Housing deal critics spin themselves silly

Landlord and tenant groups reacted to the housing deal that was leaked Friday and announced Monday as if lawmakers had thrown them all under the bus.

With billions of dollars and years of advocacy on the line, some level of hysteria was understandable. We can’t discount the human emotion evoked when politicians gather behind closed doors in Albany to make decisions that will affect the lives and bank accounts of owners and renters for years to come.

But the responses were over the top, and that was no accident. The Assembly and Senate invited them by floating the terms — a strategy to gauge people’s reactions before shaking hands with Gov. Kathy Hochul on a final deal.

They could have made a deal and voted before interest groups started whacking it like a piñata. Legislative leaders did not do that, in part to avoid pushing their members to vote for bills they haven’t read and don’t fully support.

In June 2019, however, the same leaders employed the rush-to-vote strategy for a drastic rent reform. It was unveiled in a press release and signed by Andrew Cuomo before the ink was dry. From landlords’ perspective, Albany had robbed them and fled the scene before anyone could call 911.

The new housing package, however, is no major crime, despite the outraged responses of Housing Justice for All, the Community Housing Improvement Program and the Rent Stabilization Association.

Let’s look at their complaints. First, the landlords.

RSA said the deal is an “economics-denying attempt to placate everyone while actually accomplishing nothing” and fails rent-stabilized buildings “on a massive scale.” CHIP called it a “total failure.”

They were upset because it only allows modest rent increases to pay for apartment renovations when a rent-stabilized unit becomes vacant after a long tenancy. It clumsily boosts rents based very roughly on the amount of renovation needed, yet caps the 15-year total at a much lower number — $30,000 or $50,000 — than the actual cost of work needed to bring units up to modern standards.

Housing Justice for All, meanwhile, wanted no increase at all from the current $15,000, which translates to at most $89 a month, and then is rolled back after 15 years. The temporary rent hike is so pitiful that owners have left tens of thousands of units vacant.

The new increase is two or three times as large and would be permanent after long-term vacancies. Dozens of lawmakers had pledged last week not to support anything like that.

Both sides need a reality check.

First, any owners refusing to, for example, spend $80,000 to renovate a unit that would rent for $1,200 should have their heads examined. Borrowing $80,000 at 6 percent interest over 15 years costs $122,000. Rent collected over that time totals $251,000, assuming 2 percent annual increases. That’s a $129,000 difference.

Adding a tenant increases operating costs, but only marginally, because those costs are spread over the entire building. The extra expense of an occupied apartment is certainly less than $129,000.

Even if the rent increase were temporary, a typical renovation would make sense. But in the new package, it’s permanent. That’s a no-brainer.

True, some apartments won’t rent for $1,200 even with the increase, because their rent today is absurdly low, like $750. And some renovations would cost $100,000 or even $150,000 because of lead paint, asbestos, ancient plumbing and more. NYCHA spends $375,000 per unit.

But under the new pricing scheme, the vast majority of vacant units will be renovated and re-rented, unless their owners are brain-dead.

Speaking of brain-dead: Tenant advocates demanded that the 2019 rent law limits remain untouched, even though it could be proven mathematically that low-rent, dilapidated units would remain vacant forever — unless the government took them over.

Landlords therefore concluded that property seizure was indeed the advocates’ goal. Some activists proudly acknowledged this on social media. It was not a productive debate, and legislative leaders were right to ignore it.

On the other side, tenant groups’ cries about the housing deal’s “good cause eviction” policy being “the weakest in the country” are also a bit much. They failed for five years to get their version passed, then imagined they could get it through by holding housing-supply bills hostage.

It was a ridiculous tactic: Legislators realize that tenants desperately need more housing, so it would make no sense to sacrifice that for the sake of an unattainable “good cause” policy.

Good cause proponents’ arguments against the version Hochul accepted were equally preposterous. Housing Justice for All warned that the new law would encourage landlords to “mass evict tenants” in gentrifying, low-income neighborhoods to make “minor improvements” and jack up rents.

That’s already possible, so the new law won’t change their incentive. Moreover, the predicted “eviction tsunami” never came, and after several years, tenant advocates finally stopped using the phrase. Rents rose because the city added far more jobs than homes, and tenants moved in search of housing they could afford. Landlords did not cause that.

The most consequential component of the housing package, the revival of 421a, will help both tenants and developers alike. Comprehensive property tax reform would have been preferable, but legislators made no effort to even consider it. As such, they are obligated to support the new tax break for multifamily projects, imperfect though it may be.

Perhaps Albany will take up tax reform next year. If so, get ready for more weeping, wailing and gnashing of teeth. That’s one thing that will never change.