Rent Reform Rationale

The familiar arguments about inequity and inefficiency have yet to bring an end to rent control. A recent study by a New York City research group suggests an argument that appeals more directly to politicians' self-interest: Phasing out rent control would increase tax revenue.

The Citizens Budget Commission recommends decontrolling about half of the city's 1 million regulated units. (It proposes to retain rent control for apartments of people with low to moderate incomes, at least over the short term.) The CBC estimates that its plan would raise property values by about $1 billion, resulting in additional property- and sales-tax revenues of $80 million to $100 million a year.

The proposal is well timed, since New York City faces a projected budget shortfall of more than $3 billion next fiscal year. The New York Times has endorsed the idea. "With the city cutting vital services and flirting with new taxes that could stifle the economy, rent control can no longer be viewed as a politically benign way to do a favor for tenants at the expense of everyone else in New York," the Times editorialized in April. "Ignoring the economics of such unjustified subsidies has become political treason to the city."

Charles Brecher, the CBC's research director, says the atmosphere of fiscal crisis may give state legislators the courage to modify the Emergency Tenant Protection Act, which established New York City's rent controls after World War II. "Business as usual won't do it," he says. "This [additional revenue] alone is not going to close the gap, but given the enormity of the situation, a lot of things might get done that could not otherwise be done."