Borough President Suggests Tax Breaks in Exchange for New Rent Restrictions
Bronx Borough President Ruben Diaz, Jr., recently proposed pairing new rent restrictions with a tax-break for property owners. The plan is intended to end the threat of sudden, significant rent increases in regulated apartments where tenants currently enjoy preferential rents and compensate owners who may lose out on revenue.
Diaz recently issued a report entitled, “The Preferential Rent Crisis in New York City.” According to the report, approximately 260,378 apartments in the city now have preferential rents. That’s 29 percent of all rent-stabilized apartments, and 7 percent of apartments overall. An Independent Budget Office analysis found that the average gap between the rent that was being charged and the rent that could be charged was $286 in 2008, but a much higher $444 in 2015.
That rent gap is highest in Manhattan ($800), but preferential rent is a bigger deal in the Bronx, where 11 percent of apartments feature one. Some neighborhoods are especially dense with vulnerable apartments, like Two Bridges in Manhattan, Bay Ridge in Brooklyn, and the Ground Concourse corridor in the Bronx.
Diaz supports a bill introduced in the Assembly by Assemblymember Steven Cymbrowitz (D-Dist.45) and in the Senate by Senator Liz Krueger (D-Dist. 28) that would prevent owners from jumping from the preferential rent to the legal rent during a tenancy. It would require owners to treat preferential rent like a unit’s legal rent until the end of the tenancy. That would create an incentive for landlords to push tenants out, so Diaz also calls for stronger tenant protections that would impose “increased civil penalties and compensatory damages” if that occurs.
Diaz says the property-tax break won’t be a net cost to the city because, by salvaging preferential units, his policy will save the city money on homeless shelters and the other costs generated by displacement.