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Espada’s defection hurts more than just the Dems

Jill

For those not following New York politics, Pedro Espada recently defected from the Democratic party, helping to secure a power coup for the Republicans in Albany. But his decision didn’t just hurt the party; it did harm to tenants (and particularly low-income tenants) across New York:

In the weeks before Mr. Espada bolted, Senate Democrats were poised to vote on the most significant expansion of rent regulation and tenant rights in a quarter-century, including legislation that could have cost the owners of the more than one million rent-stabilized apartments in New York City and its suburbs billions of dollars on their investments.

Mr. Espada, as chairman of the Senate Housing Committee, had assured Democratic leaders he would take up the bill, already passed by the Assembly, but repeatedly blocked it, citing technical objections and scheduling issues. Last Monday, after he defected to the Republicans and ascended to the Senate presidency, he announced he was opposed to the legislation.

His move has all but assured that the bill will die this year.

Landlords and the real estate lobby obviously opposed the bill, and Mr. Espada sided with them over the interests of low-income tenants who are increasingly priced out of living in New York City. It’s a disappointing, though not surprising, move.

19 thoughts on Espada’s defection hurts more than just the Dems

  2. I don’t know the details of the Democrat’s proposals in New York, but rent control is horrible economic policy (both theoretically and empirically). Paul Krugman discusses why (very easy to understand for a lay audience) in this NYT article:

    http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html

    Relevant portion for those who don’t want to read it:

    “The analysis of rent control is among the best-understood issues in all of economics, and — among economists, anyway — one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ”a ceiling on rents reduces the quality and quantity of housing.” Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand. Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go — and the absence of new apartment construction, despite those high rents, because landlords fear that controls will be extended? Predictable. Bitter relations between tenants and landlords, with an arms race between ever-more ingenious strategies to force tenants out — what yesterday’s article oddly described as ”free-market horror stories” — and constantly proliferating regulations designed to block those strategies? Predictable.”

    You don’t have to look at the notorious cases of San Francisco and NYC to see the disastrous effects of rent control.

  3. Yeah it sounded like this would hurt tenants rights, which is one reason I thought your focus on gay marriage was kind of annoying, as a gay woman, but fuck. 🙁 not happy to hear it.

  4. Melancholia, Krugman’s article hardly addresses the intricacies of NYC rent control. Yes, he’s right that it does create difficult relationships between landlords and tenants, with LLs trying to get low-income rent-controlled tenants out of the apartments so that they can rent them to higher-paying consumers. But the bill that Espada killed would have reigned in those “decontrol” rules, so that LLs would have less of an incentive to make rent-controlled tenants leave.

    Beyond that, rent control is about MUCH more than just a cap on rental costs. Rent control and rent stabilization both give tenants a whole set of valuable rights to protect them against predatory landlords. Under standard landlord/tenant law, landlords have a lot of power; it’s very imbalanced. Rent stabilization and control laws put a little bit of power back in the hands of the tenants.

    It’s also worth noting that rent-controlled apartments are not very comment; rent stabilization is much more frequent, and landlords still often try and get those tenants out of their apartments.

    What would you suggest as opposed to rent control? How else do we make sure that long-time tenants — and especially low-income, elderly, and public-assistance-dependent tenants — remain in their homes, or continue to be able to afford to live in a city like New York? Section 8 and public housing aren’t exactly dream programs either. I peronally think the whole housing system needs overhaul, but in the short-term what should Dems be supporting?

  5. Rent control/stabilization is more or less a necessity for good function of expensive areas. Areas without such remedies suffer from other social ills like large poor areas that are poorly maintained. Limits on housing prices also prevent landowners from sucking out the majority or entirety of the residents general economic surplus and depressing the area economy. However, the examples are most clearly seen in the third world and not here.

    San Francisco is a terrible example. I don’t think there *are* very many places on that peninsula where you *could* build more housing. More than this, I think it’s highly doubful that apartment pricing would actually go down. The primary issue is really about businesses pricing individuals out.

    Rigid rent control is bad, of course. However, no system is as rigid or unresponsive as many economists make it out to be. The Atlanta metro area, for example, could have *really* benefited from building restrictions on new subdivisions in exurbs along with caps on rent prices via progressive property taxation that start at fairly high levels. The interior of the city is fairly underbuilt. The real essential point that most americans miss is that people do not have a unilateral right to profits, and that is true for desperately important reasons.

    Here’s a contrasting article:
    http://www.governing.com/column/rent-control-revival

  6. Oh, I forgot something else.

    A reminder: Paul Krugman is sane, not a liberal. Don’t confuse the two, even as the right-wing grows ever more batshit…

    Secondly, this is ultimately a terrible move for Espada. He’s going to get killed for this, politically.

  7. Jill:

    Reforming landlord-tenant law is another matter, so I’m not opposed to that. Landlord-tenant law is really about default presumptions that the law makes about the warranties and respective powers of the parties to a contract, and that’s always worth tweaking in favor of tenants.

    As to rent stabilization (as opposed to price ceilings which I think we can all agree are bad), it’s probably desirable to have some laws in place which prevent landlords from making drastic and sudden increases in the price of rent. For instance if you had a tenant for a term of years (lets say year to year) at $800/month, and the landlord wanted to increase rent to $1500/month for the next term, there must be some control on that, because clearly people could be shifted around at awkward times etc, which impose a lot of costs on everyone. You shouldn’t allow opportunistic behavior or unexpected and drastic changes, of course.
    However, that should not mean that it is never possible to raise rent and that tenants are guaranteed their tenancy forever at a statute-defined “reasonable price.” If the market value truly goes up and there is much greater demand, interfering with a landlord’s ability to raise rents for all time is no different than price fixing, and impedes the efficient operation of the housing market. To avoid the bad consequences of say a family unexpectedly getting kicked out in the middle of the year, there should be requirements for notice of an increase far in advance, and some sort of review for price gouging. But if over time the market genuinely changes and the family has to leave Manhattan and mom and dad have to start taking the commuter rail in to work from NJ, I do not see a problem with that. The alternative would be inefficient as a price control.

    I guess the point is, there should be legal protections that prevent the sudden unforeseen dislocating of families. To the extent the law does that, great. But to the extent it somehow guarantee your unit at a “reasonable” rate for perpetuity, no that is not desirable. It gets trickier when you talk about the rights of poor people who might not ever be able to afford a place like Manhattan if the market were unregulated. That comes down I guess to a societal judgment of efficiency vs. value in letting the poor have their traditional neighborhoods.

  8. shah8, I don’t know enough about rent control to have an opinion on the merits. However, I think it’s a bit much to say Krugman isn’t a liberal. He calls himself a liberal, wrote a book called “The Conscience of a Liberal,” is a prominent critic of the conservative movement, and generally aligns with liberal policy positions. If that isn’t enough, what is?

  9. I’m curious about how these kinds of regulations work on the ground. We don’t really have anything like rent control or stabilization in Chicago, but when I was working as a leasing agent I saw widespread discrimination against section 8 and other subsidized renters that in many neighborhoods made it impossible for them to find an apartment. I know my boss priced his places and adjusted his credit standards so as to disqualify pretty much any subsidized renter and when I started as a leasing agent I was advised that working with “those kinds of people” wasn’t worth the effort. Do these kinds of laws really make a dent? Are they actually able to influence landlords or do they just create new loopholes?

  10. Boston used to have rent control, but it was phased out a long time ago.

    I remember when I was in my first apartment, when rent control was starting to be phased out, that my landlord sent me a letter, in the middle of the lease term, that demanded a 150% increase in rent, right away.

    And also demanded that I send them enough money to increase the amount of the security deposit to match the new rent they wanted to charge.

    Now this didn’t seem right to me, so I went to city hall and talked to some people who seemed terribly overworked.

    They listened, and (since it was apparently not an isolated incident) they had a packet already made up, under City letterhead, spelling out the *state* laws that govern, so that the landlord could not say that the city laws let him do what he was trying.

    Of course, it helped that I had a cousin who was working for the Mayor, so I didn’t have to do a bureaucratic shuffle trying to find the right office.

    Fast forward more than a few years, there is no effective rent control or stabilization in the city of Boston. My mother, then a woman aged 89,on a fixed pension (and not a big one either) was informed that when her lease expired, she would have to come up with triple the rent she had been paying for the last decade. And she had been in that apartment since at least 1973.

    The children of the prior owner wanted to convert as many units to condos as they could. And this was the way they saw to force people out.

  11. William – this would have closed a loophole, the vacancy decontrol loophole, the loophole right now means landlords can remove rent stabilization (and tenant eviction protections) from an apartment as soon as it is vacant. In a rent stabilized apartment they can still raise rents, there are just controls on it. Once it is not stabilized they can do what the fuck they want. The bill would also have put stabilization back on some apartments.

  12. But William. Chicago must be much better than NYC on the things that you mention. In NYC landlords can discriminate against Section 8 and not a lot of them take it.

  13. Also I don’t think there’s anything in rent stabilization about housing discrimination, I think those are separate laws. But I am not an expert. I know a most what I know from housing activists and reading online.

    I do know they definitely still can do credit checks and income requirements on rent-stabilized. :/

  15. But I would like to say, someone was talking about Manhattan, does not just affect Manhattan, affects all the boroughs.

  16. You know, actually (looking online) it actually IS illegal for them to discriminate on Section 8/income source, as of like a year ago, it just is not always enforced. Sorry.

  17. Oh I guess what it is, if they have a certain number of apartments they are not allowed to discriminate, otherwise they are.

  18. Idk there are plenty of people in shelters with vouchers, who can’t find housing. Sometimes shelters try to make (or succeed) people take SROs that eat up vouchers (or illegal 3/4 housing).

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