Rent hikes 'another nail in coffin.'

Real Estate Weekly, June 30, 1993 by Lois Weiss

In Queens, rent for a one,bedroom in a doorman building is about $750. I've had situations where we were getting $850 and had to keep it empty and then go back to $800,' Spodek said . "That's what we're faced with."

While his properties would not be affected by luxury decontrol, Spodek hoped the legislature would implement vacancy decontrol. "At least you would have something to look forward to," he said, predicting the legislature would instead merely extend the rent regulations. "You don't need a crystal bail to see that," he said. Even higher-end owners were complaining, particularly about the loss of a vacancy allowance.

Apartment Owners Association (AOA) President Irwin Gumley, also president of Gumley-Haft Inc. manages 5,000 units of which 1,000 are rentals. "The guidelines are inadequate especially at our level because we don't have a vacancy allowance," he said.

The rent guidelines have never kept pace with the cost of operating the buildings, he said, noting that real estate taxes alone went up 4.6 percent for bills due July 1. Insurance premiums and wages are going up next year and the guidelines do not take into account mortgage debt servicing. 'After 50 years you become immune to it,' he added.

"Where we have decontrol," Gumley said, the rents are higher but the people in the stabilized apartments can afford more." Gumley reported these tenants typically own homes in the Hamptons, have live-in maids and drive luxury cars.

Nancy Packes, president of Feathered Nest which specializes in high-end apartment rentals, said removing regulations would prompt two trends. While it would cause more people to move because they would not have a low rent as a reason for remaining in their apartments, Packes believes it would also tend to hinder some activity because fewer people would be able to afford higher rentals. "The net effect would be to help the brokerage industry,' she said.

But she explained most sophisticated owners only raise rents to the place the market will accept them. Individual owners, however, often hang onto the hope of a higher rent too long.

Adam R. Rose, executive vice president, Dwelling Managers, Inc. manages 12,000 units of which several thousand are owned. 'The entire system rewards the wrong people with the wrong kind of incentives to hang onto apartments that may be too large or may not actually meet their needs, he said. "The laudable goals of rent stabilization have been grossly distorted by a system which benefits high income individuals rather than those with actual need," Rose continued. "We have people with high incomes, lavish cars with housekeepers -- it was intended to help working people with moderate incomes."