Major Capital Improvements (MCIs) were initially introduced to the state legislature to encourage landlords to maintain rent-stabilized buildings. For these tenants in Queens, it certainly did not turn out that way.
Under MCI: Neglected Lives, Unaffordable Future
The Nightmare began after MCI
Hip Hop music, landscape paintings, and photos of her son fill the apartment of Keisha Clarke making it look comfortable at first glance. But the cracks in the wall, the green mold at the corner of the kitchen, the low temperature in the bedroom and the electric radiators everywhere are hints that her life is going through some difficulties.
These difficulties were caused by the MCI renovations of her building done by her landlord Zara, she argues. “The thing is that I was comfortable before, but Zara makes us so uncomfortable. And if you could find one person in this building [who is] OK with Zara, that’s a lie. They don’t fix anything,” said Clarke. “They try to fix outside, but inside, nothing.”
Zara declined to comment on tenant complaints about individual buildings or apartments.
MCI means Major Capital Improvement, by which landlords can invest in and improve the common area of a rent-stabilized or a rent-control building to benefit all the tenants, like changing floors of the lobby or replacing old boilers. Landlords can pass the cost of the MCI as a permanent rent increase on rent-stabilized and rent-control tenants. But renovations to individual apartments don’t fall into the category of MCI so there is often less incentive for the landlords to make these needed changes.
MCI was first introduced in 1974 (Click here to know more about the MCI history) as a way to encourage landlords to fix the city’s old buildings. But as time went on, it is often used now as an excuse for landlords to raise the rent. In the meantime, the MCI renovations often cause unexpected problems for the tenants.
1. Painting the Exterior Walls
In the summer of 2016, Zara Realty Holding Corp. bought the building complex which Clarke lived in and began its MCI. The first thing they did was to repaint the exterior walls into “Zara Red”. But during the process, mold grew on the interior walls of the apartments on the first floor of 150-03 88th Avenue in Jamaica, Queens.
According to the Center for Disease Control and Prevention, if some people are sensitive to mold, they may have nasal stuffiness, throat irritation, coughing or wheezing, eye irritation and for people with chronic lung illness, the mold can even cause severe infections.
Clarke and her 11-year-old son both got sick because of the mold in their apartment. “They sprayed the water into the wall to clean it, and after that, the apartment started to be full of mold. I was asthmatic and my son was asthmatic,” said Clarke.
In the one-bedroom apartment across the hall from Clarke’s lives a family of three adults and three children, with a baby on the way. The apartment’s mold problem visibly seems more severe than Clarke’s. Behind the headboard of the queen-size bed where the pregnant mother sleeps the mold covers the white walls everywhere.
Mustapha Sawaneh has lived in his apartment for his entire life; his family moved into the apartment 25 years ago, 4 years before he was born. He complained to Zara several times about the mold in his bathroom cabinet but Zara didn’t fix anything. “If you would complain about something, they would take forever to resolve the issue. Like we have the mold problem for a long time and we still have that problem, but when we tell them about it, what they do is just put some cheap paint over it and it becomes bad again within a month or two,” said Sawaneh.
2. Replace the Entrance Doors
Zara also updated the security system of the building including new front entrance doors and security cameras.
Before Zara bought the building, the previous landlord would give each apartment two keys for the building’s front door. But now, each apartment only receives one free key and Zara charges tenants $50 to $200 for each extra key. (The price charged per extra key seems to vary randomly with tenants paying different prices in that range.) In the meantime, the new buzzer of the entrance door doesn’t work that well so most of the time tenants need to go out and pick up their family members.
Also, the backdoor of the lobby has no lock so anyone outside can get into the building through that door. “The homeless people would come inside to pee at night,” said Clarke
3. The Security Camera
Zara installed new security cameras in the building. But when Clarke’s package got lost in front of her apartment, her request for checking the surveillance video was turned down by Zara. “When I called the [Zara] office they said the camera doesn’t belong to them. They have a company to tell [them] what is on the camera. I have to write and give them a letter and then they will ask the company,” said Clarke. “I pay for the camera you put on and now you are telling me the camera is not yours and you can’t tell me who is stealing my package.”
4. Basement Reconstruction
The garbage cans of every building are now placed near the windows of the first-floor apartments in the backyard. Before Zara came, the garbage cans were originally put in the garbage rooms in the basement.
Next to the garbage room should be a laundry room. After Zara began its MCI in the building they shut down the basement forcing tenant Tammy Jenue to walk one block away to wash clothes. “They said this is a ‘luxury apartment’, but why don’t we have a laundry room?” said Jenue.
When we examined the laundry room we discovered that, unbeknown to many tenants, it had indeed been re-opened, but Zara did not change the washers and dryers. Instead the landlord re-equipped the old machines with a new Zara fee-charging card system replacing the coin fee system. It also repainted the laundry room in “Zara Red”.
5. New Lobby
Zara also cosmetically renovated the lobby extensively even adding a Christmas tree and decorations. But the new floors proved too slippery for tenants, and an elderly tenant even fell. Despite complaints Zara did not make significant changes. Instead, a single warning sign was put behind the entrance door, which people couldn’t see easily when they opened the door.
6. AC Fees
In the past 11 years, Keisha Clarke has had her own two window AC units. But when Zara came they started to charge her $30 a month per AC unit, adding $60 a month to her rent. Clarke didn’t want to pay the money so she removed the AC units from her windows. Zara continued to charge her anyway.
To Stay or to Leave: This Is the Question
Clarke has been living in this building complex for more than 12 years. At first, she lived in an apartment upstairs but when she was pregnant in 2006, she couldn’t manage to go up and down, so she moved to her current first floor apartment.
When she moved into the $850 a month apartment, it was a mess, barely cleaned. She made minor repairs and improvements with the help of a friend making her apartment feel like a home.
The apartment holds a lifetime of memories as it is where she was living when her son was born, the only home he has known. For Clarke, an immigrant from Jamaica, her small apartment in Jamaica, Queens represented the American dream. But everything changed in 2016, after Zara came and began its MCI in the building.
Before Zara, the monthly rent for her was $947. In July, the month after Zara came, her rent rose by $50. And in October that year, her rent went up to more than $1000 when Zara charged for the retroactive rent of $6000, taking her to the court for payment.
By Thanksgiving of that year her mother passed away back on the island of Jamaica. “I was going through a lot but [Zara] gave me a really hard time. I was losing my mom but they were asking me to pay more money. They knew because I told the super my mom passed away but they had no consideration. Everybody has somebody, we all have a mother and we all have somebody,” said Clarke.
Although the court ruled in her favor reducing her charges from $6000 to about $200 and even demanded Zara fix the problems in her apartment, her life still seemed to be different from then on.
Now the MCI in her building has reached the middle stage which means that Zara has finished the construction and is waiting for the DHCR, the state organization which oversees MCI, to approve its rent increase. If it gets approved, Clarke will be charged an extra $600 in her monthly rent, impossible for the single mother to afford.
In the MCI process, it is longtime tenants like Clarke who are often the ones most ignored by their landlords.
Where Is the Way Out?
What is happening to people in Jamaica, Queens, happens across the city. But the ultimate solution for this dilemma lies in the law which would be possibly changed in 2019.
But for now, when tenants face problems in their buildings and apartments, they still can turn to several people and groups for help. The first choice would be community tenant organizers. They will organize tenants together to solve the building-wide issues and problems.
The second is legal-aid organizations. They recommend three procedures for tenants to follow when they face problems: First, call 311 to complain about the problems and then second, if the situation is not improved, file a rent reduction form to the DHCR. The last but most effective way is to sue the landlord with the help of legal aid lawyers.
Video by Ziyu Wu
A Queens Ransom
Rosa is a mother of three. With Zara’s latest MCI, the landlord replaced the doors of Rosa’s building giving tenants only one non-duplicable key per apartment. Rosa wants an extra key for her son for when he walks home from school but Zara is charging her $200 for a spare key. With the help of Samantha Lyons, a staff attorney with Catholic Migration Services, tenants take Zara to court to resolve the key issue.
Rent Regulation: How It All Started
Maria Florencia Smith
Since the 1920’s New York City has had some sort of regulation laws when it comes to housing. In a city of renters, and prices that are known to be sky high, rent protection is needed to make living affordable for many New Yorkers. After a long history of new laws and reforms these legal protections are now known as rent control and rent stabilization.
Often confused by average New Yorkers, these protections do not apply to every tenant or every building in the city. Rent control applies only to buildings built before February 1947 and only covers apartments in those buildings that have been occupied by the same tenant, or their lawful successor, consecutively since July 1, 1971. On the other hand, rent stabilization applies to buildings with six or more units that were built between February 1, 1947 and December 31, 1973.
Tenants living in rent regulated apartments have certain protections including limitations against unexpected rising rents. Their rent increases are only determined by law, not the landlord. Also, they are entitled to a lease renewal.
A tenant has the right to live in a decent apartment, an apartment that is in really good condition.
Constantino Tejeda, community organizer
“You’re entitled to remain in your apartment so long as you don’t do something that either violates the lease or the law,” said Samuel Himmelstein, tenant’s rights attorney for Himmelstein, McConnell, Gribben, Donoghue & Joseph LLP.
These tenants can only be evicted by order of a judge. Furthermore, tenants in rent stabilized apartments have protections to required services, such as heat, hot water and any repairs they need to be made. When the rights of these tenants are not being met, they can file a complaint through the Division of Housing and Community Renewal (DHCR). In some cases, like not receiving required services, tenants can file for rent reduction.
Constantino Tejeda is a community organizer for Woodside on the Move, where he educates tenants about their rights and guides them through court cases. “A tenant has the right to live in a decent apartment, an apartment that is in really good condition,” said Tejada. He added: “When tenants are living in these kinds of apartments landlords cannot do whatever they want.”
When an apartment is no longer rent controlled, it falls under rent stabilization instead. The only exception is in buildings with less than six units, which in that case the apartment goes through deregulation. In the case of rent stabilization, there are several ways an apartment can become deregulated, but the most common one is High Rent Decontrol. Once the rent goes above $2,773.75, and its current tenant leaves, that apartment automatically becomes deregulated. This amount changes every year on January 1st, and it depends on the one-year renewal lease increase percentage the Rent Guidelines Board decided on the previous year. On January 1, 2019, this amount will increase $1.01 to $2,774.76.
Today rent stabilized apartments are much more common in the city than rent controlled, however the numbers of both types of protected apartments have been rapidly declining. According to research done by the Rent Guidelines Board, the number of rent-controlled apartments in New York City fell from two million in the early 1950s to 103,000 in 1993. According to the NYC Housing and Vacancy Survey, in 2017 the number of rent-controlled apartments fell to approximately 22,000. On the other hand, a report made by the Rent Guidelines Board in 2017, states that since 1994 there has been a loss of approximately 151, 899 rent stabilized units. Currently, there are roughly one million rent stabilized apartments.
A lot of the developers decided not to build in New York because they were worried about being controlled and their prices being controlled.
Joseph Strasburg, president of the Rent Stabilization Association
New York’s first rent control laws appeared after World War I when New York was lacking resources and there was hardly any new construction. Due to the housing shortage, rents were spiking up and tenants were protesting. Thus, came the April Rent Laws handed down by New York State courts which were in charge of the administration of rents. In these laws, the increase in rent was measured by a standard of what was “reasonable.” In 1928, due to vacancy rates rising from 1% to 8%, rent regulations started to be phased out and they expired entirely a year later.
By the middle of World War II, the federal government established a price regulation system nationwide called the Emergency Price Control, due to shortages and inflation caused by the war.
“You had all these vets returning from the war and people couldn’t find places to live,” Himmelstein said. Because of this, in November 1943, New York City rental units experienced a rent freeze. Fearing the expiration of federal control laws, New York State applied a similar rent control system in 1946 making millions of apartments formally regulated by the federal government to now be overseen by the state. Federal government rent regulation control officially ended across the country in 1953.
Although recent control laws were introduced to protect tenants, some argue that the protections ended up having damaging repercussions. “[Landlords] started abandoning [rent control] because they couldn’t cover the cost,” said Joseph Strasburg, president of the Rent Stabilization Association, which represents the interests of landlords across the city. Rent levels weren’t enough for landlords to afford the cost of maintaining their buildings running properly. But once rent stabilization came, landlords still feared the regulations would not be profitable for them. “A lot of the developers decided not to build in New York because they were worried about being controlled and their prices being controlled,” he added.
Rent stabilization in New York City first appeared in 1969. At the time, vacancy rates were falling and landlords were starting to increase rents in non-controlled, post-war apartments. It was because of this that Mayor John Lindsay created the first Rent Guidelines Board and proposed that owners from non-regulated apartments come up with a self-regulation system. The Rent Guidelines Board, to this day, is still in charge of the annual establishment of lease renewal guidelines. This means that the board is who decides what will be the monthly percentage increase in the contract rent across the city. This affects rent stabilized tenants who sign one-year leases. If the tenants decided to sign a two-year lease, the monthly rental increase won’t affect them. But by signing a one-year lease, and in the case of wanting to renew their lease beyond that year, the increase percentage will automatically apply to their rent.
The proposal that we have is to eliminate the vacancy bonus, we see no reason for a landlord to get 20% for doing absolutely nothing to the apartment.
Judith Goldiner, Attorney-in-Charge
In 1971, New York State passed the Vacancy Decontrol law, that is still in effect today, where rent-controlled apartments become rent stabilized if the tenant vacates the unit after June 30, 1971 and has no one to succeed that apartment. Under this law, landlords can also raise rents to rent stabilized apartments up to 20% upon vacancy. If the landlords have new tenants often, they will make more profit due to the vacancy decontrol rate applied to the new contract rent.
The vacancy decontrol law has been and still is one of the most controversial issues when it comes to housing in New York City. In 1973, after the denial of a court action brought by New York City to delay this law, Mayor Abe Beame stated that the decision would affect mostly the low- and middle-income families since their rent was increasing to high amounts and many of them had to leave the City to find affordable rents.
People in favor of tenant’s rights, want to get rid of this law. “We see a lot of fraud with [vacancy decontrol] as well because it’s so lucrative for a landlord and it drives the rent ever higher and it’s driving rents out of the system,” said Judith Goldiner, Attorney-in-Charge of the Civil Law Reform Unit of The Legal Aid Society, during a panel about rent stabilization reform held on Nov. 29 at NYU Furman Center. New York’s rent regulation laws expire in June 2019, and people like Goldiner want to see some changes. “The proposal that we have is to eliminate the vacancy bonus, we see no reason for a landlord to get 20% for doing absolutely nothing to the apartment,” she said during the panel.
Assembly member Victor M. Pichardo introduced a bill back in 2009, to eliminate the statutory vacancy bonus. The bill passed in the assembly but has yet to be acted upon in the state senate.
Also rooting for a change in 2019 is Ellen Davidson, staff attorney for the Legal Aid Society. “Responsible landlords are being crowded out by people who see rent regulated buildings as the opportunity to push people out and deregulate,” Davidson said. She believes that vacancy decontrol created problematic market incentives by having unregulated money come into the system. “As long as deregulation is a possibility in the system,” she said, “a responsible landlord will not be able to compete with predatory equity investors.”
Landlords and those in favor of landlord’s rights, of course, disagree. “Whatever changes are going to occur in June of 2019, is going to exacerbate the problem because once it happens you are going to find more, more people deciding not to invest in New York. You are going to see people who are owners not investing in their buildings,” argued Strasburg.
While the future of New York’s rent regulation laws is uncertain, we can say with certainty, however, that there are as many people rooting for the laws to renew as people fighting for a change.