Rent Regulation Chief: System Needs ‘Wholesale Reform,’ Rent Tax

A State Senate forum on rent-regulation policy Thursday morning brought a long list of sharp criticisms of the existing system and calls for radical change, standard fare for events on this topic.

Some samples: The rent-regulation system “needs a wholesale reform”; there is “absolutely no rationale” for high-income decontrol; the city should implement a “rent tax” to subsidize middle-income tenants who can’t afford increased rents.

What was notable was that all of those statements came from the chairman of the city’s Rent Guidelines Board, the Bloomberg administration–controlled body that sets rent increase limits on the city’s 1.4 million rent-regulated apartments each year.

The chair, Marvin Markus, made a point to note that the views were his own, not those of the administration or of the board.

The main theme of Mr. Markus’ remarks—made at State Senator Pedro Espada’s forum on housing policy held at N.Y.U.—seemed to be that New York City’s system of rent regulation was full of irrationalities, marked by a hodgepodge of various rules that can often be contradictory or have unclear intentions.

For instance, on the subject of high-rent, high-income decontrol (often called luxury decontrol), Mr. Markus was less than kind, calling it, “probably the most irrational piece of the existing construct.”

“There’s absolutely no logic, in my opinion,” he said, “to a system that says if your rent goes above $2,000 and if your two-year income is above $175,000, you get kicked out. But if you’re Warren Buffet, or if you’re Bill Gates, and your rent is $1,100, you can stay. There is absolutely no rationale to that construct.”

His prescription to resolve some of the illogical aspects of the existing system would allow exemptions to rent increases for those who are unable to afford them, funded by a broad rent tax. This plan would infuse the concept of one’s ability to pay into the rent-stabilization system, which currently does not consider income other than for high-income decontrol.

“It is clear that what the board does—that is, an across-the-board increase for one- and two-year increases—does not target the areas of stabilized stock that need larger increases,” he said. “At the same time, tenants residing in these buildings are generally the least able to afford the required increases. I believe that the Rent Guidelines Board’s role in stabilization would be considerably more rational if the system accommodated an income-based approach.”

The political viability of such a plan is, of course, a different question, and it’s hard to imagine that legislators would accept a new rent tax to pay for this plan (which is modeled on a program already in place for seniors) without a huge fight.

But if there were “wholesale reform,” of the system, as Mr. Markus called for, now would be a good year for it, as most of the newly empowered Democratic majority in Albany are pushing for an array of new laws this session that would give tenants broad new protections, sparking a defensive fight from landlord groups.

Many eyes are on Mr. Espada, who is the new chairman of the State Senate’s housing committee. In his opening remarks at the event, he called generally for a middle-road approach to reforming the state’s rental laws, though he did not delve into specifics. (Tenant groups have been cold to Mr. Espada, as has the Daily News, with advocates passing out flyers that said in bold caps that “SENATOR ESPADA IS NO FRIEND TO TENANTS.”)