How the Rangel controversy could help tenants

Someone took a bite out of Congressman Rangel, and the teeth marks are not going away, but to discover who is attacking him we should pay close attention the New York Times story.

The story reflects the perspective of angry tenants who have lost ground in New York City. They live in a new economic environment of free market apartments where landlords can raise rents at will. It is not the New York City way. This suggests that the Rangel story was planted by tenant advocates.

The rent system in New York City is changing. The old promise of no large rent increases is eroding. Under the old system, once a tenant moved into an apartment, rents rose gradually. The tenant in New York City received the same protections offered homeowners all over the United States. Once they buy a house, taxes rise gradually. Homes are assessed at full value when the house is sold. Over time, the homeowner who stays in one place pays a lower tax than a household that have just moved into a community. So it is under rent stabilization, tenants who stay in place pay less than new tenants.

However since the early 1990s rent stabilization has been restricted, and the number of rent stabilized apartments declined even though rising rent caused hardships. Since 1994, price controls have ended on 73,700 apartments -- a significant victory for landlords.

One system for removing price controls is luxury decontrol, which removes high-priced apartments from rent control guidelines. This theory suggests that rent stabilization is only for a hard hit middle class, and the landlords should be allowed to charge their rich tenants a full market rent. This assumption is arbitrary; it is less about argument and more about choosing sides.

In the beginning rent stabilization was for everyone. Its purpose was to give people good deals and prevent evictions because the tenant could not afford the rent. It allowed families to stay in New York City and in their neighborhood. It gave tenants a significant advantage over landlords. Once tenants know they can't be evicted except for cause, they are more willing to complain or to cooperate with other tenants who organize.

Price controls help stabilize neighborhoods and increase tenant tranquility. Under this theory, Congressman Rangel is paying the maximum legal rent. It is a large rent even though it is stabilized -- $3,894 a month.

Luxury decontrol would more than double the Congressman's rent. A household whose combined income exceeds $175,000, and whose rent exceeds $2,000/month can have his income challenged by landlord. Should the building owner win the challenge, the rents can go up by any amount to the so-called market level. However no landlord is required to challenge a tenant's rent. They can let the household remain at the rent stabilized level. This is the choice that Congressman Rangel's landlord made. Many wealthy families who are long term tenants are in the same situation.

The New York Times article has now led to a legal inquiry. Is Rangel's rent stabilized rent an illegal gift or gratuity from the landlord? This is a lawyer's question and lawyers will resolve it. It is a perfectly straightforward legal problem that arises all the time.

A second question also requires resolution. Is the Congressman renting too many rent stabilized apartments. Rent stabilization is a legal benefit and the tenant can only have one rent stabilized apartment that must be his primary residence.

This question will also be resolved by lawyers. Rep. Rangel claims he is renting two apartments. His critics believe he might be renting four. The Congressman argues that three of these apartments are no longer separate but are now attached making them one apartment. A situation that the lawyers might conclude is legal and aboveboard.

On another floor, the Congressman rents an apartment but uses it as an office. This is illegal. And Rangel accepts that this rental is a problem. According to the New York Times, Rangel said "'I have to take another look' at that situation. If the use of the apartment as a campaign office is a problem, he would 'go to another place and get a different office. Period.' "

That is it. When the inquiries are finished, the conclusion may be that Congressman Rangel illegally rented one residential apartment and used it for an office.

But that is not the charge being debated. Congressman Rangel's honesty is being challenged. He is accused of siding with the landlord and abandoning the community.

According to the first New York Times article on this so-called scandal, he is protecting his landlord: "Mr. Rangel, a critic of other landlords' callousness, has been uncharacteristically reticent about Olnick's actions." This is a career-destroying charge against a New York City political leader. In a city suffering from high rents, one of its progressive leaders is being bought off by cheap rents. It is not stated as a charge, it is stated as a fact.

The sentence would be one thing if it stated that so & so, chair of the Harlem Tenants association, accused Rangel, but the sentence doesn't attribute the charge to anyone, it is stated as fact" that Rangel has been "uncharacteristically reticent" about his landlord's activities. The Congressman acknowledges that his housing situation is an "embarrassment."

In other words, the story appears to be a leak from a housing group, and only one person is quoted who has the expertise to help the Times reporter do the story. Dov Treiman, a lawyer who publishes The Housing Court Reporter, a legal trade publication, makes the charge that the landlord is giving Rangel special favors. Tenants sometimes have two apartments, but Treiman says "I've never heard of any tenant managing to get four." His words make this story explosive.

Based on the internal evidence in the New York Times, it is the tenant advocates who have bitten Charles Rangel, and issued a warning to Governor David Paterson and other notables who live in the same building that they could be gnawed by stories about housing hypocrisy.

It is the dawn of a new era where charges from the left sting the Democrats. For decades the Democrats have been punished by the right -- accused of favoring the criminal over the victim, creating a culture of dependency with welfare, and being soft on terrorism, Now the left is baring its fangs and Mr. Rangel has been caught in the jaws. This is the true significance of an Obama victory and a new Democratic Party era. The left becomes a player able to influence Washington and Albany.

Democrats claim the Republicans turned the United States into two Americas, the super-rich and the declining middle class. In New York City, a major way income has been transferred from ordinary households to the wealthy in New York City is through rising rents while wages stagnate or fall.

And this is the key accusation in the New York Times article. Landlords are harassing tenants so they leave their rent stabilized apartments. The new rent for the vacant apartment is over $2,000 and the apartment is no longer price controlled. This is happening in Stuyvesant town and in Harlem. Rangel's landlords, the Olnicks are accused of using "overzealous tactics" as they make old tenants leave and find new tenants who can pay much higher rents.

This is the biggest problem facing the rent stabilization system, the balance of power has shifted. Under the old system, the tenants could press their demands against the landlord. Under the new system the landlords can make big money by irritating the tenant to the point he or she wants to leave. This is a Republican shift taking money from working households and transferring it to wealthy real estate operators.

Changing the system won't be easy but presumably Governor Paterson will now be paying attention. Hopefully this Rangel flap will lead to the restoration of the older system that gave the tenants tranquility and bargaining power.