VACANCY PROFITEERING how NYC's landlords keep rents high by keeping buildings and land off the market - and what NYC tenants can do about it

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VACANCY PROFITEERING

how NYC’s landlords keep rents high by keeping buildings and

land off the market – and what NYC tenants can do about it

 

On April Fool’s Day 2012, New York City-based housing rights advocacy group Picture the Homeless issued a report on the city’s 65 year long housing crisis. The document, BANKING ON VACANCY, homelessness and real estate speculation, exposed how New York landlords have deliberately kept 3,551 abandoned apartment buildings and 2,489 vacant lots off the market.

 

These properties, if developed as low income housing, could provide apartments for 199,981 poor and working class New Yorkers – five apartments for every one of the city’s 40,000 homeless people!

 

Keeping these properties undeveloped maintains an artificial shortage of housing, helping landlords to keep vacancies low and rents high. As a result, average apartment rents in Manhattan are over $3,000 a month, half of the city’s population spend more than 30% of their income on housing and hundreds of thousands of New York tenants live doubled or tripled up with relatives or roommates.

 

The City, which owns 10% of these vacant properties, is part of the problem, having deliberately kept many of its vacant buildings off the market for many years, to preserve them for future profitable use by the real estate interests.

 

A disproportionate amount of these vacant housing units are concentrated in predominantly African American and Latino working class neighborhoods like Harlem, the East Bronx, Bushwick, East New York, Bedford-Stuyvesant, Far Rockaway and the North Shore of Staten Island.

 

These communities are also the neighborhoods of origin of many of the city’s 40,000 homeless people, with thousands more doubled and tripled up because of high rents and few vacancies.

 

There are also a large number of vacant units in gentrified areas like SoHo, the Lower East Side and Williamsburg – areas that were overdeveloped in the early 2000s and are now dotted with luxury housing construction sites abandoned because of market conditions.

 

Picture the Homeless wants the city government to develop low income housing the vacant properties and lots that it directly owns, and to require landlords to develop vacant properties that they own for rental to the city’s working class and poor and to provide those landlords with subsidies to build those housing units.

 

They also call for the city, state and federal government adjust the rent guidelines for affordable housing, which currently allow developers who receive federal, state and city subsidies supposedly intended to build low income housing to charge luxury housing rents for the units they build.

 

Picture the Homeless also appeals to the city’s construction unions to join them in a call for a City funded jobs program that would train unemployed inner city residents to work as apprentices, at union scale, on these low income housing jobs.

 

As far as actually implementing this simple but  radical plan, Picture the Homeless has gotten one of its allies in the City Council, former SEIU local 32bj organizer Melissa Mark-Viverito (D – East Harlem) to sponsor a bill, Intro 48, that would enact some of their proposals into law.

 

Predictably, in a city with a mayor with a net worth of $ 19 billion and where real estate developers are the dominant element of the local capitalist class who bankroll both parties, Intro 48 was quickly pigeonholed by Council Speaker Christine Quinn and in the two years since it was introduced hasn’t had so much as a public hearing.

 

Obviously, it’s going to take a fight to get this very necessary proposal actually carried out.

 

Considering the power that the real estate developers have in both the Republican and Democratic Parties, and the influence with the city’s politically powerful not for profit sector that the developers are able to buy with their billions, it would take a very powerful mass movement of the 80% of the city who are renters to force the City to deal with vacancy abuse by the landlords.

 

Since a majority of the city’s construction workers live in the city, and most of the city resident tradespeople are renters, we have a stake in this fight too, especially if the housing units were going to be built with 100% union labor.

 

That movement would also have to be sustained to preserve these housing reforms.

 

In 1947, after 25 years of struggle by communist-led tenants rights groups, Mayor William O’Dwyer (D) and the City of New York was forced to acknowledge that there was a housing crisis (a crisis that we are still in to this day) and impose the Rent Control Law on the city’s real estate interests.

 

That law, along with the construction of thousands of units of public housing by the New York City Housing Authority, forced landlords to charge reasonable rents and made life bearable for the city’s working class and poor for a quarter century.

 

However, the mass movement that built the Rent Control Law was disbanded almost as soon as the bill was passed.

 

Just 24 years later, the city’s real estate interests got the administration of Mayor John Lindsay (R) to repeal the Rent Control Law, and replace it with the far more pro landlord Rent Stabilization Law.

 

Rent Stabilization, and the annual rent increases authorized every two years by the nominally independent but actually landlord controlled Rent Guidelines Board, began the upward spiral in housing costs that have made this city’s rents so stratospherically high.

 

A package of $ 784 million in long term low interest city loans to real estate developers  gave them a direct financial incentive to tear down low rent units and replace them with luxury housing, which they proceeded to do with gusto.

 

Unfortunately, the construction unions of the day supported this development, for the same reason they support any construction projects that are going to be built union, regardless of whatever social consequences might arise from them.

 

The landlords also began a parallel blatantly illegal campaign of hiring “torches” (arsonists) to destroy units in areas of the city where luxury housing wasn’t commercially feasible. 

 

Some of the more decent torches would give the tenants a warning, often by slipping notes under their apartment doors, shortly before burning the building.

 

Sometimes, they just struck a match, with the tenants still inside.

 

A few of the torches were jailed, almost none of the landlords ever saw the inside of a courtroom for their blatant terroristic criminality towards the tenants of New York.

 

Hundreds of tenants and dozens of firemen died and nearly a quarter million New Yorkers, mostly Black and Latino and almost entirely poor or working class, were driven from their homes by the fiery terrorism of the landlords.

 

The City of New York also went bankrupt, because the $ 784 million in long term low interest loans given to the developers by the city to build luxury housing had been borrowed by the City short term at high interest from Lazard Frères, Citibank and other leading Wall Street financial houses.

 

They called in their loans in the summer of 1975; the City couldn’t pay so the bankers seized control of the City’s finances to get their money.

 

This cut off the gravy train for the developers and finally stopped the fires from burning.

 

It also left much of the city in ruins.

 

In the wake of the city’s bankruptcy, newly elected mayor Ed Koch (D) launched a series of initiatives to partially rebuild the most aggressively torched neighborhoods.

 

Koch’s newly created Department of Housing Preservation and Development contracted with publicly financed but privately run not for profit Community Based Organizations to hire the contractors who would do the actual housing construction.

 

This was basically a legal form of money laundering. If the city had directly used public funds, it would have been bound by Davis Bacon Act requirements that mandated that workers on those jobs get paid prevailing wages (in New York those are pegged to union pay and benefit scales).

 

However, privatizing the funds enabled the city to use the lowest paid workers available to do the work, legal requirements be damned.

 

The unions did nothing to resist this, in part because the main unions in residential construction (Carpenters, Laborers, Bricklayers and Painters) were so heavily dominated by gangsters that they were incapable of fighting the City or the scab contractors it hired.

 

Even with the low wages paid to the workers, the City failed to build enough low income housing to meet the demand – especially with the landlord arson-created housing shortage being used to drive up rents citywide.

 

In the absence of any serious organized struggle against the real estate developers, rents soared, decent low income housing was scarce and, by the 1980s, New York began to see homeless people actually sleeping on the streets.

 

The City and the corporate media tried to explain away homelessness as a “mental health problem” and falsely blamed disabled rights activists for the sudden rise of people sleeping on the streets. In reality, increasing civil rights for psychiatric patients didn’t cause homelessness.

 

Landlord profiteering, specifically the demolition of single room occupancy residences (SROs) to build luxury housing was actually the cause of this horrible social phenomenon.

 

These attacks on working class tenants went unanswered.

 

The more activist oriented tenant rights groups put all of their energy into these basically ceremonial protests at the biannual Rent Guidelines Board hearings, providing a street theater backdrop to the landlord dominated body’s dog and pony show hearings and having no outcome on the rent increases that the RGB always imposed.

 

The more social service oriented tenants rights groups got sucked into administering various HPD run programs. A few low income people got assistance thanks to their efforts, but this had no impact on the broader class wide attacks on working class tenants by the real estate interests.

 

It didn’t help matters that much of that so called  “low income housing” being built with those HPD subsidies wasn’t actually going to low income people.

 

HPD and the US Department of Housing and Urban Development calculate the rents and income requirements for low income housing based on a formula that sets the incomes for prospective tenants far higher than the average income in NYC’s poor minority neighborhoods.

 

In HPD’s bizarro universe, $ 64,000 a year is the MINIMUM income for some of these “low income” housing units!

 

In practice, HPD and HUD were using low income housing programs to gentrify poor minority neighborhoods and price their present residents out of their communities.

 

The only “low incomes” in these housing developments was the subminimum wages paid to the non union construction workers building these apartments - $ 7/hr off the books for skilled carpenters and masons, $ 4/hr for laborers and helpers.

 

Yes, public funds were being used to openly violate federal and state minimum wage laws and to evade federal, state, city, social security, disability, workers compensation  and unemployment insurance withholding requirements.

 

As for the construction unions, at this point the federal government and the New York County District Attorney’s office had intervened in a number of the more corrupt and openly gangster ruled building trades unions (in particular, the District Council of Carpenters and the Mason Tenders District Council)

 

This intervention was due to the fact that cosa nostra had used these unions to collect bribes from developers in return for labor peace. However, as the unions had gotten weaker due to gangster rule and no longer posed as much of a threat of leading struggles of tradespeople on the jobsites, the real estate interests no longer wanted to pay those bribes. Unable to defeat the unions and the gangsters themselves, the developers had the feds and the DA’s office do it for them.

 

One of the positive effects of law enforcement intervention in the District Council of Carpenters and the Mason Tenders District Council was a revival of union organizing by those bodies, the first time that any of New York’s construction unions had done any new organizing since the 1920s.

 

The Carpenters and the Mason Tenders were the only organizations that exposed the labor abuses of HPD’s low income housing developers and contractors.

 

Unfortunately, they weren’t able to unionize the roughly 50,000 brutally underpaid subminimum wage non union workers in this sector. If they had, it would have been a colossal victory not only for the New York building trades but the American labor movement as a whole.

 

The Wall Street meltdown of 2007 and the massive recession that resulted brought residential construction in New York City to a standstill.  Many apartment buildings were abandoned in mid build, a phenomenon this city hasn’t seen since the 1970s.

 

This explosion of abandoned units accelerated the city’s housing crisis – one of the reasons that rents continue to rise, despite the collapse of the housing market.

 

The bottom line is, the housing crisis and the exploitation of the people of New York City, in particular the poor and working classes, by the real estate developers is the central political question  here and has been since the 1940s.

 

The enormous political influence of the real estate developers, and their allies the Wall Street bankers, acts as a barrier to resolving this crisis.

 

Billionaire media mogul Mike Bloomberg, (R), the city’s mayor for the last 10 years, is an ardent backer of the real estate interests, as was his predecessor Rudolph Giuliani (R), and the entire Republican Party establishment and the leadership of the Republican satellite Conservative and Independence parties.

 

Republican Mayor John Lindsay was also the architect of the pro landlord Rent Stabilization regime which caused the wave of arson and gentrification in the 1970s that created so much mass misery for working class tenants in this city.

 

However, the Democrats, by far the city’s largest party (80% of New York voters are registered Democrats and 90% of the city’s councilpeople, assemblypeople, state senators and congresspeople are Democrats) is just as thoroughly under the influence of the real estate developers.

 

The Republican Lindsay may have imposed Rent Stabilization, but the attacks on working class tenants created by that law were also carried out by the next three Democratic mayors (Abe Beame, Ed Koch and David Dinkins) and by the overwhelming Democratic majorities in the City Council and the city’s delegations to the State Assembly and the State Senate.

 

The Democratic Party’s pro landlord bias isn’t as readily evident as the Republicans, due to the fact that some of the more liberal of the party’s elected officials often make pro tenant statements or introduce bills that would expand tenant’s rights.

 

Be that as it may, the Democratic Party’s hierarchy and its more conservative officials make sure those pro tenant laws never actually get voted on in the City Council or the State Legislature.

 

The city’s supposed “labor” party, the Working Families Party, has, in practice, done little to actually fight for working class tenants, although, on paper, the party is supposedly pro tenant and the party’s only elected official, Brooklyn City Councilwoman Leticia James, is known for rhetorically supporting tenants rights and cosponsoring pro tenant bills (that, inevitably, get pigeonholed by the Council’s centrist Democratic leadership and never get put to a vote). 

 

Despite the fact that New York has a huge far left, none of the many socialist, communist or anarchist groups in the city have attempted to deal with the housing question in a major way. The city’s only leftist electoral party, Black Panther turned liberal Democrat Councilman Charles Barron’s Freedom Party, has also studiously ignored the rent gouging crisis. The most recent entrant to the city’s left wing political scene, the Occupy Wall Street movement, has also had little to say about the housing crisis (even though it is a clear example of “the 1%” exploiting “the 99%”).

 

Sadly, just about the only political figure in the city that’s tried to mobilize around rent gouging in a political way is eccentric building super turned activist Jimmy McMillan and his “Rent is 2 Damn High Party” (he got 40,000 votes in the last gubernatorial election, running a one-man campaign with no resources or money, solely on the single issue of excessively high rents in New York City).

 

The city’s unelected “permanent government” of publicly subsidized but privately run not for profit corporations are also close allies of the real estate interests, in large part because they themselves are major players in the real estate game here.

 

The city’s three biggest not for profit entities (the New York Archdiocese of the Roman Catholic Church, Columbia University and New York University) happen to be the city’s biggest landlords. Columbia University is also the leading gentrifier in Harlem, with NYU playing a similar role in Greenwich Village and the Lower East Side.

 

They aren’t the only not for profits on the landlord’s side of the fence. Many of the housing related not for profits have spent decades administering HPD’s “affordable housing” programs, which, as I explained above, were often thinly disguised luxury housing construction programs, using underpaid sweatshop labor to build six figure apartments for the wealthy.

 

Much of the city’s labor movement are also on the side of the landlords, with the building trades unions, local 32bj of the Service Employees International Union and UNITE-HERE’s Hotel Trades Council among the most aggressive defenders of landlord interests in the labor movement.

 

The city’s public sector unions, which represent the bulk of New York’s million union members, are largely silent on housing questions, even though these are life-and-death bread and butter issues for the vast majority of their members who live in rental apartments.

 

Ironically enough, most of the members of those unions, like most New York City workers, are tenants who are as victimized by landlord profiteering as any working class New Yorker.

 

Facing down the heavy battalions of the landlords, the city’s 80% tenant majority have very few forces on their side.

 

There are tenant activist groups in the city, however, on the whole, much of their activity consists of the ineffectual street theater protests at the Rent Guidelines Board hearings and individual legal and social services assistance to tenants who’ve been hauled into Housing Court by their landlords.

 

Unfortunately, their efforts aren’t nearly adequate to fight against landlord profiteering.

 

There are exceptions (Picture the Homeless being a good example) however they have limited forces and are facing powerful enemies.

 

This is tragic, because landlord profiteering and rent gouging is the lynchpin political issue in New York City. Eighty percent of the population here are renters – not only the vast majority of the city’s poor and working class, but also most of the middle class and even a section of the rich also are plundered by the landlords. In the case of store owners and small businesspeople, they get gouged twice, by high rents for their apartments and for their businesses.

 

The one issue that could unite the common people of New York City against the multimillionaires and billionaires, it is the real estate question.

 

There is an urgent need for the city’s labor unions, the tenants’ rights movement, Occupy Wall Street and the city’s left to unite around the question of fighting for more low income housing and a rollback and freeze in rents.

 

This is a lot harder than it sounds.

 

It would involve these groups breaking with the real estate interests (a tall order for the building trades unions, the SEIU and the Hotel Trades Council, the leaders of which have long been close allies of the developers) and, more importantly, it would involve these groups having to break with the pro corporate leadership of Democratic Party.

 

It would also be necessary for these groups to put the “friends of labor” and “progressives” among the ranks of Democratic Party politicians on the spot. They would have to challenge these elected officials to live up to their professed principles and break with the pro corporate leaders of the Democratic Party and the Working Families Party.

 

Again, that’s easy to say but hard to actually accomplish in the real world.

 

Of course, the only way that the pro tenant legislation that these Democratic politicians propose in the City Council and the State Legislature will ever actually get passed is if there is massive pressure from the labor movement, the working class and the poor.

 

A good start point for a campaign would be to demand that two bills in particular be brought up for debate and passed – Melissa Mark-Viverito’s Intro 48 that would force the city and the developers to use abandoned buildings and vacant lots to build affordable housing and Senator Adriano Espaillat (D – Manhattan) and Assemblyman Vito J. Lopez’ (D – Brooklyn) S. 2893/A. 2472 that would require that construction workers on HPD subsidized low income housing jobs receive prevailing wages.

 

Both Intro 48 and S. 2893/A. 2472 are currently in limbo, safely pigeonholed by the Democratic leadership in their respective legislative bodies with no hope of being debated any time soon.

 

Building a mass movement among New York City’s poor, working class and those sections of the middle class and small businesspeople who are also exploited by landlord profiteering would be a giant step forward, not only in terms of the immediate issue of excessive rents and inadequate housing, but also in terms of increasing the power of the working class and weakening the rule of bankers and billionaires over our society.

 

Again, this is easier said than done, but we really need to start making moves in this direction.

 

-          commentary by GREGORY A. BUTLER, LOCAL 157 CARPENTER

FOR GANGBOX: CONSTRUCTION WORKERS NEWS SERVICE

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“UNION NOW, UNION FOREVER”

               Originally published on Friday, April 13, 2012

               © 2012 Gregory A. Butler, all rights reserved.