By Josefa Velasquez
June 11, 2019
Leaders of the state’s Democratic-controlled Legislature reached an agreement Tuesday to overhaul New York’s system regulating rents on nearly 1 million New York City apartments, offering tenants the most robust reforms in a generation.
Measures agreed to by Democratic Party leaders who control the state Senate and Assembly Tuesday would eliminate landlords’ ability to remove high-rent vacant apartments from the state-supervised rent regulation system.
Other measures announced by Assembly Speaker Carl Heastie (D-Bronx) and Senate Majority Leader Andrea Stewart-Cousins (D-Westchester) would cut down — but not eliminate, as Heastie had proposed — cost pass-throughs to tenants of building and apartment upgrades.
The deal also would end landlords’ ability to raise rents sharply when renewing leases for tenants who had earlier agreed to pay lower, so-called preferential rents for their apartments.
“These reforms give New Yorkers the strongest tenant protections in history,” the leaders said in a joint statement Tuesday night.
“For too long, power has been tilted in favor of landlords and these measures finally restore equity and extend protections to tenants across the state. These reforms will pass both legislative houses and we are hopeful that the governor will sign them into law. It is the right thing to do.”
State rent regulations that govern rent hikes and lease terms on about 44% of the 2.2 million rental apartments in New York City and tens of thousands more in nearby counties expire Saturday. Lawmakers had to introduce legislation by midnight Tuesday to vote on the bill on Friday before the clock runs out.
At an Albany news conference Tuesday, Gov. Andrew Cuomo said he would “sign whatever bill the two houses together pass” — doubling down on his charge the Senate doesn’t have the support to pass the more dramatically pro-tenant package the Assembly put forward in April.
Landlord lobbying groups have warned the Assembly’s initial proposal would discourage building repairs.
“If the law did not expire, I would bet you they wouldn’t pass a bill because they don’t want to make this choice. They don’t want to choose between the advocates’ anger and possible economic harm to their home district,” Cuomo told reporters.
Curbing Improvement Charges
The rent law renewal agreement would make the changes permanent.
It centers on rolling back a power landlords secured from the Legislature in 1997 to remove apartments from rent regulation once apartments hit a high-rent threshold, currently $2,774.76 a month. Gone too would be allowances for rent increases of 20% or more when an apartment becomes vacant.
Also in lawmakers’ sights are longstanding provisions allowing property owners to pass on costs to tenants of building and apartment upgrades, known as Individual Apartment Improvements (IAIs) and Major Capital Improvements (MCIs).
Landlords may currently pass on the cost of building-wide capital improvements through a permanent rent increase of up to 6% in any given year, spread over eight or nine years.
Senate and Assembly Democrats supported fully eliminating MCI charges, a process that has been plagued by high-profile abuses.
But lawmakers are poised to reduce the rent increase to 2%. That would align with Cuomo’s commitment to limit, but not scrap, the landlord allowances.
Also in the mix is a proposal to end an apartment’s MCI rent increases after three decades have passed.
Landlords contend that such changes will “devastate” the housing stock, said Jay Martin, the executive director of Community Housing Improvement Program, a trade group that represents owners of 4,000 buildings in the five boroughs.
His group is also objecting to proposals to limit rent increases on vacant units that pass along to new tenants the cost of individual apartment improvements, or IAIs.
“By proposing temporary MCI/IAIs that would disappear after 30 years, the legislature is creating a regulatory nightmare and gutting these programs to the point of insignificance,” Martin told THE CITY.
“Our members cannot afford to make 30-year, interest-free loans on their property — we don’t believe any small business in any industry ever could.”
The Assembly-Senate pact would cap cost pass-alongs to tenants for improvements made on individual apartments to $15,000 — only permitting such expenses to be added to the rent once every 15 years for a given apartment.
The limit on charges for apartment improvements wouldn’t “cover the most basic of repairs let alone renovations after decades of tenancy,” Martin said.
In statements released by legislative leaders along with their proposed measures, tenant leaders celebrated the proposed changes.
Said Adrien Holder of the Legal Aid Society: “This package of legislation will reverse decades of rampant landlord abuse and enact much-needed protections for hundreds of thousands of tenants in New York State. It is a new day for our clients and all low-income communities who have been disproportionately impacted by rent loopholes.”