After the Coup: Landlords Get a ‘Reprieve’

Mike McKee was in the State Capitol Monday afternoon, eagerly awaiting Tuesday. For the past three years, the white-haired, bearded activist had devoted his efforts almost exclusively to passing sweeping new rent regulations in the State Senate that favor the city’s one million–plus stabilized tenants.

As of early afternoon Monday, the chamber’s housing committee was slated to vote the next day on a far-reaching bill he had championed, and Mr. McKee was expecting a heavy activist turnout. “We told everyone, ‘Wear your T-shirt,’” he said, referring to the bright red “Real Rent Reform” shirts that tenant organizers have handed out.

By his count, he had all the votes needed to pass in the committee and head to the Senate floor, where he said he had “30 or 31 votes” of the 32 required for a full repeal of vacancy decontrol, for instance.

Joseph Strasburg has spent the past half-year playing legislative defense on behalf of landlords of stabilized apartments. This defensive posture was a relatively new one for the president of the Rent Stabilization Association, as he’d enjoyed a years-long alliance with the Senate Republicans, who dutifully blocked any major new rent regulations.

In recent months, Mr. Strasburg has been telling his members to brace for losses on at least some fronts.

“There was a level of expectation that I had cautioned the members here was going to occur,” said Mr. Strasburg, a Bronx native and chief of staff under former City Council Speaker Peter Vallone. “We expected some legislation enacted in terms of Mitchell Lama going into rent stabilization. We expected increased penalties. … We expected a big push on the luxury decontrol issue.”

Particularly if there was a full repeal of vacancy decontrol—which would prevent rent-stabilized units from becoming market-rate—the bills pushed by tenant groups would cost his members millions and, by landlords’ telling, would unleash a wave of defaults on apartment building loans citywide.

And in an instant—3:46 p.m. on Monday, June 8, when the Senate flipped from Democrat to Republican, to be precise—Albany, along with the positions of these two men, was turned on its head.

The fight over changes to rent regulation has been one of the Legislature’s more high-profile battles since the Democrats won control last November, and a climax of some sort was expected this month, as the Senate was likely to pass at least some changes to rent laws that had been blocked for years by Republicans. But now that the G.O.P. has regained control after a tumultuous five months, tenant activists like Mr. McKee have immediately thrown up their hands, declaring all is lost—at least for now.

“We have been tantalizingly close,” Mr. McKee said of the set of pro-tenant bills. Now? “It’s dead. It’s dead.”

The various landlord groups are skeptical that a full repeal was actually in the tenant groups’ grasp, but, as noted by Mr. Strasburg: “It’s a moot point.”

Still, he and his colleagues at the other major landlord groups—the Real Estate Board of New York and the Community Housing Improvement Program—are hardly breaking out the Champagne, at least not publicly. “I think the reality is, it’s a reprieve, albeit a temporary reprieve,” Mr. Strasburg said. “You’re talking about a change that extends to next year,” if the deal sticks.

Regardless, the past few months had seen noticeable efforts from both tenant activists and landlord groups, efforts that, presumably, will be suspended.

Both the Rent Stabilization Association and REBNY had made this a top lobbying priority in Albany, taking the position that rent regulations should be dealt with when the law expires in 2011—not earlier. They had called for extra contributions from members for the issue, according to individuals from the organizations, and both groups hired the Bronx-based political operative Stanley Schlein to lobby on the issue. The RSA had commissioned a study to show the deleterious effects on the construction industry that added regulation could have, and held a luncheon honoring Pedro Espada, the Bronx Democrat who led this week’s revolt.

On the part of tenant activists, the efforts started years ago, by helping to get Democrats control of the Senate, as few if any of their major housing bills ever made it through the Legislature with Republicans in control. Starting after the November election, the groups began calling voters in districts of state senators who had not signed on to a repeal of vacancy decontrol, and went door-to-door on numerous weekends in those legislators’ districts.

As to just how close things were to passing, Mr. Strasburg said uncertainty was rampant.

“Clearly, we were not sure,” he said. “Nobody had a great level of comfort one way or another because the leadership—[Senator] Malcolm Smith—never articulated publicly what he supported or didn’t support.”