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Tenant groups praised the legislation, and while they acknowledged that it left out some of their major requests, they consider the deal a validation of the flipped power structure. | J. David Ake/AP Photo
A deal to pass a sweeping tenant-friendly overhaul to state rent laws has sounded the death knell for the real estate industry’s longstanding dominance in the state capitol — at least for now.
State lawmakers are poised to usher through a package of wide-spanning changes to strengthen the rent-regulation system and expand tenant protections — ending key provisions to laws that have long been shaped by the industry’s outsize influence on Albany. Gov. Andrew Cuomo said Wednesday he would sign the package, all but ensuring it will become law.
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The changes signal a major shift in the balance of power that has long prevailed in New York, as lawmakers move to alter a series of landlord-friendly changes passed in recent decades. Tenant activists have pushed to reverse those provisions for years, but their proposals were continually blocked under the Republican-controlled state Senate.
Now, with Democrats newly in charge of the chamber, several core changes are on the brink of becoming reality, despite the industry’s vocal and well-funded lobbying effort against them in recent months.
“The change people voted for last year is being realized,” said Senate Deputy Leader Mike Gianaris, adding that in previous legislatures, “The Republicans in the Senate would hold the very existence of the rent laws hostage to extract concessions, and many of the loopholes exist because the Senate Republicans would threaten to allow the entire regulation structure to expire.”
Throughout the recent debate, real estate and landlord groups painted a bleak portrait of the future of rent-stabilized housing — warning of widespread deterioration of housing quality and the loss of jobs, property tax revenue and investment.
“Clearly the atmosphere in Albany was, ‘We have to punish the real estate industry because they only supported Republicans in the past,’” said Joseph Strasburg, president of the Rent Stabilization Association. “It’s now easy to beat up business … the message that’s being sent to investors outside of the state is, ‘After Amazon and after this, why invest in New York?’ It’s becoming a very anti-business atmosphere.”
But that message failed to gain much traction with legislative leaders. The ouster of the Independent Democratic Conference — a group of centrist Democrats who often voted with Republicans — was won largely on tenant issues in New York City, which is in a continued housing emergency. The left-leaning Democrats who would replace the IDC painted the real estate industry as the chief antagonist in a push for greater affordability.
The industry’s longstanding strategy in Albany was to rely on the IDC and Senate Republicans — to whom they have been generous donors — to block unfavorable changes. With the flip of Senate control imminent last fall, that strategy shifted toward funding and attempting alliances with more moderate Democrats.
“It’s a humbling moment for the political strategy of the real estate industry,” said Neal Kwatra, a prominent Democratic operative. “From a pure politics perspective, the bill creates a potentially tectonic shift in the future power dynamics between affordable housing advocates and [real estate].”
The new regulations, which will be voted on in the next few days, would end the ability of landlords to convert apartments to market-rate when they reach a $2,775 rent threshold — a policy that has led to the deregulation of thousands of apartments over recent decades. It would also eliminate or severely curtail mechanisms that permit landlords to raise rents beyond annual Rent Guidelines Board increases.
The package additionally removes the sunset provision in the laws that has required them to come up for renewal every few years — meaning the regulations cannot be easily used as a bargaining chip for future legislatures.
During this year’s session, groups including the Real Estate Board of New York and the Rent Stabilization Association banded together in a coalition that branded itself under the name, “Taxpayers for an Affordable New York.” They funded television ads and organized rallies highlighting small building owners and contractors whose livelihoods they said would be hurt by the potential changes.
Opposition to some of the more radical changes was apparent in the final package. It does not, for example, fully eliminate programs that allow landlords to charge tenants for building and apartment improvements. It also did not include a wide-spanning measure that would enact statewide protections against eviction and essentially regulate market-rate apartments — referred to as the “good cause” measure.
Still, industry representatives said the package went far past what they would consider a reasonable compromise. Several said the changes effectively kill the building and apartment improvement programs, stripping owners of the incentive to make upgrades to their properties. And while some more moderate members of the Senate Democratic conference indicated some concerns with aspects of the legislation, it is expected to clear the chamber when it comes up for a vote.
George Fontas, a lobbyist for the LeFrak Organization, said the industry has more work to do in educating lawmakers on how the changes will be detrimental to housing quality, and eventually, the tenants the changes are seeking to protect.
“Fundamentally, the Legislature took the lessons that their predecessors learned in the 1970s and 1980s and completely threw them out the window,” he said. “I predict that next winter, calls to elected officials’ offices about heat will spike, and it’ll go up every year for the foreseeable future, because what’s going to happen is people will put a Band-Aid on that 30-year-old boiler rather than replacing it.”
Tenant groups praised the legislation, and while they acknowledged that it left out some of their major requests, they consider the deal a validation of the flipped power structure.
Rebecca Garrard, a member of the statewide tenant coalition that lobbied for the changes, said the advocates plan to come back to Albany next year to pass the “good cause” bill, among other measures. The current package falls short on statewide tenant protections, she said, but bodes well for future efforts.
“With all of the money that the real estate industry poured into this campaign, with how influential the real estate industry is, not just in rent but in other issue areas, this is a really powerful moment in illustrating that constituent voices can affect change, even when they’re vastly outnumbered by lobbying dollars,” she said.
Nick Niedzwiadek and Emilie Ruscoe contributing to this report.