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Tag rent control

WSJ: Rent Control Is the Real New York Scandal

In case you didn’t catch it last weekend, Eileen Norcross wrote an excellent piece on rent control in New York. She touches on Charlie Rangel’s four rent control apartments scandal, some history of rent control in New York, the destructive results of rent control, vast inefficiencies caused by rent control, and moves to further subsidize low and middle income housing in New York. I found this paragraph to be particularly startling, and I would bet that the vacancy rate for stabilized apartments is well below the overall vacancy rate: New York has a city-wide vacancy rate of just 3% — and when good rent-stabilized apartments come on the market, you have to either know someone or pay someone (a broker, for example) to get it. The result is that many renters who pay below-market rents are reluctant to move — because it’s too difficult to get as good a deal elsewhere in the city. Thus, economists Ed Glaeser and Erzo Luttmer estimate that 21% of the city’s renters live in apartments that are bigger or smaller than they would otherwise occupy. The controlled rents certainly don’t increase the number of affordable apartments. This demonstrates the hoarding effect, which we can see hampers mobility and the ability of a location to adapt to market shifts. Norcross agrees, ending the rent control regime will be a step towards solving New York’s housing shortages: There is a better way to address the lack of reasonably priced housing in the city. If Rep. Rangel, Gov. Paterson and all the other well-to-do New Yorkers lost their rent-controlled or rent-stabilized apartments, there would be a loud public outcry to loosen regulation and allow more new construction.

Rangel Now Only Hoards Three Rent Controlled Apartments

[flickr photo: aznatca68] Democratic Congressman Charlie Rangel has announced that he will vacate the rent controlled apartment he has been using as a campaign office. This apartment is just one of four rent controlled apartments he is hoarding in the Lenox Terrace apartment building in Harlem. NY Times – Rangel to Relinquish Apartment Used as Office: Representative Charles B. Rangel has decided to move his campaign office out of one of four rent-stabilized apartments he leases in Harlem, his spokesman said on Monday. One of the units — a one-bedroom apartment that he paid for with money from his re-election fund and from a political action committee — had been used as a campaign office, despite city and state guidelines that require rent-stabilized apartments to be used solely as a primary residence. Because that apartment is rent-stabilized, Mr. Rangel paid $630 per month, while similar market-rate units in the building rent for $1,700 a month and higher. Under House ethics rules, a gift is defined as any “gratuity, favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value.” And some suggest that the difference between what Mr. Rangel pays for the second, third and fourth apartments and the market rate could fit that definition. . But Mr. Rangel said that it was ludicrous to consider the rent-stabilized apartments a gift because he paid rent for them. He also said that two of the units were combined by a previous tenant. Rangel should either resign or return every penny he saved by hoarding this apartment while using it as a campaign office. For this apartment alone, that should be $1,000 per month for as long as he has used it as a campaign office. Also: Reason – Rangel’s Down, But He’s Not Out

Congressman Rangel Legally Plunders $30,000/year in Four Rent Controlled Apartments

[update! Rangel Now Only Hoards Three Rent Controlled Apartments] In case you missed it, powerful New York Congressman Charlie Rangel has been hoarding four apartments in Harlem’s Lenox Terrace. Coincidently (perhaps not so coincidently) Lennox Terrace is the same building where New York’s Governor Patterson, Patterson’s father, former Manhattan Borough President, Percy E. Sutton, and Rangel’s Cheif of Staff, Jim Capel hoard rent-controlled (ahem, Rent Stabilized as it’s referred to by NY politicians) apartments. Not only does Rangel have four rent-controlled apartments in the building, but he has been using one of those apartments as a campaign office! [flickr photo: jschumacher] New York Times – Rangel Defends Use of Rent-Stabilized Apartments: The Times reported on Friday that Mr. Rangel has four rent-stabilized apartments at Lenox Terrace, including three adjacent units on the 16th floor overlooking Upper Manhattan, in a building owned by one of New York’s premier real estate developers. (The apartment is featured in “Style and Grace: African Americans at Home,” a book published by Bulfinch Press.) Mr. Rangel, the powerful Democrat who is chairman of the House Ways and Means Committee, uses his fourth apartment, six floors below, as a campaign office, despite state and city regulations that require rent-stabilized apartments to be used as a primary residence. Mr. Rangel, who has a net worth of $566,000 to $1.2 million, according to Congressional disclosure records, paid a total rent of $3,894 monthly in 2007 for the four apartments at Lenox Terrace, a 1,700-unit luxury development of six towers, with doormen, that is described in real estate publications as Harlem’s most prestigious address. The current market-rate rent for similar apartments in Mr. Rangel’s building would total $7,465 to $8,125 a month, according to the Web site of the owner, the Olnick Organization. The use of multiple apartments that might […]

Economakis Family Threatened by Friends of Rent Control

The Economakis family has been threatened my some members of the community who planned a protest tonight against their family using their own property as a home. See this truly despicable flyer calling friends of rent control to arms. [image from curbed] Here’s Mr. Economakis’ response: Response to the July 11, 2008 Protest – a threat to my family and property: I have always respected the rights of people to express themselves regarding my desire to make the building I own a home for me and my family. However, the latest expression of certain persons cannot go without comment. Our neighborhood was recently papered with a flyer announcing another protest in front of 47 East 3rd Street. This flyer states it is the work and the expression of a group identifying themselves as “LES” and is offensive on numerous fronts: not only for its profanity (is this really what our neighborhood children should be taught is an acceptable way to express oneself?) but for attributing to me the statement “Let Them Eat Cake”. I never made this statement nor any other like it. I find the statement offensive; and further I find its attribution to me to be threatening. As the statement was invoked to justify the death and destruction that came with the French Revolution, I hope that persons attending the protest do not mistakenly use it to justify the destruction of property. While I respect that people have the right to disagree with my position regarding wanting to make the building I own my home, and while I believe that these persons are allowed to exercise such disagreement through peaceful means, I am disturbed that the tenor of this protest is not only threatening in nature, but is also encouraging protestors to damage the very property they presumably […]

Quinn Proposes to Revamp Rent Control ‘Freakshow’

Curbed NY – Christine Quinn, Hands Off Our Freakshow! Fact: The biggest joke in New York is the Rent Guidelines Board. Every year this nine-member panel gathers to hold a series of circus-like public hearings on rent increases (or, heh, decreases) for stabilized apartments. Every year, tenant groups demand a rent freeze, and landlord groups demand double-digit increases. Every year, the increases fall somewhere in the middle (this year is a little high, though), following lots of shouting, some impromptu jam sessions and occasional nudity. But here’s the thing: it’s only now, when this annual theater is suddenly threatened, that we realize how much we’d miss the damn thing. Quinn (City Council Speaker) is supporting a state bill that would restructure the board (which is appointed by the mayor and includes two members representing tenants, two representing landlords, and five representing the “general public”), deny rent increases for one year on buildings with serious violations, and require the use of a tenant’s income and expenses in determining whether an increase is warranted. So, owners would be subject to the needs of their tenants? I doubt the “general public” she refers to includes the interests of the renters moving to New York or market rate renters… Also: NY Sun: Speaker Quinn Urges Overhaul of Rent Board

Landlord Finally Free to Live in His Own Home

After battling in court since 2003, this family is finally able to turn their 60 room apartment building into one gigantic home for themselves. Of course, the beneficiaries of the rent-controlled apartments don’t believe the owner’s family should have the right to live in their own building. New York Post – VILLAGE TENANTS ‘HOUSE BROKEN’ The Court of Appeals found that Alistair and Catherine Economakis can go ahead with eviction proceedings against their low-income tenants at 47 E. 3rd St., as long as they plan to use their apartments for themselves. “We’re all working people, your typical, moderate-income working people. For them to want to kick us out so they can have a luxury mansion – it’s ethically and morally unconscionable. I don’t know what other word to use,” said David Pultz, 56, who’s lived in the building for the past 30 years. Pultz said he pays $625 a month for his one-bedroom apartment, and is concerned that if he gets booted, he’ll have to leave the city. (that’s about 1/4 -1/3 the market rate for that neighborhood) “At a time of a really grave housing shortage, it’s a matter of serious concern that an owner can be permitted to obtain 15 apartments for his own use,” he said, adding that in the rest of the state, owners can’t claim more than two apartments for themselves. As I described in Rent Control Part 3, rent control creates this type of class tensions between the property owners and the “entitled” class tenants. It seems completely silly that the landlord has to go to such extremes to get out of the burdens of rent control, but can you blame him? Compared to buying a new home, it probably cost him next to nothing in lost revenue to evict the tenants. Here is […]

Somin: Causes of the Defeat of Prop 98

Ilya Somin at Volokh – Causes of the Defeat of Proposition 98 There were two major causes of Prop 98’s defeat. One was the sponsors’ mistake in combining the popular cause of restricting eminent domain with a far less popular phaseout of rent control. The second and more unusual cause of 98’s defeat was the presence of Proposition 99 on the ballot. If you are interested in this, please check out Ilya Somin’s extensive writings on Proposition 98 and 99 at The Volokh Conspiracy.

Somin: Prop 99 Worse Than Nothing

Ilya Somin at Volokh: Why California’s Proposition 99 is a Lot Worse than Nothing Yesterday’s California returns show that Proposition 98 – the referendum initiative that would have imposed real restrictions on eminent domain and also phased out rent control – has been overwhelmingly defeated by a 61% to 39% margin. The rival Proposition 99 – an initiative sponsored by local governments and other pro-condemnation interests that only pretends to protect property rights – passed easily by 62 to 38.

Somin: Prop 98 Likely to Fail, 99 to Pass

Ilya Somin at Volokh: Polls on California Eminent Domain Ballot Initiatives Show Prop 98 Likely to Fail and Prop 99 Likely to Pass: In a recent Field Poll cited in the article, Proposition 98 was losing by 43 to 33 percent among “likely voters,” while Proposition 99 was ahead by 48 to 30 percent. A slightly earlier poll conducted by the Public Policy Institute of California has similar results. If, as is likely, Proposition 98 is defeated, it will probably be a result of the combination of the sponsors’ tactical error in combining the popular anti-eminent domain measure with a far less popular phaseout of rent control (a mistake I criticized in one of my earlier posts), combined with the presence of the deceptive Prop 99 on the ballot. The latter probably led voters to believe that they could protect property rights against takings without simultaneously attacking rent control. Keep your fingers crossed….

Rent Control Part 4: Conclusion and Solutions

Welcome to the final post in the series discussing the consequences of rent control. Thank you to the subscribers who have patiently awaited each new post. I hope everyone found it enlightening. If you haven’t read the entire series, you can catch up with these links: Rent Control Part One: Microeconomics Lesson and Hording Rent Control Part Two: Black Market, Deterioration, and Discrimination Rent Control Part Three: Mobility, Regional Growth, Development, and Class Conflict Conclusion Rent control is not just a simple price control setting the price at which willing renters and landlords are permitted to do business, it is much worse.  It is a coercive act that gives landlords no legal option, but to rent to a tenant against his will, often at a financial loss.  Rent control adds a non-voluntary burden to landlords which deepens over time because landlords do not have the option to rent to a tenant at below market rates.  Not only does rent control cause huge distortions in the housing market, but the burdens fall disproportionately on the poor and underprivileged people it was intended to benefit. Although particular people are able to live with the comfort of low rent payments, even those renters will see their living conditions deteriorate as landlords neglect repairs and maintenance. As the situation gets worse, middle class residents are able to move away, leaving behind the poorest residents who have become reliant on the reduced rent. In effect, rent control grants property rights to renters, that originally belonged to the original property owners. Rent control becomes a redistribution of wealth to rent control tenants away from apartment owners, market apartment renters, and newcomers to the area. Nonetheless, over time the quality of life decreases for all residents of a city where rent control is imposed. Solutions So, it […]

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