High rent is a fact of New York City living. Residents lucky enough to live in one of the city's hundreds of thousands of rent-stabilized apartments – which limit rent increases and provide eviction protection to tenants – are supposed to get a break from that. But a ProPublica investigation revealed that they also might be paying more rent than they should, even when taxpayers subsidize lower rents.
In their Rent Racket series investigating New York City rents, reporter Cezary Podkul and reporting fellow Marcelo Rochabrun detailed how landlords who collect tax breaks in exchange for providing rent-stabilized housing failed to register 50,000 apartments for the program – despite raking in more than $100 million in tax benefits. Just last week ProPublica further reported that the problem may even be bigger than we thought, with up to 200,000 apartments missing from rent stabilization rolls.
The revelations came to light because of the work of Stephen Werner, an analyst at the city's Department of Housing Preservation, who brought these issues to ProPublica's attention. On this week’s podcast, Podkul interviews Werner alongside Ben Kallos, a New York Council Member who has sponsored new legislation to address some of the problems identified by our reporting. Here they discuss the lax regulation that allowed landlords to sidestep rent-stabilization laws, the repercussions of whistle-blowing and the status of legislation designed to fix the problem.
Highlights from their conversation:
- Werner first spotted the problem decades ago, when the official numbers failed to add up.
Werner: It was my immediate responsibility to work with the data sets that include the Division of Housing and Community Renewal registration information and…data on buildings getting tax exemptions. For 23 years, I have been putting into the report that's produced every three years what I considered a fraudulent number – the number one million. As I add up, one by one, each apartment that is registered with the state, and I never get to over 800,000, I said: "Where are the other 200,000?"
- Multiple layers of government are partially responsible for the lack of enforcement.
Kallos: You have Housing Preservation and Development, which has a duty to deal with [affordable housing] registrations. You have the Division of Housing and Community Renewal, which is the state entity. Everyone must register with the DHCR, and that information should be shared with HPD – which theoretically should have a duty to do the enforcement. … Currently we're not seeing that happening. As of 1993, the state of New York stopped charging fines for people who don't register, which is partially responsible for what happens. If you're a landlord and you do not register, nothing happens to you.
- Another factor behind inflated rents is landlords who falsely claim they’re exempt from rent stabilization.
Werner: In conducting the work I do, I see that people who report an apartment as "exempt" leave the reason blank. Well, that's not a good reason, and yet there are hundreds of cases every year – up to a thousand – where this is the case and nobody is looking at this. It helps get you up to that number of 200,000 apartments that are missing from the registration rolls because once you register an apartment as "exempt," you do not have to report on it in a subsequent year. It just officially disappears.
- ProPublica’s reporting pushed Council Member Kallos to introduce his bill.
Kallos: The affordable housing registration problem is something that I've been looking at for quite some time, but it wasn't until ProPublica did this intrepid reporting that really uncovered what was going on and what was wrong. That really helped me finalize legislation that I introduced. … It requires every owner of affordable housing, whether it is subsidized or rent-regulated, to register with HPD in addition to DHCR. And it has steep fines for people who do not register – and that would be per apartment, per month, up to $2,000, indexed to inflation.
Listen to this podcast on iTunes, SoundCloud or Stitcher. For more, review Council Member Ben Kallos’ affordable housing registration Bill 1015-2015 and read ProPublica’s The Rent Racket series. If you have a story to share about New York City rents, take our anonymous reader survey.