Paterson Housing Plan

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Neither tenants nor landlords like governor’s proposed legislation
By Dan Rivoli

With the state’s rent stabilization laws set to expire next year, Gov. David Paterson announced a package of proposals that would change when landlords can charge market rate for regulated apartments. The package also addresses the uncertainty of how the Stuyvesant Town ruling on tax benefits and rent regulation affects tenants and landlords.

But West Side legislators who have written and pushed for pro-tenant bills have reservations about the governor’s plan, and hope that this is merely the start of a debate about new housing laws.

Under Paterson’s proposals, the threshold for vacancy decontrol—the point at which a newly vacant unit is taken out of the rent regulation system and converted to market rate housing—would be raised to $3,000 a month in rent, up from $2,000.

But Assembly Member Linda Rosenthal, author of a vacancy decontrol bill that has been bottled in the State Senate, wants the practice completely lifted. Paterson’s proposal on raising the limit to $3,000 barely changes the existing law.

“The problem is, landlords can get it to $3,000 as easy as they can get it to $2,000,” Rosenthal said. “Clearly, this is a gift to the landlords.”

Landlord organizations, however, are griping about the package just as loudly as tenant supporters.

“That’s perhaps the most ridiculous proposal amongst them,” said Jack Freund, executive vice president of the Rent Stabilization Association, about raising the decontrol level. “People who can afford $3,000 rents don’t need rent protections.”

Paterson also tried to clear up confusion around the State Court of Appeals decision regarding J-51 tax benefits. The state’s highest court found that Tishman Speyer, owner of Stuyvesant Town and Peter Cooper Village, wrongly used a tax benefit—known as J-51—to make renovations and raise rents, ultimately deregulating apartments. Freund said the decision has frozen transactions because building values are uncertain now that longstanding practices have been ruled unlawful.

Under the governor’s plan, tenants in wrongly deregulated units can recoup money from owners who wrongly overcharged rent. Rents can be claimed from up to four years prior to the court’s 2009 decision. Owners in the rent stabilization system would also be allowed to apply for rent deregulation when a unit becomes vacant and the rent hits the proposed $3,000 level, even if the landlord receives the J-51 tax benefit.

That doesn’t sit well with State Sen. Tom Duane, whose district covers the Upper West Side as well as Stuyvesant Town and Peter Cooper Village.

“It undercuts the Court of Appeals decision,” Duane said. “To say landlords and developers can take advantage of J-51 and not be in the rent stabilization system is philosophically wrong.”

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