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Tuesday, October 27, 2009

Rent News

As Jordan wrote this morning, Senator Espada gave some hope that he may actually back changing or repealing High Rent Vacancy Decontrol on Sunday. While we will all have to wait and see if he will walk the walk, the timing of Espada's verbal reversal coincides with major rent decontrol news across the City.

First, here are a few excerpts from my recent op-ed on why Espada Must Reconsider Vacancy Decontrol, despite the fact that he is correct to assert that most rents in his district are in danger of going above $2,000 per month just yet:

High-rent vacancy decontrol has helped to fuel speculation throughout the city during this past boom decade, especially in neighborhoods succumbing to gentrification pressures... As a result, the number of neighborhoods where working class families can afford to live within city boundaries continues to shrink. Rents remain within reach of these families in few New York City neighborhoods outside of the west Bronx...
In addition to increasing economic segregation, vacancy decontrol is making it harder to find a decent apartment in the west Bronx as competition for lower rent units gets fiercer. Most of Espada’s district overlaps with community districts that rank among the city’s highest for percentage of households paying more than half of their income on rent...
Vacancy decontrol has also helped spur on the aggressive tactics used by many landlords, including certain private equity investors, to attempt to achieve higher rates of turnover and thus higher rents in their recently acquired properties. The practices, many of which could qualify as harassment, have been pursued most notably in upper Manhattan, but have also been well documented in the Bronx – including in Espada’s district – going back to Norwood News’ coverage of the Botanical Square properties in October 2005.
In having owners’ sights set on the magical $2,000 rent mark, vacancy decontrol has also encouraged speculation throughout the five boroughs. Speculative investment has, in turn, greatly inflated the city’s real estate bubble over the past decade. We are now beginning to see how devastating the effects of this bubble bursting are, as buildings go into foreclosure, and some are even abandoned in the process. Many more buildings are at risk for foreclosure in the coming years and are currently suffering from cuts in services as owners struggle to make huge mortgage payments. The tenants in these buildings – many of them the Latino constituency Espada claims to be representing, both in and out of his district – are the ones suffering the effects of the speculative market the most.
Speaking of foreclosures, there's more news on the Ocelot/Fannie Mae buildings. Crain's is reporting that Senator Schumer and Rep. Serrano implored Fannie in a letter to not continue selling its mortgages on these properties. "After backing off an earlier attempt to sell the buildings' mortgages via an online auction, the agency now wants to unload them through a competitive bidding process." Instead of just shifting the problem to new hands, the letter requests that Fannie complete the foreclosure process and then work towards moving the 14 buildings to responsible ownership.

While it's not clear whether the subject will be these same Ocelot/Fannie buildings, a United Nations rapporteur has been appointed to look at affordable housing in the City, including speaking with tenants whose owners are in foreclosure in the Bronx. Her overall task is "to to tour New York City and six other places in the United States and to report back to the United Nations General Assembly about housing rights violations and advances."

Now, on to the biggest news item: the court decision reversing rent deregulation at Stuy Town because they received tax abatements. You can read more about the decision in City Limits and see how the Daily News is reporting that the decision may have an affect in a building in Morris Heights.

While the Stuy Town decision will only accelerate foreclosures in a number of properties, most of these buildings were likely headed there regardless. The decision also represents another strike against speculative investing and may help build more momentum in the quest to change or repeal vacancy decontrol laws. Since Espada is up for re-election a year from now, we won't have to wait long to see where vacancy decontrol goes.


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