It’s famously hard to find an apartment in New York City. Andrew Cuomo has floated a plan to make it harder.
The disgraced ex-governor and current mayoral candidate has proposed banning middle-income tenants from rent-stabilized apartments. Specifically, under Cuomo’s proposal, prospective tenants wouldn’t be allowed to rent a rent-stabilized unit unless they could prove that the rent would eat up at least 30 percent of their household income. In a city where 41 percent of all apartments are rent-stabilized, this would take over one million apartments off the table for many tenants.
So why do this? Cuomo purports to believe that too many rich people are occupying rent-stabilized apartments. Specifically, he’s got a bee in his bonnet about Zohran Mamdani, who lives in a rent-stabilized $2,300 one-bedroom apartment in Astoria. Cuomo thinks Zohran, who earns a good living as a state legislator — is too rich for that unit.
Tenants may question whether Cuomo has their best interests at heart. After all, Cuomo, whose campaign is being bankrolled by landlords, has an awful record on tenant issues. As governor, he oversaw the loss of nearly one hundred thousand rent-stabilized units as predatory landlords removed them from the system, all while colluding with Republicans to keep the state senate in deep-blue New York in Republican hands for a decade.
If it were up to Cuomo, rent stabilization in the city would be on its way out the door. Thankfully, a tidal wave of progressive activism during Donald Trump’s first term brought Democrats to power in the state senate, and the governor was forced to sign a rent law reform package that stopped the bleeding. (He now says he regrets allowing it to become law.)
History aside, though, is Cuomo’s idea a good one? Let’s consider an example. Imagine a young couple living in Washington Heights. He’s a nurse making $80,000 a year, and she’s a traffic cop making $70,000, so together they earn $150,000 — not too bad. They love their neighborhood, but they’re thinking of starting a family and they need a bigger place. So they’re delighted when they hear about a rent-stabilized two-bedroom apartment in the neighborhood for $3,500 a month. (A note for out-of-town readers: $3,500 for a two-bedroom may sound absurd, extortionate, even criminal to you, but you’ll have to trust me that in New York City, a $3,500 rent-stabilized two-bedroom in Washington Heights is the middle-class dream.)
In Cuomo’s New York, they won’t be able to: This nurse-cop couple is just too rich. If they rented this place, after all, they’d only be paying 28 percent of their annual income, $42,000 a year, to their landlord — so they wouldn’t qualify.
But it’s worse than that. Washington Heights is a very rent-stabilized neighborhood; exact current numbers today are hard to come by, but 87 percent of rental units in the area were rent-stabilized as of 2014. It’s not just that our couple can’t rent this apartment — they’ll struggle to find any apartment in Washington Heights. In a city with a 1 percent vacancy rate, where Cuomo has made it illegal for them to rent 87 percent of the apartments in their neighborhood, they’re shit out of luck.
Of course, they could move out of the neighborhood, to some new-build yuppie apartment in Harlem where they’ll pay, say, 40 percent of their annual income in rent, without the stability and protections of rent stabilization. But at that point, is it worth it to them to stay in the city? Cuomo’s proposal will add to the flood of families with children moving out of New York.
Our imaginary couple certainly isn’t unique. As City & State reporter Peter Sterne notes, 46 percent of rent-stabilized tenants are “rent-burdened” (meaning they pay more than 30 percent of their income on rent). But of course that means 54 percent of rent-stabilized tenants are not rent-burdened, i.e., paying less than 30 percent of their income in rent. Those people — more than half the rent-stabilized tenants in the city! — are too rich to live where they live now, according to Cuomo. He’s not proposing that they be evicted exactly (the income test would apply only to new tenants, not current tenants); he’s just saying that if they have to move, ever, for any reason, they should have half as many apartments available to them as they do now and pay a heck of a lot more in rent.
Such a policy would be a catastrophe — and not just for the tenants barred from housing. Forcing tenants to prove they’re poor enough to rent would add a huge bureaucratic step to the already-awful experience of finding an apartment in New York. Banning tenants with moderate incomes from rent-stabilized apartments would destabilize neighborhoods, increase vacancies and worsen the finances of rent-stabilized buildings, chase moderate-income New Yorkers out of the city, and increase income polarization. An income test for rent stabilization would create “apartment lock,” as current tenants who earn too much to move into a new stabilized unit cling for dear life to the one they have.
Short of demolishing affordable housing, it’s hard to think of a more effective way to worsen New York’s acute housing crisis than what Cuomo has proposed.
If Cuomo’s proposal is disastrous as a policy proposition, it’s even worse as a political stunt. It’s clear what he’s trying to do here: take a potshot at Zohran Mamdani, who recently trounced him in the Democratic primary. Zohran has family money; Cuomo, who got his start in politics as a lowly campaign manager for his father’s gubernatorial campaign at age twenty-five and was so good at it that he became assistant secretary for Housing and Urban Development at thirty-six, is acutely sensitive to the way family resources can launch a political career.
He wants to remind voters that Zohran has money, and this is a good way to do so. New Yorkers harbor a deep reservoir of apartment envy, and tapping into that must have seemed like good politics. Proposing a stupid and unworkable policy just for the troll value is a bit of an odd look for someone who at one point was running on seriousness and experience, but losing a primary will do that to a man.
The trouble is that Cuomo’s proposal would be a disaster for many of his own voters.
If Cuomo has a path to victory in this election, it surely requires winning middle-class people of color in areas like the Bronx, where he received a bare majority of primary votes. But the Bronx — a neighborhood where 80 percent of households are renters and nearly 60 percent of apartments are rent-stabilized — would be among the areas hardest hit by Cuomo’s restrictions. Do nurses, cops, and public school teachers in the Bronx really want to support a candidate who will forbid them from renting in their neighborhoods? Are they inspired by the idea of rising vacancy rates and reduced rent collections in their rent-stabilized buildings? Do they think longtime middle-class tenants should be forced to move out of the neighborhood because they earn more than they used to? Mamdani’s historic field operation will ensure they know about Cuomo’s initiative; whether they find it appealing is another question entirely.
Cuomo, who seems to have been living in fashion designer Kenneth Cole’s seven-bedroom mansion in Westchester before kicking his daughter out of her $8,200 a month Manhattan apartment when he needed a New York City address to run for office, may be a tad out of touch with the concerns of middle-class New York tenants. But his misguided policy idea reveals a deeper and more dangerous misconception about rent regulation. Cuomo seems to think that rent regulation is a charitable endeavor aimed at low-income tenants — when in fact, it’s a form of market regulation that benefits everyone.
To understand where Cuomo went wrong, consider some lucky soul who bought a six-unit apartment building in, say, Williamsburg, Brooklyn, in 1990.
In 1990, Williamsburg was a rough neighborhood, and rents were low. You could buy a building for cheap. Over time, though, as New York City’s economy rebounded, crime decreased, hipsters were invented, and Brooklyn became cool, things changed dramatically. Today rents in Williamsburg are stratospheric, multiples of what they were back in 1990. If our hypothetical landlord can evict his old tenants and bring in new ones at market rents, he can get rich beyond his wildest dreams.
But I ask you, reader: Should our landlord get rich? Does allowing him to get rich serve a social purpose?
Williamsburg is a much more desirable place to live than it was in 1990, but the landlord didn’t make it more desirable. The landlord didn’t lower the crime rate or make the economy rebound or open a cool art gallery or create transit access to lower Manhattan. The landlord owns a slice of land that has become very valuable, not because of anything the landlord did but because New Yorkers collectively made it cool and safe and convenient and interesting. Why should the landlord be the one to benefit from that collective work?
I’m not saying the landlord didn’t do anything. The landlord maintained the building and fixed the plumbing when it broke and took out a loan to replace the boiler, and the landlord is entitled to compensation for that work. But lots of landlords in Columbus, Ohio, did that same kind of work, and none of them can charge $5,000 a month for a studio. Why should our Williamsburg landlord be any different? At best, he made a smart bet on what slices of land society would work to make valuable. At worst, he’s a beneficiary of dumb luck, like someone who bought a painting at a yard sale and later found out it was an Andy Warhol.
There’s no reason to resent lucky Warhol-buyers or smart speculators. But there’s equally no reason to reward them.
Insofar as they’re maintaining housing, landlords deserve fair compensation, and society has an interest in incentivizing them to keep doing so. But to the extent that they’re profiting from the growing desirability of a given neighborhood — desirability that, again, they have no role in creating — they neither deserve a reward nor does rewarding them serve any useful social purpose. Certainly not when the reward is an ever-growing share of the total annual income of every working-class person in New York City.
After all, Williamsburg isn’t going to become more cool because the rents go up more. Quite the contrary. Landlords who charge $5,000 for a studio in Williamsburg are like people charging $10 a bottle for clean water in a disaster zone: profiting from a commodity that happens to be scarce and that they happen to own. In other words, price-gouging.
And price-gouging cries out for price regulation, which is where rent stabilization comes in. Under New York’s rent laws, landlords are permitted to increase rents modestly over time as maintenance costs increase, but they’re not allowed to jack up rents arbitrarily to earn speculative profits. As a result, the social value of New York City is shared by everyone, rather than being monopolized by landowners.
This arrangement is rare in the United States, which has very weak tenant protections by international standards. (By contrast, the United States has directed massive federal subsidies to promote stability for homeowners. As some have observed, the thirty-year mortgage is rent control for homeowners.) But internationally, rent stabilization is common. Germany, a majority-renter country, has virtually universal rent control, while in Japan, a landlord may need to sue to raise your rent.
The benefits of rent control are obvious: tenants enjoy not only lower rents but the confidence and stability they need to put down roots in a neighborhood. Businesses can grow and hire workers without needing to pay a massive wage premium to subsidize landlords. Social resources are directed away from rent-seeking behavior and toward productive enterprise. As market regulation, rent control is an obvious win and should be expanded.
Some commentators worry that rent control may disincentivize housing production. In New York’s existing system, that’s not a problem, since only buildings built before 1974 are typically stabilized. More broadly, while New York desperately needs more housing, it’s not obvious that allowing developers to speculate on skyrocketing rents is the best way to encourage housing production; a simpler path might be to make it easier to build more apartments, which Mamdani supports and Cuomo opposes.
When we understand rent control as an efficient and necessary form of market regulation, the fact that middle- and even upper-income people are allowed to benefit from it becomes a matter of course. Why should nurses and traffic cops (or doctors and lawyers, for that matter) be subject to price-gouging? If you think they earn too much money, you’re welcome to raise their taxes, but reducing their income by awarding their landlord a speculative profit hardly makes sense.
So where does this means-testing idea come from? Here a bit of history is revealing.
One of the tremendous political strengths of New York City’s rent laws is that they benefit people from all walks of life. That makes them hard to weaken. Excluding better-off tenants from rent stabilization would erode the constituency protecting them and create the conditions for their elimination — a landlord lobbyist’s dream.
New Yorkers know that because we’ve been here before. Enter vacancy decontrol.
Back in 1994, the real estate industry persuaded New York’s city council to allow rent-stabilized units with rents over $2,000 to leave the rent stabilization system when a tenant left. At the time, $2,000 was an unimaginably high rent in most of New York City, and the rhetoric around the law would be familiar to anyone who has watched Andrew Cuomo’s recent press conferences: why should Mia Farrow enjoy a rent stabilized apartment? Isn’t she rich enough? City council members figured they could do a big favor for the real estate industry without hurting their constituents: Who knew anyone who paid $2,000 a month in rent? It would only affect wealthy Manhattanites.
What happened next was predictable. Landlords had every incentive to push rents up to the vacancy decontrol threshold, and that’s just what they did. Things got ugly, with landlords using illegal tricks to force rents up to the threshold and threatening and abusing tenants to produce the vacancies. Speculators bought rent-stabilized buildings at exorbitant valuations, betting that they could evict their way to a market-rate building. According to ProPublica, the city lost 250,000 rent-stabilized units between 1996 and 2016.
Banning vacancy decontrol was one of the key achievements of the 2019 rent law reform — the law Cuomo was forced to sign and now says he regrets. The lesson couldn’t be clearer: Eliminating rent stabilization for the rich weakens rent stabilization for everyone. New York’s tenants understand that.
Cuomo’s new proposal, though, would be even more politically damaging to the rent laws than vacancy decontrol. If Cuomo got his way, middle-class tenants not only wouldn’t be allowed to benefit from rent stabilization, they would actually be harmed by it — locked out of almost half the rental units in the city. The rent-stabilized housing stock, meanwhile, would be pushed into dire financial straits, excluded from renting to half of current tenants and left with a poorer, less reliable tenant population.
Angry middle-class tenants, vacant buildings falling into disrepair, a greedy and ever-potent real estate lobby — if you were intentionally trying to create the political conditions for the end of rent stabilization in New York, it’s hard to imagine a better way to do it than Cuomo’s proposal.
But I’m probably being paranoid. More likely, Cuomo’s proposal is just what it looks like: a half-baked, economically illiterate, pragmatically unworkable policy rolled out to score cheap political points by a politician who has never cared about tenants and never struggled to pay the rent.
Great Job Michael Kinnucan & the Team @ Jacobin Source link for sharing this story.
