Fighting fraud and for your right to the right rent

State Senator Brad Hoylman, left, and City Comptroller Scott Stringer teamed up to lead last week’s town hall meeting on rent regulations. Photo courtesy City Comptroller’s Office

BY WINNIE McCROY | A capacity crowd of 200 gathered at the New York Public Library on Wed., Nov. 28 for a town hall meeting, “Fighting for NYC: The Future of Rent Regulations and Tenants’ Rights.”

The event featured Comptroller Scott Stringer and state Senator Brad Hoylman, plus advocates Aaron Carr of the Housing Rights Initiative, Shelia Garcia of Community Action for Safe Apartments, and Delsenia Glover of Tenants and Neighbors.

“New York City has an extraordinary, existential affordability crisis, and on June 15, 2019, New York’s rent laws, which cover 1 million apartments, will officially expire,” Hoylman told the crowd. “Rent regulation is the largest source of low-cost housing for low- and moderate-income tenants, yet a third of New York’s 2.5 million rent-stabilized tenants already pay more than half their income in rent.”

Hoylman traced this problem to the 1940s, when controls on rent were enacted to combat the post-World War II housing crisis. In 1947, New York State passed the Emergency Housing Rent Control Law. This law kept rent largely stabilized, until 1994 when the New York City Council implemented vacancy decontrol, allowing landlords to slowly move apartments toward market rate. In 1997, Albany legislators pushed through the Rent Regulation Reform Act, allowing regulated apartments to be decontrolled if the rent hit $2,000 per month, leading to the loss of 400,000 affordable units since 2005.

Stringer said the resulting roughly 62,000 people (including 24,000 children) currently filling homeless shelters was “not an accident.”

“This has been designed to create a city for the very, very wealthy, with enclaves for the very, very poor, and nothing aspirational in between,” he said.

Stringer added that the demise of Mitchell-Lama affordable housing was the beginning of the end, leading to developers “coming to communities you built and saying ‘Thanks a lot. Give us the keys and get out of New York.’

“We’ve had enough,” Stringer declared, “and we’re not going to let them do it anymore!”

The biggest problem empowering unscrupulous landlords, said Carr, is that laws meant to protect tenants are unenforced. Those laws include J-51, a tax benefit landlords receive for renovating apartment buildings. The J-51 stipulation requires that 100 percent of these apartments must then be rent-stabilized — but they’re not, he said.

“Our organization in 2016 found that over a thousand buildings receiving J-51 tax benefits were out of compliance with rent-stabilization laws,” Carr said. “And the outcome is a city saturated with fraud — tax subsidy fraud, J-51 fraud, 421a fraud — across the board.”

This fraud is easy enough to spot. Visit the Department of Finance Web site, type in your address, and see if your landlord is receiving a J-51 tax benefit. If so, all units should be rent-stabilized; if they’re not, it’s fraud. Housing Rights Initiative has mounted more than 40 J-51 class-action lawsuits. But Carr said the New York State Division of Housing and Community Renewal should be doing this work, not “a nonprofit that has the budget of a nickel and a piece of lint.

“We need to keep pushing enforcement agencies to do their job, to enforce your rights and to uproot fraud, so they can muster the political will to solve this,” Carr declared.

State Senator Brad Hoylman, left, and Comptroller Scott Stringer, to the right of him, were joined by tenant advocates at a town hall meeting last week on rent regulation. Courtesy City Comptroller’s Office

Another method landlords use to raise rent is to make Individual Apartment Improvements, or IAIs, on vacant apartments, allowing a rent increase of about 2 percent. But landlords don’t have to submit receipts: It’s all on the “honor system.” Landlords can claim they spent any amount — even, as one of them asserted, $300,000 — on improvements. And despite being tasked with supervising affordable housing, D.H.C.R. freely admits on its own Web site that it doesn’t verify the truthfulness of the owners’ statements or the legality of rents.

Indeed, a recent government audit investigated 13,000 landlords and found 40 percent illegally overcharged tenants in rent-stabilized buildings.

“And that just completely makes sense, because why would they follow the law?” Carr asked. “No one is looking, no one is forcing them to, and even good landlords are put at a competitive advantage when everyone around them is cheating.”

Yet another way landlords drive rents up is by Major Capital Improvements, or MCIs, annual rent increases of up to 6 percent charged for building-wide improvements. The increase is permanent — even after the repairs are paid off. Many unscrupulous landlords create shell construction companies, have them create large invoices for “repairs,” then submit these to D.H.C.R., which usually approves the claims. Then bad-actor landlords do low-cost improvements and pocket the cash.

“This is a huge problem because [they] have defrauded tenants, duped the government and stolen affordable housing from New York City,” Carr stated. “It’s more than just bad policy, it’s the legalization of fraud. And that’s why it’s so important to close these loopholes.”

There are several methods legislators and activists can use to close the loopholes allowing landlords to act fraudulently without repercussions. For starters, lawmakers can repeal vacancy decontrol. They can close preferential rent loopholes, which allow for future overcharges. And they can end IAIs.

“And you didn’t even mention the vacancy bonus — the biggest driver of rent increases,” said Glover. That policy allows landlords to increase rent by 18 to 20 percent for a vacancy lease. This has led to an increase of “eviction by harassment,” under which landlords repeatedly push tenants out quickly so rent-stabilized apartments convert to market rate.

Affordable housing also suffers due to Airbnb, problems with enforcement of the Senior Citizen Rent Increase Exemption, or SCRIE, and the lack of both transparency and enforcement by the New York City Department of Buildings, among other things. There is currently $1.5 billion in uncollected “quality of life” fines on landlords — and after three years, the city gives up on collecting.

Glover’s solution: universal rent control. She wants to remove geographic restrictions in the Tenant Protection Act, implement rent-control relief, end vacancy control, eliminate permanent rent hikes by means of MCIs and IAIs; eliminate the vacancy bonus; and make preferential rents — when a landlord charges a tenant below the maximum allowable rent — last the duration of the tenancy.

And forget about resolving your issues in Housing Court, which CASA’s Garcia called “an eviction mill” that landlords use to push renters out. Instead, she urged audience members to share information with neighbors, and push D.H.C.R. to make administrative changes. Hoylman pointed out that the City Council introduced a package of 18 bills meant to stop widespread landlord fraud.

But rather than waiting for new laws to be passed, Garcia said the average Joe would have better luck following two simple steps. First, check online to see if your apartment is rent-stabilized, and if you discover you’re being overcharged, reach out to D.H.C.R. to resolve it. Then, organize a tenants association.

“If you have issues,” she said, “it is much easier to get them addressed when there are 30 people suing the landlord verses you by yourself. It’s so much stronger to submit a rent reduction when a group of 60 people are facing the same issue. It builds a power that is so much more than you just getting your initial issue addressed.”

Learn more about tenants’ rights at the 13th Annual West Side Tenants’ Conference, Sat., Dec. 8, at Fordham University School of Law, 150 W. 62nd St. For information or to RSVP, call 845-367-7003 or e-mail [email protected] .

One Response to Fighting fraud and for your right to the right rent

  1. Aside from making a VOICE, know your rights as a tenant as the saying goes "ignorance is not an excuse".

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