Opinion: Good Cause is good economic development
Rising market-rate rents are driving workers out of the city and hurting the state’s overall economy. Albany can stanch the bleeding by including Good Cause Eviction legislation.
All around New York state, cities from Albany to New York City to Rochester are facing intertwined crises. In New York City, property owners large and small are raising rents even as the city’s unemployment rate continues to soar at double the national average. Meanwhile, housing is unaffordable for renters across the Hudson Valley and Catskills region. Now, recognizing the connection between housing and the economy, Gov. Kathy Hochul has emphasized the need for more housing to strengthen communities. Indeed, according to a recent survey by the Community Service Society of New York, the number one thing all New Yorkers – and low-income New Yorkers in particular – say would help them advance economically is affordable housing.
There’s one economic policy currently being debated in Albany that could strengthen the statewide economy and deliver housing stability and affordability to New Yorkers all over the state: Good Cause Eviction legislation. If passed, it could be a key piece of the state’s economic recovery. By staunching the flow of displacement and rent debt, it would allow New Yorkers to focus on stabilizing their communities and contributing to a prosperous future. As New York pursues its economic recovery amidst uncertain macroeconomic conditions, legislators and the governor should support Good Cause Eviction legislation, which could expand the tax base and help revitalize our cities.
Good Cause Eviction legislation has been circling in Albany for years. Sponsored by state Sen. Julia Salazar of Brooklyn and Assembly Member Pamela Hunter of Syracuse, the bill would restrict landlords from evicting tenants at will and allow tenants to challenge “excessive” rents that exceed 3% or 1.5 times inflation. The legislation has widespread support within the state Legislature, with 23 state Senate co-sponsors and 54 Assembly co-sponsors. It’s also received support for members of New York’s congressional delegation – including House Minority Leader Hakeem Jeffries and U.S. Reps. Jerry Nadler, Alexandria Ocasio-Cortez and Ritchie Torres. “We believe Good Cause Eviction levels the playing field between tenants and landlords and can protect hundreds of thousands of families from unnecessary displacement,” the members of Congress wrote last year in a letter sent to the governor, state Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie.
Good Cause Eviction is needed now more than ever. A solid majority of market-rate tenants – 59% – have seen a rent increase in the past year, according to the Community Service Society of New York. “New Yorkers are going into debt just to afford the rent,” said Samuel Stein, housing policy analyst for the Community Service Society. “The percentage of market-rate tenants with rent debt went from 16 percent in 2021 to 25 percent in 2022.” These astonishing numbers reflect the unrestrained power of landlords outside the rent-stabilized sector to squeeze tenants.
Leaving this sector unregulated creates huge economic costs for the state and employers. When very poor tenants face rent debt or eviction, they often rely on public support to get them through – most directly in the form of legal and financial assistance to keep them in their homes, or the costs of shelter if they are evicted and have no back up plan. In addition, high rents create indirect social costs as people without stable housing lose their jobs, can’t pay medical bills and can’t support their children. This system also hurts employers by putting undue stress on their workers, who are forced to commute long distances from their homes or even leave their neighborhoods entirely.
We indeed face a very real “urban doom loop”, a scenario of uncontrolled decline driven by flight from the city. But contrary to popular narratives about high taxes on the rich driving New Yorkers to flee, the reality is actually this: people are leaving the state because of the high cost of housing. According to a recent comparative analysis, making $100,000 in New York is like making $36,000 elsewhere, due to pressures on cost of living that include housing costs. According to a StreetEasy calculation, a New York City household now needs to make $134,000 a year to afford rent for a median-priced apartment. With the prospect of remote work on the table, professionals who make less than that are surely considering more affordable options. According to the Fiscal Policy Institute, net outflow from the city is driven by a search for lower rent and mortgage payments. With the city still struggling to find its economic footing in a pandemic era, we cannot afford to lose people who could be contributing to the state tax base and the revitalization of neighborhoods.
The state budget expands every year – this year is no exception, topping out at more than $227 billion. This yearly increase in expenses relies on expanded revenues, including from property taxes. The governor might consider high rents beneficial, since they help inflate the tax base, but there is a clear limit beyond which high rents hurt the state’s tax base. In the absence of any regulation of market-rate housing, the market is free to cross that limit. When New York loses residents to high housing costs, it loses their tax dollars and the power of their consumer spending. In many cases, it also loses their contribution as workers in the city’s increasingly fragile business districts. “People’s consumption that could be going towards more productive sectors of the economy – where consumer demand can lead to true economic development – is being swallowed up by rent,” said Lauren Melodia, Deputy Director of Fiscal & Economic Policies at Center for NYC Affairs.
If Albany doesn’t take action, landlords will continue to absorb resources that could play a productive role in the state’s economy. “If we had Good Cause, a lot of those tenants would be spending that money elsewhere in the economy, and not just passing it along to their landlord,” Stein said. The governor’s 2023 State of the State address was entitled “Achieving the New York Dream.” Fortunately for New Yorkers, economic growth, a resilient economy, and stable housing is no dream if the state passes Good Cause Eviction.
Avi Garelick and Andrew Schustek are researchers and writers based in New York City who hold graduate degrees in urban planning and policy from Hunter College.
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