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'Loophole' Said to Give Landlords Unfair Advantage
By Kevin Shin
PUBLISHED OCTOBER 29, 2007
The New York State Division of Housing and Community Renewal is considering closing a legal loophole that allows some landlords to sidestep rent regulations in the case of “unique or peculiar circumstances.”
“Some landlords have attempted to get around the rent stabilization laws by manipulating the so-called ‘unique and peculiar’ loophole, attempting to force low- and moderate-income tenants into totally unreasonable and unfair rent increases,” Director of Organizing and Policy for the Urban Homeownership Assistance Board Dina Levy said in a statement.
Many landlords have argued that opting out of the Mitchell-Lama program, which entitled them to unlimited rent increases, constitutes such a circumstance. The Mitchell-Lama program allows tenants in designated buildings to have subsidized housing. Landlords can usually opt to withdraw from the program after participating in it for 20 years, as many do in order to raise rents.
“By closing this loophole, landlords will not be able to pull their buildings out of rent stabilization when leaving the Mitchell-Lama program in violation of New York’s rent laws,” said Bertha Lewis, executive director of the affordable housing advocacy group ACORN.
According to The Independent, there were 24 “unique or peculiar” applications pending before the DHCR, including some buildings with nearly 5,000 units.
A final decision on the issue, which would involve an estimated 17,800 apartment residents, is expected in early- to mid-November, a DHCR spokesman said.
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Opting out of the Mitchell-Lama program does not entitle owners of PRE-1974 Mitchell-Lamas to unlimited increases. While tenants in buildings built from 1974 on have virtually no protection, those in pre-1974 buildings are protected by the state's Emergency Tenant Protection Act.
As evidenced by the name, the act was passed because of a tremendous housing emergency resulting from the lack of rent regulation between 1969 and 1974. So the ETPA was enacted to sweep tens of thousands of apartments into rent regulation.
The law built in an exception where the rent stabilized rent could not be easily determined, such as where the owner had given an apartment for free to the building's superintendent or to the owner's daughter. In such "unique or peculiar circumstances," either the tenant or the owner could ask the state's housing agency to set the rent.
But that makes no sense where the law already establishes that the first rent stabilized rent in a former pre-1974 Mitchell-Lama is the last rent paid under the Mitchell-Lama program.
Permitting landlords to use this "U or P" loophole in pre-1974 Mitchell-Lamas would turn the ETPA on its head, sweeping tens of thousands of apartments out of rent regulation: the higher rents would effectively oust tenants who could not afford them, leaving the vacant apartments for landlords to renovate out of rent stabilization.
Tens of thousands of tenants would lose their homes and the city (and state -- since this is a state-wide program) would lose a huge stock of affordable housing -- forever.
That is why on July 16, 2007, Governor Spitzer announced a change of policy. He pointed out that just leaving Mitchell-Lama -- a process regulated to the smallest detail -- is not in itself a "unique or peculiar circumstance."
And the courts have held that this is up to the state.
To keep up on this issue, check out www.save-ml.org
Sigh, I can't stand rent regulation. Driving up prices for non-regulated apartments while keeping people who can't afford market value in the neighborhood... it's creepy.
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