Dozens of representatives from various tenants’ rights organizations along with some elected officials gathered in front of City Hall on Feb.18 to show their support for Assemblyman Sheldon Silver’s new proposal, which would forbid landlords from exploiting a legal loophole that allowed them to raise the rents of rent-controlled and rent-stabilized apartments.
Of New York City’s 2.1 million rental apartments, roughly 1.4 million are rent-controlled or rent-stabilized, their rent required by law to remain below certain levels. Under a plan called the 1/40th Program, landlords who renovate rent-controlled or stabilized properties may increase those units’ rents by 1/40th of the cost of renovations. However, many landlords falsely report their expenses in order to jack up the cost of rents astronomically. The Division of Housing and Community Renewal, which is in charge of regulating rent-controlled and rent-stabilized apartments, does not examine these reports closely. In addition, once affordable units, whose monthly rents surpass the $2,000 mark can become normal market-rate apartments, or be bought up by real-estate developers. In 2006 alone, New York City had 14,000 apartments escape rent-control and become market-rate apartments.
According to a report issued by the Association of Neighborhood and Housing Development, landlords who falsely report renovation expenses sometimes claim to have spent as much as $20,000 on a single stove or $10,000 on a toilet. A single-bedroom apartment in Woodside, Queens, originally $730 per month, was said to have been renovated for $42,100, allowing the landlord to increase the monthly rent to $1,996 in order to compensate. An apartment that rents for $800 a month in Forest Hills, Queens was supposedly renovated for $40,000 to refurbish the kitchen and bathroom; the landlord increased the rent to $2,000 before the next tenant moved in. Because the landlord was unable to verify these expenses, the tenant filed a complaint with the Division of Housing and Community Renewal. Over the past 18 months, there has been a 37 percent increase in the number of such complaints.
Silver’s proposal would change the amount landlords could increase their rents from 1/40th the cost of renovations to 1/84th. In addition, it would require Housing and Community Renewal to tighten its inspections of landlords’ expenses. Under the new plan, if a monthly rent increases more than 25 percent as a result of renovations, the landlord would be subjected to detailed scrutiny so as to determine if the expenses were reported honestly.
Li Zhen, a Korean-American lawyer for Asian Americans for Equality, said that New York City’s supply of affordable housing is constantly diminishing, and that in these difficult economic times it is particularly important to monitor landlords and keep them from exploiting legal loopholes in order to increase rents. Otherwise, the precious good of affordable housing could become even scarcer.
