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Truth Analysis: Comptroller Confusion and Scott Stringer’s Latest Report
September 27, 2018
Comptroller Stringer’s latest report severely misrepresents key facts and originally would have one believe that the entirety of the city’s 1.2 million plus rent regulated housing stock has disappeared.
OVER 20,000 UNITS OF RENT REGULATED UNITS WERE ADDED IN 2017
While 425,492 units have changed in price point from rents of $900 or less, they are still rent regulated units according to an analysis by the Real Estate Board of New York (REBNY). Between 2005 and 2017, only 7% of the units increased rents above the deregulation threshold. According to the 2017 New York City Housing and Vacancy Survey, nearly 60% of the city’s rental housing stock is covered by some form of rent regulation.
The Rent Guidelines Board’s most recent report disclosed that from 1994-2017, there were approximately 155,664 subtractions from the stabilized housing stock due to high-rent vacancy deregulation, less than 6,800 a year or one half of one percent on an inventory of 1.2 million. During the same period, the city added 143,446 rent stabilized units, bringing the net annual loss to 531 units or four one hundredths of a percent of the 1.2 million.
The report also found that 2017 experienced a net increase in rent-stabilized units for the first time since records were kept. This net increase was primarily due to the renewal of the 421-a tax abatement program. Increasing the supply of the city’s rental housing stock through sound economic policies is the only way the city will close the affordability gap.
QUALITY HAS A DIRECT RELATIONSHIP TO RENTS
New York City is a city of renters. Rental units comprise 62.9% of the city’s housing stock, and families have the right to be in safe homes. Over the last 25 years, the quality of the city’s housing stock has improved to unprecedented levels due to a robust infusion of capital improvements by the private sector with the introduction of high rent and high income deregulation. Today, less than 0.2% of New York City’s rental housing stock are considered dilapidated units.
It is critical that buildings should remain financially viable. A steady stream of income, whose growth can meet the increasing taxes and rising operating expenses incurred by a steady stream of new government regulations, allows building owners to make necessary improvements and maintain their buildings over time. Stringer’s report should have pointed out that the inflation rate has risen 26.2% since 2005. Therefore, everything from a loaf of bread, to a gallon of milk, to an apartment in New York City is more expensive today than it was 13 years ago.
Providing apartments at rents of $900 or less is an important objective, but with rising costs and the need for capital improvements to these typically older properties this monthly rent won’t pay the bills. The key issue, as discussions move forward regarding rent regulation laws next year, is how private sector apartment owners can provide affordable rents while at the same time addressing a range of costs that increase annually and ensuring the long-term capital improvement such properties would require if we are going to maintain the high quality of the city’s rental housing inventory.
We have seen in the New York City Housing Authority what happens when the desire for fixed low rents faces the economic reality of rising operating expenses, particularly real property taxes, and the unavoidable need to replace building systems at the end of their useful life. Today, over 400,000 people daily go home to units and buildings that are filled with vermin, mold, lead, and other signs of dilapidation. NYCHA continued fixed low rents and rising operating expenses and inevitable capital improvements has led to a steady decline in the quality of its inventory due to decades of disinvestment.
Some of the proposed changes to the current rent regulation system, like universal rent control, will send New York City’s private sector multi-family rental housing down the same road as NYCHA.