Mortgage Crisis? There's a Rental Crisis Too as the Poor, Middle Class and Elderly are Being Evicted

On Feb 5, the management of the NYC's famed Chelsea Hotel evicted a 75-year old man from his apartment. The police were called and he was told to have his belongings out by four that afternoon. This was not a case of non-payment, as the tenant was paid up through the next week. The elderly gentleman's crime? Being in the way of the minority owners desire to turn the Chelsea, for over 100 years a permanent residency hotel offering affordable housing to people in the arts, into a boutique tourist hotel charging $500 per night.

As concerned neighbors scrambled to pack the man's things -- including hundreds of books -- police reacted with obvious disgust, asking incredulously, "You're evicting a 75-year-old man?!" In response, de-facto manager Arnold Tamasar cited, "Innkeepers prerogative!"

Those of you following the ongoing crisis at the Chelsea know that majority owner and longtime manager Stanley Bard was ousted in a hostile takeover by the minority shareholders Marlene Krauss and David Elder in July of 2007. Since that time we have had two changes of management: prestigious real estate firm BD Hotels, brought in after Bard's ouster, was in turn fired 10 months later by Krauss and Elder for, among other things, not moving fast enough with their program of evicting tenants (though BD turned out 17) and renovating the hotel. The next manager, Andrew Tilley, trying to step up the pace of this program, resigned last month under pressure soon after being caught engaging in illegal "construction" (he gutted the historic room once occupied by Bob Dylan) by the Department of Buildings. Residents of the Chelsea continue to call for the return of the Bard family.

Yesterday's NY Times featured an article about the community organizing group ACORN, which is calling for victims of the sub-prime mortgage lending scam to fight back by refusing to vacate their foreclosed homes. ACORN. Yes, little ACORN, whom, you might remember, the New York Post was recently at pains to paint as the culprit in the sub-prime crisis! Quite the troublemakers, these folks.

Well, a similar, though less well publicized, situation exists in rental buildings, as landlords are pulling out all the stops to end affordable housing in New York and other cities. As in the mortgage crisis, they are now going after not only the poor, but middle class renters as well, using various tricks to force them from their homes so they can rent their apartments at double or triple the rate, reaping a short term windfall at the expense of the long term stability of the housing market and the economy as a whole. (In the case of the Chelsea, the short term rewards are potentially even greater, as they can turn permanent housing into nightly rental units.)

I'm with ACORN in saying, enough is enough. The greed of the developers has wrecked the economy. Rents must come down, and warehousing (illegally holding housing units off the market to increase demand) must cease immediately. There must be a national moratorium on both foreclosures and eviction. And for those of you facing foreclosure or eviction, stay put. As the NY Times article, and my own experience, makes clear, the police, seeing the obvious injustice involved, are becoming increasingly reluctant to carry out these draconian vacate-orders.

Comments

[jade7243]

Use a different example:

an $8.00/hour minimum wage worker in CA must work 83 hours a week, year round to afford and $869 STUDIO apartment. Not only can he or she not afford to buy a home, he or she cannot even work a standard 40-hour work-week and afford an apartment.

That is the crisis.

[avocats]

Aw, come on. This is a hotel. The resident chose to live there under the terms of a contract that permitted the owners to terminate his residency if they so choose. The people doing the evicting OWN the property. If they want to remodel or restore it, it's their business. You have no greater "property rights" because you're 75 than other people. Frankly, the fact that Bob Dylan lived there changes the analysis not one iota. In fact, if this nonsense keeps up, no one will have any property rights. That worked out so well in the Communist bloc last century.

[mightbesane]

Using the Chelsea as an example is a poor way to make a compelling case. As the blog's title suggests, the mortgage crisis does not only effect people living in the homes, but has a huge effect on the population of renters as well.

The National Low Income Housing Coalition reports that although only 20% of foreclosures are on rental properties, 40% of the families effected by foreclosures are renters. Not only are those families kicked out of their rented homes, but they are competing for housing with homeowners new to the rental market. Add to that government policies that have decreased the number of subsidized housing units in favor of an 'ownership society' and we're at the crest of a tidal wave.

[BGraham]

Excellent reply. I'm finally glad to read something though about those of us who are struggling with rent. While homeowners are getting a $15,000 tax credit and foreclosure help, renters are getting nada except their $13/wk....­.to be lowered to $7.70/wk in 2010.

[nevadaandy]

I agree it's the greed of developers and those who already have enough money to live in luxury for the rest of their life that has created this economic mess. When are people going to learn that greed is the heart of all evil?

Renters are especially hard pressed to find afforadable housing. Many who are renting are being force out because the homes or apartments they rented are now in foreclosure. There is a domino effect to being greedy. Those who already have enough money to live in luxury need to take a closer look at themselves and see what effect their need to make more money is having on the rest of America.

[devadasi]

The Chelsea Hotel is a New York institution. What's happened here is dispicable. And yes this is a very timely post....re­nters are suffering immeasurably as well.

[HonorJusticeTruth]

Unfortunately as more and more people lose there homes, they will be forced to move into rental homes and apartments. In some cities apartments became a premium as many had been transformed into condominiums. With that will be the rise in rents as land owners, many of which are property corporations, decide that the good old law of supply and demand is useful. Doesn't matter that the property has been paid for for years. The coldness of some people in times of trouble for those less fortunate is saddening.

By the way, no one in this article said that the current renters were not profitable. Maybe they were and maybe they weren't. But obviously they weren't profitable ENOUGH.

[oustfan]

This puts landlords in a bad position as well. When they rent out their land, are they morally required to allow the people to stay there for the rest of their lives?

[DinkSinger]

I don't know about morally, but in New York City they are legally required to. Apartments in New York are covered by the Rent Stabilization Code which is complex, but basically limits the amount of rent increases and requires "As long as the tenant continues to pay the rent to which the owner is entitled, no tenant shall be denied a renewal lease or be removed ... except on one or more of the grounds specified in this Code." The grounds are extremely limited.

The gentleman at the Chelsea Hotel was not protected by the code because the Chelsea Hotel is a hotel (although the law provides protection for some residents of some hotels).

[avocats]

And while I'm not privy to the facts surrounding his eviction, I strongly suspect that the notice that sent neighbors scurrying to pack the man's belongings was not the frist, but more likely was the final in a long series of notices.