By Sean Creamer and Anam Baig

James Harmon’s brownstone (center) at 32 W. 76th St.

Earlier this week, the Supreme Court weighed a decision that could have meant the destruction of rent regulation in New York. The court decided on Monday morning, after several delays and requests for more information, not to hear a case brought by Upper West Side resident James Harmon against the state’s rent regulation laws. While supporters of Harmon’s fight grumble and regroup and advocates of rent regulation breathe a collective sigh of relief, many people have said that they were surprised that the challenge went this far in the first place, and that the fight to keep rent regulations in place is not likely to end any time soon.

City and state agencies charged with defending rent regulation reiterated the long-standing viability of the law, even as it is has faced legal challenges in the past.

“We are pleased that the Supreme Court will allow the existing court rulings dismissing this case to stand. Rent regulation in New York City has a long history, and the court properly left it to elected state and city officials to decide its future,” said Alan Krams, senior counsel of the Appeals Division, in a statement issued by the New York City Law Department.

While rent control is designed to enable people who cannot afford market-rate rents to stay at a comfortable level in the city, one disgruntled property owner decided that his tenants were taking advantage of this system. Harmon sued to overturn the regulations that he said amounted to the taking of his property, since he was not able to rent the units out at market rates.

The court declined to hear the case because of the fact that Harmon and his wife Jeanne were aware that the building was rent controlled when they inherited the property.

Harmon, an Upper West Side resident, inherited the five-story brownstone building on West 76th Street. At that time, he became the landlord of several tenants who were living in rent-controlled apartments. According to previous statements made by Harmon, he felt that these tenants were affluent citizens and did not belong in rent-controlled apartments.

“It’s pivotal that the Supreme Court even thought about taking it, said Sue Susman, the president of the Central Park Gardens Tenants’ Association. “For decades, the U.S. Supreme Court was in support of the regulation.”

Harmon had several avenues he could have taken to alleviate the situation, but he chose to go to court, Susman said. He could have filed a hardship increase application, where he could have showed the State Housing Agency his account books and had his tenants pay a higher percentage of regulated rent.

Harmon, an attorney, argued that under his Fifth Amendment rights, the fact that rent control even exists is an unconstitutional seizure of his personal property by the government. The court ruled that there was no “taking of property” and dismissed the case, but Harmon appealed, touting his 14th Amendment right to due process which he claims was denied him. The case was denied in both the Federal District Court and the Second Circuit Court of Appeals.

He pleaded to the courts that rent stabilization laws were denying him the ability to earn as much as he could from his apartments. He has to offer the rent-stabilized apartments at 59 percent below the regular market price to his tenants, is not able to choose his tenants and has no say over who inherits the apartments when their tenants die. Even when a beneficiary of the deceased takes over the property, they too are graced with below-market-rate rents.

Harmon’s lawsuit was against several parties who are in charge of rent control policies, including Jonathan Kimmel, the chair of the Rent Guidelines Board, and Darryl Towns, the commissioner of the New York State Homes and Community Renewal.

After the denial of both federal courts, the Harmons petitioned the U.S. Supreme Court for a writ of certiorari, which would allow the Harmons to appeal to the Supreme Court for a final decision in their case. The state and city each filed a brief defending the Rent Stabilization Law as constitutional, urging the Supreme Court not to grant the petition. With the decision on Monday, the case has finally reached its last stop.

“The Harmon family is disappointed in the Supreme Court’s decision,” Harmon said in an email. “We still believe that the Constitution does not allow the government to force us to take strangers into our home at our expense for life. Even our grandchildren have been barred from living with us. That is not our America.”

While Harmon was looking to free himself of his rent-stabilized tenants, his efforts snowballed into a movement with the aim of dismantling rent control policies in New York City. Real estate interest groups stood together to oppose a sanction that they believe impedes their rights, but most local politicians support rent regulation and fight to renew it every time it is set to expire.

“I am gratified that the United States Supreme Court has denied review of the Harmon case, which could have spelled the end of rent regulation in New York City,” Assembly Member Linda Rosenthal said in a statement. “This is a victory for millions of rent-regulated tenants throughout New York City who would not be able to afford to live in this city were it not for rent regulation.”

A new law will protect New York City tenants and tourists from the dangers of illegal hotels. The bill, sponsored by State Senator Liz Krueger and Assembly Member Richard Gottfried, was signed into law July 23 by Governor David Paterson.

For decades, landlords have exploited ambiguous wording in state and city laws to set up hostels for tourists, renting out small Single Room Occupancy units in apartment buildings to tourists looking for a good deal. Tourists, often drawn in by online ads, don’t always realize until they arrive that their housing is not in a bona fide hotel.

The new bill will make it easier for government agencies to prosecute landlords who rent out rooms to temporary visitors, and to collect the appropriate real estate taxes.

“By removing a legal gray area and replacing it with a clear definition of permanent occupancy, the law will allow enforcement efforts that help New Yorkers who live in SRO units and other types of affordable housing preserve their homes,” Paterson said, in a statement.

Permanent residents will no longer have to worry about the risks posed by illegal hotels.

“This is a real win-win for New York City residents and visitors,” said Kruger in a statement. “Residents will no longer see their apartment buildings overrun by transient tourists and visitors will no longer have to worry about arriving to find that their hotel is actually an apartment building.”

Residents of SRO units have been chased out of their homes by landlords seeking to make more money by renting their rooms out to tourists.

“This legislation is a crucial step in the preservation of affordable housing and SROs,” said Yarrow Willman-Cole, of Goddard-Riverside West Side SRO Law Project.

The real estate industry has been critical of the law. Real estate attorney David Satnick, partner with Loeb and Loeb, said that the rent from the transients allows landlords to improve their buildings. Without that funding, he believes that the apartment buildings will fall in to disrepair.

“It will turn away budget minded tourists who can’t afford pricey hotels and 1,000’s of workers will lose their job because of this bill,” he said.

The new legislation includes exceptions for roommates and boarders who rent rooms along with permanent occupants.

Putting a stop to illegal hotels will also put thousands of apartments back on the housing market.

The law is set to go into effect on May 1 of next year.

In 2002, a representative from the Goddard Riverside SRO Law Project told Community Board 7 that Hersh forced out undocumented workers staying at his Colonial House Hotel, at 611 W. 112th St. He allegedly told them that inspectors from the city’s Housing and Preservation Department were actually federal Immigration and Naturalization Services agents, according to board minutes.

But as the city struggles to help the ever-increasing homeless population, the Department of Homeless Services is looking to give Hersh a lucrative deal to use his West Side Inn Hostel, at 237 W. 107th St. between Broadway and Amsterdam Avenue, as emergency homeless housing.

Photo by Andrew Schwartz

The hostel is an SRO, or “single room occupancy” housing—a low-cost, dorm-like accommodation—though its website describes it as a “hip and trendy” place to stay while visiting New York. The department did not answer questions about how much Hersh would receive for use of his facilities, but housing advocates say that landlords can get several thousand dollars a month from the city, per room, for housing homeless populations. That amount is far more than the typical SRO rate of several hundred dollars a month, and rates starting at $17 a night, as advertised on the hostel’s reservations website, which works out to roughly $500 a month.

For housing advocates, this is a new wrinkle in the fight for affordable housing. Where they once complained that SROs, meant to house low-income permanent residents, were being illegally converted to more lucrative hotels, they are now seeing these SROs being used for the homeless. The shift is most likely due to a combination of factors, including a city crackdown on illegal hotels, decreased demand for hotel space and an increase in the homeless population.

“The city is lining the pockets of these landlords who harass tenants and go through whatever means to get permanent tenants out of the building in order to put in placements from [Department of Homeless Services],” said Marti Weithman, project director for Goddard Riverside SRO Law Project. “It’s happening all over the West Side.”

According to people involved with the situation, the West Side Inn Hostel is already housing approximately 40 homeless women along with some long-term tenants, though the department did respond to an inquiry to confirm that homeless women are currently residing there. Services for the clients are being provided by Help USA, a nonprofit founded in 1986 by now-Attorney General Andrew Cuomo and chaired by his sister, Maria Cuomo Cole.

The nonprofit identified Hersh’s property as a potential space for Department of Homeless Services’ clients, as part of an open-ended request for proposal process. The department then filed an “Emergency Declaration” request at an unknown date with the city comptroller’s office to allow the contract with the West Side Inn Hostel to move forward more quickly. Eventually, Help USA plans to administer services to a total of 135 women at the hostel.

Alexandra Sirota, director of external communications at Help USA, said the group had no comment about Hersh’s reputation as a landlord. But the department is currently investigating community allegations of landlord harassment. Kristy Buller, deputy press secretary for the Department of Homeless Services, said in a statement, “We value the input of the community, and we strive to be a good neighbor as we assist New Yorkers who are unfortunately experiencing homelessness.”

Help USA was to present its plan to Board 7’s health and human services committee Feb. 23. However, the group canceled, as did representatives from the Department of Homeless Services, only hours before the start of the meeting.

Some officials, including Department of Homeless Services Commissioner Robert Hess, met with local civic groups Feb. 17 to discuss the temporary homeless housing, according to Rev. John Duffell, pastor at the neighboring Church of the Ascension, at 221 W. 107th St. The reverend said he convened the meeting because he was worried that the community was unaware of the emergency housing and long term plans for the homeless women. Duffell, along with other opponents, stressed that their views are not a “not in my backyard” response; Help USA and the city should have consulted with the neighborhood before creating emergency housing, they argue.

“It’s assuming people would say ‘no’ to any kind of homeless shelter. I don’t think that’s the case,” Duffell said. “The city is steamrolling, rather than going places and working it out.”

An added concern is the fact that the West Side Inn Hostel has open violations from the Department of Buildings and the Housing and Preservation Department, the most recent of which, dated January 2009, stems from an elevator problem. In 2006, the Environmental Control Board hit Hersh with a $2,500 fine for operating an illegal hotel in an SRO building, a violation that is still active. The Buildings Department looked into 14 complaints between 1991 and 2009, including questions about parties on the roof, dilapidated rooms and elevators that remained broken.

“It’s been a detriment to the neighborhood,” Ruffell said of the hostel.

“It’s not kept in good condition.”

Hersh could not be reached for a comment. A woman who answered the phone at the hostel claimed to not know anything about the homeless population and declined to answer questions or give her full name before hanging up.

The city’s Finance Department lists G. M. Canmar Residence Corporation as the building’s owner. A phone line at the corporation’s mailing address was not operational. Adam Leitman Bailey, named as Hersh’s attorney in a 2006 Village Voice article, did not return calls and messages at his law office. In the phonebook, Hersh’s number was listed at the Hotel Saint James, another SRO. The man who answered the phone there said that Hersh could only be reached at that number Feb. 24 and declined to provide additional information.

However, in an interview with the Village Voice and in a transcript of a Housing and Preservation Department hearing, Hersch denied allegations of tenant intimidation.

Far from a West Side issue, the conversion of affordable housing into emergency homeless lodging seems to be happening across the city. In the Bronx, civic leaders are protesting the use of a building at 1564 Saint Peters Ave. that was originally planned for middle-income housing and is now being used as temporary homeless housing. In Harlem, a block association is mobilizing against a plan to house 76 homeless men at Spot Hostel’s Fifth Avenue Spot, at 35 W. 126th St.

But the transitions may be self-defeating. Weithman, of Goddard Riverside SRO Law Project, said that tenants forced out of SRO units are low-income New Yorkers who may find themselves in the homeless system after all.

“They can very well end up in another SRO because they’ve been placed there,” Weithman said. “The rent that was $400 a month turns into the landlord getting four or five times that.”