A NY Tale of "Rent Control"

[PoliticalChic]

Ever hear of 'rent control'? That's when government decides what an owner can charge for use of his property.

In NYC, there are lots of apartments which the government will not allow to be rented at free market rates.

Now, if the owner wants to get a long-term tenant out, so as to legally raise the rent for a new tenant....how he do so?

Listen my children, and you shall hear not a fable, but a tale of New York:







1. "...sometimes a developer has no choice but to use legal means to persuade long-time rent-stabilized residents to move along. This usually involves writing a fat check,...

2. ... the quintessential New York story of 15 Central Park West, the city's most exclusive building. It's now home to residents like Goldman Sachs CEO Lloyd Blankfein and Alex Rodriguez, but before that the property was home to the old Mayflower Hotel and a handful of mostly elderly men living in very small rent-controlled apartments in the top floors.

3. ... in 2004, developer brothers Arthur and Will Zeckendorf were required to buy out the rent-stabilized tenants before they could raze the building. The last remaining holdouts settled in the million-dollar range, but one Herbert Sukenik, 73, wouldn't budge.




4. Sukenik knew the precise acreage of his block and how much the Zeckendorfs had paid. He’d calculated the taxes, insurance and carrying costs of the empty properties and recited them all to Grabow. And he wouldn’t begin negotiations until his three fellow tenants were gone. “He knew the last man standing was very valuable.”

5. His key demand had been a park view, so a broker took him to Essex House on Central Park South and showed him a 2,200-square-foot, two-bedroom unit on the 16th floor.
“It looks like a bed of green,” he rhapsodized, staring out at Central Park beneath him. Grabow sent Sukenik a letter spelling out their agreement: The Zeckendorfs would buy the condo and retain ownership, but he could have it for life and they would even furnish it for him.

6. ... one demand they refused was free meals twice a week ...





7. ... things had changed. ... Sukenik wanted more than the apartment and moving expenses. A lot more.

8. ...he did now want money — even though he had no use for it, no kids, no charitable impulse, and didn’t want to leave it to his brother.
The Zeckendorfs decided to play hardball. They separated the two halves of the building lobby and began demolishing the southern end.

9. Sukenik’s response? “Oh, I love to watch construction.” Jackhammers began pounding away for hours a day. “I love the noise,” he said.





10.... they’d bought the Essex House condo, which set them back $2 million. They won’t reveal the additional sum they finally paid Sukenik; Will says only that it was “by far the highest price ever paid to [relocate] a single tenant in the city of New York.”

It was $17 million, according to someone with knowledge of the transaction."
How To Turn Your Rent-Stabilized Apartment Into $17 Million: Gothamist




And....a tribute to Sukenik:


[ame=http://www.youtube.com/watch?v=8m0dJXtwwiY]My Way - YouTube[/ame]

 

[DGS49]

Rent control: what a wonderful example of a "do-gooder" program that ultimately harms most of the people it was intended to benefit (i.e., middle class renters).

Mostly instituted in the post-WWII era when returning veterans were straining the market for rental units, cities like NY and SF sought to protect them from profiteering landlords by freezing rents at historical rates (the phenomenon of "inflation" was little understood at the time). As long as the tenants remained in the apartment, their rent could not be raised.

In time, as the natural rental market rose with inflation, those perpetual leaseholds became valuable properties that the tenants would have been crazy to relinquish even if they wanted to move. Thus, many of them were privately sub-leased to relatives and close friends (actually illegal under the prevailing laws).

The result was that large numbers of rental units were essentially frozen off the market, resulting in even higher rents for those who were just entering the rental market (i.e., the people that the laws were supposed to benefit).

I believe I recall that when Alistaire Cooke died in the 70's he was still holding a lease on a rent controlled apartment in Manhattan for a couple hundred dollars a month, in a building where comparable units were renting for thousands.

Of course, he was virtually penniless and needed this favorable lease to survive.

 

[Spoonman]

so does the city increase taxes on properties they force to be rent controlled?