The REST Act

This recently proposed bill S4659/A4877, the REST Act, “Rent Emergency Stabilization for Tenants Act”, proposes to bring a quick and certain death to any hope  because it will allow the rapid spread of rent control across the entire state, ensnare up to 90% or more of the rental housing in the state in its grip, and put a final fatal bullet in anyone’s thought of building new rental housing in the State.

The bill does this in 3 ways:

1. It eliminates the current requirement that a community conduct an objective vacancy study prior to enacting rent control within its borders. Several communities in the Hudson Valley, have tried without success to opt-in the rent control, their failure a result of high vacancy rate study results. The REST Act seeks to circumvent those inconvenient facts; let’s instead change the rules, no vacancy study required, just have a public hearing and, presto, rent control.

1. It allows communities to capture any size rental property, now limited to buildings of six apartments or more, down to even as low as one

1. It captures any building built before 2010; the present cutoff date is built before 1974, and introduces a rolling 15-year window, so a new building built today will have a 15 doomsday clock on it with declining value each year as it moves toward its 15-year rent control date. Not exactly an environment that will foster new rental housing supply which is the true and only solution to New York State’s housing situation.

1. Take as 2 recent  examples, a 40+ apartment development originally proposed for construction in Kingston that was withdrawn from the Kingston Planning Board and substituted with instead a different development of single family houses, as conditions for building rental housing in Kingston is unfavorable. In addition, a large project slated for midtown Kingston, originally to be rentals, is now going to be condos as “you can’t do rentals in Kingston” both direct examples of how regulation has actually prevented the creation of badly needed new rental supply.

You often see press and media reports of NYC tenants sitting in front of their buildings holding signs complaining that their roof leaks, heat doesn’t work, no hot water, rats and vermin, collapsing ceilings, leaking pipes and doors that don’t lock. The landlord is always portrayed as the villain, but it’s often actually your State Legislature at fault, let’s explain.

Rent control, rent stabilization, (essentially the same, any distinction removed with a 2109 amendment), a state law , ETPA, institutionalizes a program where a politically minded rent board annually sets rent below the actual rate of inflation. The end result is, as these complaining tenants are painfully experiencing, is that their rents are not enough to pay the ever rising costs to heat, light, pay taxes and maintain their building.

Ironically, contrary to universal belief, it’s this system of State legislature created rent control laws, coupled with the political rent boards and the tenants gladly paying below cost rents for years on end are who are milking the buildings to death, not the landlords. The first thing to go is maintenance. We are already experiencing this diminution of maintenance here in Kingston, a certain  slow and painful death of what were once proudly maintained buildings, all of which are old and badly need new but now disincentivized investment to maintain and improve living conditions.

The situation of deteriorating rent control buildings in NYC, particularly in the Bronx, is so serious that not only are the buildings themselves going bankrupt, but the banks which mortgage large numbers of these building themselves now find themselves in receivership. The Federal Securities & Exchange Commission in D.C. now requires banks to identify their “toxic loans” i.e., their rent-controlled mortgages, effectively redlining these building from any further financing.

A recent study by the NYU Furman Center, not exactly a conservative think tank, spells out in detail how rent control is destroying housing in the Bronx, housing which surprising share their same single most damaging key characteristic with Kingston buildings captured under rent control and which are destined to meet a similar fate.

Say you are a housing provider in Kingston and your building needs a new roof and you need to borrow $50,000 to finance it; the bank will ask where is the new money that will allow you to pay us back? Can you raise rents? yes, but under rent control laws at a pitifully small allowable amount that won’t even cover the interest on the loan. Loan denied. Roof patched, not replaced. Low rents saved, building on its way to death.

So, what does this have to do with the REST Act? If you want to spread this destruction of what are now affordable livable apartments fast, far and wide across the entire State, the REST Act is your AK-47 weapon of choice.

Call your State Senate and Assembly representative as shown on the Contact Your Representative page and let them know that you want to productive solutions to our housing issues through loosening of restrictive zoning and environmental laws on new  building, not  the spread of counterproductive , destructive rent controls and that you oppose the REST Act.