3 Paths to save NYC from itself (Good Cause Eviction)
3 Paths to save NYC from itself (Good Cause Eviction)
New York State leaders are at a crossroads. They must decide how to address the housing issue and they can either:
1- Ignore the problem
2- Pin the blame on housing providers
3- Look to the government inaction as the problem
NYC is on the brink of becoming a place “where only millionaires and billionaires can live,” according to NY Governor Kathy Hochul. The housing crisis is to blame, of course. From 2010 to 2020, NYC and its suburbs created 1.2 million jobs, and only 400,000 units of housing. That’s a slow walk towards a very unsustainable future. The pandemic magnified the issue and pressed down on the forces of supply and demand in the worst ways possible. Now, everyone involved in housing is panicking: tenants, housing providers, and government. Still, there’s only so many ways of interpreting the problem. There’s just 3 paths forward for New York City leaders.
1- Ignore the problem
This approach would maintain the status quo. The leaders of Long island suburbs grew the housing stock by only 0.6% in the last three years (and this rate persists even pre covid). Unless more people leave Long Island than move in, then Long Island becomes supply/demand imbalanced and housing prices climb. On Long Island the issue of affordability has largely been kicked down the road and ignored. Matinecock Court is a planned affordable housing co-op with 145 units that is beginning preparation for site development. It took 44 years and even a Supreme Court challenge from when it was first pitched in 1978 for it to get to the starting line today. The same can be said about the enthusiasm for building apartments in NYC. There are very few housing projects built per capita, compared to the rest of the U.S.
Tenants complain about affordability to elected officials. Elected officials hear the issues and recognize that housing providers literally provide housing to tenants and cannot be shaken down completely. Some form of compromise ensues, which usually involves the Rent Guidelines Board mediating some kind of allowable annual rent increase that will keep tenants and landlords from getting to upset. Sticking to this approach is the easiest answer, but probably not the best scenario for tenants or landlords alike.
2- Pin the blame on housing providers
This is the populist approach of the day. This view foregoes the possibility of economic forces and their potential stifling effect on housing. Instead, it says something like “landlords are price gouging because that is what landlords do, and that is not possible to manage for tenants.” So, the government limited the degree to which, owners and landlords can be self-interested. 2019’s rent stabilization laws are a powerful example of this. Now, the rallying cry is around Good Cause Eviction, or a way to extend rent stabilization to all rental housing in NYC (sometimes called universal rent control). Tenant advocates have tried to get this done in a decentralized way, city by city but state courts have ruled these options out. If landlords are the problem, then Good Cause Eviction could appear reasonable, so that a tenant can be protected from the viciousness of the people that provide him or her housing. To be clear, I don’t subscribe to this view. But, some form of this is playing out in a big way right now. There is talk of forcing Good Cause Eviction into the NY state budget due April 1st of this year. Owners of property are against this. And tenants might consider being against it too. Anecdotally from my conversations with owners: housing providers are not just going to give up autonomy over their properties and think fondly of the good old days. They are going to adapt. Specifically, two owners who I’ve discussed this with have already raised their rents higher than they would have, in anticipation of Good Cause Eviction passing. It’s always better to collect single digit rent increases on an already higher number. These aren’t greedy people acting out of sheer avarice. These are hardworking folks with maybe a handful of properties who don’t want to see their businesses slowly wiped out. If policy makers understood this, maybe they would think twice. Is running a business and trying to make money in doing so such a bad thing?
3- Look to the government as the problem
Looking at the mirror and admitting what you’re doing wrong out loud is difficult. Thinking about things you could do better that would improve the situation is a bit easier and maybe more helpful. This is the approach that Hochul is taking. Instead of pinning the problem at the feet of investors, she is taking the approach that government has stifled development -> this stifling has led to less housing -> when demand for housing surges, less housing means rents grow more quickly than expected. You could think of it like addressing an issue at the root cause, not the symptom level. Hochul’s solution is to offer the state of NY more power to push through development projects and create changes even when localities might not be so inclined.
Hochul’s plan contains interesting and practical ideas. One tactic that is getting traction is the Transit Oriented Development (TOD). Anywhere within 1.0 mile from MTA train or rail stations, will be upzoned to allow for greater density developments so that more people can live and occupy those spaces. Despite the controversy this has stirred up on Long Island (looking at you Huntington County), research from Data for Progress has shown strong bi-partisan support for TOD. It’s also just common-sense development.
Hochul’s efforts offer real housing plans and goals to achieve, but they also represent an opportunity for New York State leaders to upright themselves and start taking responsibility for their roles in the housing equation. The plan also shows a commitment to long-term wins. The benefits of this plan won’t be noticed overnight. This is delayed gratification in its truest form. The greatest victory will be that rents don’t jump through the roof come summertime every year. Not exactly something a politician can beat their chest on and brag about. This is different from the short-term win legislators could get from bullying landlords with new codes of conduct. The long-term plan is much better, believe it or not. And it will work and it’s what New York needs, and it’s inspiring to see.
Sources: Politico, Data for Progress