHAIRPERSON SPIGNER: 16 Thank you very much. Thank you. Moving along now, the Brooklyn Borough President's office, Malika Graves. 17 MS. M. GRAVES: Good afternoon. My name 18 is Malika Graves and I am speaking on behalf of 19 Brooklyn Borough President Howard Golden. 20 testimony: This is his 21 I am speaking before you today on behalf 22 of all tenants who reside in rent controlled and rent 23 stabilized apartments throughout Brooklyn and all of 24 New York City. 25 rent regulations after April 1, 1994 is of the utmost The need to continue the laws governing 1 COMMITTEE ON HOUSING AND BUILDINGS 2 importance to everyone. 202 New York City is in the grips of a housing 3 4 emergency. 5 increase daily. 6 of available, affordable, and decent housing units. 7 Families and inqividuals with limited incomes and means 8 are particularly hard hit by this shortage of adequate 9 housing. 10 The rate of homelessness continues to At the same time, there is a shortage It is unlikely that the situation can be 11 resolved before April 1, 1994. 12 regulations are not continued, the possibility of 13 excessive rent increases coupled with evictions due to 14 the failure of tenants to pay said increases will 15 produce a serious threat to the public health, safety 16 and general welfare. 17 If these rent I support the Council's proposed 18 resolution urging the Governor and the New York State 19 Legislature to adopt legislation authorizing the City 20 of New York to establish a program modeled after the 21 Senior Citizen Rent Increase Exemption that would 22 shield low income households from rent increases. 23 The establishment of a low income tenant 24 rent increase exemption program would provide subsidies 25 in the form of real property tax abatements for owners L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 of buildings where the household's rental payments 3 exceed one-third of their incomes. 4 help offset the reduction of rental income the property 5 owner might otherwise have received. 6 would cover low income tenants who reside in buildings 7 at high risk of delinquency and abandonment in targeted 8 neighborhoods. 9 203 This abatement will This proposal I strongly urge the Council to approve the 10 continuation of the rent regulations after April 1, 11 1994 to protect all New York City residents. 12 afford to let these regulations lapse until the housing 13 crisis can be addressed. 14 would like to request that landlords open their books, 15 as a good faith showing on their part. 16 would be advantageous to both tenants and landlords and 17 help bolster a better relationship between them. CHAIRPERSON SPIGNER: 24 And thank you, and give our best to the Borough President. 22 23 This effort Borough President Golden's testimony. 20 21 As part of this process, I Thank you for allowing me to present 18 19 We cannot Marolyn Davenport, Real Estate Board of New York. MS. M. DAVENPORT: My name is Marolyn \ 25 Davenport, representing the Real Estate Board. Thank 1 COMMITTEE ON HOUSING AND BUILDINGS 2 you for the opportunity to speak. 204 "Rent regulations inflate the cost of 3 4 housing, rob the city of tax revenues, discourage new 5 construction and speed the deterioration of older 6 housing," stated a New York Times editorial last summer 7 in a message to the State Legislature. Further, said the Times, 8 9 "If the Legislature clings to the status quo it will have 10 missed another opportunity to help a city that badly 11 needs rational rent laws, not legislation driven by 12 politically fanned fears." 13 equally to this body today. 14 This message applies As a result of 50 years of rent 15 regulations and ill conceived housing policies, we are 16 passing on a diminished and deteriorating residential 17 inventory to future generations. 18 are: 19 The painful facts New York has had lower per capita rates of 20 new, private residential development than any other 21 American city for decades, as well as much higher rates 22 of housing abandonment and decay. 23 Not surprisingly, it has maintained lower 24 vacancy rates for affordable housing for this period 25 than virtually anywhere else. 1 L 2 3 4 COMMITTEE ON HOUSING AND BUILDINGS 205 The political process has prevented a candid, open examination of housing issues. As a result, New York is one of a handful 5 of American cities where housing costs far outstrip 6 housing quality. 7 decades in the making and cannot be remedied quickly. 8 Measures must be taken to attract capital and skills to 9 the residential stock and to make the laws governing 10 11 Our current plight has been five housing fairer and more economically efficient. The Rent Regulation Reform Act of 1993 12 recognized that rent regulations provide a grossly 13 misdirected subsidy to many well-to-do New Yorkers. 14 These subsidies reduce tax revenues by keeping 15 assessments artificially low and driving improvement 16 capital away from residential properties. 17 properties' incomes are limited by regulation, but 18 operating expenses 19 rise steadily. 20 These labor, taxes, fuel and water Consequently, investors and lenders shy 21 away from rent regulated apartment houses, while 22 buildings' market values and assessments sink, 23 depriving the municipal treasury of revenue. 24 same time, protected rents discourage occupants from 25 moving to more desirable or suitable housing. At the t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 206 The state took a small first step toward 2 3 phasing out rent regulations for the wealthy last July 4 by providing for the deregulation of some luxury units. 5 The 1993 rent reform act provides for vacancy decontrol 6 of high rent units, that is, tho~e renting for over 7 $2,000 a month. 8 no one disputes that there has ever been a housing 9 emergency for units renting at this price. 10 At four times the current median rent, However, for this provision to begin to 11 provide for a gradual and orderly transition, it must 12 be extended to rents which reach $2,000 a month after 13 the brief 12 week window currently allowed. 14 strongly urge the committee to support the deletion of 15 the October 1, 1993 deadline. 16 We Luxury decontrol is supposed to be 17 cumulative 18 1st deadline completely removes the capital investment 19 incentive that was the single most important reason for 20 enacting the change in the first place. 21 that's what makes it work. The October Rent regulations have long provided a 22 subsidy to many prosperous New Yorkers. When the Real 23 Estate Board first proposed high income decontrol, we 24 recommended that all units rented by families with over 25 $100,000 a year income be deregulated. In adopting the t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 measure, the Legislature pegged high income at $250,000 3 a year and added the requirement that the unit rent be 4 $2,000 a month or more. 5 the $2,000 rent requirement. 6 207 There is no reason or logic to It's outrageous public policy to subsidize 7 occupants making $250,000 a year regardless of whether 8 their rent is $2,500 or $1,200 a month. 9 in this instance simply results in a higher subsidy to The lower rent 10 the high income tenants and a lower property assessment 11 and tax revenues generated from the building. 12 strongly urge the deletion of the rent level 13 requirement from the deregulation of units occupied by 14 high income tenants. 15 We The fragile financial state of the 16 existing housing stock, particularly small buildings, 17 is well documented and is understood by the members of 18 this committee. 19 on mortgage and tax arrears on rental properties was a 20 wake-up call to everyone who cares about preserving our 21 housing. 22 The Community Service Society's report And we all understand that long before an 23 owner misses a mortgage or tax payment, he will defer 24 needed repairs or maintenance where operating costs 25 exceed the rent roll. The result, housing in tax or t_ 208 1 COMMITTEE ON HOUSING AND BUILDINGS 2 mortgage arrears is also deteriorating physically for 3 lack of capital or operating income. Small building owners are particularly 4 5 hurt by rent regulation. 6 overwhelming, to say nothing of the financial realities 7 of operating these buildings. Something must be done to assist owners of 8 9 The paperwork alone is smaller buildings to manage and retain their 10 properties. 11 fewer units would restore some financial stability to 12 these properties without hurting tenants in occupancy. Vacancy decontrol of buildings with 20 or We applaud the courage of the committee in 13 14 suggesting changes to the status quo and we hope that 15 you will go forward and approve those changes. 16 Thank you. 17 CHAIRPERSON SPIGNER: 18 19 20 21 22 23 Thank you very much as well. Senator Franz Leichter. I don't see his representative here. All right, Hilda Chavis, Northwest Bronx Community Clergy Coalition. MS. H. CHAVIS: Good evening. I am going 24 to read my statement that I read earlier today on our 25 press conference on the steps of City Hall. That t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 statement says it all for us. 209 I am joined today by tenants from all over 3 4 New York City. 5 Morris Heights in . the Bronx, from Kew Gardens in 6 Queens, Manhattan's Chinatown, Bay Ridge in Brooklyn 7 and many other neighborhoods to show their support for 8 the renewal of rent laws in the City Council. Tenants have come from neighborhoods of We are here today to say that without the 9 10 rent laws we wouldn't have our neighborhoods. 11 laws are good. 12 unwarranted rent increases, undeserved evictions, and 13 from landlords who don't provide services and repairs. 14 The rent laws have been getting a bad rap The rent They protect tenants from sudden, 15 from the real estate people in the last year but 16 tenants like myself are never included in the debate 17 about the merits of the rent regulations. 18 Council has before it proposals to do more luxury 19 decontrol and proposals to raise rents by 25 percent. 20 The City The tenants stand united against these 21 proposals. 22 keeping the rent regulation system intact. 23 Legislature weakened the laws last summer and the real 24 estate people want to continue chipping away at this 25 protection here in the City Council. Our lives and our neighborhoods depend on The State And there are L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 Council Members who want to help the landlords. 210 We tenants came here today to say no more 3 4 weakening amendments. 5 Support Council Member Stanley Michels' bills to renew 6 the rent stabilization and rent control laws. We want the laws as they are. 7 CHAIRPERSON SPIGNER: 8 MS. H. CHAVIS: 9 Donelle Gladwin for Assemblyman Pete 10 Thank you very much. Thank you. Grannis. 11 MS. GLADWIN: Thank you very much for 12 allowing me to speak today. 13 Gladwin, speaking for Assemblyman Pete Grannis. 14 My name is Donelle I appear before you today to urge you and 15 the full City Council to adopt Resolution No. 144 and 16 pass Intro No. 215 and by so doing continue rent 17 protections desperately needed by New York City tenants 18 on the basis of the continuing existence of a housing 19 emergency. 20 Rent regulations are vital for the lives 21 and well being of tenants living in rental apartments 22 in the city. 23 from unfair evictions, illegal practices and excessive 24 rent increases. 25 They depend on these laws to shield them These regulations, whose fate now rests in t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 your hands, enable rental residents of this city to 3 live in affordable apartments, raise a family, and 4 contribute to their community and the city as a whole 5 without the threat of being uprooted every lease 6 renewal. 7 regulations allow them to live out their lives in their 8 homes, 9 neighborhoods. 211 For thousands upon thousands of seniors, rent living independently, contributing to their 10 Rent regulations, however, do not only 11 benefit individuals but communities as well. 12 preserving affordable housing, rent protections are 13 probably the most effective tool in the city's arsenal 14 for maintaining economic diversity in our 15 neighborhoods. 16 established longstanding neighborhoods against the 17 forces of gentrification and dislocating 18 development. 19 By Regulations provide a buffer for As the Council and, most importantly, 20 tenants well know, when the issue of rent extenders 21 came before the State Legislature last year, the Senate 22 Republican majority, at the urging of the real estate 23 industry, repeatedly pushed negotiations dangerously 24 close to the expiration date with total disregard for 25 the emotional impact on the lives and health of city L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 residents. 3 212 As word of the risk caused by the Senate's 4 callous efforts to disrupt the continuation of rent 5 protections spread during the months the issue was 6 before the Legislature, tenants became increasingly 7 apprehensive about the fate of their homes. 8 9 Far more than usual, in these troubled economic times, the real estate industry's highly 10 aggressive campaign against rent protections took a 11 tremendous psychological toll on renters, especially 12 seniors and lower income families. 13 By approving the measures before you 14 today, without weakening amendments, you will not only 15 help to reassure tenants across the city but will send 16 a clear signal that this body, unlike the Republicans 17 in the State Senate, understands that tenants are the 18 backbone of the city's future. 19 Thank you very much. 20 CHAIRPERSON SPIGNER: 21 Mr. William Moses, Community Housing Thank you. 22 Improvement Program and the Rent Stabilization 23 Association of New York. 24 25 MR. W. MOSES: Mr. Chairman and members of the committee, my name is William Moses and I am a vice L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 president of the Rent Stabilization Association, RSA, 3 and chairman emeritus of the Community Housing 4 Improvement Association, CHIP. 213 However, I am now speaking before you, 5 6 although I have been speaking for almost 30 years, as a 7 fellow New Yorker. 8 organization. I am not representing any I want to tell you that as I have listened 9 10 to the speakers today and thought about all the work 11 and studies and so forth that have gone on in the past 12 recent times. 13 One of the major charts, and don't see it 14 yet, 15 by Donald Kummerfield in his report to Mayor Dinkins in 16 December in which he called for a careful look at the 17 city's housing development and in rem programs suggests 18 that the city is spending hundreds of millions of tax 19 dollars to compensate for failures in the private 20 housing market. 21 is a chart dealing with a remark and a report made The city should press for a faster 22 phase-out of rent regulations and take other steps to 23 revive the housing market, including modifications of 24 its land use and zoning procedures. 25 the advisor to Mayor Dinkins saying that we must phase But here we have t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 these regulations out quickly. 214 Now I recognize that this body is not able 3 4 to do everything that needs to be done. 5 has to be a two step or a three step process, then so 6 be it. 7 However, if it The first step is to begin the process of 8 phasing out these regulations. One of the reports, and 9 I don't know whether these have been distributed to 10 you, my remarks, the Community Service Society points 11 to the Rand Institute study of rental housing in which 12 put estimated housing losses due to abandonment at 13 15,000 a year during the 1960s and an astounding 38,000 14 units a year between 1965 and 1968. 15 city only 4,600 abandoned multi-family dwellings taken 16 through tax foreclosure and another 23,000 in tax 17 arrears for at least a year. 18 And in 1976 the The loss in the rental housing stock 19 through abandonment, and this lady is standing up there 20 doesn't change the facts because I didn't gather these 21 facts, these facts have been done by others who have 22 been hired by the city. 23 Now, the Housing and Vacancy Survey points 24 out that there are 134,000 rental occupied apartments 25 in our city built before 1900, before 1900 \ 134,000 L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 renter occupied units 3 occupied units built before 1920. 4 house more than a million people but clearly not for a 5 long time. 6 facts. 7 215 and over 400,000 renter These units can It's time for us to start looking at these Look at the statement made by Mr. Roger 8 Starr, who is a former New York City housing 9 commissioner, professor, writer, New York Times 10 editorial board member, who wrote in his book, 11 "The Rise and Fall of New York City," done in 1985, 12 that notes that, 13 therefore, broken up the rental housing market; i t has 14 speeded the deterioration of fundamental good buildings 15 and has forced tenants to buy cooperative apartments. 16 Above all, it has not succeeded in accomplishing what 17 sanguine legislators promised; it has not provided 18 moderate cost housing for New Yorkers." 19 "New York's rent regulation has, And he continues, "New York, having had 20 one rise and fall, may be destined to diminish until it 21 disappears as one of the world's great cities. 22 would not have been the first." 23 It The premise for the need for rent 24 regulation as it's been related here time and again 25 today is the five percent vacancy rate. In 1993, the L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 rate was deceptively set at 3.44 percent. 3 misleading number is arrived at by excluding 39,603 4 apartments that are called vacant but not available 5 because they're being held for occasional or 6 recreational use. 216 This Add them back to the 70,000 vacant units 7 8 used by the city and the vacancy rate is 5.38 percent. 9 But don't stop there. Add back another 87,000 vacant ID ::i? a: 0 10 but not available units, which do not including 5,000 11 dilapidated units, and the vacancy rate is 9.65 percent 12 for New York City. 13 rate, LL ~ (.) 0 ti a: w ~ This is our city's true vacancy 9.65 percent. Professor Peter Salins of Hunter College, 14 15 who has written many, many books and is a very 16 important economist, and has done work ·for the city in 17 his most recent book, 18 points out, 19 City from 1981 to 1986, a period of prosperity and 20 economic and population growth, was 30 percent lower 21 than prevailing in the middle of the Great Depression 22 when the city was losing both people and jobs." a. :::, 0 a: (!) ~ a: 0 (.) "Scarcity by Design," 1992, "The housing construction rate in New York w :x: I- 23 A further comment by Professor Salins is, 24 "Another way of computin_g the Manhattan bias of price 25 control benefits is to compare the aggregate windfall t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 benefit of the Manhattan core resident to the rest of 3 the city. 4 be worth $934 million for the Manhattan core's 308,000 5 controlled households, $3,032 per households, as 6 opposed to $417 million per year for the city's 7 remaining 848,000 controlled consumers, $492 per 8 household per year." 11 12 13 In 1984 this was conservatively estimated to And this work was done by Arthur Little 9 10 217 as well. The price of a half-century of rent regulations is being paid in many different ways: $1.6 billion dollars in real estate tax 14 arrears occurred from 1983 to 1992, including $600 15 million for 1991 and 92. 16 around me, all around me (indicating). 17 some of them are behind me. 18 And these charts are all I'm sorry that The loss of these taxes plus uncounted 19 losses on buildings taken in rem by New York City and 20 not included in the currents tax losses has been paid 21 by the private sector through higher tax assessments. 22 Since 1969-70 assessed values have been increased over 23 $45 billion, of which $32 billion of the increase took 24 place in Manhattan. \ 25 And with the tax rate having almost t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 doubled during the same period, the added tax burden is 3 driving businesses out of New York City to New Jersey, 4 Connecticut, Westchester and elsewhere throughout the 5 United States. 218 And if you look at the New York Times, and 6 7 it's also included in my remarks, of this last Sunday, 8 you see that hundreds and thousands of people have left 9 New York City for jobs and for a better lifestyle 10 elsewhere in the country. In New Jersey, the cost for renting office 11 12 space, which includes real estate taxes, is 13 approximately $2 per foot, per square foot. 14 Connecticut and White Plains, the real estate tax cost 15 in rental per square feet is approximately $2.50 per 16 square foot. 17 from $8 to $15 per square foot. 18 For In midtown Manhattan, the cost ranges And in addition, Governor Christy Whitman 19 is committed to reducing taxes in New Jersey by over 20 30 percent over three years and has already reduced 21 them by five percent. 22 we can't ignore. 23 This is a serious problem that With the abandonment comes homelessness, 24 joblessness, hunger, business failure, crime and 25 despair, and the decline of our city and, if we don't L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 do anything about it, the permanent demise of New York 3 City is possible, according to Roger Starr. 219 Consider the following opportunity, 4 5 though, and this is 6 Spigner is not here, this is the important point. and I'm sorry that Chairman Now, assuming that we rid ourselves of 7 8 these rent regulations, building a 150 to 200 family 9 apartment building will create approximately 250 jobs 10 with a $10 million annual payroll. 11 effect of 3.5 to one will create $35 million in annual 12 business. 13 34,000 new units were built, about 200 to 230 buildings 14 per year for 10 years. 15 50,000 new jobs with $2 billion in salaries and $7 16 billion in new business for New York if construction 17 begins anew. 18 The multiplier In the period 1961 to 1970 an average of This could mean more than Now, in a study that was done for the 19 Rent Stabilization Association last year by Professor 20 Charles deSeve of the American Economics Group, i t is 21 pointed out that: 22 23 24 25 Almost 80 percent of necessary capital maintenance is left undone in New York City. Low maintenance cuts demand for other New York business by $1.9 annually. 1 L COMMITTEE ON HOUSING AND BUILDINGS And 17,600 new jobs will be created if 2 3 maintenance is raised to standard. New York State and City lose over a 4 5 hundred million dollars annually in real estate taxes. And vacancy decontrol offers help but 6 7 total deregulation is the best goal. Rent regulated buildings and apartments 8 9 220 require a total annual expenditure of $992 million to CD :::;; a: 0 u. 10 prevent further deterioration of the housing stock. ~ (..) 0 I- en a: w en ~ One more point. 11 12 control done in September 1991 by the U.S. Department 13 of Housing and Urban Development, several important 14 points include: 15 a. In a report on rent 16 Rent control is an inefficient income transfer in many ways. :::, 0 a: C!l 17 A substantial proportion of landlords of >CD a: 0 (..) 18 controlled properties who bear the burden of rent 19 control transfers are themselves lower income 20 households. w J: I- 21 And there are many options for mitigating 22 the harm from decontrol to those low income households 23 who live in controlled units. 24 25 The benefits of rent control are poorly targeted. Significant members of well-to-do renters t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 live in rent controlled apartments and enjoy 3 substantial benefits while many lower income renters 4 receive relatively little benefit. 5 reporting to Congress. 221 This is HUD 6 The City Council of New York City has the 7 power to begin the resurgence of New York City for the 8 benefit of all New Yorkers. 9 act now, If the Council does not later may be too late. Let us prove to Roger 10 Starr that New York City will not disappear as one of 11 the world's great cities. 12 Let us move forward even if it's a step by 13 step process. 14 and push them with the information that they need. 15 There is much information out there available and we in 16 our industry are prepared to supply it along with all 17 of the other research that's been done by people who 18 are not members of our industry. 19 20 We can go up to Albany I thank you very much for the opportunity to talk and address this committee. 21 22 Let's begin now. Thank you. ACTING CHAIRPERSON OGNIBENE: Thank you very much. 23 Our next witness will be Mr. Michael 24 McKee, representing the New York State Tenant and 25 Neighborhood Coalition. t_ 1 COMMITTEE ON HOUSING AND BUILDINGS - 222 After Mr. McKee, we are going to ask that 2 3 the witnesses because of the time constraints keep 4 their remarks to three minutes, and we will be 5 indicating through the clock the three minute time 6 limit. 7 you can and it's long, please, then summarize it. 8 want to give everybody an opportunity to speak before 9 the committee. So we ask you to review your testimony and if We That of course will be subsequent to al ::i: a: 0 10 Mr. McKee, who still is untimed. LL. ~ () ~ Cl) MR. M. McKEE: 11 Thank you. My name is a: w Cl) :s 12 Michael McKee of the York State Tenant and Neighborhood 13 Coalition. 14 a. ::> 0 a: (!) The coalition is a statewide membership 15 organization which advocates and lobbies for tenant 16 protection laws and affordable housing programs. 17 here in support of Intro 215 sponsored by Council 18 Member Michels and many others members of the Council 19 and in support of Resolution 144, again sponsored by 20 Council Member Michels and several other members of the 21 Council. I am >al a: 0 () w J: I- 22 We see from the new Housing and Vacancy 23 Survey data, some of which have been released by HPD, 24 that the housing situation is growing worse for tenants 25 and for affordable housing. Vacancies are down, L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 warehousing is up, a point that I think was brought out 3 earlier. 4 12 percent adjusted for inflation. 223 Tenants' incomes are down very substantially, The rent-to-income ratio has gone up for 5 6 the first time in more than ten years. 7 decade the rent-to-income ratio has remained fairly 8 constant, has not gone up or down virtually, and we see 9 now that it has gone up by more than two percentage 10 points, which is a very significant increase in the 11 amount of income that tenants typically pay for rent. 12 Hardly surprising, considering the other data in the 13 report. 14 In the last And we also see a very significant number, 15 increase in the number of renters living below the 16 federal poverty level, which between 1990 and 1992 has 17 gone from 27 percent of renters to 30 percent of 18 renters. 19 is down but rents have gone up. 20 In addition, rents are up. Everything else I want to refer to the table on green 21 paper which I did yesterday from the hard copy tables 22 from the new Housing and Vacancy Survey which we 23 obtained this week from the Census Bureau. 24 25 And what this table does is to describe a trend in how many or what percentage of vacant t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 224 2 apartments are affordable to most tenants. 3 that in the last decade you've gone from a situation 4 where 46 percent of vacant apartments were affordable 5 to the tenants earning the median income in that year 6 to the current status where something like 14 percent 7 of vacant apartments are affordable to tenants paying 8 30 percent of income and having a median income. And you see And then if you look at the bottom two 9 10 lines, this is another way of expressing this, in 1984 11 the median asking rent was $315 and the affordable rent 12 to a median renter with a median income paying 30 13 percent of income for rent was about $315. 14 gap is $450 compared to $650, which is the median 15 asking rent, median meaning of course that half of the 16 asking rents are higher and half are lower. 17 Today the So you have a situation where very few 18 people can afford a vacant apartment, which means 19 people can't move. 20 Spigner's bill or bills were to become law, the 21 affordability situation would be even worse because you 22 would have even higher rents for vacant apartments. CHAIRPERSON SPIGNER: 23 24 25 And I would have to say that if Mr. You said they couldn't now MR. M. McKEE: Fourteen percent can afford L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 the median asking rents, Mr. Spigner, so you would make 3 it even worse if you raised rents additionally. I'm also here in opposition to Intro 207, 4 5 225 208, 217, 219, 220, 227 and 228. I think the discussion of buildings with 6 7 20 units or fewer is mis-focused in that I believe one 8 thing that the data do bear out about buildings of 9 smaller size, and the Census Bureau measures them up to 10 19 units ahd above, so it's not precisely the same. Those buildings are older generally, and 11 12 they have poorer tenants, and that is a profile of the 13 smaller buildings that shows up in every Housing and 14 Vacancy Survey. 15 data from the 1993 survey, I would be very surprised if 16 the trend was any different. 17 And even though we haven't seen those I have some suggestions for what you might 18 do which would be helpful to property owners and also 19 to tenants and to housing. 20 suggestions, they're not easy things for government to 21 deal with, but I think they are where the solution 22 lies. 23 They are very hard And I have to say that decontrol is not a 24 solution, · it is a prescription for disaster. 25 the tenants movement believe that it is absolutely And we in t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 essential that elected officials believe in rent 3 regulation, protect the integrity of the rent 4 regulation system and stop trying to dismantle it. 226 Some things you could do that would 5 6 actually help both tenants and owners and government: 7 You could stop over taxing apartment buildings. 8 understand this is a very difficult issue for elected 9 officials. And I But until you have a reform of the real 10 property tax system where residential buildings are 11 taxed the same, whether they are one or two family 12 homes or multiple dwellings, you are going to have 13 gross inequities which operates to the detriment of 14 tenants, also of apartment buildings and to 15 government. 16 You have to remember that it's not the 17 landlord who pays the real property tax, it's the 18 tenant who pays it because the landlord pays the real 19 property tax out of rents that are paid by tenants. 20 And the system we have where homeowners in 21 certain neighborhoods where you have one, two and three 22 family homes are taxed at eight percent of market value 23 and apartment buildings are taxed at 45 percent, that 24 is grossly unfair and it is causing terrible problems 25 in housing, and I think you really have to face up to t_ 1 COMMITTEE ON HOUSING AND BUILDINGS 2 this and deal with that issue. 227 We're not talking about taxing homeowners 3 4 out of existence but I think it is perfectly clear that 5 apartment owners and apartment building dwellers are 6 overtaxed. Second, you could undo the enormous damage 7 8 that has been done in the past years in the policies 9 that have been implemented concerning water and sewer 10 charges. 11 the Koch administration, and I believe it was 1986, to 12 basically load all of the capital needs as well as 13 other needs into the charges that are charged for water 14 and sewer, is so shortsighted and so destructive, it is 15 feeding the housing crisis normally. The policy that the city embarked upon under 16 You can't just say we're going to raise 17 water and sewer charges to the extent that they have 18 been raised in the last eight years, and we're just 19 going to simply pass it on to the owners and occupants 20 of that housing. 21 and it is very destructive and I see no sign that the 22 city government is coming to any kind of meaningful 23 grips with that situation despite the fact that there 24 was a freeze of the rates for a period of time. 25 It is extraordinarily short-sighted Finally, I think you could take a very L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 serious look at doing a~ay with the maximum basis rent 3 formula for rent control, which is harmful to rent 4 controlled tenants who are much poorer than rent 5 stabilized tenants on average, harmful to small 6 property owners because the paperwork is very onerous 7 and very difficult to apply for the MBR. 228 8 And it's also, by doing away with it you 9 also could do something to help the state Division of 10 Housing and Community Renewal because it would free up 11 approximately 30 to 35 staff people who currently spend 12 all of their time dealing with these complicated forms 13 dealing with fuel pass-along programs. 14 I have to point out to you that that 15 proposal of doing away with the MBR program is strongly 16 opposed by the lobbyists because the big landlords get 17 the MBR rent increases every two years and the MBR rent 18 increases every year because they can afford to have 19 accountants and attorneys, et cetera, on their staff to 20 do it. 21 want to take a very serious look at and we would 22 certainly welcome that move. 23 So this is something that I think you might I also have to add, we do not want to lose 24 other aspects of rent control. There are, for example, 25 superior eviction protections under rent control than L 1 COMMITTEE ON HOUSING AND BUILDINGS 2 there are under rent stabilization. 3 the fact that the average age of rent controlled 4 tenants is 70 years of age, those additional eviction 5 protections are not something that should be lost. 6 We're talking about changing the mechanism for changing 7 rates. 229 If you consider 8 ACTING CHAIRPERSON OGNIBENE: 9 today we propose an addition to some of the decontrols You know, 10 in buildings system-wide and in 20 units or under, a 11 decontrol feature for tenants whose income is $250,000 12 or greater, which obviously exceeds the numbers that 13 you've put down here. 14 And I'm looking at your numbers. Would 15 you agree with me that people earning $250,000 a year, 16 their apartment should be decontrolled or deregulated? 17 MR. M. McKEE: 18 with that premise. 19 purpose of rent regulation. 20 No, I strongly disagree I think you misunderstand the ACTING CHAIRPERSON OGNIBENE: I 21 curious what your attitude was toward wealthy 22 tenants. 23 just was It's the same as with the poor tenants? MR. M. McKEE: The purpose of rent 24 regulation is to protect the rental market and to make 25 housing more affordable for everybody and