Rent spike a real soar point

By \KEVIN McCOY

August 7, 2000 Web posted at: 3:06 PM EDT (1906 GMT)

In this story: "Unaffordable for all but rich people" What's behind the surge RELATED STORIES

NEW YORK (The New York Daily News) -- Rents went through the roof in the 1990s, with some New Yorkers now paying as much as 67% more to landlords than they did a decade ago, a Daily News-City University analysis shows.

Driven by changes in the state’s rent laws, the booming economy and other factors, the increases in all five boroughs also have required New Yorkers to spend a larger chunk of their income on rent than they did nearly a decade ago.

The only consolation is that the average household income also rose citywide during the past decade, helping city renters cope with the higher costs.

"Rents have gone up significantly, and they’re taking a big bite out of people’s income," said Joseph Pereira, the CUNY Center for Urban Research senior analyst who helped research census data with The News. "The only thing that saves folks is they’re making more money in a good economy."

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Yet the rising rents could signal long-term economic danger as companies think twice about expanding or relocating in the city and New York increasingly becomes a city of haves and have-nots.

The first-of-its-kind computer analysis offers a preview of the broader 2000 Census results scheduled for release next year and provides dollar figures that confirm what most New Yorkers sense: A city apartment has become a hotter status symbol than a prime table at Balthazar.

The analysis is based on statistics from the periodic New York City Housing Vacancy Surveys conducted by the U.S. Census Bureau. The review included all rental housing, both free-market units and those covered by state rent protection laws.

Citywide, the median or average household rent rose 36% from 1991 to 1999. But tenants in many neighborhoods faced far higher hikes. Rents in Manhattan’s Chelsea/midtown area soared 67%, the largest increase in the city, while those in the Bayside/Little Neck area of Queens jumped 64%.

Manhattan residents continued the long economic trend of paying the most. The median monthly household rent in four areas — the upper East Side, Greenwich Village/Financial District, Stuyvesant Town/Turtle Bay and Chelsea/midtown — cost $1,000 or more in 1999, the analysis showed.

Rising rents in Manhattan areas deemed the city’s most desirable may be forcing some residents and newcomers to move to other boroughs, contributing to higher costs there, the census data suggest.

The Chelsea/midtown area experienced a slight population decline from 1993-99, while the population rose in increasingly trendy or popular areas such as Williamsburg, Brooklyn, and the Hillcrest/Fresh Meadows section of Queens.

"Most of Manhattan is unaffordable for all but rich people, and parts of the other boroughs are getting that way, too," said Michael McKee, associate director of Tenants and Neighbors, New York’s largest tenant advocacy group. "Two of our staff members had to give up on Manhattan and look elsewhere."

Rents also are rising in historically less expensive neighborhoods far from Manhattan. Nearly half of those who moved into apartments in Brooklyn’s East New York/Starrett City area from 1996-99 paid between $700 and $999 in monthly rent.

That’s too high for Yefim Volodarsky, 73, and his wife, Alla, 62, who are typical of the thousands of former Soviet immigrants who settled in southern Brooklyn during the past decade. After moving from Kiev, Ukraine, to Brooklyn in 1993, the couple had to borrow from friends to pay the $700 rent on a small apartment they found at W. Second St. and Avenue P.

"It was very hard for us," said Alla Volodarsky, a former Soviet economist.

The Volodarskys got lucky. They won a housing lottery that awarded coveted units in a recently built Starrett City tower subsidized by the federal government. Rent on the family’s tiny, tidy apartment is about $200.

"We could not believe our luck. Now we can pay our bills," Alla Volodarsky said.

Other New York City tenants have managed to pay rising apartment costs because inflation-adjusted household income citywide rose slightly faster than rent during the past decade, the analysis found. Inflation-adjusted income rose 14%, from $24,460 to $28,000, while inflation-adjusted rent figures rose 12%.

However, an average renter household in 1999 was faced with spending more than 35% of the monthly income on rent — up nearly 1.9% since 1991 to one of the highest levels in the nation.

"Even the wealthy dot-com people are realizing there’s a problem finding affordable places to live," said John Fisher, director of TenantNet, a renter advocacy organization based in Manhattan.

Several factors powered the rent surge.

Major state law changes enacted in 1997 made it easier for apartment-building owners to free units from the regulations that limit rent hikes. The changes authorized landlords to add part of the cost of apartment renovations to the monthly rent. The revisions also automatically deregulated any unit once the rent reached $2,000.

Demand for rental housing increased during the 1990s, as the city absorbed its largest immigration boom since the turn of the 19th century. Newcomers from around the country, drawn by the city’s lower crime rate, growing Internet industry and reputation as a cultural and social capital also flocked into the five boroughs.

Construction of high-priced rental buildings in Manhattan and elsewhere during the ’90s also helped drive up citywide tenant costs. Despite spending $1.6 billion to subsidize new low- and middle-income units since 1994, New York still faces up to a 200,000-apartment shortage, City Council Speaker Peter Vallone (D-Queens), Manhattan Borough President Virginia Fields and former Mayor Ed Koch warned at a joint news conference last week.

Although rising rents attest to New York City’s cachet, they also sound a warning. A 1999 survey of major city employers and commerce groups found that most fear the consequences of the city’s high-price, short-supply housing market.

Both problems limit "the city’s prospects for long-term economic growth," warned state Controller Carl McCall, whose office conducted the survey.

Polytechnic University faces the rent affordability problem almost every time the downtown Brooklyn education center recruits faculty members, said Executive Vice President Ivan Frisch.

Typical annual salaries for new assistant professors run about $60,000, "so they’re looking to spend about $12,000 a year," on housing, Frisch said. "You can’t touch anything around here with that."

Polytechnic, now building a 400-bed student dormitory, may include some faculty housing in the project to spare new professors long commutes from apartments and homes far from the city, Frisch said.

The only foreseeable solution to fast-rising rents is an expanded city effort to subsidize construction of moderate-priced housing, said Jack Freund, executive vice president of the Rent Stabilization Association, the city’s largest landlord group.

Koch, Vallone and Fields suggested just such a plan in their City Hall appearance last week. They urged the creation of a $1 billion housing construction trust fund financed with an estimated $100 million in real estate taxes from the planned privatization of the World Trade Center in lower Manhattan.

"We basically need knights on white horses to come in and build new housing," said Edward Hochman, chairman of the city’s Rent Guidelines Board, the city agency that sets increases for rent-regulated apartments. "I don’t care whether it’s public or private (financing). That’s the only way out."

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