A 1994 City Council vote enabling landlords to dodge limits on rent increases has had a profound impact on the lives of New Yorkers.
By Marcelo Rochabrun and Cezary Podkul, Propublica.org
At the end of a pedestrian tunnel, down a flight of stairs from street level, a plush bar with a Prohibition motif caters to wealthy newcomers who have gentrified Manhattan's Lower East Side, displacing immigrants and blue-collar workers. Amid chandeliers, velvet couches and Rubenesque oil paintings, bartenders serve beer bottles in paper bags and pour $14 cocktails into teacups.
The beige pre-World War I tenement above the bar also profits from the neighborhood’s transformation. In 1994, a typical apartment in the 25-unit Norfolk Street building cost $552 a month. Today, it rents for $4,800.
This almost nine-fold increase reflects the gradual dismantling of New York’s system of rent stabilization. That system is supposed to protect renters, who occupy almost two-thirds of New York’s housing stock, by limiting annual rent increases to modest amounts set by the city. Instead, it’s become so easy and lucrative for landlords to circumvent these protections that, when the Norfolk Street tenement went on sale three years ago, a broker’s advertisement boasted that 85 percent of its units were stabilized, providing “tremendous upside” to prospective buyers who could exploit the loopholes to jack up the rent. Similar language has been used to pitch hundreds of other rent-stabilized buildings in the past few years.
How landlords gained the ability to remove apartments from regulation has a surprising backstory. Over the years, the Republican-dominated State Senate has often flexed its muscle to weaken rent stabilization at the behest of real-estate interests. Yet it was an overwhelmingly Democratic body that made the most important and far-reaching move. Shortly before Easter in 1994, by a 28-18 margin, the New York City Council implemented what is known as “vacancy decontrol,” which allowed a landlord to escape regulation and charge market rates once tenants moved out of apartments that cost at least $2,000 a month. Then-Mayor Rudolph Giuliani signed the measure into law.
More than two decades later, it has become clear that the 1994 vote was more consequential for the lives of New Yorkers than anyone could have predicted at the time. Through dozens of interviews and research in state and city archives, ProPublica has unearthed the hidden history behind the vote, including arm-twisting of decontrol opponents, a remarkable number of last-minute flip-flops, and Giuliani’s weighing of a veto.
“This bill opened the floodgates,” said Guillermo Linares, then a Council member representing Washington Heights, another neighborhood where decontrol has spurred gentrification.
“Could we envision that people would be moving to Bushwick and paying $2,000 an apartment?” recalled Harold Schultz, who at the time was a deputy commissioner for the city housing agency. “Back in 1994 I wished that would happen. Did I believe it could happen? Not on your life.”
In a city where haves and have-nots have battled over affordable housing since the Civil War, the Council vote tilted the balance. Vacancy decontrol expanded the city’s tax base, and likely helped revive decaying neighborhoods, but at the cost of driving out longtime residents. Those dislodged had few other options, especially since New York’s population, which fell sharply in the 1970s, began to climb. For every rental unit added to the housing stock between 1993 and 2014, nine people moved into New York, according to a ProPublica analysis of city and census data.
Back in 1994, hardly any tenants outside Manhattan’s toniest neighborhoods were paying $2,000 a month or more. The median rent across the city was under $600. Since then, of the 860,000 apartments that were stabilized, almost 250,000 have become free-market units, diminishing New York City’s largest source of affordable housing. Most of the decrease came from vacancy decontrol.
A third of New York households now pay at least half of their income in rent, and homelessness in the city is at its highest level since the Great Depression, having more than doubled since 1994. Between January 2013 and June 2015, owners of private properties filed more than 450,000 eviction cases citywide, data from the New York City Public Advocate’s Office showed. Less than 10 percent of all identified landlords were responsible for 80 percent of the cases.
“Vacancy decontrol is such a key player in why apartments are unaffordable for the average renter in New York,” said Jenny Laurie, a tenant advocate who lobbied against the 1994 measure. “It gave the landlords a bull’s eye to aim for. They did everything possible to raise the rent.”
The standard economic argument for decontrol — that raising rents to market rates spurs construction of new apartments — was less persuasive in New York, where housing built after 1974 was already exempt from caps on rent increases. Instead, supporters of vacancy decontrol framed it as an egalitarian reform, a way to force rich renters to cough up their fair share. “There is no way that the Council members … would permit affordable housing to be taken away from low income people,” John Fusco, who represented Staten Island, said during the Council’s 1994 deliberations. The Rent Stabilization Association (RSA), the city’s biggest landlord group, which pressed for the 1994 law, still takes the same stance today.
New York’s rent regulation “protects the wealthy to a far greater extent than the people most in need of rent protections — the poor,” Mitchell Posilkin, the RSA’s general counsel, said in a statement. “Historically, these higher rent apartments are occupied by higher income tenants, who are not in need of rent protections.”
But, by setting a threshold, the Council gave landlords an incentive to hike rents in traditionally inexpensive apartments above $2,000 and displace older, poorer tenants. Many landlords have done so, taking advantage of a variety of loopholes created by the state legislature and the courts.
The March 1994 vote reflected the political muscle of two men: Peter F. Vallone, then Council speaker, and Joseph Strasburg, his former chief of staff, who had become president of the city’s most powerful landlord group only a month before. No fewer than 11 Council members who had co-sponsored a bill to continue existing rent regulations changed positions at the last minute and backed vacancy decontrol. Virginia Fields, a member from Manhattan who was absent for the vote, said in an interview that the number of switchers was “huge” and unprecedented in her experience.
Among them was Anthony Weiner, who represented Brooklyn. He defends his vote to this day on the grounds that it was needed to block a total gutting of rent regulation. “Posturing was easy that year,” he told ProPublica in an email. “Trying to save the program was much tougher.”
The vote came up when Weiner sought the Democratic nomination for mayor in 2013. Another candidate, Bill de Blasio, attacked Weiner during a mayoral debatefor having supported vacancy decontrol. “It’s absolute bull to say you had no other choice,” de Blasio, now mayor, told Weiner.
Martin Malavé Dilan switched positions in 1994, too. “I will also vote today to end subsidies for those people who need it the least,” he said at the time. Then a freshman member from Bushwick, where the median rent was about $500 a month, Dilan thought vacancy decontrol would never affect his constituents.
But it has. Two Bushwick landlords recently pleaded guilty to using intimidation tactics, from pit bulls to sledgehammers, to drive tenants out of stabilized units. Dilan’s old Council district has lost one in five of its rent-stabilized apartments since 2007, tax records show.
Dilan has moved up to the State Senate, but he can’t shed his 1994 City Council vote for vacancy decontrol, which became an issue in his re-election campaign this year. “If I had known that this would have such an impact on my district, I definitely would have voted against it,” he said in an interview. “Knowing what I know now, yes, it’s a vote that I regret.”
In the early 1990s, New York City was struggling. It was running annual budget deficits of more than $2 billion. The number of murders each year was almost six times higher than it is today. And thousands of buildings had been foreclosed because owners failed to pay their taxes, costing the city hundreds of millions of dollars.
The real-estate industry blamed the foreclosures on rent regulation. Its solution was higher rents. They would enable landlords and developers to make a decent return that they could reinvest in maintaining buildings and constructing new ones, lifting the city’s depressed housing values.
A barrier stood in the way: The city’s longstanding housing shortage had spawned protections for tenants, shielding them from rent increases and evictions that could strand them with nowhere to live. Even with vacancy decontrol, New York still “stands out far ahead of every other American city in terms of the scope of the programs and the percentage of units that are protected from the unregulated market,’’ said historian Thomas Mellins, who recently curated “Affordable New York: A Housing Legacy,” an exhibition at the Museum of the City of New York.
Introduced in 1969, New York’s rent stabilization system was technically a temporary measure whose ultimate goal was the return to a free market. Yet it was repeatedly renewed, and generations of New Yorkers came to depend on it. The Real Estate Board of New York (REBNY), which represents developers, and the RSA, the landlord group, have never been able to muster support for a full repeal of rent stabilization, which a 1992 New York Times editorial described as “an icon in New York City, protected by politicians” who dared not offend their tenant constituents.
To the real-estate industry, the argument for rent control was circular. “Rent regulations have been maintained continuously based on continuing housing shortages,” then-RSA president John Gilbert III told the City Council in 1988, “despite the fact that these housing shortages have largely been induced by the very existence of rent regulations.”
Acknowledging that the regulations were unlikely to disappear overnight, the industry pushed for a more modest goal. “Vacancy decontrol was the next best thing,” said Dennis Keating, an urban-studies professor at Cleveland State University who has studied rent regulation across the country.
In 1971, the New York state legislature enacted vacancy decontrol for all apartments, regardless of the rent. The measure was repealed three years later after a state commission found soaring rents in decontrolled apartments.
The industry pushed to restore decontrol. In December 1992, the RSA demonstrated its clout by bringing then-Mayor David Dinkins and other top city and state officials to a full day of discussions at a Sheraton hotel in midtown Manhattan. The subject: the survival of the rental market in the city.
Toward the end of the event, then-RSA president Gilbert looked to the future. He stood at a podium, flanked by the chairs of the State Senate and Assembly housing committees.
“The next legislative session in Albany is key,” Gilbert said. Gilbert didn’t respond to a request for comment.
Gilbert was anticipating 1993, when the legislature would consider New York’s rent laws once again. While both the state and the city must renew these laws periodically, the state has primary responsibility. Under a 1971 law, the city can weaken tenant protections, but cannot strengthen them.
The rent stabilization laws were due to expire on June 15. In late May, the landlord association mailed a video to Gov. Mario Cuomo’s office that included excerpts of the Sheraton Hotel discussion. Toward the end of Gilbert’s remarks, a message appeared on the screen in white letters: “Enact Vacancy Decontrol.” The camera then panned to an audience clapping.
The RSA took a now-or-never tone with Republican legislators who depended on campaign contributions from the real-estate industry. The association told Guy Velella, a Republican senator from New York City, “that if you renew the rent laws again without weakening amendments, we’re not going to give you any money,’’ according to tenant lobbyist Mike McKee. McKee said that Vellela, who died in 2011, told him about the threat.
Over the past few decades, the Senate and the Assembly had never reached a deal on rent laws before the very day they were supposed to expire. In 1993, the brinksmanship lasted beyond the deadline. The laws were set to expire on a Tuesday. With no deal in sight, the state legislature extended the laws for a few days at a time as negotiations continued.
Finally, over a weekend, a deal was reached, giving landlords the escape route that they had coveted for decades, but only for a three-month window. The landlords gained vacancy decontrol of apartments with rents over $2,000 if a tenant moved out between July 7th and October 1st of that year. Few leases expired in that period. The landlords also won a separate form of decontrol enabling them to boost rents without a vacancy if the monthly rent exceeded $2,000 and the tenants’ household income in the two preceding years surpassed $250,000.
That measure affected only a relative handful of tenants, including Manfred Ohrenstein, a successful lawyer and the Senate minority leader, who helped orchestrate the agreement. He lived in a palatial 10-room apartment on the Upper West Side. The apartment was rent-stabilized.
The small elite of wealthy Manhattanites paying tiny rents for prime apartments—including actress Mia Farrow and Ohrenstein—became a staple of the landlords’ counter-offensive. One New York Post cartoon featured a tuxedo-clad tenant who commented to his wife from a grand staircase beneath a chandelier: “Start giving in to those damn landlords and before you know it we’ll be paying $200 a month!”
Ohrenstein became a target of criticism thanks to Charles Urstadt, a former head of the state housing agency, for whom the 1971 law giving Albany control over rent rules is named. “I found out [Ohrenstein] had a big apartment on Central Park West,” Urstadt, now 88, recalled in a recent interview. “And I leaked that to the press.”
As a result of the 1993 deal, Ohrenstein’s rent quadrupled. He moved to a smaller place.
“I was the only jerk in town who just voted to raise my rent,” Ohrenstein said during an interview at his 37th floor office in the Chrysler building in midtown Manhattan.
Four months after the legislature approved decontrol, The Buffalo News reported that the Senate Republican Campaign Committee had to give back $27,500 of $90,000 in campaign contributions from a political action committee controlled by the Rent Stabilization Association because they exceeded the legal limit. A Republican Party spokesman said at the time that there was no connection between the landlords’ contributions and the Senate’s support for changes in rent regulation.
One influential politician featured at the RSA’s 1992 Sheraton Hotel event was City Council speaker Peter Vallone. “Let me tell you, what you are doing makes a real difference, it really does,” he told the audience of more than 1,200 people from the real-estate industry. “This is what changes government.”
Vallone, a Democrat, had led the Council since 1986 and cosponsored two renewals of the rent stabilization laws without weakening them. After the state legislature dipped its toe in the water of vacancy decontrol in 1993, the Council was to address the regulations again in 1994.
A devout Catholic, Vallone considered becoming a priest, and goes to Mass regularly. His father was a judge, and his mother a teacher. He grew up in the middle-class Queens neighborhood of Astoria, and earned bachelor’s and law degrees from Fordham University. Friendly and amiable in public, he ruled the Council like a Tammany Hall boss. From his office below the Council Chambers in City Hall, he and his staff would listen via microphones to meetings above and call down legislators for scoldings.
“I distinctly remember a few votes when Peter was the speaker where he would literally raise hell,” said Sheldon Leffler, who, like Vallone, represented Queens. “I almost had the impression he was going to collapse in front of me. His face would turn so red I wouldn’t be surprised if he was about to drop dead and I was going to be blamed for it.”
Vallone “tried to be a person who could call on you for a key vote that he wanted regardless of your convictions,” Leffler said. “He would tell you what he wanted you to do, but any actual discussion on the merits would be very brief. Then he would say, ‘You have to do this.’”
Vallone controlled committee appointments and a $4 million discretionary fund that members used to carry out projects in their districts or to back community organizations. Those who opposed his agenda could lose funding.
“Once you take that money it’s like organized crime,” said Sal Albanese, an independent-minded Council member who often defied Vallone, and was never given a committee chairmanship. “Either you do as you are told or you lose a committee.”
“Peter just became obsessed with what he thought was his job: to keep people in line,” Leffler added.
To do so, Vallone depended on his chief of staff, Joseph Strasburg. The son of a baker, Strasburg moved to New York City at age 6 from Israel. Raised in the Bronx, he later lived in a regulated apartment in Stuyvesant Town, the city’s biggest rental complex, where he participated in the tenants association. But the gregarious attorney crossed over to the landlord side in January 1994 when he accepted the RSA presidency, which he had turned down the previous summer. It was a lucrative position. By 2014, he was making almost $800,000, tax records show.
John Gilbert, RSA’s former president who had predicted that the legislature’s 1993 session would be key, showed similar foresight about his successor: “If anybody could put together the coalition necessary to implement vacancy decontrol, Joe Strasburg’s the guy,” Gilbert told a business publication when Strasburg was hired two months before the Council was to conduct its triennial review of the rent laws.
Strasburg was prohibited from lobbying the City Council for a year. Nevertheless, at least three former Council members said that his fingerprints were on the vacancy decontrol campaign.
“He set it all up,” Albanese said. “[Strasburg] was the most influential member of Vallone’s staff. He literally ran the Council.” McKee, the tenant lobbyist, recalled Strasburg as a daily presence in the Council chambers in the weeks before the vote.
Kathleen Cudahy, then Vallone’s legislative counsel, said Strasburg abided by the lobbying ban. “There is nothing wrong with somebody who leaves government, comes back to visit colleagues, even talk to them for informational purposes, but lobbying as it’s defined is a real no-no,” she said in an interview. “He was quite aware of it, and there is no way he would have lobbied on it.”
Early in February 1994, three days after Strasburg began his new job at the RSA, Mike McKee and other tenant advocates met with Vallone. Stung by Albany’s weakening of rent regulations, they wanted assurances that the Council would leave the laws alone. The assurances were not forthcoming. Vallone was “noncommittal,” according to McKee.
McKee and Jenny Laurie, then the director of the Metropolitan Council on Housing, a tenant group, followed up with Vallone’s legislative counsel, Cudahy.
“That's when [Cudahy] told us” that Vallone, exercising the Council’s authority to lighten rent regulations, planned to extend vacancy decontrol for three years, McKee recalled. The decision surprised them and they tried to sound the alarm. “People were just asleep at the wheel, it was really very frustrating.”
Cudahy said she didn’t recall the meeting but “it sounds consistent with the events, certainly.” She added with a chuckle, “It wouldn’t be unusual that I’d be the bearer of bad news.”
On February 28, two bills were formally introduced into the Council. One of them had 25 sponsors, just one name shy of a simple majority out of the 51-member body. With Albany’s window for decontrol now expired, the bill proposed keeping it closed and continuing rent regulations as they were.
The other bill proposed decontrolling vacant apartments that rented for over $2,000 for three years, from 1994 to 1997. That bill had only four sponsors. But one of them was the housing chair, Archie Spigner, a Democrat from a Queens district largely populated by homeowners rather than tenants.
It soon became clear that Vallone favored Spigner’s bill. One of Vallone’s aides summoned Leffler and asked him to vote for decontrol. It wasn’t a political risk for Leffler because most of his constituents were homeowners. When Leffler refused, the aide tried to stop him from leaving the room, according to McKee. Leffler said he didn’t specifically recall the incident, but it would have been typical of Vallone’s leadership style.
The Housing Committee met on Thursday, March 10, for nine hours, hearing testimony from both sides.
One landlord representative downplayed the effect the bill could have on tenants. Because of a sluggish economy, “the unregulated market and the regulated market rents have come so close, the impact of decontrol now will be as minimum as it could ever be,” Dan Margulies, a property owner’s representative, told the committee. “The political time is now.”
Following the hearing, tenants held a press conference at City Hall. Una Clarke, a Council member from Brooklyn, delivered what a tenants’ newsletter described as a “fiery speech in support of rent regulation.”
Tenants lobbied members, but made little headway. “Everyone outside of Manhattan said, ‘This will not affect my district because no one in my district pays $2,000 a month,’” Laurie recalled.
Donald Halperin, the state’s housing czar, proved prophetic. He wrote to Vallone a week before the vote, expressing concern about the Speaker’s support for expanding vacancy decontrol beyond the three-month period negotiated in Albany.
“The State Legislature’s action was intended to provide a window of opportunity … not to permit the practice to continue in perpetuity,” he wrote. “Furthermore,” he warned, the measure would provide “a great incentive for owners to aggressively encourage vacancies.”
The City Council usually votes on Wednesdays, and Vallone scheduled a vote on the rent regulations for Wednesday, March 16. Then it was suddenly postponed until the following Monday. McKee believes Vallone delayed it because he wasn’t sure he had the 26 votes needed for passage.
Vallone and Strasburg were also bucking the new mayor, Rudy Giuliani. He had defeated Dinkins on a platform that promised to end the city’s fiscal deficit and sell off the thousands of properties it had accumulated through foreclosure. He opposed vacancy decontrol, but didn’t want to risk political capital against it.
“This is not the fight to have,” noted an aide to Giuliani, citing “the politics of it for the mayor.’’
Giuliani likely sensed that the tide was shifting toward the landlords. “Organizations representing building owners are mounting a last-minute lobbying effort,” Andrew Eristoff, a Republican and a Council member from Manhattan, warned the mayor.
Still, decontrol opponents saw Giuliani as their best hope. Three days before the vote, Stanley Michels, who represented Harlem and was among the most vocal supporters of rent regulation, gave Giuliani a list of Council members who could potentially help him sustain a veto, according to handwritten notes taken by Jack Linn, then a lobbyist for City Hall. That same day, when Deputy Mayor Peter Powell met with his staff, they discussed whether to veto the decontrol bill if it passed the Council.
Marc Mukasey, an attorney and spokesman for Giuliani, did not respond to a request for comment.
There were 17 names on the list, representing one-third of Council members, the minimum needed to uphold a veto. Four of them would vote in favor of decontrol.
The late Antonio Pagán represented the Lower East Side, including the tenement on Norfolk Street. On March 18, his chief of staff, Anne Hayes, wrote to tenant advocates, promising that Pagán would oppose decontrol. She hadn’t cleared that stance with her boss, who was out of town, Hayes said in an email. On his return, Pagán startled tenant advocates by backing decontrol. He told the housing committee at the March 21 meeting to ignore opponents’ doomsday warnings. “The enemies of decontrol today are asking for your strong lobby to protect God knows what,” Pagan said. “It’s a lie. It’s a lie. It’s a lie. It’s a lie.”
The committee approved decontrol 5-3, and members then hastily assembled for a floor vote. Agendas were distributed so quickly at the general Council meeting that followed that Eristoff suspected they had actually been printed before the committee voted to approve the bill.
“Let me just be frank with you. The committee process is pro forma at best,” Eristoff said in an interview. “Nothing gets passed out of committee without the speaker's office approving it first.”
Michels made a last-minute appeal to Council members. He argued the decontrol bill contained the “poisoned seeds of destruction of all rent control, all rent stabilization in the city.”
Una Clarke did not say anything at the meeting, transcripts show. But after standing with tenants at the March 10 press conference, she voted for vacancy decontrol. She declined repeated requests for comment.
Two days after the vote, Giuliani announced he would sign the bill into law, without mentioning he had considered a veto. “The Mayor was playing games here,” Albanese recalled. “He really did not exert any pressure. Giuliani could have stopped vacancy decontrol if he really didn’t want it.”
At the signing, Giuliani lamented that the bill he preferred had lost, but called the result a “fair compromise.”
Spigner, the housing chair and sponsor of the decontrol bill, prepared a short speech for the signing, which he apparently softened at the last minute.
“Tenants are more concerned that [this bill] presents a slow but sure dwindling of rent regulations,” Spigner said, before deviating off script. He had planned to say, “Yes, [this bill] is a step but unfortunately it’s only a small step, and my only regret is that it is such a small step.” But he skipped the potentially inflammatory remark, and resumed in a less controversial vein.
Vacancy decontrol had little immediate effect. In 1994, 544 units were deregulated in Manhattan, but only three in the Bronx, nine in Brooklyn, and nine in Queens.
The pace accelerated as landlords learned how to exploit regulatory gaps to hike rents above the $2,000 threshold. The most important loophole allowed them to pass on a small percentage of apartment renovation costs to tenants. Whenever renters paying less than $2,000 per month moved out, savvy owners claimed expensive renovations, and then charged new tenants whatever the market would bear.
“That is the number one tool for gentrification and the number one tool for fraud,” said Aaron Carr, head of the nonprofit Housing Rights Initiative, which recently organized a lawsuit against one of the city’s biggest landlords over the tactic.
The renovation ruse alarmed Speaker Vallone, who in 1997 complained that “decontrol could take place for apartments that became vacant with rents less than $2,000. That was not the intent of the Council.” At his prodding, the Council banned the practice.
But later that year, the legislature struck down the prohibition and allowed landlords to increase rents by 20 percent whenever a stabilized apartment fell vacant, even without renovations. Tenant groups called it the “eviction bonus,” because of the incentive it gave owners to expel residents.
Under state and city law, buildings that collected certain property tax breaks were supposed to limit rent increases in return. But soon they, too, were removed from regulation. First, in 1995, Giuliani and Senate Majority Leader Joe Bruno reached a deal to extend decontrol to downtown Manhattan office buildings that had been converted into apartments. The following January, a top lawyer for the real-estate industry persuaded the state housing agency to allow landlords to deregulate thousands of apartments in renovated older buildings. Both types of buildings enjoyed tax subsidies.
In 2003, landlords obtained the right to collect rent increases retroactively. This policy allowed owners who had increased rents each year below the maximum amount set by the city to make up the difference whenever a lease came up for renewal. Currently, tenants in nearly one-third of rent-stabilized units pay these below-maximum “preferential rents.” As a result, when their leases expire, their landlords can jack up rents on these apartments by more than is otherwise allowed.
Increases in the decontrol threshold lagged behind inflation. In real terms, the $2,000 bar set in 1994 is equivalent to $3,260 today. But lawmakers waited until 2011 to raise it, lifting more apartments over the dividing line with each passing year. Today, it’s $2,700.
As the toll of its 1994 vote on tenants was becoming apparent, the City Council lost the power to reverse its decision. In 1997, the legislature stripped the Council’s authority to repeal vacancy decontrol, which it enshrined in state law. In the next decade, tenant lawyer Sam Himmelstein told ProPublica, the surge in evictions helped his business grow eightfold.
“I personally was in court every day with three to four cases,” he said.
A grateful real-estate industry rewarded the architects of vacancy decontrol. When Peter Vallone ran unsuccessfully for mayor in 2001, his offices were located in the same building as the RSA, and two of his key backers were the industry’s largest interest groups. Spinola, REBNY’s president, raised slightly over $175,000 for Vallone. Strasburg, RSA president and Vallone’s former chief of staff, raised just under $110,000, according to The New York Times.
Spinola retired in 2015 and was replaced by John Banks III, also a former chief of staff to Vallone. Strasburg still heads the RSA, which declined to make him available for comment.
Kathleen Cudahy, who advised McKee and other tenant advocates of the council’s intentions to enact vacancy decontrol back in 1994, works now for a lobbying firm headquartered just across from City Hall. She heads up the firm’s real-estate practice.
Vallone defended the 1994 vote in his 2005 autobiography, “Learning to Govern: My Life in New York Politics, From Hell Gate to City Hall.” The Council “moved to break the stranglehold on the city’s housing supply by passing a law decontrolling apartments,” he wrote. “… Even this small effort to modify incongruous aspects of our rent laws that were mostly hurting the middle class and the poor was interpreted by some tenant interest groups as the opening salvo in a conspiracy to destroy rent stabilization.”
Today Vallone, who just turned 82, divides his time between Constantinople & Vallone, a lobbying firm at the same address as the RSA, and Vallone & Vallone, a family-law firm just off the last stop on the elevated subway route to Astoria. A sign in the firm’s window reads, “Keep Christ in Christmas.”
Vallone wasn’t in when reporters visited his wood-paneled third-floor office, which is lined with photos and plaques from his years on the Council. At his modest, two-story home nearby, Vallone autographed a copy of his memoir before begging off an interview, saying he had to catch a plane.
“Some other day,” he said. His assistant at the family-law firm then said there would be no interview.
The City Council has passed four motions asking the legislature to undo vacancy decontrol. Three Council members who supported decontrol in 1994 and have moved on to the legislature — Dilan, Annette Robinson and Jose Rivera — have tacitly admitted their mistake by endorsing repeal bills. Dilan sponsored two repeal bills in the 2015-16 session alone. The Assembly, with a Democratic majority, has approved five such measures. But the Republican-controlled Senate has ignored them all.
The next generation of politicians inherited the controversy. Peter Vallone Jr., who replaced his father on the Council before becoming a judge, voted once for and twice against vacancy decontrol. Another son, Paul Vallone, has supported repeal. So have Dilan’s son, Eric, and Clarke’s daughter, Yvette, now a member of Congress.
On the Lower East Side, median rents have tripled since 1995, while they have doubled citywide. Shortly before the Norfolk Street building went up for sale in December of 2013, the rents there illuminated the “tremendous upside” for a buyer who would drive out existing tenants. Of the building’s 25 units, the few free-market apartments were collecting almost as much rent as another 18 units — all regulated — put together, according to tax records compiled by Property Shark, a real-estate website.
Investor Samy Mahfar bought the building for $11 million in March 2014. He describes himself on his web site as a preservationist who specializes in restoring tenements that housed immigrants. But tenant advocates say he exploits the rent stabilization laws to displace long-term tenants and gentrify buildings.
Within a week of taking over the building, Mahfar had spoken with all the tenants, offering buyouts and warning that conditions in the building would become dangerous. He was planning building-wide renovations, which can help boost rents above the decontrol threshold.
A month later, in April, a city health inspector found levels of lead in the air 2,750 times the legal limit, the byproduct of Mahfar’s removal of paint and plaster from the common areas to expose the brick walls. By July 2014, tenants encountered water shut-offs, stray wires, dust and debris.
One of the plaintiffs, Brian Clark, a risk-management analyst, said he feels sorry for longtime residents who moved out of their rent-stabilized apartments under pressure. “It’s a losing system,” he said.
Clark said ten of his rent-stabilized neighbors moved out. Apartments have been converted into luxury rentals, with Caesarstone counters and Carrera marble bathrooms.
Mahfar denied that his business model was to drive out rent-stabilized tenants and raise rents to market rates. “We … demonstrably improve the living conditions of our tenants,” he wrote in a response to questions. “… I am not denying mistakes were made but we quickly worked to correct them and we actively took measures” to ensure they were not repeated.
“Most tenants seem to be happy these days,” Mahfar added. To illustrate the turnaround, he quoted a tenant in a rent-stabilized unit as telling him, “The transition to your ownership was very much like giving birth, painful at inception, but very enjoyable now.”
Such turmoil has given Archie Spigner second thoughts. Like many other Council members, the former housing committee chair from Queens who championed the 1994 decontrol bill had believed that rents in the outer boroughs would never reach the $2,000 threshold.
Contacted by a reporter recently, the 88-year-old Spigner said he hoped he had taken the right position, and lamented the rise in the city’s homeless population. “I wish a home and a warm place to sleep for everybody in the world,” he said.
When informed of ProPublica’s finding that the Council’s 1994 law removed tens of thousands of apartments from regulation, Spigner paused and said: “That is true, that is true, that is true, that is true.”
Correction, Dec. 15, 2016: This story originally misidentified former New York City councilman Jose Rivera. His name is Jose, not Gustavo.