An inescapable sense of déjà vu hung over the efforts of the City of Kingston Rent Guidelines Board (RGB) in the week leading up to its newly revised recommendations to allow no increase in rents for the next two years for 1117 rental units in 64 apartment buildings in Kingston understood to be under the jurisdiction of the Emergency Tenants Protection Act (ETPA).
The previous recommendations of the board, an across-the-board 15 percent rent reduction retroactive to January 1, 2019, had been vacated by Ulster County Supreme Court judge David Gandin in February. The board was charged with revisiting its deliberative process.
Following the first city-hall meeting of the RGB last October, its recommendations and the original city survey were both challenged in court by Richard Lanzarone’s Hudson Valley Property Owners Association (HVPOA) and ten other plaintiffs. The survey had found a rental housing vacancy rate of just 1.7 percent
Most of the plaintiffs to sign onto the Article 78 lawsuit did so as Limited Liability Corporations. The identities of the people behind those interests attempting to overrule the recommendations of the RGB remain obscured.
“There are real-estate corporations,” said Jon Hoyt, a transactional attorney with an office on Wall Street in Kingston, “that are in it for one thing, and one thing only. And that’s always going to be a concern.”
Hoyt boils everything down to supply and demand.
“[The speculators] are going to be bound by it,” explained Hoyt. “So if there’s an oversupply of housing in an area and rentals are very affordable to low cost, they’ll go somewhere else.”
Hoyt acknowledged that “a fairly significant segment of the population is financially challenged to obtain housing.” He blamed the higher rents on the scarcity of supply in the Kingston housing marketplace.
Kingston statistics show slightly more than half (50.7 percent) of renters in the city are spending more than 30 percent of their income on housing, a condition referred to by the federal department of Housing and Urban Development (HUD) as “rent-burdened.”
Hoyt’s solution may sound counterintuitive. “As I have said from Day One,” he asserted, “if you want to solve the housing problem in Kingston, add a thousand luxury units.”
Luxury units offer the profit which developers and investors desire. As these units become available, increasing supply, the pressure keeping existing rents high should decrease. More affordable rents will become available for the rest of the population.
“Point me to a city,” said Hoyt, “that after rent control was enacted, the city blossomed beyond what would have been without rent control.”
Rent control as poison
The idea that rent control destroys a city is one of the major talking points bandied about with various levels of intensity by propertyowner advocacy groups like the HVPOA and Ulster Strong, a hard-to-classify local non-profit which functions as a mutant chamber of commerce.
A section of the HVPOA website is dedicated to elucidating the evils of rent control. A headline blaring “Rent Control Destroyed Hanoi” is juxtaposed with a picture of a bombed-out apartment building. A reverse-image search on Google shows that the building was hit by a Russian rocket attack in Kharkiv in Ukraine, not by rent control in Hanoi in Vietnam.
Lanzarone and Ulster Strong’s director for community outreach Megan Bianco spoke at the public hearing on rent control at the Kingston Library. As he did at the same site last November, Lanzarone differed with the statistical interpretations of both the United States Census and the City of Kingston rental survey and presented his own numbers.
Bianco alleged that Kingston “was being exploited by people with national interests… entrenching themselves in the community … set on pitting local against local, and playing out their national agenda in our small community.”
The problem with evasive or fear-mongering rhetoric is that it can serve to obscure valid points which could be made.
Asked by the RGB whether any of her members were propertyowners affected by the implementation of the ETPA, Bianco was unable or unwilling to answer. Rent Guideline Board member Michael Tierney asked whether Ulster Strong had national interests among its membership. She provided no answer.
After additional questions about Ulster Strong, Bianco became defensive.
Think of the landlords
Anthony “Junior” Tampone, a member serving on the Rent Guidelines Board, voted against both the rent freeze and the previous 15 percent rent reduction. “The landlord representatives on this board are not allowed to own buildings that are under the guides of the board,” said Tampone. “Nothing we rule on here affects our buildings.”
Tampone makes a similar argument against rent regulation, light on hyperbole but strong on simile. He said rent regulation was like practicing surgery with a baseball bat.
Tampone worries about a class of landlords he describes as smaller and local, who may be forced to divest themselves of their properties as a result of the rent regulations.
“If a board of a handful of people that you don’t know suddenly told you that you were taking a 15 percent pay cut and there’s nothing you could do about it?” asked Tampone. “How would you feel? And then what if they can’t make ends meet, the building doesn’t pencil out any more, it’s in the red? There are larger buildings that have gone through million-dollar acquisitions, you know, working with real-estate trusts, and it’s like those are people in very, very different boats. Unfortunately, we have to look at them exactly the same.”
By inadvertently driving smaller landlords out of business with an unwieldy across-the-board tool like rent reduction, Tampone argued, “you end up then with these large firms that buy lots of property as an investment and can take the kind of multi-year hit to their funds that small landlords can’t afford while waiting for the real-estate rental profit picture to improve.”
If you chase out the entry-level lower- or middle-class rental propertyowners, he was warning, you might end up getting exactly the monster that everyone is afraid of.
Uptown Kingston Properties, an LLC, spent over $4 million to purchase eleven properties, six of them apartment buildings, over the course of two quick sprees in January and March. There is nothing illegal about these entities gobbling up large amounts of limited housing stock. Any arguments to outlaw it, moral or otherwise, will have to be addressed by federal rule-making bodies.
Out of 63 buildings affected by Kingston rent regulation, those with more than six units built before 1974, 33 have performed the initial building registration as mandated by New York State law. At the June 12 public meeting of the RGB, only four of the propertyowners affected by the regulations had submitted income-and-expense disclosures. Without information regarding the financial health of the buildings and their owners, there is little way for a rent guidelines board to assess their financial situation before making a reasoned recommendation.
Lanzarone explained that the initial registrations of HVPOA members required a large amount of data. Even completing the login access protocol was so difficult, claimed Lanzarone, that some members had just given up. He suggested that the board step up its informational outreach.
Among the 33 properties who completed their initial registration of their buildings were numerous LLCs who signed on as plaintiff’s in the Article 78 legal action against the RGB.
Housing activist John Reilly has his own theory.
“By providing as little information as possible to the rent guidelines board,” he said, “the propertyowners hope to undercut the legitimacy of the guidelines issued, based as they must be then on incomplete information.”
Many propertyowners affected by the board’s original recommendations had declined to complete the city rental vacancy study and then complained that not enough information had been collected, said Reilly. They then produced their own data for the court’s consideration.
Judge Gandin dismissed the owner group’s contentions and sided with the city survey, noting that the landlord survey was designed to derive a vacancy result to meet predetermined policy initiatives. “While petitioners claim they obtained a 100 percent survey participation rate,” wrote Gandin, “propertyowners had a vested interest in participating in the private survey for the express purpose of challenging the imposition of rent control.”
Past propaganda to solutions
Focusing on the distinction between local and out-of-town landlords, Hoyt at this time doesn’t espouse the belief that one is better than the other.
“They have a stake in their own investment,” said Hoyt. “Very often, the income stream over the years carries the property along. But very often the best return on a real-estate investment, the pot of gold is at the end is when it gets sold. I don’t think anybody’s got a vested interest in watching anything go down in terms of depreciation over the course of the ownership.”
Something must have gone terribly wrong back before the pandemic for the situation — which now exists — facing all those who found themselves struggling on the brink of eviction or deciding to seek rental housing in another locale or state. An influx of city immigrants prior to the pandemic would provide an alternate explanation.
Hoyt acknowledges that even the addition of his 1000 luxury rental units or measures like converting vacant second- and third-floor units currently available in commercial buildings in order to increase the number of available housing units in Kingston won’t happen overnight. New housing is not just around the corner. The beginning of relief is at least a couple of years out, and probably much longer.
Without a government-backed regulatory framework to artificially control rents so that they are affordable, those who can’t afford shelter are out of luck.
“I’m not putting anyone who thinks differently down in any way, shape, or form,“ said Hoyt. “But I think it’s important to sometimes just approach things from a slightly different perspective, to help balance the whole approach.”
Hoyt is optimistic that introducing enlightened thinking into the process will assure a better longer-term outcome.
But rent regulation doesn’t fit into his philosophy. “We need apartment stamps or whatever,” said Hoyt. “If something is beneficial to society at large, let society at large pay for it … some form of subsidization that does not put the entire onus of the social program on the backs of the landlords.”
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