Charles Schumer Village

Senator Schumer's proposal to use our tax money to under-write a tenant buyout of Peter Cooper Village and Stuyvesant Town is a doozy. He's come up with this scheme in the wake of the announcement by the Metropolitan Life Insurance Company that it intends to sell the East Side developments for as much as $5 billion. So-called tenants advocates have been up in arms over the supposed danger the deal poses to residents of the complexes. Some tenants are talking about organizing a buyout. Mr. Schumer promptly piped up, along with City Council Speaker Quinn, with the idea of government assistance.

More government interference is exactly the last thing New York City's housing market needs. The worrywarts are overstating the threat to tenants who currently enjoy some form of rent stabilization. Any tenant who is stabilized today will be so under new ownership. What deregulation is happening is taking place anyway thanks to rules that allow a landlord to charge market rates if a vacant unit reaches $2,000 a month or an occupied apartment hits that ceiling and the residents earn $175,000 a year for two years in a row. Between a quarter and a third of units are already off the stabilization rolls.

Tenants still might have some concerns. The new owner would likely seek to enforce the terms of the existing leases. Presumably this would include a crackdown on illegal subleasing, with which the development is suspected to be riddled, although estimates of how extensive the problem is are hard to come by. Illegal subletting allows a nominal tenant to profit from rent regulation while taking the opportunity to live elsewhere, but the practice would technically void the terms of a lease and could lead to eviction. Met Life has already been trying to crack down on the practice via the use of photo key cards, an effort that sparked a bizarre tenant outcry.

There is also the question of whether a new owner would take a closer look at tenant incomes to make sure that only those who actually qualify for stabilization receive the benefit. Whereas the development was a haven for the working and middle classes 30 and 40 years ago, many of those residents and their successors have moved up in the world since then. We do not suggest that all or even most residents of the developments are cheating the system. Only that any who are would find it harder to do so under new ownership and that Senator Schumer's plan, however, well intentioned, would mainly protect the cheaters.

Unless the idea is to enable current tenants to flip their apartments and gain a windfall from the deal. But if that's the case, the public interest in subsidizing a sale is no greater if the dwellings are sold the tenants than to a corporate buyer. If the buildings are sold to a buyer at market rates, the tenants who truly qualify for rent stabilization will continue to enjoy all the "benefits" (to them) of the market-distorting regulations. And if those who don't qualify get bumped, harried apartment-hunters across the city stand only to gain. All of which means that yet more government interference is exactly the wrong thing to do at this point.