RENT CONTROL’S CONSTITUTIONALITY: PART 2, COMETH THE MAN
January 26, 2012
Continued from yesterday’s Part1.]
In yesterday’s Part 1, we met the Don Quixote of rentcontrol, lifelong New Yorker James Harmon, whose case challenging the statutelost on appeal to the U. S. Second Circuit Court of Appeals, but may be heardby the Supreme Court granting certiorari. To fill in the legalarguments, I’ve used RichardEpstein’s Wall Street Journal op-ed (Palatino brown) and Cato’sdescription of its amicus brief (Georgia gray), because the NewYork Times’s (December 19, 2011) story, though sympathetic,glides over them, preferring to focus on the long-suffering plaintiff:
The Harmon family’s ties to the house go back to 1949, whenhis grandfather, the waiter, and his grandmother, a Belgian governess, boughtit.
Throughout history, real estate ownership, especially ofurban residential property, has been one of the very few ways that theunlettered and untitled could become self-sufficient – and it’s heartwarming tosee the family pooling its money to buy a piece of the American dream.
In 1949, Manhattan was no enclave of the rich, but aworking-class industrial city that was rapidly building public housing.
The Upper West Side was a pleasant but by no means exclusiveresidential area.
Mr. Harmon grew up there, delivering newspapers to BasilRathbone and other neighbors, until he went on to West Point, where he was inthe class of 1965. He was awarded a Silver Star in Vietnam. Mr. Harmonand his wife returned to live there in 2002, and three years later he took outa $1.5 million mortgage to buy his brother’s share of the house.
Mr. Harmon and his wife live on the parlor floor, behind thebay windows sheathed in decorative copper. With the appraising eye of an owner,he points out a ragged hole in the window glass left by a bullet in the 1970s.
The floors above are divided into six one-bedroomapartments.
Multi-household housing would have been natural enough inthe 1930s or 1940s, with the brownstone being subdivided into a rooming house,presumably with the landlord on the parlor floor for maintenance, community,and security.
Three are market rate rentals.
And you know that Mr. Harmon will never let those apartmentsgo back into being rent-stabilized.
The other three are occupied by rent-stabilized tenants,inherited from his parents, who have been there for what Mr. Harmon calculatesas 90 tenant-years,
In other words, an average of thirty years apiece.
and it is not necessarily, he says, by virtue of theirneediness.
“It is all about luck — a racket in which property ownersand market rate tenants always lose,” Mr. Harmon says in his petition –
As we’ve seen, he is right about that. Some get lucky,some have friends, some are politically connected. As Richard Epsteinnoted:
People who don’t live in New York City … may recall theiroutrage in 2008 upon reading that New York Rep. Charles Rangel worked thesystem by paying a total of $3,894 a month for four rent-stabilized luxuryapartments in Harlem, about half the market price.
Aside from the sweetheart deal – $975 per month – that Mr.Rangel was able to secure, and felt no qualms about using, four apartments isitself a travesty. More broadly, few if any rent-stabilization residentsare deserving.
– borrowing a term he often encountered when he waschief counsel to the President’s Commission on Organized Crime in the Reaganadministration.
Over the years, small things have galled him, like on amorning 12 years ago, when he opened the Sunday newspaper to find a subtenantbragging that he lived in a spacious one-bedroom apartment with a terrace in anexciting neighborhood near Central Park for “practically free,” or $1,190 amonth.
Such braggadocio would gall a person with much less at stakethan Mr. Harmon.
The writer called it ‘real estate karma,’ and the buildingwas, yes, the Harmon family ‘maison.’
Mr. Harmon has an affinity for uphill causes.
In his previous foray to the Supreme Court, he got the courtto reverse a finding of contempt for two Yonkers City Council members whorefused to pass a housing and school desegregation ordinance.
Finding contempt for not voting the ‘right way’ would betaking political correctness a bit too far, wouldn’t it?
He also secured a pardon for Sgt. Osvaldo Hernandez, aveteran of the war in Afghanistan, from a youthful gun conviction so he couldbecome a New York City police officer, but he has not gotten the job becausethe Police Department says only people “who have never been convicted of afelony” can become officers.
Evidently Mr. Harmon picks out individuals wronged by ‘thesystem’ and seeks to get justice for them. One such, he realized, washimself:
Mr. Harmon said he had appealed to his assemblywoman, LindaB. Rosenthal, a strong supporter of rent regulations. Ms. Rosenthal said Mr.Harmon had asked for an exception to rent regulations for his building, whichshe found untenable because it would, she said, extend to thousands of otherpeople in “the vanishing middle class.”
“I understand he thinks he could make more money, thathe is being deprived,” she said. “But I have so many constituents who wouldwillingly trade his problems for theirs.”
Evidently for Ms. Rosenthal it’s all about votes, notproperty rights.
She said her views had nothing to do with the fact that shelives in a rent-regulated apartment, though she added, “If I didn’t, I probablywouldn’t be representing tenants in this district because I couldn’t afford tolive in the city.”
As the old parliamentarians used to say, Where you standdepends on where you sit.
Mr. Harmon said he had nothing against his tenants, whom hegreets and mingles with at the mailboxes and in the floral-carpeted foyer.
He is certainly tolerant, given facts like these:
[One of Mr. Harmon’s] rent-stabilized tenants, David Mlotok,moved into 2-R with his then-girlfriend in 1976, he said recently, as hestopped to talk while bringing his dry-cleaning home. Mr. Mlotok was paying$1,298.24, according to the papers.
Now a youthful-looking 73 with a full head of white hair, hesaid he had worked in video production, as a freelance photographer and doingstage work at Lincoln Center, and now works in publishing.
So he’s lived in the apartment for 35 years, with someoneelse doing all the maintenance, upkeep, and paying the heat. A sweet, sweetdeal.
Mr. Mlotok said that whether he could pay market rent was “apersonal issue.”
Unquestionably so, Mr. Mlotok, as the City of New York inits infinite wisdom has declined to make rent stabilization means-tested, ageor personal situation qualified, or in any way something other than a lotteryfor the fortunate.
But in the final analysis, he said, it was just anapartment, and it was not irreplaceable.
“The apartment doesn’t keep me in the city; New York keepsme in the city,” he said. He mused about moving to a small town in Colorado.How about Brooklyn or the Bronx?
“To me, to live in New York is to live in Manhattan,” Mr.Mlotok said. “To live in Manhattan is to live just north of the park and downinto the Village.”
Is that a sense of entitlement speaking?
According to his original lawsuit, filed in 2008, the tenantin Apartment 3-F was paying $951.22 a month –
Earlier in the article, the Times referenced Mr. Harmon’scitation of a 59% discount from market; if so, market for that apartment wouldbe $2,375 a month, implying that the Apartment 3-F resident is saving $1,425per month, every month.
– and owns a home on Long Island, which the Harmonscontend that they are effectively subsidizing.
I’d say the implied subsidy was very effective, wouldn’tyou? Indeed, it’s a beautiful example of what Peter Senge would call‘seeing the system’. At one end is a huge input from Mr. Harmon – namelythe $1,425 legally mandated in-kind discount – and at the other is 3-F’s LongIsland house. In between lies a boatload of money. At (say) 5.0%interest rate, 30-year amortization, the money 3-F is not paying Mr. Harmonwill support a mortgage of $265,000. Add to that (say) five years ofsavings and you have a down payment of $85,000. In short, Mr. Harmon’senforced largesse has bought 3-F a house worth $350,000.
The tenant in 4F was paying even less — $908.72.
Both of those tenants did not return telephone calls.
With any luck, the Supreme Court will return Mr. Harmon’scall, and overturn rent control nationwide.