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Giuliani & Vallone: Never Met a Rent They Didn’t Hike
by Mitchel Cohen, New York City Green Party
New York City Mayor Rudolph Giuliani lives rent-free in Gracie Mansion, a beautiful dwelling (soaked in toxic pesticides) on Manhattan’s luxurious Upper East Side. Yet he has repeatedly ordered the eviction and arrests of dozens of poor and working class folks who are squatting abandoned city-owned apartments downtown. The Mayor said: “They think they can live some place and not pay rent. That simply doesn’t work. You have to pay rent.”
Unlike the Mayor, more than five million New Yorkers actually do pay rent for their apartments. Around half of them live in units that are rent stabilized or rent controlled (and even these average $538/month in Brooklyn). (1) But an increasing number of people cannot afford New York’s skyrocketing rents; many, particularly women with dependent children, are driven to homelessness on New York’s sidewalks and subway grates.
And now the Mayor wants to give $1.1 billion in corporate welfare to the NY Stock Exchange to build a new building, while thousands can’t afford to pay their rents and many more go hungry in our fair city.
Back in 1994, Mayor Giuliani signed pro-landlord vacancy de-control provisions into law which enabled landlords to hike rents through the roof once an apartment had been vacated, so long as it rented for more than $2,000 a month.
Deregulation, it was argued, would help the small landlord make ends meet. If anything, the opposite turned out to be true: It enabled the giant landlords to further consolidate their stranglehold on real estate in New York City, at the expense of tenants and small landlords. As of 1999, just 12% of landlords had come to own 71.2 % of the City’s regulated apartments; a group of less than 3,000 landlords owns an average of 238 apartments each! (2)
For many working class and poor families, fully one half of their income goes to rent.
Unlike the Mayor, who saw fit to raise his own salary—he now makes $190,000 a year—the real income for NYC households fell on average by 11% between 1990 and 1993, and it has gotten regressively worse since then. More than half of all NYC households report income low enough to qualify for Federal housing assistance. A quarter of them live beneath the official poverty line.
Unlike landlords, a majority of NYC renters spend way more than the federally advised maximum of 30% of their income on rent. For many working class and poor families, fully one half of their income goes to rent. In Brooklyn, where I live, the figure in a number of areas goes even higher, approaching 70%. (In contrast, Cuba has passed a law setting the maximum rent at 10% of income.) When combined with the portion of income earmarked for food it is not unusual that 75–90% of household funds go to just those basics, leaving little left over for other necessities, such as clothing, transportation, insurance, or health care. In fact, in 1993 the median income for rent stabilized tenants in the city was $19,000 per year. (3) It hasn’t gotten much better—in fact, in real dollars, the median income has decreased. What will happen to all those people if rents are deregulated?
The landlords’ “logic” runs something like this: If a city is rent controlled, landlords won’t invest in their properties because there’s not much profit to be made. Investors won’t invest, neighborhoods will be redlined, and housing won’t be built. Too many people will be able to remain in their apartments illegitimately because—oh, the shame of it all—the landlords won’t legally be allowed to throw them onto the streets. (Of course, as enterprising chaps, in real life they’ll find all sorts of ways around the law.) Then, so the argument goes, landlords will begin abandoning their unprofitable enterprises, the buildings will crumble, people will be forced out of their apartments anyway, and a housing shortage ensues. As population increases and the temperature drops, the demand for housing further burdens the system and homelessness becomes a modern day Victorian plague.
…one would be hard pressed to find a single city where “the free market” led to the construction of affordable housing without substantial subsidies from government.
That is how, we are told, rent control leads to homelessness and abandonment of property. But one of the leading studies on the matter refutes every facet of the landlords’ contention that rent control causes homelessness. In “Scapegoating Rent Control: Masking the Causes of Homelessness,” (4) the authors point out that 3 out of the top 4 cities in the US with the most severe homeless problems do not even have rent control laws. Detroit and St. Louis, which never had rent controls, have suffered massive abandonment.
On the other hand, Berkeley and Santa Monica, California, which limit rents, haven’t. So the landlord groups pull the old bait and switch, offering an endless series of shifting rationalizations as each previous one is debunked. Blame shifts, in turn, to “insensitive tenants” for refusing to abandon their rent stabilized apartments so that landlords can re-rent or condo them at higher rates! According to landlords, a true “free market” would spark the construction of more housing which, in turn, would curtail homelessness. Right! As Applebaum et al. show in impressive detail, one would be hard pressed to find a single city where “the free market” led to the construction of affordable housing without substantial subsidies from government. Left to market forces, nowhere has the construction of new housing alone put a significant dent in homelessness.
Instead of blaming rent control regulations for the rise in homelessness, why not blame the banks for refusing to invest in low profit areas? Or builders for refusing to build new affordable housing because they can make greater profits off of luxury buildings? Or landlords who warehouse apartments in order to create scarcity in the first place to jack up the rent? Or the City for not allowing homeless people to squat abandoned buildings and fix them up with the help of unionized workers, while they learn needed skills?
In reality, without rent control and stabilization, we all become helpless victims of the landlord. We’d have no right to stay in our apartment and automatically renew the lease, with legal protection from unreasonable eviction. There’d be no limitation on what rent the landlord could charge; no Senior Citizen Rent Increase Exemption; no succession rights for family members and loved ones; no right to a continuation of current services and repairs; no ability to form tenant associations for fear of retaliation and eviction. Without protection, “tenants would be at the mercy of the New York City market every time their lease ran out. And we all know how little mercy that is.” (5)
Why is it taken for granted that someone has a right to make any profit at all from such a nonproductive enterprise as the renting out of apartments?
There are alternatives to being forced to choose, yet again, between the evil of two lessers. But they require us to challenge the way we normally think of things, our assumptions, our way of framing the questions. Why, for instance, is it taken for granted that someone has a right to make any profit at all from such a nonproductive enterprise as the renting out of apartments? Such fiefdoms are blood sucking vestiges of medieval times. Why not ban profits in housing altogether?
As a transitional measure, we could allow landlords a period of time—say, five years—to recoup their investment, after which they can be put on fixed income. Why should we go on assuming that anyone has a “right” to a guaranteed and perpetual profit, that banks have a “right” to refuse to invest, that builders have a “right” to refuse to build unless they’re guaranteed tax abatements and millions of dollars in incentives (let alone in rent), that landlords have a “right” to keep apartments off the market to drive up the price, and that the City has a “right” to evict, bludgeon and imprison squatters in order to keep them out of the thousands of vacant City owned and deteriorating apartments?
Finally, we get to the landlords’ last gasp: “Rent control is a magnet attracting homeless and low income people to our city. And we (supposedly) can’t afford it.” Clearly, many factors besides rent control lead people to migrate from one town to another. But let’s accept the landlords’ claim, here. The obvious answer for the landlords, if they believe their own argument, is to push for a “federal” rent control program that equalizes the situation across the country, instead of pummeling poor and working class tenants in New York. Will Hillary Clinton sponsor such a measure in the US Senate? Will Peter Vallone and the other Democrats, or Republicans Badillo and Bloomberg, do so in their race for Mayor?
It’ll be a cold day in hell before the landlords and their advocates push for rent control, federal or otherwise, or a repeal of vacancy decontrol. For them the name of the game is profits. Everything else is a ruse. And a ruse is a ruse is a ruse.
… it is important to coalesce buildings on rent strike into a united front: A citywide general rent strike.
That is why it is important to coalesce buildings on rent strike into a united front: A citywide general rent strike. That is why it is crucial to support squatters at the same time we fight against attempts to remove rent stabilization. In fact, we must fight not only for maintenance but for strengthening of existing rent stabilization laws. We must demand across the board rent rollbacks throughout the city, and an end to the criminalization and sweeps of homeless encampments. And, we must demand a moratorium on eviction of squatters—except for, of course, the chief squatter living rent-free in Gracie Mansion.
Notes
1. Housing NYC, “Rents, Markets and Trends ‘96,” NYC Rent Guidelines Board. Figure is the average for Brooklyn, and varies in other boros.
2. Metropolitan Council on Housing.
3. 1993 federal NYC Housing and Vacancy Survey.
4. Applebaum, Dolny, Dreier and Gilderbloom, Journal of the American Planning Association, Spring 1991.
5. Steve Wishnia, “Tenant/Inquilino.”
If you’d like to help Mitchel Cohen run for Mayor, please make out checks to “Friends of Mitchel Cohen”, 638 East 6th St., NYC 10009, or email Mitchel at: mitchelcohen@mindspring.com.