Rent Stabilization is Coming Upstate. Will It Matter?

Rent Stabilization – long limited to New York City and certain communities in bordering counties – will be an option for Upstate New York municipalities after the democratic-led state legislature passed an omnibus bill dramatically changing how renting works throughout the state.

Several Hudson Valley communities expressed interest in rent stabilization prior to the bill becoming law, passing resolutions supporting the measure’s expansion upstate. The Other Hudson Valley focused on three of these communities – Hudson, Kingston, and New Paltz – to see what problems the communities are trying to address in their rental markets, and whether the new bill will help.

The New Law

The new law, a composite of multiple pieces of legislation, can be split into two portions: parts of the law only applying to communities that request them, and parts of the bill automatically applying to the entire state.

The first portion contains the Emergency Tenant’s Protection Act (ETPA) – commonly called “rent stabilization” – which has existed in New York City since 1969 and was set to expire. Numerous changes are also made to the act while giving communities outside the city and its adjacent counties the ability to adopt it if they meet certain criteria.

A community must prove less than five percent of their rental properties are vacant to be eligible for the ETPA. The community then must pass a resolution declaring a “housing emergency,” which sets in motion the creation of a county-level board regulating price increases for some of the community’s rental properties.

The second portion automatically applies to the entire state, and enacts numerous protections for renters, making it harder for landlords to evict tenants, easier for tenants to collect security deposits, and requires a month’s notification if rent is going up more than five percent or if a landlord intends not to renew a lease.

The second section also includes protections for renters of mobile home lots, including limiting lot rental increases to three percent annually, or up to six percent if the increase can be justified; creating a “Homeowner’s Bill of Rights” to be included in all lot leases; and makes evictions more difficult.

These measures were folded into the new law from The Manufactured Homes Tenant Protection Bill, legislation partially developed by Hudson Valley legislators Sen. Jen Metzger and Assemblywoman Didi Barrett.

The protections for those renting mobile home lots may well be the most relevant, and most effective, part of the new law for the Hudson Valley and much of Upstate New York. It has already taken effect in all communities across the state and affords the types of rights to mobile homeowners once only enjoyed by downstate renters.

The new law will have a range of effects in Hudson, New Paltz and Kingston, though many of the stakeholders interviewed said the legislation would have the most impact where rent stabilization started: NYC.

Hudson

Hudson, a micropolis of 6,200 about 30 miles down the Hudson River from Albany, is facing an urgent affordable housing crisis.

Two-thirds of city residents rent, and the average rental price has increased more than 300 percent since 2000 as the city has gentrified. Forty-six percent of renters in Hudson pay more than 30 percent of their income in rent — the definition of a property being “unaffordable” for the renter — according to the city’s Strategic Housing Plan.

Hoping to “start a conversation,” according to First Ward Alderman Kamal Johnson, the Hudson Common Council passed a resolution in March supporting a suite of bills, most of which became part of the new law.

The suite of bills was being pushed by Housing Justice for All, an umbrella advocacy group. A representative from the group was at the Common Council meeting to advocate for the resolution’s passage.

The resolution passed 6-5, with dissenters arguing they needed more time to understand the legislation.

Much of the new law would not affect Hudson.

Though Hudson’s rental market is certainly squeezed, its vacancy rate was more than 16 percent in 2015, according to a housing assessment prepared for Columbia County – far higher than the five percent required for a municipality to declare a housing emergency and start the process of enacting the ETPA – becoming rent stabilized.

Some property owners have been accused of “warehousing” properties, pushing up the vacancy rate. The city passed a law in October 2018 creating a registry of vacant properties and imposing fines if the property remains vacant for more than a year.

Hudson Mayor Rick Rector said he was still studying the new state law, but said it “won’t have such a huge impact on Hudson.”

“I’m certainly supporting it, it was a big move by the government,” Rector said. “But I think the impact is going to be on bigger communities, most likely.”

Protections for tenants during the eviction process, which now apply to all communities in the state, are probably the most significant part of the bill for Hudson, Rector said

Kingston

The city of 23,000, 20 miles downriver from Hudson, faces similar issues with affordable housing.

“It’s very open here that we have a housing crisis,” said Kingston Tenants Union (KTU) spokesman Alex Panagiotopoulos.

Rents in surrounding Ulster County rose 47 percent from 2002-2017, according to a 2017 county Rental Housing Survey.

Kingston’s Common Council held a series of seven housing hearings last spring to try to better understand the issue.

Panagiotopoulos, who called the new law “a huge gain for the first time in a long time,” said protections for tenants were a necessity as cities were invested in.

“Investment without tenants’ protections equals displacement,” he said. “Because if you invest in Kingston, Hudson, anywhere – everyone’s really excited about making investments, making the community better, but if you don’t protect the people that are already there, you’re directly leading to their displacement – you’re scattering them to the wind.”

Panagiotopoulos referenced a May article by the real estate publication The Real Deal focusing on E&M Management, the NYC landlord that bought Lakeshore Villas and Sunset Gardens in Kingston last March.

E&M is focusing its operations here in part because of negative publicity in New York CIty and looser rent regulations upstate, according to the article. Residents of Sunset Gardens have faced so many problems since E&M took over, the Kingston Building Inspector, Kathryn Moniz, devoted an entire day a week to the premises, according to the Kingston Times.

Kingston would more than likely be eligible for the ETPA. Its vacancy rate was just above 1 percent in 2017, according to the county Housing Survey.

However, the new law doesn’t apply to all rental properties in an ETPA community. Properties must have been constructed prior to 1974 and must contain six or more units for the law to apply.

E&M’s Sunset Gardens is large enough and old enough to fall under the ETPA, according to Ulster County Property Tax rolls, but Lakeshore Villas, constructed in 1980, is not.

Though Panagiotopoulos has nothing good to say about E&M, it was wrong to think the landlord is “a bad actor in an otherwise OK system.”

“Some of us in the (tenants’ rights) movement look at them and say: they’re acting rationally in the system,” he said. “The system is set up to incentivize this behavior.”

An important aspect of the new law for Kingston – one which applies automatically across the state – is the section dealing with evictions, Panagiotopoulos said.

There were 210 evictions in Kingston in 2018, according to KTU, a number not seen since the back-end of the Great Recession in 2010. Evictions in smaller Ulster County towns such as Ellenville and Wallkill have also risen in recent years.

Under the new law, it would be up to the landlord to prove an eviction wasn’t retaliatory if the tenant made a complaint to the city’s housing inspector within the prior 12 months. It would also give tenants more time to fix violations of their lease before being evicted and gives courts the ability to delay an eviction for up to a year if the tenant can’t find similar housing within the same neighborhood after making a reasonable effort.

Panagiotopoulos would have preferred the Good Cause Eviction Bill, one of the measures Housing Justice for All endorsed. This bill did not make it into the final law.

The bill would have made lease renewals automatic. Most of the time when a landlord wants a tenant out, they will simply not renew the lease instead of going through the complexities of eviction proceedings, Panagiotopoulos said.

Kingston Common Council Majority Leader Reynolds Scott-Childress spearheaded last spring’s housing hearings. The Council also passed a resolution endorsing an expansion of the ETPA, but not the other housing bills eventually rolled into the new law. Scott-Childress said these bills were still in flux at the time, and the Council only wanted to pass resolutions endorsing bills they knew would go forward.

Scott-Childress, Kingston Mayor Steve Noble and Alderwoman Andrea Shaut wrote an op-ed piece appearing in the in the Daily Freeman and Kingston Times after the completion of the housing hearings endorsing all the bills.

The Council “clearly support having those tools,” Scott-Childress said of the measures in the final law.

“The question is which of the tools we’ll actually use,” he continued. “We’re looking at a range of options, so we would like to work with different stakeholders in the community to establish clearly what the problems are and then to seek out solutions that could either be voluntary or legislative.”

Some non-legislative “tools” included encouraging small property owners from the local community to rent out a second house or a unit in their abode, Scott-Childress said. The hearings revealed there were property owners in Kingston interested in doing this who cared more about having good tenants than profiting off market-value rents, he added.

Scott-Childress said he was in favor of creating economically diverse neighborhoods. One way of doing this would be to require new developments to include affordable housing units, but Scott-Childress said he would rather think of the problem more holistically than “putting the burden on certain types of developmental projects” – projects that may not materialize on a large scale.

The Council was also considering legislation requiring permits for short-term rentals, such as Airbnbs, Scott-Childress said, with the potentiality of capping the numbers of short-term rentals or enacting a lodging tax. Hudson enacted a four percent tax on hotels and short-term rentals in 2017.

New Paltz

Set about 20 miles south of Kingston in the foothills of the Shawangunk Ridge, the town’s demographics are heavily influenced by SUNY New Paltz. The average age in New Paltz is just shy of 25 years, according to the census, and about 50 percent of the town rents, according to the county’s Housing Survey.

The town most likely has a low enough vacancy rate to be ETPA-eligable, said New Paltz Village Trustee KT Tobin, referencing the county’s Housing Survey, which puts the town’s vacancy rate at less than one percent.

However, any municipality that wants the ETPA must prove its vacancy rate through a local study, she said.

If New Paltz becomes an ETPA community, several of its large apartment complexes would fall under the law.

Windsor Court Apartments, Southside Apartments, New Paltz Gardens and Paltz Commons all contain far more than six units and were constructed before 1974, according to Ulster County Property Tax Rolls. Turtle Rock Apartments and The Ridge at New Paltz have enough units but were constructed after the cut-off date.

New Paltz Tenant Union Founder Celeste Tesoriero called the law “really a bill for New York City.”

“This is going to help people in Bushwick,” Tesoriero said. “This is going to help people where the residents are long-term and its gentrifying.”

Rents are not going up dramatically in New Paltz, Tesoriero said, and there was little problem with evictions, since non-payment was rare, as students’ rent was usually paid by student loans or parents.

Though she said she was “grateful” the legislation included the whole state, the ETPA portion of the new law would have little effect on New Paltz, she said.

However, both Tesoriero and Tobin agreed walk-throughs with the tenant and the landlord at the end of a lease – part of the new law automatically applying to the whole state – would be helpful to figure out any damages that might affect the return of the security deposit.

There was a “bad culture” of some landlords automatically pocketing security deposits, Tobin said, and New Paltz enacted a law earlier this year requiring deposits to be returned within 21 days with an itemized list of deductions. Landlords can face a fine if they do not.

“As I like to say, all landlords are not created equal, and neither are all tenants, so there’s a spectrum,” she said. “Even if 90 percent of either group abided by the law, we would still have to put protections in for the other ten percent.”

The new state law cuts down the time landlords have to return a deposit to 14 days.

However, the state law sets no minimum penalty for not returning the deposit in two weeks, whereas the local New Paltz law did, Tesoriero said, making the state law a step down from the law her community passed.

An unscrupulous landlord owning a house they have converted to five student apartments could hypothetically continue to automatically withhold deposits, and generally profit if judges set low penalties under the state law, Tesoriero said.

The Real Victor

The most important part of the new law for the Hudson Valley, and much of Upstate New York, may be the least talked-about: the portion limiting rent increases for mobile home lots and enacting other protections for these renters.

In most cases, people living in mobile home parks own their house, but lease the land on which it sits, which is owned by the mobile home park.

Rebecca Gerrard, the upstate coordinator for Housing Justice for All, said this arrangement is being abused by developers, who buy up parks and jack up the lot rents.

Despite the name, it is difficult to move mobile homes. A move costs thousands of dollars, can damage the home, and the homeowner must often leave behind certain improvements they’ve made to the home or the land.

“When the rent goes up for the land, you can’t really sell your house, because the new person doesn’t want to buy it because it has this high land rent, and so these people were almost being forced to walk away from their home investments,” Gerrard said.

Investment firms are increasingly buying and operating mobile home parks.

The top 50 mobile home park owners together owned 680,000 sites nation-wide in 2018 – a 26 percent increase from two years prior, according to the Iowa City Press-Citizen, as large firms acquire more and more parks. Blackstone Group, the world’s largest private equity firm, bought 14 mobile home parks last year for $172 million, according to Time.

Assemblywoman Didi Barrett, whose district includes rural parts of Columbia and Dutchess counties, said it was important for the new law to benefit Upstate residents.

“During my seven years in office I’ve seen downstate tenants benefit from a host of policies to protect their housing security, but upstate often seemed to be left out of the picture. As our conference began conversations about rent reforms I made it a priority to ensure that my constituents were not left out this time,” according to an emailed statement.

Lot rent increases are limited to three percent annually under the new law, or six percent under certain circumstances, though residents in the mobile home park can challenge these increases. The law also regulates “rent-to-own” payment plans and requires landowners to pay stipends of up to $15,000 to tenants if the park is developed for other purposes and the tenant must move.

Sen. Jen Metzger, whose district includes rural swaths of the western Hudson Valley, said the mobile home part of the new law was “particularly important to my district, and rural New York and Upstate generally.”

“In many communities, this is…one of the main kinds of affordable housing, and they’ve really had no protections from ridiculous lot rate increases,” she said.

These protections went into effect immediately upon the law’s signing.

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