Country of Tenants

Two hundred years ago, enslaved people built the wall that gave the world’s financial heart its name. Just several blocks down Wall Street stands Federal Hall where, in 1765, delegates from the 13 British colonies gathered to write a letter to King George III defending the rights of merchants and the principle of self-government. When the building that today still functions as City Hall was built near the corner of Chambers and Broadway in 1812, the North-facing façade was left unfinished. No one thought that the city would expand north of Chambers Street.

Today, the city has overgrown Manhattan several times over, and the institutions clustered at its southern tip are the symbolic heart of global wealth. Next to Federal Hall, the New York Stock Exchange; across from City Hall, the Woolworth Building, also known as the “Cathedral of Commerce.” The Federal Reserve, just off Liberty Street, holds one quarter of the world’s gold supply in its basement.

The Rent Guidelines Board (RGB) sits in the midst of these monuments to moneymaking, in the David N. Dinkins Municipal Building. Each year since its establishment in 1969, the Board has determined how much landlords are allowed to raise the rent on over one million rent stabilized apartments throughout New York City. In so doing, it enters into a hundred-year debate over what role regulation should play in the city’s housing market. Economic considerations have often been at the heart of the debate: Proponents of rent regulation argue that limiting annual increases is an important tool to maintain affordability, while detractors argue that regulation depresses development by making it less profitable, and leads to neglect by constricting owners’ cash flow. But a growing cohort of tenant groups and community organizations across the country are looking beyond these arguments and asserting rent regulation as an answer to a broader question: Who gets to live in the city, and who decides?

In practice, regulating rents is a technical exercise. To arrive at the annual allowable increase, the RGB reviews data including vacancy rates, landlord operating costs, availability of financing, supply, demand, and cost of living indices. It also takes (often raucous) testimony from owners and tenant groups. One morning in April, the RGB convened in a dark conference room on the ninth floor of the Manhattan Municipal Building; the nine members (all appointed by the mayor, with two representing tenant interests, two representing owner interests, and five representing the general public) took their seats at one end of a long table. At the other end, representatives from various owners’ organizations took turns reading from prepared remarks. “As we have mentioned before,” many of them began, reciting by-now familiar arguments: the RGB had not accounted for all of the costs and demands that owners face; property taxes and other expenses were quickly rising; the federal definition of rent burden — paying 30 percent of household income toward housing — needed to change with the times. The Board’s efforts to provide affordable housing, though admirable, were hurting small owners’ ability to maintain their properties. The economic calculus, they said, would backfire.

When the owners’ organizations filed out, Tim Collins, the former Executive Director of the RGB, comfortably took his seat to testify. Seeing rent regulation as a fight over affordability, he explained, would be like seeing the American Revolution as King George did – as a fight over taxes.

“There is hardship,” he said. “We live in a country where the top one percent holds twice the amount of wealth as the bottom ninety percent. I mean, to me, it’s obscene.” But, he said, “I don’t think it’s the purpose of rent regulation to make every unit affordable.” When the colonial representatives met down the street to write their letter to the King, their actual purpose was “to secure accountability over power and to establish certain rights for certain people.” Collins leaned forward in his chair. “This is not a graceful tango between supply and demand . . . this is like two sumo wrestlers, Need and Greed, and it takes democracy to referee the two. This board is sort of in the middle of that.”

The link between post-recession economic growth for some and hardships like homelessness and displacement for others hints at this tension between the interests of private property and those of public welfare. The RGB’s role as referee turns rent regulation from an issue of affordability into one of political mediation between competing interests. That is why a growing number of voices agree with Collins that rent regulation should referee the fight not only in New York, but in other urban and non-urban communities across the country.

Rent control and real Americanism

Rent regulation has only recently become a technical policy issue debated annually at conference tables. Unaffordable, scarce, crowded, and dilapidated housing has been a problem in New York for at least 200 years, and tenant movements have seized on regulation as a way to assert their interests. In 1825, the Niles Weekly Register observed that “a finished house without a tenant is not to be found in this great city.” In the second half of the 19th century, immigrants from Southern and Eastern Europe settled in crowded neighborhoods that Jacob Riis described infamously in How the Other Half Lives. Reformers, more concerned about living conditions than rents, were finally able to push the state legislature to pass the Tenement House Act of 1901, which regulated overcrowding. Opponents said that the law would exacerbate the housing shortage. Variations of the same argument have been a staple in the regulatory debate ever since.

But they were wrong, at least initially. From 1903 through 1916, developers built nearly 400,000 units across New York City – enough to house the entire population of each city in the United States except for Chicago. Vacancy rates reached 8.1 percent and owners offered benefits such as free rent for the first two months to attract tenants. But by the end of the First World War, demand again outpaced supply. Even without the wholesale destruction of buildings that led to postwar housing crises in Europe, throngs of returning soldiers and wartime workers broke the city at its seams. Families lived in subdivided bedrooms that were so small that residents had to step out in order to be able to put on clothes. Others doubled up with friends or family, while those who had no such connections slept in hallways and basements. Rose Schneiderman, a prominent tenant activist, reported that rents had almost doubled in some working-class areas.

On the other side of the globe, another housing shortage fueled a revolution; after 1917, the newly formed Soviet government reallocated spacious apartments from their bourgeois owners to members of the proletariat. In New York, rent disputes became a battleground for political action and the definition of Americanism. The New York Call wrote in 1918 that if the government did not do anything to address rent profiteering, “then the people may, and in their own fashion.” In the spring of 1918, a rent strike grew in Brownsville, a Jewish neighborhood described by radical Scott Nearing as “a Socialistic oasis in a desert of capitalism.” New York City judges responsible for adjudicating rent disputes fought what they saw as radicalism on both sides; Judge Harry Robitzek said he had done all he could “to drive Bolshevism [out of] the Bronx,” both by ruling against abusive landlords and by speaking out against rent strikes.

In 1920, New York City’s mayor, John Hylan, brought Robitzek’s philosophy to the state legislature, which was debating whether five newly elected socialist Assemblymen would be allowed to take their seats. Hylan told the legislators that if they wanted to rid the Assembly of socialism, they “must first eradicate the causes of socialism, and one of the greatest…is the speculating landlord.” The socialists were expelled and, within a few hours, New York adopted its first rent laws. That same month, Socialist New York City Alderman Baruch Charney Vladeck spoke to a mass gathering of tenant leaders in support of more radical change. “Call it Bolshevism or anarchism,” he said, “but I call it real Americanism, when the people of the city get together to benefit their condition.”

Two decades later, a series of initiatives would transform rent regulation from a local to a national concern, and ultimately entrench the policy in New York City. The federal government enacted rent regulation during the 1940s to stabilize the wartime economy. “Rent control” is the official name of this early form of regulation, which froze rents on prewar buildings and then allowed only for uniform, annual rent increases up to a fixed ceiling. Rent control had emerged at a moment in which a global economic crisis and world war normalized broad government action by democracies and totalitarian regimes alike. But in the war’s aftermath, searching for lessons in political upheaval, scholars like liberal Austrian-British economist Friedrich A. Hayek argued that economic regulation is a slippery slope that ends in totalitarianism. The idea was immensely popular in the United States, where members of the Chicago school of economics, including Milton Friedman, used Hayek’s ideas to formulate and popularize a free market ideology which would inspire opponents of rent regulation for decades to come.

Today, when people say “rent control,” what they are usually referring to is actually rent stabilization, which began locally in New York in 1969 after tenants protested the phasing out of the earlier rent control policy. If rent control was the first generation, then stabilization, which entails annual rent increases based on a review of economic data, is its more sophisticated offspring. Today, World War II-era rent controlled apartments account for less than one percent of New York City’s housing stock. Rent stabilized apartments, however, make up almost one third of all units in the city, and have been at the center of the regulation struggle for decades.

State legislators with apparently little skin in the game have led the opposition to rent regulation in New York. In 1971, the State Assembly passed the Urstadt Law, which prohibited New York City from passing new regulations more stringent than those already in place, and handed power over rent regulation to the state legislature. In fact, Albany’s sallies against rent regulation were part of a growing, country-wide effort by some groups to protect real estate markets from the regulatory boogeyman. Conservative policymakers’ founding of the American Legislative Exchange Council (ALEC) in the mid 1970s was pivotal; among its large repertoire of legislation, ALEC has helped pass nearly identically worded laws in several states that ban rent regulation.

As ALEC member and then-Oklahoma state senator Scott Pruitt put it in 2003, ALEC “puts legislators and companies together, and they create policy collectively.” They also collaborate on messaging. Real estate lobbyists have often argued that rent regulation destroys housing, frequently invoking the “Burning Bronx” as evidence, though the fires that razed swaths of that borough during the 1970s were caused by a more complex set of factors. While New York City experienced a building boom in the first decade following the adoption of rent control, state senator and ALEC member Joseph Bruno once said of rent regulation that “an atom bomb would have created less of a problem, literally.” Bruno’s district at the time included parts of rural Dutchess and Columbia counties, far from the regulated housing stock in New York City. Ex-RGB director Tim Collins said that “real estate is to New York as oil is to Texas,” by way of explaining why upstate Republican lawmakers and their donors seek to maintain state control over rent regulation in the city.

Over the last twenty years, rent stabilization in New York has been geographically expanded but ultimately weakened. When the state’s aggressive decontrol campaign contributed to rising rents, the Legislature passed the Emergency Tenant Protection Act of 1974, allowing cities in Rockland, Nassau, and Westchester Counties to opt in to rent regulation if their vacancy rates fell below five percent. It also placed buildings with six or more units completed within several years of the passage of the Act under stabilization. But laws passed in the 1990s deregulated apartments if their rents or the incomes of their inhabitants passed certain limits, allowed owners to raise rents indefinitely following apartment improvements, and entitled owners to increase rents by 20 percent when a tenant moved out and by 0.6 percent for every year of the previous inhabitant’s tenancy if it exceeded eight years. By creating a rent threshold beyond which apartments become deregulated, along with mechanisms to “earn” rental increases beyond the Rent Guidelines Board’s annual rates, these laws established an escape velocity towards deregulation, enticing some owners to submit falsified renovation documentation or harass tenants into vacating their apartments. New York City’s rent stabilized housing stock shrunk by 152,000 apartments between 1994 and 2016.

Rent regulation has been de-fanged, placed at the bottom of a crowded toolbox of other policies, and turned into a wonky mess of rules and exceptions on the elusive path to affordable housing. But it is now being reasserted as an answer to the political questions out of which it first emerged when Alderman Vladeck spoke of “real Americanism.” As the 2019 legislative deadline to renew the New York rent laws approaches, a statewide coalition of organizations is seeking to leverage local, progressive, electoral victories to close regulatory loopholes and expand rent regulation’s geographic scope across the entire state. Meanwhile, in other cities around the country, similar movements are using rent regulation as a rallying point for political mobilization.

The regulated game

In 1956, Neri Carranza moved into a small but comfortable apartment at 247 West 109th Street. She grew houseplants in the windows and watched as landlords came and went over the years. But in 2010, at the age of 87, she received notice that the new owner was evicting her.

The Orbach Group, a New Jersey-based company, had bought the building along with most of the others on Carranza’s block. The buildings in that historically Latino neighborhood are tightly-packed five-story walk-ups, and many tenants were enjoying stabilized rents at the time of the mass buy-up. The New York Times reported that Meyer Orbach, whose company originally specialized in commercial and high-end residential real estate, shifted strategies after the 2008 financial crisis to play the “regulated game,” using regulatory loopholes to reap the difference between stabilized and market rents.

New York City tenant organizers have heard many stories like Carranza’s. The game starts with eviction, proceeds to gut renovation (new countertops, a chrome kitchen), and ends with several students or young professionals renting the same unit at a much higher price, which increases each time these new, high turnover tenants leave. Orbach knew that if he could evict Carranza, he would be entitled to increase the rent by 20 percent. Orbach knew that he could also raise the rent by a portion of the reported value of any repairs he made, and by 0.6 percent for every year since the last vacancy. The goal in the regulated game is to push rent past $2,733.75, at which point an apartment becomes deregulated and rent increases are limited only by what prospective tenants will pay.

The ranks of a new class of owners belonging to “Landlord Inc.” has grown alongside longtime operators like Steven Croman, who recently served a sentence on Rikers Island for offenses related to his development work. These mega-landlords make bulk purchases of stabilized units in older buildings and use a variety of strategies to deregulate them. Some file eviction after eviction, using court dates and paperwork to tire tenants into leaving, and then collect the vacancy increase. Other landlords rely on renovation. The lack of communication between the Department of Buildings, which oversees construction, and other departments that protect tenants allows landlords to submit falsified permitting documents, after which they use dusty, noisy, and prolonged construction work to push tenants out. Some owners raise rents based on fictional renovations because regulators do not check for proof unless a tenant complains. If the fraud is discovered, applicable fines are modest in comparison to the scale of cash flow.

Making a killing or making a living

While tenants in New York City have for years called to close rent regulation loopholes in times of housing crisis, tenants in cities without that same history have increasingly been doing the same. There is no form of rent regulation on the books in Chicago. But the fight between Need and Greed has prompted several community organizations there to look to rent regulation as a referee not only in their city, but across the entire state. As tenants feel embattled by rising rents and ignored by policymakers in Illinois, rent regulation has become part of the fight for political representation.

For most of the twentieth century, Chicago had been an affordable place to live. That changed in the 1990s when the city began to reinvent itself, transitioning from an industrial metropolis to a hub for services and tourism. In 1999, then-Mayor of Chicago Richard M. Daley announced the Plan for Transformation: Large swaths of mismanaged public housing high-rises would be demolished and replaced by mixed-income development as part of the city’s reinvention. Ultimately, developers never built enough replacement units to match those that were demolished. The many former public housing tenants who lost lotteries for on-site units (or couldn’t feasibly wait to find out if they won) fanned out into unfamiliar neighborhoods across the region, while real estate prices in what had recently been considered undesirable areas adjacent to some public housing towers skyrocketed.

Following the demolition and displacement, a number of community organizations introduced an ordinance that would ensure a one-for-one replacement of demolished units. But while the ordinance languished in committee, developers took the opportunity to remake the city. Today, a CrossFit and a Target sit on the centrally located, former site of the Cabrini-Green high-rises, catering to professionals who work in one of the largest and densest business districts in the world, merely a mile away. After the ordinance failed to pass, several of those organizations started thinking about a different way to address affordability.

When asked, “Why rent control?” Jawanza Malone tells a story like Carranza’s. Malone is the director of the Kenwood Oakland Community Organization (KOCO). The neighborhoods along Chicago’s southern lakefront are historically Black and characterized by an eclectic mix of historic apartment buildings and mansions, modernist towers in the park, classic two- and four-flats, and a copious helping of both new townhomes and vacant lots. “There’s an 84-year-old woman who lives in our neighborhood who’s seen her rent double,” Malone recounts. The woman’s rent shot up when a venture capital firm out of New Jersey bought her building. “She’s lived there most of her adult life, and right now she has to pay almost all of her monthly income just on rent.” But the significance of his neighbor’s dilemma and importance of rent regulation in addressing it goes beyond affordability, and speaks to the conflict between Need and Greed. At a housing justice forum, Malone traced his 84-year-old neighbor’s story back to the founding of the United States. “The Revolutionary War was about a bunch of guys who were pissed off because the Brits were cutting into their profit margin,” he said. “So as we fight against housing injustice in this city, we’re going against a legacy of exploitation. When we’re taught the mythology of our country, we aren’t told that it’s about people who would do anything to make a buck.”

Historically Black neighborhoods in Chicago have always been a good place for a landlord to make a buck. The policies and practices that prevented Black residents from moving outside of a restricted area created a crowded and captive housing market, meaning that residents paradoxically paid more for worse conditions. Today, as a result of disinvestment, deindustrialization, arson, and outmigration, neighborhoods like Oakland and Kenwood contain so many vacant lots that, on some blocks, buildings are the exception. Yet on side streets between empty parcels, you can find new mansions the size of apartment buildings. In the past, the area was expensive because landlords could charge whatever they wanted. Now, it is expensive in part because the vacant lots signal a development opportunity. Malone has approached owners to explain his position on rent regulation. According to Malone, one developer listened, thought it over, and finally responded, “You’re talking about the difference between making a killing and making a living.”

During the summer of 2016, KOCO convened community organizations from across the city to form the Lift the Ban coalition, which would aim to repeal the 1997 Rent Control Preemption Act that ALEC crafted and which outlaws rent regulation in Illinois. The coalition’s ally, State Representative Will Guzzardi, introduced HB 2430 in February of 2017. It stated plainly: “The Rent Control Preemption Act is repealed.”

In the KOCO offices, a picture of a bespectacled Malcolm X sits opposite several poster-sized electoral district maps. District boundaries follow an inscrutable logic, zigzagging down major streets and cutting abruptly through alleys and parks. Considering the number of rent burdened people, Malone said, “you have to ask what Chicago and Illinois are going to look like in the next decade.” He paused. “What does that say about our priorities about who we want to live here? It begs the question of ‘are we doing enough for our citizens?’” Malone suggests that rent regulation advocates are asking their own version of the question that has in recent years motivated a movement: Do the Black lives being displaced from cities today matter?

Displacement relates directly to political representation. If rents continue to rise and people are priced out of Chicago, their shrinking communities have fewer votes, and are increasingly ignored by policy makers. Malone argued that outmigration, violence, and school closings are all interrelated and ultimately rest on the question of political power. Imagine Malcolm X, framed on the wall in KOCO’s office, surveying population loss, waning political representation, and violence; where might he place rent regulation relative to the Ballot and the Bullet? As tenants are displaced from the city, KOCO and other rent regulation advocates are rethinking not only the spectrum of tactics available to them, but the geographic boundaries of their struggle as well.

Once a tenant, always a tenant

After prevailing in her eviction case, Neri Carranza left her $300 per month apartment on 109th Street to live with a niece in rural Pennsylvania while the owner made court-ordered repairs to her unit. A year and a half after she vacated, the unit was still uninhabitable. She sued, but then settled for about $100,000. She lives next to fields and forests now. The owners illegally remodeled her unit and now rent it to two Columbia University students who pay a deregulated rent of $3,500 per month.

“Today’s Inwood resident is tomorrow’s Kingston manufactured home owner,” said Kevin Borden, the founder of Manufactured Housing Action (MHAction), a national movement of mobile home owners fighting for affordability. MHAction is a member of the Upstate Downstate Housing Alliance, a coalition of tenant organizers in New York that, through the Housing Justice for All campaign, is fighting to close regulatory loopholes. Among other objectives, the campaign aims to end the 20 percent vacancy increase and make rent increases following renovations temporary, effectively dismantling the two goalposts of the regulated game.

While it is difficult to track what happens to people who are priced out or evicted from their apartments, anecdotal evidence suggests that many leave New York City. Some move upstate, and others move out of state altogether. Whatever the case, populations are shifting. On lobbying visits to Albany, Peter Nagy, an organizer with New York Communities for Change (NYCC), a core member of the Upstate Downstate Housing Alliance, sits with elected representatives and tells them, “You’re losing your fucking constituents!”

In Illinois, MHAction has partnered with the Lift the Ban coalition to expand the campaign for rent regulation beyond Chicago’s borders. Statewide regulation would protect tenants like Pat Bohlen, who lives about 100 miles south of Chicago, organizes for MHAction, and pays $256 every month for the lot on which her 16-by-72-foot mobile home sits in a small manufactured home park, just a “road with 40 homes along it.” Almost everyone who lives there is, like Bohlen, a senior with a fixed income who cannot afford to live in a town or city. In early 2017, the local owners sold the park to RV Horizons, a Colorado-based mobile home park owner, manager, and developer. The company promptly began to raise the lot rents. At the top of the Google results for RV Horizons is the tagline “We provide the US with affordable housing.” Bohlen said that RV Horizons had bought several parks in the area. “You can’t escape,” she said.

Malone might add to his list of questions, “Do mobile home dwellers matter?” For Bohlen and her neighbors, statutory rent regulation symbolizes more than an important way to control prices in the city, suburbs, and rural communities. Shandra PB-Weeks, a MHAction organizer based in Detroit, said that the rent regulation movement empowers residents to bridge the division between the people living in communities and the decisions being made about those communities. For Esther Patt, a former member of the Urbana City Council and head of the Urbana Champaign Tenant Union (just down the road from where Bohlen lives), the ability of tenants to represent themselves is key. As a tenant advocate, Patt felt herself a minority in legislative spaces. “They can’t think like a tenant,” she said of her fellow council members. “They can’t get into the tenant’s shoes.” Patt’s experience in Illinois speaks to the gulf between upstate representatives and downstate realities in New York, and the importance of stemming displacement that weakens local power: Most people only know what they experience, and only prioritize what they know.

The rent regulation campaigns in New York and Chicago are pushing the movement across the urban-rural divide and building a political class out of tenancy. In so doing, they are attempting their own version of what Alderman Vladeck called “real Americanism.” For these activists, rent regulation is about making it possible for people to come together and better their situation. When low-income people stay put, they can make themselves impossible to ignore.

But the city includes more than low-income tenants and avaricious property owners. In testimony before the Rent Guidelines Board, a representative of Small Property Owners of New York (SPONY) said that some of its members are forced to sell their buildings each year because they cannot cover costs. If Landlord Inc. buys out smaller operators, long-term tenants like Neri Carranza fall prey to the regulated game. Owner advocates also predict that low rent increases will force owners to let their buildings fall into disrepair. When asked what the city would look like under more comprehensive rent regulation, Vito Signorile, Communications Director at the Rent Stabilization Association, said that it would be hard to recreate the burning Bronx. “But it chokes owners. The owners were forced to light a match under their buildings, so to speak.”

In Chicago also, landlords, owners, and realtors fear what kind of city universal rent regulation would create. Brian Bernardoni, the Senior Director of Public Affairs and Public Policy at the Chicago Association of Realtors, once said that rent control is like “gardening with a hand grenade.” He argues that it suppresses the potential development of affordable housing, and does nothing to address the more concerning issue of Chicago Aldermen blocking development in their wards at will.

Whether in Chicago, New York City, or elsewhere, owners make up an important constituency with substantial burdens and fears. Some turn skirting regulation into a business model, others comply, and still others are in favor of regulation that would squeeze out large speculators, help tenants remain in place, and not cut too far into profits. One small property owner in Chicago, who keeps his rents affordable for working class tenants, said, “We are stewards. We hold and manage shelter as a place for people to live. I take it as a big responsibility.” He then ended his midday break and went back to driving for Lyft.

Regulation and representation

In 1626, Peter Minuit is storied to have bought Manhattan from the Canarsees for twenty-four dollars; in America, the acquisition of property has long been the surest way to wealth, and the ideal of home ownership is the distant ideological descendant of the real estate project that turned into a country. In the early 1800s, a businessman bought a piece of swamp along Lake Michigan for next to nothing. When the same man became Chicago’s first mayor, he put the streets where he needed them to make an astronomical profit. Recounting this story, the writer Nelson Algren echoes Jawanza Malone. “We remember them,” Algren writes, “under such subtitles as ‘Founding Fathers,’ ‘Dauntless Pioneers’ … Meaning merely they were out to make a fast buck off whoever was standing nearest.” Ex-RGB chair Tim Collins, on the other hand, argues that seeing the American project as a business proposition would be to miss the point. In his view, the founding fathers struggled for political representation. Either way, both Malone and Collins agree that rent regulation should do the same.

After three in four voters across 77 Chicago precincts voted in favor of a non-binding referendum for rent regulation last March, a new state bill was introduced that would both repeal the ban on rent regulation and create six regional bodies resembling New York’s RGB. In September, New York primary voters unseated most of the former Independent Democratic Conference members, a step toward tenant activists’ goal of expanding and strengthening rent regulation in 2019. But on November 6, California midterm voters defeated a ballot measure that would have given local governments more autonomy to implement rent regulation. Real estate trusts and a PAC association with the California Association of Realtors outspent proponents by nearly a factor of three.

Rent regulation movements are responding to growing crises. The number of people living on New York City streets is reaching record highs, while Chicago’s population is hovering near record lows, due in part to displacement. Across the country, small owners are losing ground as Landlord Inc. transforms cities, suburbs, and trailer parks. The struggle over rent regulation is not only about reigning in those who would make a buck at a tenant’s expense, but also about who gets to live where, who matters, and who — or what — ultimately decides.