Legal Commentary

The New York Times had an article yesterday on apparent efforts by Tishman Speyer Properties to investigate and challenge the status of the residents of its massive Stuyvesant Town and Peter Cooper Villages complexes, some 110 buildings housing 20,000 people in Manhattan.  The photo caption to the story calls them "middle-class complexes," and the story describes them as being "among the city?s largest middle-class redoubts, where nurses, teachers and others could live comfortably and even afford a weekend or summer house."  They are rent-controlled, natch: the story notes that the "average monthly rent at Stuyvesant Town in 2006 was $1,241 for rent-stabilized units and $2,767 for market-rate units."  The issue on which battle joins in the story is whether some residents have maintained other primary residences, which would disqualify them for rent control; they are allowed to own property elsewhere provided it is not their primary residence.  This is one in a recent series of stories the Times has written about firms that have purchased rent-controlled properties in Manhattan and used "aggressive tactics to dislodge rent-regulated tenants."

Of course I don't endorse many kinds of aggressive tactics to dislodge rent-controlled tenants, and some of the other stories the Times has written on this topic have indeed suggested seriously abusive tactics on the part of landlords.  But this story somehow didn't get my tiny violin playing, although the author quite evidently played it for all it was worth.  The story suggests that Tishman Speyer has denied renewal in about 800 rent-stabilized leases in the past 18 months or so.  Of those, "more than 4 in 10 cases were later dropped, while 3 in 10 ended with tenants giving up their apartments."  The story cites serious errors in three denials, none of which the company ultimately pursued.  It suggests that some of the folks who gave up their leases might have been perfectly innocent but surrendered to avoid the hassle, but it doesn't offer any figures to support this.  Nor does it acknowledge that of those "4 in 10 cases" that were dropped by Tishman Speyer, it is possible that the landlord was right in some of those cases, but similarly abandoned its efforts in order to avoid the hassle.  It barely discusses the cases in which people surrendered their leases because they were clearly exploiting the rent-control system -- in the one example cited, a tenant was maintaining a rent-controlled lease while working as an anchorman in Michigan.

And given the numbers and the people involved, the story hardly makes its case that the "ordeal of proving their occupancy" is so stressful and expensive that people give up their apartments despite being entitled to them.  Keep in mind that the average monthly difference between a rent-controlled and a market-price apartment at these complexes, according to the story, is some $1,500.  The average total legal cost of retaining legal counsel to defend one's primary residence status, again according to the story, is $1,100 to $3,500.  Even if you then add in the intangible pain of litigating, surely a rational "middle-class" citizen wouldn't give up so easily.

And consider the victims!  I emphatically don't mean to belittle them.  But the first such couple cited (a retired police detective and his wife, so they're unlikely to be rolling in dough, I want to make clear) owns a summer house on Long Island.  The second owns property in Maryland and Florida.  The third owns property in Virginia.  I can understand the appeal of wanting to maintain a broad spectrum of residents in Manhattan, although I seriously doubt that the benefits of doing so through rent control exceed the costs of the system, and surely a better approach would be to encourage the construction of new housing stock -- say, by eliminating rent control -- while using a combination of market forces and the city's own significant leverage to ensure a distribution across the income spectrum.  But I find it hard to justify maintaining a stock of thousands of rent-controlled units in the heart of Manhattan so that people can afford summer homes.