In Washington, dinner party conversations revolve around politics. In New York, it’s real estate. And that conversation is reaching a fevered pitch as the June 15th rent regulation laws are set to expire, giving tenant advocates cause for alarm that the deadline will come and go without an agreement in Albany that strengthens their cause.
In this debate, Governor Cuomo’s deep ties to both tenant groups and the real estate industry are positioning him as a power broker.
Ties to both sides
Cuomo has made statements saying that he considers the extension of rent regulations a priority. At the same time, his strong relationship with the real estate industry—which was the number one donor in his candidacy—raises questions about which way his chips will fall.
A NYPIRG analysis showed that real estate interests dominated contributions to Cuomo’s campaign. He raised over $2.6 million from the real estate and construction industries for the 2010 election cycle. Major players in the New York real estate world also contributed real money to the candidate over the past few years: Tishman Speyer Properties, Shaya Boymelgreen, Lloyd Goldman, Bruce C. Ratner, Stephen Ross, and more.
The Committee to Save New York, a non-profit lobbying group that formed after the November election and has spent over 2.5 million in just January and February of this year on advertisements that support Cuomo’s fiscal reforms and the local property tax cap, counts among its board members Rob Speyer, President of Tishman Speyer and Steven Spinola, President of the Real Estate Board of New York. Bill Cunningham, a spokesman for CSNY, says the organization does not have a position on the extension of rent regulation laws.
Spinola does have a stance, however. He affirmed that REBNY supports the extension of current laws (though there are certain aspects of it they don’t agree with), but is absolutely against the law passed by the State Assembly on Monday that would expand the laws further.
“Rent regulation law has always been a drag on the creation of new housing in the city of New York and it took the dramatic changes done fourteen years ago to encourage national builders of housing to come into New York City,” Spinola said, referring to the vacancy decontrol law.
The Working Families Party, who endorsed Cuomo and carried him on their ballot line in November is confident that the rent laws will be extended—for them the question is if they will be expanded in this economically difficult time in New York. But Cantor is more nervous about the State Senate derailing the expansion than the Governor.
"The Governor is both popular and quite committed to strengthening these laws so I think the tenants of New York have a powerful ally," Cantor said. "The State Assembly has proven its reliability on this, obviously the Senate leans towards the landlords. But you can’t win an election only with money, you need voters too."
Indeed, a recent Siena poll showed that 62 percent of New York voters supported renewing the rent regulation laws.
As for the State Senate, a hidden video (see 06:10) taken by stabilized tenants in late March captured Joe Strasburg, head of the pro-landlord lobbying group the Rent Stabilization Association, talking about his large investment there.
"We’re not ashamed of it. We gave and donated and supported all the Republicans," Strasburg said. "We basically emptied our piggy bank in order to make sure they capture the Senate. Dean Skelos understands how important we are as an industry – and it’s selfish – but he understands clearly that if he doesn’t hurt us or he tries to avoid hurting us, we will be there for him next time around, two years from now."
Up to this point, the governor has remained above the fray. The tenants feel he's on their side, and the real estate industry does too. But at some point he’ll have to be concrete about what exactly strengthening rent regulations means for him.
What's on the table
As for how this plays out in a legislation battle, some lawmakers are confident that his unique positioning enables him to carve out agreements both sides can live with. A potential compromise to get the rent regulations passed could be the passage of a bill to provide tax-breaks for real estate developers, or even the two percent local property tax cap.
“Right now we have a governor that is not only supportive in concept of what we want but who has relationships with the people that have a great deal of influence of how we close this down,"said Assemblyman Vito Lopez. "I think it works to our advantage, the advantage of coming up with a good—not a perfect—but a good rent regulation bill.”
On Monday, the state assembly passed a bill sponsored by Lopez, chairman of the Assembly Housing Committee, that would extend and expand the rent regulation laws, currently set to expire on June 15, until 2016. The bill would rescind what’s known as “vacancy decontrol,” a law passed fourteen years ago that allows landlords to de-regulate apartments if the rent has risen to more than $2,000 a month and the tenant gives up the lease. The bill also increases the income and rent requirements needed to deregulate a rent-controlled unit from $175,000 and $2,000 to $300,000 and $3,000, respectively.
Spinola identifies himself as a Cuomo supporter, but he has reservations about how much Cuomo will concede to rent-regulation advocates.
“I think the governor wants to see housing built,” Spinola said. For him the question is not whether to extend, it’s whether to expand the regulations. “I don’t agree with him on the issue of expanding but we’ll have to find out what he means by expanding, I would hope that he does not mean the bill that passed the Assembly [Monday]."
Affordable housing advocates, including state Democratic officials, were plugging to include the regulations in the state budget, but Senate Majority leader Dean Skelos put the kibosh on that.
Lopez, for his part, is optimistic, despite the Governor’s silence on which parts of the bill he supports.
“I believe the governor, I think the fact that he has relationships will be the ideal individual to broker a compromise, not on the extension, but on the expansion in certain areas of the law,” Lopez predicted.