Additional reporting by Suhail Bhat, Sam Rabiyah and Hiram Alejandro Durán
The number of rent-stabilized apartments registered in Ridgewood, Queens, has plummeted — and a loophole in New York’s rent regulations may help explain why.
An analysis by THE CITY shows that the number of rent-stabilized units registered in the increasingly trendy neighborhood plunged from 6,228 in 2019 to just 2,149 in 2021 — a decline of more than 65%, compared to a roughly 10% decline citywide.
The sharp drop happened even though a June 2019 law prohibited moving apartments out of the state’s rent regulation system, with few exceptions.
One of those exceptions is called “substantial rehabilitation,” and tenant advocates say they see signs that landlords are angling to use it to remove entire buildings in Ridgewood from regulation and sharply hike up rents — by claiming the buildings were dilapidated and then undertaking extensive reconstruction.
“Just by walking around Ridgewood, you’ll go from block to block, and on every block, there’s a…building that has a new façade and it’s totally renovated,” said Raquel Namuche, a volunteer tenant organizer with the Ridgewood Tenants Union.
A three-story, six-unit walk-up building at 1819 Grove St. is one area property that appears to have undergone a rehab inside and out, with a group of new tenants who moved in earlier this year. As recently as 2019, its owner reported six regulated apartments in the building. Now it reports none — and a refurbished apartment in the 93-year-old-building is now being offered on Streeteasy for $3,300 a month.
Do you know about apartment buildings that have emptied out or gone through major renovations in Ridgewood? Email reporter Haidee Chu at firstname.lastname@example.org
‘Spillover Into Queens’
In Ridgewood, just north of Bushwick, the median sale price for residential real estate — which includes condos, co-ops and one- to three-family buildings — has almost tripled in the last decade, going from $390,000 in 2012 to $1.09 million in 2022, according to Jonathan Miller, president and CEO of real estate appraisal and consulting firm Miller Samuel Inc.
That’s benefitted property sellers and landlords, Miller said, as rents in Queens have hit an all-time high thanks in part to what he called “the global phenomenon of Brooklyn spillover into Queens.”
As Ridgewood has changed, Letitia Ayala, who’s now 72, has stayed put for more than three decades. The Nuyorican found her way to the neighborhood while seeking a fresh start away from The Bronx after a divorce in the late ’80s, and moved into a $325-a-month, two-bedroom apartment in the neighborhood. At the time, she said, the affordable rent there made it possible to put a roof over her two children’s heads while on a $15,000 salary as a customer representative for the Social Security Administration.
Rent stabilization has let Ayala, who now works as a church secretary, remain in the apartment where she raised her children in a six-unit, three-floor walk-up building at 1856 Madison Street — where she also worked as a super for about a decade.
“I ain’t moving,” Ayala told THE CITY, even as her corner of Queens has changed, with 44% of residents identifying as Hispanic in the 2020 Census, down from 49% in 2010.
“There’s a lot of people from Manhattan — you know, say, general white people.”
New neighbors have come and gone over the last five years, she said, paying vastly more than the roughly $700 a month rent she does. Only one other apartment in her building is rent-stabilized now.
Her 42-year-old son has been on the lease since he was a child, Ayala said. “Every year, I put it down,” she told THE CITY, mimicking the motion of slapping paper on a table.
“And I tell him, ‘sign here’… and I say, ‘You never know where you’re going to be 10 years from now — something could happen to you financially.’”
Tenant advocates say the larger area’s transformation is putting upward pressure on rents — and that some area property owners see a chance to escape rent regulation.
“Many of our members left the neighborhood during the pandemic, and landlords have used that to their advantage,” said Namuche, the Ridgewood Tenants Union organizer. Newcomers have moved in, she said, with many of them unaware of their building’s rent-stabilized status.
“Ridgewood and Bushwick are areas of sustained, rapid gentrification and violent displacement, so landlords are motivated to deregulate units and obtain much higher rental amounts that are only possible in market-rate units,” said Angela Stovall, housing specialist at the nonprofit group JustFix, which provided the property tax records THE CITY used to report a steep decline in the number of rent stabilized units landlords registered after 2019.
The Housing Stability and Tenant Protection Act — signed into law by former Gov. Andrew Cuomo that June — was supposed to curtail landlords’ ability to remove apartments from rent stabilization except under special circumstances. That has left experts and organizers puzzled over why and how so many apartments have vanished from city and state registries — and why Ridgewood specifically has emerged as a cluster, with the sharpest drop of any neighborhood in New York City.
Nearly all of the 4,000 missing rent stabilized apartments in Ridgewood are from buildings that did not report any regulated units at all in 2021.
The Rent Stabilization Association (RSA), a landlord trade group, said “various factors could be contributing to lags in registration,” and that the number doesn’t correspond to an actual drop in the number of stabilized apartments.
“We dispute the possibility that 4,000 apartments were deregulated in just one Queens neighborhood,” RSA President Joseph Strasburg told THE CITY. Instead, he said, the question should be “why and how legislators think stabilized apartment owners…can continue to provide affordable housing when the simple economics of costs and income no longer make any sense.”
The RSA is also a plaintiff in a lawsuit aimed at getting the Supreme Court to eventually overturn New York’s more than 50-year-old system capping rents in many apartments, which was just upheld by the Second Circuit Court of Appeals, as an unconstitutional intrusion on private property rights.
Edward Josephson, supervising attorney at the Legal Aid Society’s Law Reform Unit, said he suspected that Ridgewood’s plunge in registrations had something to do with the neighborhood’s many independent landlords, including immigrants, who may lack access to in-house experts on regulation compliance.
But, he added, “that’s always been true of Ridgewood, so it still doesn’t explain why all of a sudden, there’s a cliff in 2018, and then all the registrations disappear.”
“They were complying with the law until 2019,” he said. “They knew the law.”
Transformation in Progress
Josephson points to a clue about what may be going on in Ridgewood: under the 2019 reforms, “substantial rehabilitation” of an entire building is one of the few remaining ways landlords are permitted to remove apartments from rent regulations.
To qualify, property owners must replace at least 75% of a building’s systems, such as plumbing, heating and electrical wiring — so long as they can prove that the building was in “substandard” or “seriously deteriorated” conditions prior to that work, according to a HCR fact sheet.
One way to muster that proof, according to the fact sheet, is if 80% of the “housing accommodations” were vacant of residents at the time of the rehabilitation.
When THE CITY visited Ridgewood in mid-February, the walk-up building on 1819 Grove Street appears to have undergone noticeable and extensive exterior and interior renovations.
The sleek, black-framed glass door leading into the building is guarded by a smart buzzer equipped with a touchscreen and camera. Inside, trendy black-and-white line-art murals adorn the hallway walls. Building permits starting in July 2020 allow “proposed interior renovations to existing 3 story frame 6 family dwelling with cellar,” and showed zero “dwelling units occupied during the construction.”
Herman Weiser, who according to property records is a member of 1819 Grove LLC, could not be reached for comment. Moshe Efroyim Gluck, who is a representative for the landlord according to the building’s management company, Top Quality Management, also did not respond to THE CITY’s inquiry.
The Rent Guidelines Board reports 333 apartments citywide were taken off the rent-stabilization roll citywide between 2019 and 2021 as a result of owners applying for an exemption due to substantial rehabilitations.
RSA executive vice president Frank Ricci, however, said that substantial rehabilitations are “virtually impossible.”
“I mean, if you have rent-stabilized tenants in a building, how do you get them out to do substantial rehabilitation?” Ricci said. “In this day and age, I don’t know when that happens. I don’t even know someone who’s done it in the last 15, 20 years…. If it takes like, five years, to put a toilet into a park. Imagine how long it’s gonna take with just the permitting, and all the approvals to do substantial rehab on a building, which is why nothing gets done here.”
While landlords need to claim a “deteriorated status” to undergo an authorized substantial rehabilitation they can also up the rent on a stabilized apartment by merging it with an adjacent market-rate apartment to create a “Frankenstein” unit they can reset the rent on, advocates said at a November public hearing HCR convened last fall.
Namuche said that the small size of many Ridgewood buildings makes them low-hanging fruit for landlords seeking an end run.
“I have also been in a couple of these buildings where the landlord has claimed, ‘no, we’ve done all the renovations — the building is not rent-stabilized,” she said.
‘A Bizarre System’
There is no requirement for landlords to register substantial rehabilitation work to HCR, according to Josephson, who said notifications to the agency are in effect a voluntary process adhered to by property owners in only “a small minority of the cases.”
HCR could, in theory, question why buildings that have previously registered rent-stabilized units suddenly do not, Josephson added — but the state agency “doesn’t really have the capacity to check every apartment that disappears off the rolls,” he said.
Landlords often register their rent stabilized apartments with the state years late, according to HCR. The agency said it conducts outreach efforts to remind building owners to register “in a timely manner,” and that failure to register “can trigger proactive audits and investigations” which have “recaptured and registered over 102,000 improperly deregulated apartments” over an unspecified period of time.
But as long as their apartments’ rents remain within legal limits, a landlord’s only penalty for late registration is $10 per apartment surcharge on their rent registration fee.
“It’s a bizarre system,” Josephson said. Landlords “can just go on their merry way, based on the belief that they’ve substantially rehabilitated the building, and then they just do that until a case gets to court” if a tenant files an overcharge complaint.
Only then are substantial rehabilitation works vetted by HCR via building permits and contractor affidavits in the absence of a landlord’s voluntary disclosure, he added.
HCR did not comment for this story but cited a statement by agency commissioner RuthAnne Visnauskas in the agency’s annual report:
“HCR will continue to do everything within our power to ensure the laws governing rent regulation are strictly enforced. No tool in our toolbox will go unused – proactive audits, investigations, and other enforcement activities will be coupled with the continued improvement of our service platforms so we can best serve New Yorkers.”