11.522: UIS Research Seminar (Fall 2014) - Discussion notes

Monday, November 3, 2014, 7-9 PM

Towards Active Enforcement of Affordable Housing Agreements: New York City as a Case Study

Discussion Leader: Owen Deutsch

Background:

Of American municipalities, New York City has the largest stock of both subsidized and rent-stabilized housing [Note], has historically made the largest investments in affordable housing relative to its budget, and has some of the most comprehensive affordable housing and housing market data available. But rents in New York City are also under some of the greatest pressure from the private market, as measured by price levels and the loss of rent-stabilized units. Furthermore, direct evidence exists that many landlords in the city are in non-compliance with agreements covering affordable housing units, specifically how much rents can be raised and under what conditions. The state department charged with monitoring these rent-stabilized units, Homes and Community Renewal (HCR), has recently developed a more proactive auditing system to better ensure that city landlords aren’t charging illegally high rents. But other housing departments still largely rely on self-enforcement of rental agreements. For example, New York City’s department of Housing Preservation and Development (HPD), fails to monitor the level at which subsidized units are rented following the vacancy of the first tenant, and only recently announced the interest to eventually correct this oversight.

Note: Rent-stabilized units are rental units which are privately managed but where annual increases in rent are restricted to certain percentages determined by the city’s Rent Guidelines Board. They are part of the general housing stock and are often intermingled with market-rate units. Subsidized units, on the other hand, are entire rental properties which are guaranteed by developers and landlords to remain affordable for a certain period of years in exchange for construction financing or tax abatements. I do not address affordable housing units which are regulated through programs other than those HCR or HPD oversee.

Research Question

The enforcement of affordable housing agreements is still largely complaint-driven. My interest is in developing a framework for more actively monitoring the compliance of private landlords with these agreements. The Tenant Protection Unit (TPU) established by HCR to curtail overcharging by landlords of rent-stabilized housing now appears to take this approach, having expanded its auditing capacity and the scope of its data collection. But its methodology is obscure to the public, causing some to protest that more violations could be caught if some of the data and techniques used in these audits were more transparent. The process of determining a regulated apartment’s maximum allowable rent is time-consuming, and unfamiliar to most people. But if tenants could have a tool at their disposal which alerts them to a high likelihood of being overcharged given certain parameters and patterns of noncompliance, then either tenants or tenant advocacy groups could better focus their efforts. HCR’s monitoring system could also be adapted for HPD’s purposes, but in my discussions with HPD staff, it was indicated that no such system was yet being developed. The scale of overcharging in HPD subsidized units is likely smaller, but the department’s recent moves towards greater private self-enforcement are concerning. However, data on HPD’s properties are also more publicly accessible. Therefore, I hope to develop a model which can identify possible patterns of noncompliance with affordable housing agreements in New York City, with a probable focus on HPD units.

Existing Work

Some private researchers have already made relevant attempts at systematically identifying violations of rental agreements or housing codes. Make the Road New York, in its report on rent fraud in stabilized units, outlines a simple regression equation for predicting irregularities in any given unit conditional on three housing characteristics (Appendix D), but without much accuracy.  In “Searching for substandard housing in Alachua County,” a dated but automated methodology is described for identifying substandard housing using property tax data. In “Factors affecting compliance with residential standards in the city of Old Salt, Jordan,” the authors examine the relationship between household characteristics and compliance with housing standards on the part of tenants. And in “Public enforcement/private monitoring,” although it relates to enforcing compliance with minimum wage laws rather than housing affordability agreements, the approach used in identifying factors associated with regulatory compliance is still relevant. Finally, “There’s regulatory crime, and then there’s landlord crime” situates illegal harassment by landlords within the broader literature of regulatory crime and enforcement.

Data and Methodology

Some relevant data sources which might be used to focus on areas or properties with relatively high probabilities of overcharging include Census housing data at the tract level, the Furman Center’s Subsidized Housing Information Project (SHIP), and HPD building databases. The SHIP covers all subsidized affordable housing properties in New York City, and includes information on: address, tax liens and arrears, assessed and estimated market value, housing code violations, units, year built, owner, owner profit status, and affordability restrictions. Also at the property level, HPD building databases provide data on code violations and ownership registration. HPD’s Housing and Vacancy Survey also includes information on housing regulatory status, maintenance deficiencies, and neighborhood conditions, but aggregated by Community District, mostly corresponding to the Census’ sub-borough areas.  Other reports on income and expenses claimed by landlords are available at the borough level. Calibration of this model is an issue since actual occurrences of overcharging of subsidized units are not available to me, so unless I gain access to some database of this (which may not exist), this exercise must be theoretical. I am also still searching for more relevant papers and compliance monitoring methodologies. My objective for now is to map and test correlations in rent and property value trends; neighborhood trends (turnover, income, etc.); property ownership characteristics; types of rental properties; and tax arrears, housing code violations, and gaps in registration histories.

Key Readings:

  1. Alnsour, J., & Meaton, J. (2009). Factors affecting compliance with residential standards in the city of Old Salt, Jordan. Habitat International, 33, 301-309. (called Alnsour_compliance_with_standards_2009.pdf on website and Stellar)
  2. Schneider, R., & Zwick, P. (1990). Searching for substandard housing in Alachua County: A case study. Computers, Environment and Urban Systems, 14(4), 273. (called Schneider_substandard_housing_1990.pdf on website and Stellar)
  3. Weil, D. (2005). Public enforcement/private monitoring: Evaluating a new approach to regulating the minimum wage. Industrial and Labor Relations Review, 58(2), 238. (called Weil_Public_Enforcement_2005.pdf on website and Stellar)               

Additional References:

  1. Make the Road New York. (2011). Rent fraud: Illegal rent increases and the loss of affordable housing in New York City. New York, NY: Make the Road New York.
  2. Cowan, D., & Marsh, A. (2001). There's regulatory crime, and then there's landlord crime: From 'Rachmanites' to 'partners'. The Modern Law Review, 64(6), 831-854.
  3. Tenant Protection Unit Homepage: http://www.nyshcr.org/Rent/tenantprotectionunit/
  4. Barbanel, J. (2013, October 20). Tenant rights in focus. The Wall Street Journal. Available at:http://online.wsj.com/articles/SB10001424052702303680404579143411786780866
  5. Weichselbaum, S. (2014, February 11). Tenant advocates push the Cuomo administration to release the addresses of rent stabilized buildings. New York Daily News. Available at:http://www.nydailynews.com/new-york/uptown/rent-regulation-mystery-brews-uptown-article-1.1609033

Discussion questions:

  1. What are relevant methods used in other social service sectors in targeting private providers for closer monitoring when mostly only aggregate or secondary information is available?
  2. What are some additional variables or data sources that could be useful?
  3. Is a regression analysis of housing, landlord and neighborhood characteristics associated with escalating rents or housing code violations the most appropriate methodology in estimating likelihood of overcharging? What if addresses of units where rent overcharging has occurred were available?
  4. What might be the best representational techniques for communicating to tenants where high-risk properties or areas are?

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