Tuesday, May 31, 2005

Tell me again who rent stabilization is supposed to help?

Though I live in Westchester, I now work in Manhattan and have a keen interest in NYC city policies and developments. Previously I've blogged on the failure of rent stabilization. While it benefits a few people of lower incomes, it drives up the cost of other real estate by more than what the benefiters save. Society is left overall poorer.

Now we see that rent stabilization has failed another way:

Lauper Suing Apartment Owner Over Rent
Cyndi Lauper may be a pop-star who's sold millions of albums, but that doesn't mean she wants to pay much more than $500 for her apartment on Manhattan's Upper West Side.

Lauper, 51, and her husband David Thornton, an actor who's appeared in numerous movies, including "A Civil Action" and 2002's "Swept Away," with Madonna, are suing the owners of their luxury apartment building. Lauper and Thornton claim they were cheated out of thousands of dollars in rent in a scheme to end rent stabilization for their residence....

In 1992, 390 West End Associates entered into a lease with Shlomo Baron for an apartment in its building in Manhattan. While the prior tenant had paid just $508 a month for the rent stabilized apartment, Baron agreed to pay $2,400 a month under an agreement he would not use the dwelling as his primary residence.

Baron then sublet the apartment to Lauper and her husband for $3,250 a month, according to court documents.

Six months later, a state Supreme Court judge ruled the apartment was exempt from the rent stabilization law because Baron wasn't using it as his primary residence.

In 1996, the Thorntons sued Baron, seeking to recover what they paid in excess of the legal stabilized rent plus damages. In 1999, 390 West End moved to vacate the judgment it won in getting the apartment exempted from rent stabilization on the grounds its agreement with Baron was illegal. That motion, which ended the lease with Baron, was granted in 2000.

Subsequently, the Thorntons sued 390 West End, seeking to get their rent reduced to the stabilized price of $508 a month.

Supreme Court ruled in favor of the Thorntons except for the manner of determining rent. The court determined that the four-year limitation period adopted in the Rent Regulation Reform Act of 1997 precluded it from considering the rent history before 1996, four years before the Thorntons' suit against the building owner.

However, the court rejected 390 West End's argument that rent should be set at the $2,400 a month Baron agreed to pay. Instead, the court used a default formula adopted by the Division of Housing and Community Renewal to determine rent should be set at $989 a month.

The Appellate Division of state Supreme Court upheld that ruling.
Perhaps we should establish a minimum wage of sorts for recording artists' royalties, since Cyndi and her husband apparently can't afford the apartment without rent stabilization. Cyndi must be hitting hard times in the nearly two decades since the height of her popularity.

All sarcasm aside, how were the Thorntons "cheated"? Did they not agree to the rent? They're doing no more than using a loophole to get a moderately expensive Manhattan apartment for a song (no pun intended).

So, yet another government policy has gone awry: its attempt to help the "less fortunate" sometimes backfires, benefiting those who don't need it. The Thorntons now pay less for a city apartment than I do for mine in Westchester. Yet if I tried to apply for a rent-stabilized apartment, though I have far less wealth than they do, I'd be laughed out of the boroughs.

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