John Petro

Rent Control Preserves Affordabilty

When Governor Paterson proposed changes to the city's rent regulation laws, criticism poured in from both tenants' groups and landlords.

Pro-tenant organizations, concerned with the deregulation of 190,000 units since 1994, pointed out that the changes would do nothing to prevent the loss of rent-regulated apartments over the long term. Landlords, on the other hand, argued that the system currently protects rent levels for high-income households that do not need assistance.

Paterson proposed a change to the provision that allows rent-regulated apartments to be deregulated once the rent reaches $2,000 and the apartment becomes vacant--a provision known as vacancy decontrol. Since 1994 about 84,000 apartments have been deregulated through vacancy decontrol, further reducing the number of "affordable" apartments on the market. The proposed change would raise the threshold to $3,000.

But neither of these monthly rent levels, $2,000 or $3,000, are affordable for low-income families. Affordable housing is generally defined as 30 percent of a family's income. At $2,000 a month, an apartment would be affordable only to families earning more than $80,000. A family would have to earn $120,000 for a $3,000 a month apartment to be affordable.

Real reform would either prevent rents in rent-regulated apartments from reaching this level in the first place or would aggressively pursue ways to add to the rent-regulated housing stock to make up for the units being lost to vacancy decontrol. On average, 6,800 units are added to the rent-regulated rolls every year, nowhere near enough to make up for the 14,000 units that are lost on an annual basis.

A new report that examines rent regulation in New York City recommends that changes be made that would deregulate even more apartments. The recommendation is based on the assumption that rent regulation is an "inefficient" tool for preserving rental affordability for low-income families.

Even more important, the report inadvertently highlights just why rent regulation is a vital tool for keeping more families from falling into homelessness. The report estimates the effect that deregulating all of the city's regulated apartments would have on rent levels. Overall rents would go down, the authors contend, but only because a number of households would drop out of the housing market completely, "Some households obtaining regulated housing would not be able (or choose) to compete for housing in an unregulated market."

In other words, these families would be homeless. As the city loses 14,000 units every year, there is little surprise that the city is experiencing record levels of homelessness.

The city's affordability crisis is a challenge that must be met on multiple fronts. Stemming the loss of rent regulated units--either by preventing rents from reaching the $2,000 mark or by significantly adding new regulated units--is a good first step. We must also raise the income levels of low-income households. A citywide minimum wage should be established that will allow a full-time working family to earn enough money to rent a suitable apartment without the need of government assistance. Third, as the report also points out, we need to encourage more residential construction, but in a way that also creates opportunities for affordable housing construction. This means beefing up the city's inclusionary housing program so that more affordable units are created. Finally, the federal government must pursue a housing strategy that helps cities like New York create affordable rental housing, rather than propping up home values in the suburbs.

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Posted at 6:56 PM, Jun 03, 2010 in Urban Affairs
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