Twenty-five years ago, it was unthinkable that New Yorkers would routinely pay $3,000 a month for an apartment, except maybe for a penthouse on the Upper East Side. At the time, the city still had more than 200,000 rent-stabilized apartments that rented for less than $400 a month. But on March 21, 1994, the City Council cast a vote that would begin to bring that era to an end: By a 28-18 margin, it approved a bill that let landlords take vacant apartments out of rent stabilization if their monthly rents were at least $2,000.
The council debate, which lasted less than ninety minutes, was contentious. The bill’s supporters claimed it would affect only a few wealthy people in Manhattan who didn’t deserve such a “subsidy.” Opponents argued it would fatally erode rent regulations and the tenant protections that come with them.
“The real death knell of rent stabilization is going to be the decontrol of any rent that reaches $2,000 at any time, which is what this bill does,” said Lower Manhattan councilmember Kathryn Freed. Upper West Side councilmember Ronnie Eldridge said that while $2,000 might seem like a lot at the time, soon enough middle-class apartments renting in the $1,200 to $1,400 range — where “two working professional people live with children” — would reach that threshold as well. Upper Manhattan councilmember Stanley Michels warned that it would create “a great incentive for owners to encourage vacancy” and that the unscrupulous ones would do that “by engaging in harassment.”
But Antonio Pagán, a Democrat who memorably fought on behalf of developers in his East Village district, responded that regulation of high-rent apartments was “a subsidy for people making a quarter of a million dollars a year.” John Fusco of Staten Island, one of the six Republicans then on the council, said complaints that “this is the beginning of the destruction of rent control” were “an insult to this council.” Housing Committee chair Archie Spigner of Queens noted that the average apartment in the city was under $600, and “the likelihood that it will be raised to $2,000, I think, is rather remote.”
The result was, as the bill’s critics feared, a hemorrhaging of rent-regulated apartments. The city’s Rent Guidelines Board estimated last year that New York lost more than 152,000 rent-stabilized apartments to high-rent deregulation between 1994 and 2016, peaking in 2009. Adding in co-op conversions and other means of getting apartments off the rolls, more than 284,000 apartments were legally deregulated during those years, more than double the number of units that were added via new affordable housing programs.
Those numbers don’t include apartments that were illegally deregulated. As landlords are not required to report destabilizations, “the true rate of deregulation is certainly much higher,” the Community Service Society wrote in a 2011 report. It estimated that by 2008, the city had lost more than 450,000 affordable apartments primarily because of “vacancy destabilization and excessive rent increases.”
“People assume it was the Republicans in Albany who did it, but it was Peter Vallone and the Democrats in the City Council,” says Michael McKee, one of the tenant-organization leaders who lobbied against the 1994 bill.
The 1994 high-rent vacancy decontrol law was the first major crack in the rent-stabilization system set up in 1974. Rent stabilization had been superimposed on the city’s older rent-control system after another vacancy-decontrol law, passed by the state in 1971, led to almost 400,000 rent-controlled apartments being deregulated within three years, with their rents increasing by more than 50 percent on average. And those rent increases failed to stop owners from abandoning thousands of buildings.
The real estate lobby and the city’s political establishment began pressing to again weaken rent stabilization in the early Nineties. In 1993, the state had deregulated vacant apartments renting for $2,000 or more, but only if they were vacant during a window of less than three months that summer. The bill the council passed would apply at any point in the future.
In today’s political climate, it would be unimaginable for an overwhelmingly Democratic City Council to vote to drastically weaken rent regulations. In 1994, however, the speaker was Vallone, a machine Democrat from Astoria who had close ties to the real estate industry. Joseph Strasburg, Vallone’s former chief of staff, had just become head of the Rent Stabilization Association landlord-advocacy group. Spigner, who during the debate on the bill claimed that fifty years of rent control had caused “vacant lots, abandoned buildings, and foreclosures,” and that rent regulations were a disincentive for people to invest in or maintain buildings, represented a mostly black homeowner area in southeast Queens. In 2000, City Limits would call him one of the councilmembers who were “sure friends of landlords.”
Antonio Pagán, the only Manhattan member to vote for deregulation, had been elected on a backlash against homeless people in the East Village, and was backed by landlords and developers in the fast-gentrifying neighborhood. The Republicans who argued for the bill were ideologically opposed to rent regulations.
Outer-borough councilmembers provided the margin of victory. Of the twenty-four Democrats who voted for the bill, eleven came from Brooklyn, seven from Queens, and five from the Bronx. The four Republicans from Queens and Staten Island voted “yes,” while the two from Manhattan voted “no.”
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“My interpretation was that it was not going to impact my district,” Martin Malavé Dilan, now a state senator, tells the Voice. Malavé Dilan at the time was a councilmember representing Bushwick and Cypress Hills, where rents averaged $400 to $500 a month; he says he saw the measure as solely affecting Manhattanites who were “taking advantage of rent-control laws that were intended to protect lower-income people.”
“I thought it would provide greater access,” adds former Brooklyn councilmember Una Clarke, who also voted for the bill. She did not elaborate.
Democratic councilmember Lucy Cruz of the Bronx said just before she voted “aye” in 1994 that she had “been assured, as my colleagues have been, that there are extensive protections.”
“Rent regulation is a complicated issue, and a lot of councilmembers didn’t bother to educate themselves about it,” says Jenny Laurie, former executive director of the Metropolitan Council on Housing, who lobbied against the bill. “They were easy votes for the leadership.”
One of the few who “totally got it,” says McKee, was Anthony Weiner of southern Brooklyn. “Unlike most councilmembers, who had no clue, he understood that this would erode tenant protections.” The future sext maniac, he adds, voted for the bill after twice promising tenant groups that he would vote “no.”
The landlord lobby was very effective at framing the issue as about rich people living in rent-stabilized apartments, says Laurie. The Wall Street Journal in 1994 singled out actress Mia Farrow, who was paying about $2,900 a month to rent the ten-room rent-controlled apartment on Central Park West she had grown up in; the paper also cited an investor paying $350 for a two-bedroom apartment with a solarium on Park Avenue.
The law contained a separate provision called “luxury decontrol,” which more directly affected affluent renters, by allowing landlords to deregulate occupied apartments if the tenant was paying more than $2,000 a month and earned more than $250,000 a year. Although the state lowered that income threshold to $175,000 in 1997, only about 6,200 apartments have been taken out of rent regulation since 1994 under it, according to the Rent Guidelines Board.
“It was a fake issue, but it was effective rhetoric,” says Laurie. In reality, according to the 1993 federal Housing and Vacancy Survey, half of the 212,000 rent-stabilized tenants who were paying less than $400 had incomes below $10,000 a year, and less than 0.1 percent made over $100,000.
The key to the passage of the 1994 law, some councilmembers at the time argue, was Strasburg, the council insider turned landlord lobbyist. “The guy who really made it happen was Joe Strasburg,” says former Bay Ridge councilmember Sal Albanese, who voted against the bill. “Strasburg was a visionary. He knew the city was beginning to gentrify, and apartments were going to reach that threshold.”
“Politics is about relationships,” says Tom Duane, who then represented the Chelsea–Greenwich Village district, and Strasburg had good relationships with councilmembers. Albanese adds that Strasburg was very good at finding people in black and Latino communities friendly to big real estate.
A few days before the vote, McKee recalls, the bill lacked the 26 “yes” votes it needed to pass. Speaker Vallone had a reputation for twisting arms. “If you voted against a bill that was considered a ‘leadership vote,’ you’d lose your committees,” says Albanese.
Others disagree with that assessment. There was no “iron-thumb leadership,” says former Brooklyn councilmember Stephen DiBrienza, who voted “no.” You could go against the leadership, he explains, as long as you gave a good reason and didn’t surprise them.
In any event, the council’s 1994 vote would have been less momentous if not for what it inspired 150 miles to the north and three years later. In 1997, the state decontrolled vacant apartments renting for $2,000 or more, after a three-way wrestle among Albany’s “three men in a room.” With the state’s rent-stabilization laws expiring that June, Senate Majority Leader Joseph Bruno threatened to use his control of the chamber’s Republican majority to completely block renewing them. Governor George Pataki took the more “moderate” path of wanting to weaken them, such as through complete vacancy decontrol. A few days after the deadline, Assembly Speaker Sheldon Silver agreed to major concessions, including vacancy decontrol, allowing a 20 percent rent increase on vacant apartments, and creating what was effectively a four-year statute of limitations on tenants’ claims that their rents had been illegally increased.
“If the council had not passed this, it may not have passed in Albany,” says Albanese. Worse yet, the 1997 state law made it impossible for the city ever to repeal its own 1994 law: A provision in the 1971 vacancy-decontrol law, commonly called the “Urstadt law,” prohibits cities with over 1 million people from enacting rent regulations stronger than the state’s. “But they can pass weaker laws,” notes Duane.
All attempts to strengthen rent regulations since then have had to go through Albany. Tenant groups gradually moved toward a strategy of trying to defeat all senate Republicans, on the grounds that even the few moderates who supported rent regulations would still vote to put the GOP leadership in control of what bills got to the floor.
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In 2008, on Barack Obama’s coattails, Democrats won a majority in the state senate for the first time since 1964. The next year, the assembly passed a bill to repeal vacancy decontrol. But the day before the Senate Housing Committee was scheduled to send it to the floor, Democratic state senator Pedro Espada, from the Bronx, switched to the Republicans, ending the Democrats’ one-seat majority. Since then, whether at the ballot box (in 2010) or via the splitting off of the Independent Democratic Conference to caucus with Republicans (starting in 2012), the senate has remained in GOP control. In the years since, the assembly has regularly passed bills to repeal vacancy decontrol and otherwise strengthen rent regulations, but none have ever made it out of committee in the senate.
The renewal of rent stabilization in 2015 raised the decontrol threshold to $2,700, adjustable for inflation; it also clarified that for apartments to be decontrolled, the previous tenant had to be paying that much before they moved out, so landlords could no longer legally deregulate them solely via hikes in legal rents following renovations and vacancy increases. (On April 26, the state’s Court of Appeals ruled unanimously that that principle didn’t apply to apartments deregulated before 2015, reversing a lower-court decision that could have re-regulated up to 100,000 apartments.)
Today, the threshold for vacancy decontrol is $2,733.75 a month, and there are deregulated apartments far beyond Manhattan and the brownstones of Brooklyn Heights and Park Slope. One real estate site advertises more than eighty two-bedroom apartments that cost more than $2,740 in Bedford-Stuyvesant. Deregulated apartments can also be found in five-story walkups in Harlem and Washington Heights and 1950s-vintage buildings on Queens Boulevard. And as Duane points out, renters in deregulated apartments not only face higher rents, but they have no right to renew their leases — unlike rent-stabilized tenants, who can only be evicted for cause. That means they risk losing their homes if they complain to landlords about poor conditions.
Meanwhile, the 1994 law’s selling point that New Yorkers would never pay more than $2,000 a month to live in the outer boroughs has become ancient history. In Mott Haven — the city’s third-poorest neighborhood in 2016, with a median household income of $2,276 a month — apartments in a new luxury building are now being offered for around $2,900 to $3,500.
“Boy, were we right,” says Kathryn Freed, now a Civil Court judge.
“Looking back, it’s definitely had a negative effect on affordable rents,” says Malavé Dilan, who has co-sponsored unsuccessful attempts to repeal the state vacancy-decontrol law. “If I were clairvoyant, I would have perhaps voted ‘no.’ ”