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May 02, 2005

New York City vice

I lived in Manhattan for several years and worked there for more. If you want to know the biggest source of corruption in the City, it's not the janitors' unions, and it's not the Board of Ed. It's the whole, rotten rent-control and rent-stabilization system.

The Washington Post Style section has a fairly sympathetic portait of a man whose job it is to persuade rent-controlled tenants to move, usually by offering cash. The reason you have guys like this is that the system is corrupt.

Local rent rules are a vestige of World War II-era inflation worries, as well as fears that landlords would take advantage of the wartime slowdown in housing construction to gouge tenants. Most cities lifted those restrictions after the war ended, but not New York. Landlords say politicians have long been kowtowing to residents, and they mutter words like "central planning" and "Soviet Union" when they discuss the topic. Reps for tenants say the rules allow the poor and middle-class to live in a town that otherwise would be beyond their means.

Whatever your position, apartment dwellers here are basically divided into two categories: the fortunate and the damned. The fortunate are those in rent-regulated apartments -- generally people lucky enough to live in rental buildings with at least six units that were constructed before 1974. The damned is everyone else. You can spend $3,200 a month on a mediocre one-bedroom with a view of an alley if it's in a decent neighborhood. It's an ongoing struggle: for tenants, the endless quest for a better deal; for landlords, the endless quest to whisk the fortunate out of their apartments and add names to the list of the damned.

"In every other city landlords want to keep people in their homes as long as possible," chuckles Richard Aidekman, who owns 10 apartment buildings here. "Only in New York is the goal to get them out."
But the landlords have limited options in trying to move their tenants out.
Landlords desperate to vacate the premises have legal remedies in some cases. But what do they do when war is not an option?

They hire Mike Grabow. It's his job to talk rent-regulated tenants out the door, a feat he accomplishes with a variety of tools -- chiefly, disarming candor and great gobs of cash. Many of the buyouts he's negotiated ended with the tenant $300,000 richer. Others pocketed upwards of $2 million. All they have to do for the money is leave. Sometimes Grabow just finds a better apartment -- one with an elevator, or more space -- and negotiates a sum that covers the higher rent for, say, 10 years. That might be an appealing bargain for someone who is 75 years old and living in a fourth-floor walk-up.
Grabow succeeds by being reasonable.
"I tell them, we're going to settle this together," Grabow says, sitting in the conference room of his midtown office on Broadway. His voice is steady, low and reassuring, like a hostage negotiator. "I tell them, 'If we make a deal, you're going to be happy. You're a lucky person. Your life will be better, not worse. If it's not better, you won't sign.' "

In most cases, the initial reaction is something like "Get lost," though the choice of words is usually more colorful. Often, a single buyout will require months of phone calls, face-to-face meetings and letters. It's a process. Grabow gets to know the tenants. He wins their trust. He tells them they are under no obligation to talk to him, that they can hang up on him. And because he says things like that, they all talk to him. When they do, he finds out what they want and then he tries to give it to them.
So Grabow is a decent guy, doing a lousy job in a nice way in a corrupt system. But it makes you realize that, for the all the progress that New York has made, it's still a third-world town.