A Historic Win for New York Tenants

On June 14, the State Legislature in Albany passed a bill that will profoundly change the tenor of life in New York City. The law—known officially as the Housing Stability and Tenant Protection Act of 2019, but dubbed by its advocates “universal rent control”—strengthens tenant protections for the city’s nearly one million privately owned, rent-stabilized apartments. For many of the 2.4 million New Yorkers who live in those apartments, gone is the threat of hired harassers defecating in the hallway, shouting at the window, banging on the door, of mid-winter heat cut-offs, surprise rent hikes, and “lost” rent checks, of apartment lockouts and leases bought out under duress, of health-ruining construction debris and spurious housing court dates. 

The release from distress for thousands of people facing the prospect of displacement will ripple through the city. With the passage of this bill, the lament that has become a cliché—that New York has lost its soul, that it offers no space for the unconventional, that it is home only to the rich and ruthless—will be significantly less true. 

To understand the majesty of the new law, consider the fact that about 800,000 people—more than twice the number who live in New York City’s public housing—have immediately been freed from a looming threat of eviction. These are tenants who paid what was known, somewhat deceptively, as “preferential” rents. Owners of rundown buildings in the city’s poorest neighborhoods charged less than the regulated rent, rather than have the apartments go empty. In recent years, when the neighborhoods became fashionable, landlords levied accrued annual increases, sometimes doubling rent from one lease to the next. Unable to pay the increase, long-term leaseholders were forced out, paving the way for owners to deregulate the apartments for a new class of tenants who could pay whatever the market could bear. Now, those retroactive increases are illegal.

Crucially, the law eliminates the rent threshold ($2,744.77 per month as of 2019) at which apartments could be deregulated in perpetuity. As long as landlords had a goalpost, a specific number beyond which their apartments would be deregulated and earn top dollar, they found a way to get there. Now there is no magic number; regulated apartments will remain regulated, no matter the rent. One of the main loopholes that helped landlords reach that goalpost has also been eliminated; the so-called vacancy bonus that granted a 20 percent rent hike when tenants moved out. In addition, the law caps at 2 percent the amount owners can increase rent for common improvements, such as replacing a boiler, fixing the stairs, or painting the lobby; previously, it was 6 percent. And it limits the amount that may be passed on to tenants for work done on individual apartments. Owners routinely padded the cost of improvements, using fraudulent receipts that far exceeded the actual cost. There was almost no oversight of this practice; the amounts were simply submitted to the state and rent hikes approved. Between 2007 and 2019, at least 20 percent of New York City’s affordable housing stock was lost. 

These are tedious numbers and rules—the small print, as it were, that dictates the fates of millions. But the suffering the old regulations caused was enormous. Without these loopholes, the incentive for landlords to harass, unjustly evict, or even offer to buy out long-term tenants no longer exists. Peaceful relations with tenants are where the economic rewards now lie. 

Revolutionary at it seems, the Housing Act of 2019 represents simply a return to where the law was in 1997. That year marked the beginning of an erosion of tenant rights that continued during successive legislative sessions for more than two decades—“knocking the market off its axis,” as Benjamin Dulchin, the executive director of the Association for Neighborhood and Housing Development, told me. For years, this erosion—designed in the capitol’s chambers and conference rooms—generated little publicity. Two thirds of New Yorkers rent their apartments, but tenant laws, with their serpentine clauses and contingencies, have tended to fly low on the radar of voters’ interests.

Before 1997, owners of rent-stabilized buildings could expect a 6 percent return on their investment in the form of steady rent, plus reasonable appreciation of the value of their properties. With the exception of a few criminal landlords who made life hell for their tenants, and a brief market collapse in the mid-1970s, the business functioned well. Big developers concentrated on the construction of luxury rentals, condos, commercial spaces, and hotels that were not regulated, leaving older residential buildings to small and mid-sized players. The risks of new construction were greater but so were potential profits; as a result, New York had two coexisting but separate real estate markets.

As tenant protections were weakened, however, older residential buildings became more profitable. Banks and private equity groups with large pools of investors’ money took notice, identifying the regulated sector of New York’s housing market as an undervalued asset class. Multi-unit buildings got bought up at prices that had been unheard-of only a few years before: prices based not on the rent the buildings produced, but on the rent they would produce after lower-paying tenants were dislodged and their apartments deregulated. The East Village and the Upper West Side in Manhattan, and South Williamsburg in Brooklyn, were some of the first neighborhoods to be transformed by this practice.

In 2010, it began to extend to other parts of Brooklyn, as well as to the Bronx, Queens, and Washington Heights in northern Manhattan, where the majority of New York’s working and middle class resides. Mayor Bill de Blasio unintentionally exacerbated the situation by rezoning low-income neighborhoods for higher density housing. The city offered developers attractive tax breaks if they made 20–25 percent of their new units affordable. This seemed fine in theory, but the policy lured thousands of new market-rate renters to precincts most would not have considered moving to, pumping air into the speculative bubble that was forming around older regulated properties.

By 2015, New Yorkers were witnessing the grim spectacle of thousands of low-income families being displaced deep in the outer boroughs. “Witness” may not be the right word—this crisis was largely invisible; the displaced would slink away, stay with relatives, or rent a couch somewhere or be absorbed into the city’s vast shelter system, which was stretched beyond its limits. Parents lost their jobs. Children, moved by government agencies to motels and shelters on the furthest outskirts of the city, stopped attending school. 

When I wrote about this in The New York Review two years ago, the tenant protection laws that were passed in June seemed unimaginable. Eight Democratic senators had formed what they called the Independent Democratic Committee (IDC), siding with Republicans on legislation, annulling the Democratic majority and conferring the role of powerbroker on Governor Andrew Cuomo, who was able to use their votes to advance a real-estate industry-friendly agenda. Between 2000 and 2016, the industry contributed $83 million to elected officials in Albany. Cuomo himself received millions in campaign donations. The sense that Albany was owned by the real-estate lobby had become so entrenched in voters’ psyches that it seemed it would never change. 

Then, in 2016, a real-estate developer who seemed to exemplify everything that had gone awry in the city was elected president. New coalitions formed as voters began paying more attention to housing and local politics. In 2018, six of the eight IDC senators were defeated by candidates less inclined to capitulate to Cuomo. Several legislators, either succumbing to public pressure or obeying a personal principle, declared that they would refuse to accept money from real-estate groups. To watch the machinery of one of the most corrupt state houses in the country breaking down was an extraordinary spectacle.

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An activist named Cea Weaver played an important part in the passing of the new rent law. I first met her in 2015 when she was organizing beleaguered tenants facing eviction in Central Brooklyn. The movement seemed of little political consequence at the time; twenty, thirty, at most fifty, people would show up at actions at Borough Hall or in front of besieged apartment buildings trying to draw attention to the displacement crisis. Weaver at first appeared shy and self-effacing, but there was a determined brilliance about her that broadcast itself in the form of rushed, lucid analyses of urban politics and history. 

Weaver grew up in Rochester. By the time she moved to New York City in 2010, when she was twenty-one, she was already “politicized,” in her words, by the debt crisis that led to the foreclosure on 7.8 million homes nationwide between 2007 and 2016. Many of those foreclosed homes were scooped up at distressed prices by huge equity firms like Blackstone that now rent them. Institutional investors now own more than one in every ten single-family homes in the United States, an all-time high, and that number is rising. The country is moving away from home ownership.

Weaver calls it “a societal shift.” Young people who grew up middle-class, as she did, aren’t thinking about buying homes. “It’s not in their plans or mindset like it was for previous generations,” said Weaver. “No one I know can or would want to carry a mortgage on top of their student debt and health insurance premiums.” Nationwide, 82 percent of renters say renting is more affordable than owning, up from 67 percent a year ago. The rise of middle-class renters has altered the political landscape, and Weaver is aware of the complications it presents, especially in New York. The protests of black, Latino, and poor white renters had been falling on deaf ears for decades. “It would be naive to ignore the fact that our victory is because of the activism of white millennials,” a constituency that is listened to, she said. 

At the same time, middle-class millennials have been part of a development that was pushing out long-term renters, whose parents and grandparents had been barred from home ownership by redlining and exclusionary federal mortgage policies, consigning them to live as perpetual tenants in the urban margins—until those margins became desirable and evictions began. Animosity for gentrifiers in low-income neighborhoods was inevitable. But they were also natural allies, as Weaver saw it—especially when the gentrifiers found themselves being rent-gouged in shabbily renovated apartments where toilets overflowed and pipes burst in the walls and ceilings.

In 2017, Weaver helped create a network of tenant groups across the state called Housing Justice For All. Expanding the movement to rural New York, suburbia, and upstate cities tested her belief that the shared plight of “the renting class” could reach further than New York City. For two years, she drove all over New York bringing existing tenant groups together and organizing new ones. “There was resistance at first. Distrust,” she told me. Most renters outside New York City have no legal protection, and are subject to rent hikes, as well as so-called service fees, penalties, and eviction, at their landlords’ whim. “How do you make a bunch of people in Long Island or Buffalo believe a movement for tenants in New York City is going to make a difference for them?” Weaver asked. “People suspect they’re being used for leverage. And for good reason, if you look at history.” 

As the time to vote on the bill approached, Weaver began spending half her time in Albany. It took her weeks to grasp even an imperfect sense of how the place functioned. The tenants’ movement had its allies among lawmakers on the inside, but the cabal of legislators in their state house was inscrutable to an outsider. Who has an old grudge to settle? Who can be counted on? Who’s talking to whom? The bill’s prospects were constantly shifting, subject to furtive arrangements and unrelated deals.

The housing movement’s influence depended on the number of supporters it could mobilize—but when to call a rally and where to apply pressure were difficult to gauge. Knowing which lawmaker’s office a busload of protesters should swarm for maximum impact was of critical importance. “I can’t get a thousand demonstrators to the capitol based on what some senator told me,” said Weaver. “It wouldn’t work.” Her aim was to shift public opinion. What she needed to get the bill passed were masses of tenants marching over what she called “the moral crisis of rents and evictions,” which “has nothing to do with senators’ internal relationships in the chamber. It’s based on their relationship to their constituents, and to the broader public.”

Movement organizers chose June 4 for their day of “mass action,” ten days before existing rent laws were to expire and the new bill was scheduled to come up for vote on the Senate floor. Advocates descended on Albany from across the state, including tenants from the trailer parks that house many of New York’s rural poor, for whom the bill contained a protective clause. For a few hours, the rally had the feeling of an occupation. Andrea Stewart-Cousins, the Senate majority leader, had yet to commit to the bill, and protesters planted themselves in the halls in front of her office, as well as those of Assembly Speaker Carl E. Heastie and Governor Cuomo. They filled the capitol’s grand central staircase, scattering fake $100 bills imprinted with the faces of the governor and various landlords and developers. Sixty-one protesters were arrested, as they intended, for disorderly conduct. 

A few hours after the action ended, Stewart-Cousins announced that she would support the bill. Furious, and betting that senators would fail to muster enough votes to pass it, Cuomo challenged them to go it alone and removed himself from negotiations. But his abdication left the real-estate industry without its most powerful ally. The tenants’ movement now had the daylight it needed. Weaver and others heard from some legislators that they were startled by the protests, and were unsure of how strong the movement was or what stunt protesters might pull next. With Cuomo pushed aside, the legislators wouldn’t have him to blame if the bill got rejected. And they had seen, in November 2018, what became of colleagues who made “the wrong moral choice”: they were voted out of office.

Weaver believes Cuomo was outmaneuvered. “He’s still smarting from the defeat of his IDC. He can’t accept his diminished power.” Whatever the reason, it appears to have been a strategic withdrawal: by disengaging himself from a political battle he must have realized was already lost, Cuomo avoided unwelcome headlines and further damage to his public image as the invincible power-broker.

The following day, June 5, the real-estate industry staged its own rally at the capitol. An assortment of groups representing landlords and developers attempted to argue that the bill would hurt the working class: by eating into the profits of property owners, it would cost boiler repairers, maintenance workers, and doormen their jobs. One of the groups behind the rally, Alliance for Rental Excellence, had hired the lobbying firm led by Cuomo’s former campaign manager. A few dozen demonstrators showed up at the rally. According to The New York Times, “one landlord spoke, followed by an employee of an oil company. Then the event was over. It lasted ten minutes.” Caught off-guard, landlords had been too slow to make the transition from private donors and out-of-view lobbyists to popular campaigners in the war for public opinion.

On June 11, three days before the vote, Heastie and Stewart-Cousins announced that they had hashed out a deal to approve the bill. Rent-stabilized tenants in New York City would not be the only beneficiaries. Trailer-park owners, who had the right to raise rents at will, were now restricted to increases of 3–6 percent per lease. Park residents typically own their manufactured homes, as trailers are called, but not the land they sit on, with its water and electrical hook-up lines. The homes are planted on cinderblock foundations and are not mobile, except at considerable expense. Tenants were at the mercy of the owners of the parks.

In addition, rent stabilization, which had been illegal outside of New York City, now can extend to every municipality in the state, if mayors or a majority of council members in those cities choose to approve it. The sole criterion is that the rental vacancy rate be below 5 percent, in which case, as in New York City, properties with six or more apartments that were built before 1974 may be regulated. This gives local officials, and by extension local voters, a power over their housing stock that they didn’t have. This is exactly the kind of statute that California, with the highest number of homeless and the most severe shortage of affordable housing in the country, failed to pass in a 2018 referendum.

Hours after Heastie and Stewart-Cousins announced their agreement, a handful of the city’s most prominent developers called Cuomo, pleading with him to veto the bill or find some other way to block it. Cuomo advised them to call their legislators if they wanted to do something about it. Two days later, the bill passed by a vote of 95–41 in the Assembly and 36–26 in the Senate, and Cuomo signed it into law.

The real-estate industry has made dire predictions about the harm the new law will inflict on New York: the property market will crash; restrictions on future rental income will provoke lenders to call in loans, leading to bankruptcies and default; the city will lose tax revenue as the value of regulated properties are reassessed downward; and tenants will live in squalor because landlords will stop making repairs. Landlords plan to file a suit in federal court claiming the law “violates owners’ constitutional right against unlawful taking of property.” The complaint seems unpromising. No property is being confiscated; the law merely strips the speculative behavior that drove innumerable tenants out of their homes from an already regulated corner of the market. It moderates profit expectations, which analysts predict will settle at 6 percent—which is where they were before the “boom.”

Rents will continue to go up. Indeed, to compensate for the new law, the Rent Guidelines Board will likely be more inclined to levy larger annual increases on tenants than they have in recent years. Regulated buildings will continue to make money. Their value will appreciate over time, as it has throughout New York City’s history. Tax break for rental properties remain generous, and landlords will still be allowed to raise rents for capital improvements, but at a tamed, more reasonable rate. There is no scenario, other than a nationwide economic depression, in which New York City landlords have an incentive to degrade their investment by willfully letting their properties run down. Some private equity funds and leveraged buyout firms that were in the process of driving out tenants to deregulate their properties under the expired law will take a haircut. In light of the new rules, they probably overpaid for their buildings. But they specialize in risk, and in this case their risk analysis was wrong; their capital will migrate elsewhere.

The Real Estate Board of New York, the leading trade group of landlords and developers, has come up with an estimate of the amount of money in tax revenues the new law will cost the city: $2 billion. The estimate is probably inflated, but the assessed value of some buildings will certainly be corrected. Even if it is accurate, however, it seems a reasonable expense balanced by the public benefit of protecting 966,000 affordable homes and 2.4 million tenants. This seems especially true if we compare it to the nearly $6 billion that New York’s taxpayers sacrificed for the construction of Hudson Yards, the luxury shopping and apartment complex on the far west side of midtown Manhattan, or the $8.2 billion the city is surrendering to encourage the construction of 80,000 new affordable apartments under Mayor de Blasio’s housing plan.

REBNY’s estimate also appears not to factor in the savings the new rent law will afford. The Housing Act of 2019 will do more to stem the rise of homelessness in New York City than any measure taken in recent years. It effectively ends profit-driven displacement, relieving the city of the expense of having to shelter and care for those former tenants.

Another collateral benefit of the new law is that De Blasio’s housing plan will be far more effective. City-supported development of market-rate apartments in low-income neighborhoods will no longer spur a speculative bubble in those neighborhoods. The new affordable units that the mayor’s program creates will add to a stable stock of regulated housing, rather than try to make up for a disappearing one. Poor districts will have residents of different incomes, which will bring, as the middle class inevitably does, more investment from the city for schools, parks, street lamps, and mass transit. The outer boroughs will be more economically integrated, less isolated and cut off from the city’s prosperity. If New York’s high-end luxury property market slows down in coming years, as some developers fear, it will not be because of this law. The Housing Act of 2019 protects low-income renters and middle-class gentrifiers alike, rather than pitting one interest group against the other.

When I congratulated Weaver a few days after the bill was passed, she gave a stunned laugh. She reminded me of a performer humming with otherworldly energy after a draining show, in a state of disbelief at what had just transpired. “I still haven’t absorbed it,” she said. After a pause, she added, “We didn’t get everything we wanted. A provision to make eviction more difficult was dropped, and the capped increase for improvements fell short of our wish to eliminate such increases entirely. We weren’t able to recapture the units that had been pushed out of regulation, during this awful run, this siege I would call it, of the past six or seven years. And we didn’t win regulation for buildings with fewer than six apartments, which are especially prevalent upstate and in parts of Brooklyn and Queens.” 

Still, there was no denying the enormity of the tenants’ victory.