Opinion: The “eviction for good cause” law is a wolf in sheep’s clothing

This guest column by Nathan M. Lyman, Esq. of Lyman & Lyman LLC on the topic of good-cause eviction legislation pending before the Common Council is the opinion of the author and does not necessarily reflect the views of 14850 Magazine or its affiliates or advertisers. Letters may be sent to [email protected].

The “Just Cause Eviction” law (“the Law”) is a wolf in sheep’s clothing. Its true purpose is to impose rent control in Ithaca. The city has not considered the economic impact of the law, in its eagerness to be one of the first to impose it. Political bragging rights with no concern for the impact on taxpayers.

The majority of the city’s budget is paid for by property taxes. There are 5,506 tax parcels in the city. With a 2024 valuation of $6,714,339,468, fully tax-exempt properties make up 56.89% ($3,819,765,701). Fully tax-exempt properties include Cornell, IC, non-profits, churches, and government buildings. IDA-exempt properties are 5.12% ($343,590,001) and city taxable properties are $2,811,131,979. The city’s taxable figure is understated because it includes partial exemptions such as those for seniors, veterans, and 581-a subsidized housing.

581-a is a special tax classification that statutorily modifies the fair market value (FMV) of properties downward. While these properties do pay some tax, it is based on a significantly lower assessment than the FMV of similar properties. Each time there is a new 581-a project in the city, it reduces the amount of FMV land available to pay taxes and, in effect, increases taxes on the remaining taxpayers who pay FMV.

One comparison is that of Breckenridge Apartments (581-a) to Lofts at Six Mile Creek (FMV). Both were built around the same time and are similar in size. Breckenridge is assessed at $1,115,000. The land cost in 2014 was $1,100,000. Based on 2024 assessments, the average assessment per unit is $7,300. Lofts is assessed at $9,000,000; its average assessment per unit is $189,565. Breckenridge would be assessed at approximately $9,480,000 if it were not for 581-a. There are 13 581-a properties in the city, all of which will be exempt from the Act.

Rent control doesn’t work and is counterproductive. A 2019 study of San Francisco’s 1994 rent control law found that the supply of rental units was reduced by 15% and, in the long run, rents increased, undermining the law’s goal. A 1992 study found that 93% of professional economists agreed that rent control reduces the quality and quantity of housing. A study of Cambridge, MA, which eliminated rent control in 1994, concluded that “the success of rent deregulation in Cambridge provides important lessons that should inform the debate on the issue in New York” and found “a concrete example of full rent deregulation leading to investment in housing that would not otherwise have occurred…”

The law says it applies “to all dwellings except…” for 15 separate exemptions. Three of those exemptions will no longer apply to most Ithaca renters. These include public and subsidized housing, properties built in the last 30 years, and schools/universities. The Ithaca Housing Authority, other subsidized properties, Cornell, Ithaca College, and new large properties will be exempt.

The law has two exemptions that the city is significantly modifying. One is for small landlords. The state legislature created a protection clause for small landlords, defined as owners of 10 units or less. The city is changing the definition to 1. The second refers to wealthy tenants who pay more than fair market value for an apartment. This doesn’t really apply in Ithaca, because those people own their home and typically don’t rent.

Only 42% of the total assessment is borne by taxpayers. 94 properties equaling 1.7% of the city’s total parcels comprise 24.4% of the taxable property value. The remaining taxpayers are property owners with 10 or fewer units and homeowners. Residential assessments are set differently than commercial assessments. If commercial revenues are flat or down, or expenses increase, or the perceived risk of ownership increases, commercial assessments go down. Rent control artificially depresses revenues. Inflation increases expenses for landlords, as for everyone else. Interest rates remain high. Rent control laws significantly affect decisions based on investment risk. These effects reduce the value of commercial property. If commercial assessments go down, the only taxpayers left to pay are single-family homeowners.

Who does the law benefit? While some say it protects tenants, an analysis of the cases filed and the eviction orders granted by the courts shows that this will not be true. The vast majority of eviction cases filed are based on nonpayment of rent. This law does not protect tenants who do not pay rent. The few remaining cases appear to be primarily for misconduct. The law is not a defense for that either. The following chart illustrates this:

This chart reveals a number of important facts.

  • There is no rental eviction crisis in the city. Most cases filed in court are resolved and do not result in eviction orders. The number of cases filed countywide in 2023 was consistent with 2019, as the limitation of court access imposed by legislation in 2020 and 2021 brings the caseload back to normal. There are no statistical differences in 2024.
  • Some say there is an eviction crisis in the city today. Just look at how the caseload will increase if the law is passed. Passing the rent control law will not significantly reduce eviction filings or court orders based on the historical fact that most evictions are based on nonpayment, which the law does not protect the tenant from. Rather, it will increase filings because if landlords are not allowed to let leases expire, they will have to go to court to terminate them. This will increase the caseload, not reduce it.
  • The data does not support the need for “just cause” eviction protection if only 4 cases where court orders were granted in 2024 could involve extending the lease term or extending the lease. However, it is more likely that those 4 cases involved misconduct on the part of the tenant that led to the lease being breached. It is also likely, considering the makeup of real estate in the city, that these 4 cases are in units exempt from this law, so even if it did involve a lease extension issue, the tenant would receive no benefit from the proposed law.

The answer to the question of who benefits the most is the government, big developers with new buildings, and Cornell/IC. An exemption cuts in multiple directions: a tenant living in a unit that is exempt from this law gets no “protection” from nonrenewal, because the unit is not covered by the law. If most of those not getting a renewal now live in subsidized housing, those landlords can evict them by nonrenewal, but small landlords, who are the least able to bear the cost of a bad tenant, cannot. Where will those troubled tenants go? To the few landlords who are not exempt.

Small property owners own older buildings and receive less income; the structures are not designed to offer the services that most college students want because they did not exist 100 years ago. These are the people who bought the old historic structures and tried to monetize them by investing in them. Those with a historical mindset constantly cite these buildings as important examples of our community fabric that should be preserved even if the buildings are not viable as single-family residences.

It is these small business owners, who are not exempt, who will pay the price for this madness. And when they do, their land will be bought up by the big players who will try to knock down the buildings so that they can be exempt from this law with a shiny new building.

Ultimately, the single-family homeowner will bear the greatest cost: Home valuations are skyrocketing. When commercial values ​​stagnate or fall and residential values ​​rise, the burden will fall more heavily on the residential taxpayer. Of course, owners of tax-exempt homes, which is about 60% of them, won’t care, because they don’t pay any taxes.

Real estate has always been a way to achieve the American dream at all socioeconomic levels. This law will prevent that from happening. Most of Ithaca’s larger family homeowners started decades ago with a unit and a dream. They had no money, but they worked hard to manage the capital. They fixed up rundown houses, bought locally, invested locally, and the city benefited. Many seniors have been able to stay in their home by renting, even though their taxes and water bills go up every year. This law will limit their income, but not their water bills.

The City cannot assume that the historic cash cow of off-campus students making up the majority of the City’s renter population and contributing to commercial tax payments will continue, as new off-campus student housing (Maplewood 2) has recently been announced and large new tax-exempt properties on campus continue to be built.

The law should not be passed.

Nathan M. Lyman

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