The following notice was written yesterday by John Marsh, vice president/treasurer of the Stuyvesant Town-Peter Cooper Village Tenants Association and circulated through an e-mail list by a Stuyvesant Town resident, who asked that her name not be published.
Editor’s note: Marsh said that in this email, he wasn’t speaking on behalf of the TA, but was offering his own ideas to neighbors.
So here is a really good idea as a way to preserve long term affordability for those who choose to remain as renters in a post conversion world.
Post conversion – Renters should only pay their share of the actual cost of a MCI – and not pay in perpetuity.
We are all keenly aware of how Major Capital Improvements factor in to our base rent and how we end up paying for an MCI in perpetuity. What many fail to realize is how this can really drive up the base rent over a long period of time. My base rent has gone up by $400 over the last 15 years for improvements that have been brought, installed, paid for, and now even depreciating. Yet month after month I pay this additional $400.
So in a mixed owner/renter scenario what happens if say a building’s plumbing risers need to be replaced?
Under the law, the condo or co-op board would divide the total cost of the improvement by the number of owner units and pass a one-time special assessment to the owner units
For the renters, in the most simplistic terms, the law allows for part of the cost to be passed to the tenant as an upward adjustment to the base rent.
The disparity between renters and owners lies in that the renters continue to pay, after their share of the cost has been collected, in perpetuity.
To truly foster long-term affordability for renters, one of our requests should be that when a building or the complex faces a MCI, a one-time assessment is passed to all affected units equally. Nothing is added to the base rent. When the cost is covered the MCI charge drops off the bill.
Under the law, the renter’s portion for a building-wide improvement must be collected over a period of 84 months (1/84 of the unit’s share of the assessment.) The renter’s portion (again, passed as a permanent increase) for an individual apartment improvement was raised in 2010 from 1/40 to 1/60 of the cost.
There is nothing that can be done about this because this is the law. But in a conversion scenario we can set the rules. Renters can be given credits or a preferential rent to offset the permanence of the MCI. There are many ways we can demand fairness and long-term-affordability.
If you want to work to change the law, then you have to change the legislators. Groups like Tenants PAC (tenantspac.org) work to do this and need support from tenants.
How are they are getting away with such high rents on renovated apartments?
Individual Apartment Improvements (IAIs) are things from a simple appliance to a complete renovation of the apartment. This is how they can drive up the base rent with things like a Wolf Stove ($5,000/60= $83). Now add the cost of the labor and all the other things they do to a renovated apartment and you can see how quickly they can raise the base rent from say $1,200 to the new threshold for deregulation of $2,500.
As a rule of thumb for every $30,000 in improvements they can increase the base rent by $500.
By the way, if there are any accountant types out there or folks good with Excel, I’d love to create a “how much did it take to get the rent to” calculator.