It’s that semi-annual (or is it bi-annual?) time again. You know, when those people you know who never seem to have full-time jobs but own country homes — or maybe it’s the long suffering tenant who has been complaining about the quality of their kitchen since the Ford administration — take up in arms with their communist brethren and demand the maintenance of rent control.
[We all know that it’s rent stabilization, right? It is distinct from rent control, even though many conflate the two — rent control is one of those things that if you have, you know exactly what it means, and if you don’t, forget about it, because you will never get it. Rent stabilization was enacted in response to a declared housing crisis in 1969. Though various forms of rent control have been in place most of the century, it is this legislative moment that is the cornerstone of what we refer to colloquially as ‘rent control’.]
Now, I’m all for rent control. I wish I had it. We all do. But I recognize that I want it because it would do two things: one, provide me with more protections as a tenant (which I do think is fair), and two, provide me with an excellent economic subsidy and incentive to grow my net worth (another admirable goal, but a pretty self-interested one).
The problem is not the several highly articulate and dedicated groups who bang the drum of the impossibility of being a service or other low wage worker in this city and finding affordable housing. The problem is the people who wrap themselves in the flag of socialized housing solely to extend their egregiously skewed rent agreements when they do so for little else besides furthering their self-serving advantage.
Look, it’s expensive to live here. But having the good fortune of moving here during a down year in residential markets is not always a highly rationalized economic decision that should be rewarded with terminally discounted rent. Many of the people living off the fat of that decision would have moved here anyway. And it’s not like many of them are doing anything besides living lives similar to the super-affluent for whom making rent is likewise a minor consideration: they spend time at movies and museums in the afternoon; they go to therapy a lot. They bitch incessantly about how the city is being ruined. Great work if you can get it — but this arbitrary endowment, like wealth, is not socialism.
I make no secret of my belief that the value of New York centers exclusively on its extraordinary nexus of cultural, intellectual and, yes, economic production. I’ve carped about how the latter has skewed the delicate balance of these often competing interests by pushing the purveyors and serious supporters of the former to the margins. But pressure is also exerted from the bottom, where the usual ritual of moving to the city, finding a nasty but cheap apartment and suffering with it for ten or fifteen years is being depleted both by the nefarious efforts of Joe Bruno and the stultifying effects of the prior generations who have a deal that gets astoundingly more valuable each week. I know people with rent situations that are equivalent to six figure subsidies at this point. They aren’t going anywhere. And when they do, it will be at the tail end of a Herculean effort to disgorge them and then flip the apartment to a hedge fund manager.
The issue now is what the concept of rent stabilization is supposed to provide. Is it socialized housing? Hardly. It applies to private property exclusively, does not provide subsidies for construction, does not deliver opportunities for ownership, and provides relatively little protection. It may seem that a rent stabilized lease is like tenure, but it is only the astounding greed of landlords, and the belief that a small dose of lobbying fees submitted to the Rent Stabilization Association is a better investment that renovations that would easily push any apartment into luxury decontrol territory. Socialized housing, by any reasonable definition, is a regional or national commitment to provide affordable housing regardless of income bracket or lifestyle, and one that by definition requires direct investment by government entities.
Is it program that seeks to redress imbalances in income driven by the unique characteristics of our housing market (disproportionate numbers of high income earners within companies, and high income segments?)? Sort of. Luxury decontrol due to personal income came about only in the past ten years, and it’s a pretty cushy measure in any case ($250,000 a year).
Is it some intrinsic right of middle class New York existence? Not at all. Though the various forms of rent control has enabled a pretty impressive run of generations of New Yorkers to live here when the market would otherwise exclude them, it has been inconstant enough, and unequally distributed, to merit status of entitlement. In any event, ask a smoker about the lack of permanence in any particular cultural touchstone.
It’s not like that rent stabilization will go away wholesale anytime soon. The vacancy requirement is a red herring; there are over 15 million people in the metro region, and easily 10% of them would relocate to Manhattan and inner Brooklyn were the pricing reasonable and apartment available. We aren’t going to build a million new units any time soon. But the reason Bruno has slacked off on his chain a bit was the effectiveness of the vacancy decontrol provisions. The RSA will certainly continue to pursue it, since that is their job, but without any radical restructuring of the principles of rent stabilization, the image of hooting rent activists at meeting will go by the way of folkies lamenting the loss of the Bottom Line.
What can be done to reinvigorate our notion of rent stabilization that won’t simply retreat into yet another diametric cleft between haves and haves not? There seem to be a couple, but none of them are likely to make the majority of either group happy:
Means Testing. I won’t dwell on this, even as it is the most rational, because it smack most of true socialism. And like any progressive agenda, it would not simply be a process to write down rent for the poor, but possibly to place additional burden on those who can carry it. The limitations are determining means, and settling on the fairest break point. Even though most prudent economic models call for no more than 25% of gross income be allocated to housing, both renters and homeowners push to double that. An additional problem would be that landlords would try any means possible to cater to higher earners to maximize rent potential. But if enacted to some degree, it would weed out the most noxious beneficiaries of rent control, piling up second and third properties while still claiming that a loss of lease would make them homeless.
New developer incentives. Mitchell-Lama was an amazing program when one considers the number of units brought to market, and their relative quality. 80/20 splits, or other vague transfer requirements have not resulted in substantial new construction. The $50 million they keep talking about downtown (but still not allocated or planned, after four years) as part of the WTC recovery (about a sixth of what was allocated to subsidize market rate rental incentives) will result in only 300 new units. 300.
More clearly articulated subsidies. Rent control is a subsidy, no matter how you slice it. A better way to leverage the benefits of this subsidy would be to tie it to career choice or other cultural/social production. Teachers, for instance, could qualify for a rent controlled apartment as long as they were teaching. Though some might argue this might degrade the quality of teachers, it would likely have the reverse effect: the sudden economic impact of a housing subsidy would catapult the total economic value of teaching in the city above any other district, and would likely draw suburban teachers to the city. Other protected classes could be identified, and the subsidy could b
e applied on a sliding scale (police and fire personnel could receive a partial subsidy, as they have a better overall compensation profile).
The basic logic here is to maximize the economic incentive that rent control should provide in the best of all possible worlds. Since it is not universally available, then if should not be allowed to stand as an arbitrary entitlement but yet be subject to the deleterious effects of scarcity. It’s true that any example of socialized housing results in some scarcity, but never to the degree one sees here.
The other issues that might alleviate some of the more tendentious stresses would be to eliminate the provision for inheriting leases, and better enforcement of illegal sublets or other violations on the tenant side. Tenants are certainly put upon in this town, but I have a hard time accepting that after forty years of extraordinary benefit that your kids should stumble into an even more luxurious subsidy than you. If this seems like I’m beating up middle class tenants, it should be noted that I’m with Carnegie — who believed that inheritances should be, if not outright prohibited, then taxed upwards of 80% of assets.
What’s broke about rent control has nothing to do with suffering landlords. If you don’t think you can make it renting in this town without a leg up from the government, sell your building and go invest in Phoenix. There’s no reason why we can’t look landlords in eye and say ‘tough’. They’re are generally a miserable lot who accomplish amazing feats such as making lawyers and real estate agents look good. What’s broke about rent control is we lack an effective language for framing what justifies what should be recognized both as a subsidy and an effective economic incentive for some segments of our population. It should work to both help them along the way, and push them gently from the nest. I’m all for the workers paradise, but that doesn’t describe the attitude of the majority in this town, even those who benefit mightily from the closest thing to it we have here. But if we don’t act effectively, it will go away, and we will be the worse for it.
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Come celebrate ‘I’m a Socialist for the Day’ Day.
It’s that semi-annual (or is it bi-annual?) time again. You know, when those people you know who never seem to have full-time jobs but own country homes — or maybe it’s the long suffering tenant who has been complaining about the quality of their kitchen since the Ford administration — take up in arms with their communist brethren and demand the maintenance of rent control.
[We all know that it’s rent stabilization, right? It is distinct from rent control, even though many conflate the two — rent control is one of those things that if you have, you know exactly what it means, and if you don’t, forget about it, because you will never get it. Rent stabilization was enacted in response to a declared housing crisis in 1969. Though various forms of rent control have been in place most of the century, it is this legislative moment that is the cornerstone of what we refer to colloquially as ‘rent control’.] Now, I’m all for rent control. I wish I had it. We all do. But I recognize that I want it because it would do two things: one, provide me with more protections as a tenant (which I do think is fair), and two, provide me with an excellent economic subsidy and incentive to grow my net worth (another admirable goal, but a pretty self-interested one). The problem is not the several highly articulate and dedicated groups who bang the drum of the impossibility of being a service or other low wage worker in this city and finding affordable housing. The problem is the people who wrap themselves in the flag of socialized housing solely to extend their egregiously skewed rent agreements when they do so for little else besides furthering their self-serving advantage. Look, it’s expensive to live here. But having the good fortune of moving here during a down year in residential markets is not always a highly rationalized economic decision that should be rewarded with terminally discounted rent. Many of the people living off the fat of that decision would have moved here anyway. And it’s not like many of them are doing anything besides living lives similar to the super-affluent for whom making rent is likewise a minor consideration: they spend time at movies and museums in the afternoon; they go to therapy a lot. They bitch incessantly about how the city is being ruined. Great work if you can get it — but this arbitrary endowment, like wealth, is not socialism. I make no secret of my belief that the value of New York centers exclusively on its extraordinary nexus of cultural, intellectual and, yes, economic production. I’ve carped about how the latter has skewed the delicate balance of these often competing interests by pushing the purveyors and serious supporters of the former to the margins. But pressure is also exerted from the bottom, where the usual ritual of moving to the city, finding a nasty but cheap apartment and suffering with it for ten or fifteen years is being depleted both by the nefarious efforts of Joe Bruno and the stultifying effects of the prior generations who have a deal that gets astoundingly more valuable each week. I know people with rent situations that are equivalent to six figure subsidies at this point. They aren’t going anywhere. And when they do, it will be at the tail end of a Herculean effort to disgorge them and then flip the apartment to a hedge fund manager. The issue now is what the concept of rent stabilization is supposed to provide. Is it socialized housing? Hardly. It applies to private property exclusively, does not provide subsidies for construction, does not deliver opportunities for ownership, and provides relatively little protection. It may seem that a rent stabilized lease is like tenure, but it is only the astounding greed of landlords, and the belief that a small dose of lobbying fees submitted to the Rent Stabilization Association is a better investment that renovations that would easily push any apartment into luxury decontrol territory. Socialized housing, by any reasonable definition, is a regional or national commitment to provide affordable housing regardless of income bracket or lifestyle, and one that by definition requires direct investment by government entities. Is it program that seeks to redress imbalances in income driven by the unique characteristics of our housing market (disproportionate numbers of high income earners within companies, and high income segments?)? Sort of. Luxury decontrol due to personal income came about only in the past ten years, and it’s a pretty cushy measure in any case ($250,000 a year). Is it some intrinsic right of middle class New York existence? Not at all. Though the various forms of rent control has enabled a pretty impressive run of generations of New Yorkers to live here when the market would otherwise exclude them, it has been inconstant enough, and unequally distributed, to merit status of entitlement. In any event, ask a smoker about the lack of permanence in any particular cultural touchstone. It’s not like that rent stabilization will go away wholesale anytime soon. The vacancy requirement is a red herring; there are over 15 million people in the metro region, and easily 10% of them would relocate to Manhattan and inner Brooklyn were the pricing reasonable and apartment available. We aren’t going to build a million new units any time soon. But the reason Bruno has slacked off on his chain a bit was the effectiveness of the vacancy decontrol provisions. The RSA will certainly continue to pursue it, since that is their job, but without any radical restructuring of the principles of rent stabilization, the image of hooting rent activists at meeting will go by the way of folkies lamenting the loss of the Bottom Line. What can be done to reinvigorate our notion of rent stabilization that won’t simply retreat into yet another diametric cleft between haves and haves not? There seem to be a couple, but none of them are likely to make the majority of either group happy: Means Testing. I won’t dwell on this, even as it is the most rational, because it smack most of true socialism. And like any progressive agenda, it would not simply be a process to write down rent for the poor, but possibly to place additional burden on those who can carry it. The limitations are determining means, and settling on the fairest break point. Even though most prudent economic models call for no more than 25% of gross income be allocated to housing, both renters and homeowners push to double that. An additional problem would be that landlords would try any means possible to cater to higher earners to maximize rent potential. But if enacted to some degree, it would weed out the most noxious beneficiaries of rent control, piling up second and third properties while still claiming that a loss of lease would make them homeless. New developer incentives. Mitchell-Lama was an amazing program when one considers the number of units brought to market, and their relative quality. 80/20 splits, or other vague transfer requirements have not resulted in substantial new construction. The $50 million they keep talking about downtown (but still not allocated or planned, after four years) as part of the WTC recovery (about a sixth of what was allocated to subsidize market rate rental incentives) will result in only 300 new units. 300. More clearly articulated subsidies. Rent control is a subsidy, no matter how you slice it. A better way to leverage the benefits of this subsidy would be to tie it to career choice or other cultural/social production. Teachers, for instance, could qualify for a rent controlled apartment as long as they were teaching. Though some might argue this might degrade the quality of teachers, it would likely have the reverse effect: the sudden economic impact of a housing subsidy would catapult the total economic value of teaching in the city above any other district, and would likely draw suburban teachers to the city. Other protected classes could be identified, and the subsidy could be applied on a sliding scale (police and fire personnel could receive a partial subsidy, as they have a better overall compensation profile). The basic logic here is to maximize the economic incentive that rent control should provide in the best of all possible worlds. Since it is not universally available, then if should not be allowed to stand as an arbitrary entitlement but yet be subject to the deleterious effects of scarcity. It’s true that any example of socialized housing results in some scarcity, but never to the degree one sees here. The other issues that might alleviate some of the more tendentious stresses would be to eliminate the provision for inheriting leases, and better enforcement of illegal sublets or other violations on the tenant side. Tenants are certainly put upon in this town, but I have a hard time accepting that after forty years of extraordinary benefit that your kids should stumble into an even more luxurious subsidy than you. If this seems like I’m beating up middle class tenants, it should be noted that I’m with Carnegie — who believed that inheritances should be, if not outright prohibited, then taxed upwards of 80% of assets. What’s broke about rent control has nothing to do with suffering landlords. If you don’t think you can make it renting in this town without a leg up from the government, sell your building and go invest in Phoenix. There’s no reason why we can’t look landlords in eye and say ‘tough’. They’re are generally a miserable lot who accomplish amazing feats such as making lawyers and real estate agents look good. What’s broke about rent control is we lack an effective language for framing what justifies what should be recognized both as a subsidy and an effective economic incentive for some segments of our population. It should work to both help them along the way, and push them gently from the nest. I’m all for the workers paradise, but that doesn’t describe the attitude of the majority in this town, even those who benefit mightily from the closest thing to it we have here. But if we don’t act effectively, it will go away, and we will be the worse for it.