The road to rent stability

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Tenant rights activists continue to push the city of Rochester to adopt rent stabilization, a regulatory regime under which rent increases on eligible city apartments could be limited, and rents reduced in some cases.

“Housing and housing infrastructure is … a basic need and should be treated as such and regulated as such, like a public utility,” says Ryan Acuff, education coordinator for the City-Wide Tenant Union of Rochester, which supports the institution of rent stabilization.

A 2021 city-sponsored study of Rochester’s apartment rental market found that it did not qualify to adopt the Emergency Tenant Stabilization Act, required for rent stabilization. Acuff and other activists have challenged the way the study was conducted and called for a second one to be performed under different conditions. So far, city officials have declined the request.

That answer might not satisfy the people that Oscar Brewer Jr. meets as a volunteer tenant organizer for the Rochester chapter of the nonprofit Citizen Action of New York. When Brewer asks local renters about the problems they face, they often have the same answer.

“The classic answer we’re getting from tenants across the City of Rochester and Monroe County is that the rent is too damn high,” says Brewer, who has regularly expressed his support for rent stabilization to the Rochester City Council.

Rising rents

Rents have certainly risen in Rochester in the past few years, driven by factors including the scarcity of homes for sale.

“There’s just not enough on the market for buyers who want to buy,” says Lanie Bittner, a real estate broker who was also president of the Greater Rochester Association of Realtors in 2022.

As a result, the median sales price of a home in the Greater Rochester market rose to $200,000 by the end of 2022, according to GRAR’s research. That’s a more than 11 percent increase over 2021 and an almost 43 percent increase over 2018. Rising prices have helped drive down home sales—they declined by more than 10 percent last year—and may have led potential buyers to rent apartments, or stay put in those they already rent. That, in turn, contributes to a tighter rental market, driving rents up.

“We see the for-sale and rental markets typically move kind of hand in hand,” says Rob Warnock, a senior research associate with Apartment List, which monitors the apartment rental market nationwide.

Other factors, many of them resulting from the COVID-19 pandemic’s effects on the nation, may also have affected the apartment-rental markets. These include the switch by many employers from office to remote work. A Bureau of Labor Statistics study found that 33 percent of businesses increased the amount of remote work they gave to some or all of their employees in 2021.

In Rochester, landlords appear to have benefited from market shifts over the last few years. Buckingham Properties, which offered 572 apartments in the Rochester area back in 2020, had a 94 percent occupancy rate at the end of that year. Almost 100 percent of the 380 apartments that Hanna Properties LLP, owns in the city were occupied in 2020, and more than 97 percent of them are occupied right now.

Joseph Hanna

Apartment rents have risen. For example, the cost of living in one of Buckingham Properties’ apartments either stayed flat in 2020 or rose by 2 percent. Hanna Properties’ rents didn’t go up at all in 2021.

“I didn’t raise rents for a year,” says Joseph Hanna, the company’s founder and owner. “I felt it was unfair, with the economic turmoil we were having, to raise rents.”

In 2022, Hanna raised rents by 4.3 percent, bringing the cost of leasing one of the company’s one-bedroom apartments to $895 to $1,300 a month.

One widely accepted rule of thumb is that the cost of leasing a residential property should not exceed 30 percent of the renter’s gross income. Those who exceed that threshold are considered rent burdened.

According to the census, the annual median household income in Rochester is $40,083, or just over $3,340 a month.

Dana Miller, Rochester’s commissioner of neighborhood and business development, points to the U.S. Census Bureau’s American Community Survey 2021. Its estimates for 2017 to 2021 have the city’s median gross rent at $915. That represents 27.4 percent of the median household income in the city—very close to rent burdened.

Some recent reports, such as the one from Apartment List, show even higher rents. Last month’s rent estimates for a one-bedroom apartment in metro Rochester was $1,038, up from $992 a year ago. Another report from Rent Cafe claims the average rent in the Center City is $1,662.

The effect is particularly acute for renters who already have low incomes. A 2018 Bureau of Labor Statistics report stated that the average family at the bottom of the income scale has less than $500 after paying rent, which must be allotted for food, clothing, health care and other essentials.

Rent stabilization

Two pieces of state legislation provide the legal foundation for tenant rights activists to bring rent stabilization to Rochester: the Emergency Tenant Protection Act of 1974 and the Housing Stability and Tenant Protection Act of 2019. The ETPA set the standards under which New York’s municipalities can institute rent stabilization, and the HSTPA extended that act’s geographical reach.

A municipality has to officially opt into the ETPA in order to be able to institute rent stabilization. To do so, it must first demonstrate that the overall vacancy rate among its eligible properties is 5 percent or less, as determined by a vacancy study.

“The theory is that if you have a tight vacancy rate, then people looking to rent an apartment don’t have much bargaining power,” says Michael McKee of the nonprofit Tenants Political Action Committee, who has extensively researched rent stabilization.

As a result, those living in or seeking apartments in the affected municipality may have to pay higher rents than they would in a looser rental market.

ETPA-eligible buildings typically have six or more rental units, though municipalities can legally set that size requirement higher. They must also have been built or first occupied before 1974 and not be covered by the state’s rent control system.

A municipality at or below the 5 percent vacancy threshold can make a “declaration of emergency.” Once it does, it can appoint a Rent Guidelines Board. The RGB—which has two members that represent tenants, two that represent property owners and five that represent the public—can then determine how much the rents on stabilization-eligible properties can be increased.

In addition to empowering the RGB to limit rents where necessary, the ETPA stipulates that the tenants of eligible buildings receive the services required of their landlords, and be able to renew their leases and avoid being evicted, except on the grounds allowed by law.

The state Division of Housing and Community Renewal administers the RGB and enforces the ETPA. If a tenant’s rights are violated, the agency can reduce that tenant’s rent and levy civil penalties against the property owner.

The ETPA initially applied only to New York City and Nassau, Westchester and Rockland counties. By 2019, 41 municipalities in the three counties and New York City had instituted rent stabilization, Acuff says.

Seeking to spread the benefits of the ETPA to the rest of the state, and add to them, Acuff and representatives of other tenant rights groups headed to Albany a few times in 2019 to push the Legislature to expand the act’s reach. Their efforts bore fruit when then-Gov. Andrew Cuomo signed the HSTPA into law on June 14, 2019.

“As of the HSTPA in 2019, any city, town or village anywhere in the state has the right to opt into the system,” McKee says.

After HSTPA passed, Acuff and other Rochester-area activists began advocating for the adoption of rent stabilization with former Mayor Lovely Warren and City Council. On Dec. 19, 2019, Warren submitted legislation to the council to authorize what came to be called the Rental Vacancy Rate Study.

Studying the market

Council voted unanimously to take that action and appropriated $40,000 to pay for it. A team of three consultancies—Mullin & Lonergan Associates Inc., Highland Planning LLC and Fourth Economy Consulting—was hired to assist with the study.

Due to the pandemic, the study was postponed until April 20, 2021, when, according to a report from the contractors, surveys were mailed to the 668 city properties that were considered potentially eligible for rent stabilization under the ETPA. The surveys included questions on the total number of residential units at the property and the number that were rented or occupied, vacant and available for rent, or vacant and not available for rent.

By the end of the initial research period on May 11, 2021, the city had received 111 responses to the surveys. It was not considered feasible to contact non-responding property owners in person, so from that point until the survey ended on July 15, the contractors working on the study and city employees reached out by phone to obtain their responses.

After all of the surveys were processed, the contractors had data on 245 properties, or 37 percent of those considered appropriate. With that in hand, they estimated that the net vacancy rate of Rochester’s ETPA-eligible rental properties was 9 percent, too high for the city to adopt the ETPA and institute rent stabilization.

Some concerns

Rent stabilization supporters began expressing their concerns about the study before the surveys even went out.

“The city essentially poured $40,000 down the drain because the design of the study was a disaster,” McKee says. “The city did not incorporate aspects into the design that would’ve made it more credible.”

To begin with, rent stabilization supporters maintain Rochester’s property owners had little incentive to respond to a survey that could have negatively affected their revenue. Some of them declared in public meetings with city officials that they would not do so.

“One prominent landlord told the city, ‘I have almost no vacancies, and I’m not going to respond to the survey,” Acuff says.

Hanna admitted that he’d refused to respond.

“I didn’t agree with the way it was constructed,” he says. “It was the methodology, I think, that I objected to.”

Acuff and other activists also assert that property owners’ non-responses should have been treated differently.

“Based on best practices and past studies … one way to get an accurate amount is to assume a zero vacancy if people do not respond,” Acuff says.

In addition, those who are pushing for rent stabilization believe the city or its contractors should have more intensively followed up with non-responsive property owners.

One local supporter of stabilization used his expertise in qualitative and quantitative research to take a close look at the vacancy rate study. Harry Murray, professor emeritus of sociology at Nazareth College, believes its methodology was flawed.

“It was not a good enough representation to be able to say confidently that the vacancy rate is above five percent,” Murray says. “The biggest reason is that if all the units which didn’t respond had a zero percent vacancy rate, then the (overall) vacancy rate would’ve been below five percent.”

The report on the study sought to dispel that notion. According to that document, for the net vacancy rate of nine percent to be driven below the legal threshold for rent stabilization, “the net vacancy rate across all non-responsive properties would have to be 2.97 percent or less, which is highly unlikely” (italics in the report).

City officials accepted the results of the vacancy study, but local tenant rights activists have called for a new one.

“We would just want a do-over with the proper methodology,” Acuff says. “You say on the survey that ‘If you don’t respond, we’re going to assume zero vacancy.’”

Ulster County crusade

Murray points to the vacancy study that the city of Kingston, in Ulster County, conducted in 2022 as a good example. It was the second study for the city as it tried to determine whether it could institute rent stabilization.

Kingston’s first vacancy study was conducted by the Center for Governmental Research. In November 2019, CGR’s team surveyed the owners of stabilization-eligible city properties by mail. It then followed up with in-person visits to those properties, tenant interviews, and phone calls to property owners and managers.

By the time the study was completed in February 2020, 46 properties, encompassing 1,145 rental units, had been surveyed and their results tabulated. The owners or managers of another 21 properties, which contained a total of 193 rental units, did not provide the information needed to include them in the study. Ultimately, CGR achieved a survey response rate of 69 percent from properties subject to ETPA regulations, covering 86 percent of the total number of apartments it determined were subject to rent-stabilization.

CGR’s final report provided two estimates of the vacancy rate, both of which were above the 5 percent threshold. The first estimate used a straight count based only on received survey responses, producing a 6.7 percent vacancy rate. The second estimate counted all received responses, but also counted all non-responses to the survey as indicating no vacancy, which produced a 5.8 percent vacancy rate. Either way it was calculated, Kingston was not eligible for rent stabilization. 

Bartek Starodaj

Changing conditions in the city—which saw an influx of new residents during the pandemic—along with new information led Kingston to do a second vacancy study in April 2022.

“Based on the anecdotal data, it seemed to suggest that there was a very low rental vacancy rate in the City of Kingston,” says Bartek Starodaj, who became the director of the city’s Office of Housing Initiatives in 2022.

A 2020 Ulster County Housing Survey of rental properties in general seemed to support that idea. According to that survey, the vacancy rate among all of the county’s non-subsidized housing was just 1.81 percent. In addition, 55 percent of the county’s renters were found to be housing-cost burdened. 

Starodaj directed the second vacancy study in 2022, using city resources and employee. The research effort was modeled after CGR’s study, with the difference that property owners were informed in the initial letter that those who did not respond to surveys were assumed to have no vacancies.

“That was an assumption that was clearly stated in the survey requests the went out to property owners,” Starodaj says.

When all the results were tallied, the city had data on 59 of the 64 properties surveyed—a 92 percent response rate.

From the group of 59 properties that the city determined were subject to ETPA, court documents indicated that it received 25 responses, a 40.7 percent response rate, which covered 71.7 percent of the eligible units.  

Among the 1,270 rental units those properties contained, the net vacancy rate was 1.57 percent. Kingston’s Common Council made history on July 29 when it voted to become the first municipality north of New York City’s contiguous counties to adopt the ETPA.

Kingston subsequently appointed a Rent Guidance Board. Last November, the RGB voted 6-3 to order the owners of some ETPA-eligible apartments to reduce their rents. The owners, who had increased their rents by 16 percent or more since January 2019, were asked to reduce those rents by 15 percent and refund amounts to their tenants.

“They believed that throughout the past few years, many of the tenants have been receiving double-digit (rent) increases, so the decrease was warranted,” Starodaj says.

The Hudson Valley Property Owners Association, which represents property owners in a nine-county region, sued Kingston in Ulster County Supreme Court, alleging that the city’s recent vacancy study was flawed and that a housing emergency did not exist in the city. At the property owners’ request, that court issued a stay of the RGB’s rent reduction.

On February 10, Justice David Gandin ruled that Starodaj had made “a good-faith effort to obtain accurate survey results,” and that Kingston was justified in adopting the ETPA. Though the city retained rent stabilization and the other benefits of the ETPA, Gandin vacated the RBG’s rent decrease, and ruled that the board must create new guidelines for a maximum rate of rent increases.

Differing views

Miller doesn’t believe that the city’s apartment rental market is tight.

“Rochester’s rental market is actually booming right now,” he says. “There’s actually a fairly large number of units that have either come on the market because they’re brand new, or are coming on the market because they are major-rehabbed.”

He defends the 2019 apartment vacancy study, and says another was not necessary.

“We got a reasonable response rate that is statistically significant, and based on that response rate we calculated the vacancy, and we ended up with 9 percent,” he says. “We believe that is a valid result.”

Oscar Brewer Jr.

Mayor Malik Evans’ administration is satisfied with the vacancy survey results, Miller adds.

Brewer personally knows how hard it can be to pay for an apartment. The $900 he receives in Supplemental Security Income pays for food and clothes for himself and his young daughter, the utilities on their two-bedroom apartment in northeast Rochester, and part of the $650 rent.

Brewer continues to fight for rent stabilization, and for more protections for tenants.

“We need rent control and a rent rollback,” he says, using another term to refer to rent stabilization.

Hanna doesn’t share that view.

“I don’t think it’s worked well in areas where it’s been utilized,” he says. “I haven’t seen any empirical data that says Rochester’s in need of it.”

Mike Costanza is a Rochester Beacon contributing writer. Data visualizations created by Jacob Schermerhorn, Rochester Beacon contributing writer.

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4 thoughts on “The road to rent stability

  1. When homes and apartment prices rise 43% in about four years, with more and more people homeless, we cannot consider the current situation successful. The problem is not a landlord who owns a few apartments or multi-family dwellings, their rents will follow the market. However, about 25% of all homes and apartments are owned by large corporations/investment firms that are driving large profits in this market. While business attacks regulation, they are often the ones lobbying for regulation, like huge tax breaks and zoning laws to keep affordable housing in short supply, driving up demand and prices.
    Since the Great Recession, which was the result of massive fraud in housing, we have seen something that was rare for the homeless in previous decades. In Rochester, and all over the country, we now see people working full time going to work and children going to school from homeless shelters, and/or living in used vans from which they go to work. When over a third of workers make $15 an hour or less, current market forces are not addressing the needs for America’s people. A number of things need change, but it is very clear that the “free market”has failed in providing affordable housing.
    NY’s Fiscal Policy Institute has just released its annual survey of people leaving NY to move elsewhere. Year after year the number one reason they leave NY is not taxes, but the cost of housing. I certainly do not know all the answers, but clearly a system that can and does increase the cost of housing 43% in four years is not an acceptable status quo.

  2. Actually, the median doesn’t get skewed. “Median” means that 50% of people make less, 50% of people make more. It doesn’t matter if someone is making $100K or $100M; he’s still just one person above the median. It’s the mean, or average, that can be skewed by the very rich.

  3. Rent control/stabilization/rollback (pick your euphemism) is morally wrong, a commandeering of property by government that tends to involve ever-increasing intrusion (such as demanding renewal rights, which also lock in tenants; see NYC for examples of tenants who hold onto apartments they don’t really need so as not to lose the ridiculously underpriced rents). It’s also counter-productive, as it discourages bringing new properties onto the market and discourages proper maintenance of existing properties; landlords aren’t charities, and need to be able to make a profit. Just like price controls in any other sector of the economy, it creates privileged winners at the cost of scarcity for others and lost opportunities for providers. Far better to improve the supply of rental properties, through eliminating the barriers to construction and conversion.

    Most people don’t realize that a large percentage of rental properties aren’t owned by big corporations, but by mom & pop landlords who have an extra house or two, or a small building with a handful of units. It’s not a way to get rich quick, and it doesn’t take much to go negative, particularly in the lower-income section of the market. (I speak from experience.) The greedy slumlord is a classic villain, but is an outlier; the vast majority of landlords are just ordinary people trying to make a reasonable profit by providing reasonable housing. Limiting their return will encourage them to get out of the market, which can reduce the rental stock further and so increase pressure on rents and vacancies. The cure is worse than the disease.

  4. Informative article. My only problem is the use of “Median household income.” The incomes of the very rich skew this upward. Take out the incomes of the richest 10% and we will have a more accurate picture of the lower annual household income of working people.

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