New York Mayor’s Race Highlights The Persistence Of Rent Control

The fact that candidates for mayor of New York City are fighting over rent control should be as bizarre as if they were arguing over whether the sun is the center of our solar system. Yet, like many other aspects of the housing discussion in the United States, price controls are still appealing to frustrated voters who see them as the solution to inflation. Democratic nominee and state assemblyman Zohran Mamdani has promised to “freeze rents” (you can read his platform here) and put landlords out of business that he thinks are the “worst,” whatever that means. What would the wider impact of Mamdani’s policies be? I asked Robert J. Bolton, President and Executive Director of the Interchurch Center, ​to give me his view about what impact Mamdani’s policies could have on the non-profit sector.

First, it’s important to highlight why rent control doesn’t work. Prices, including rents for apartments, are a quantitative measure of supply and demand. When rents go up, we know that more people want apartments than there are available units. When there is scarcity, people begin bidding wars for the limited supply available. This is classic inflation, too much money chasing too few goods. Mandates that cap prices do nothing to create new supply, and, in reality, disincentivizes new production because developers can’t cover their costs to produce. This makes rent inflation worse. You can read my longer analysis of the problem with rent control for more.

The Interchurch Center is “a Class A office facility, with the mission to provide a working environment that is conducive to ecumenism and interreligious involvement,” essentially a workshare for non-profits and community-based organizations. Bolton’s comments are below and my comments are in italics.

How could proposed rental and housing policies affect nonprofits’ ability to secure affordable space?

Many nonprofits have fixed or grant-based budgets, and are already under pressure from rising commercial rents and a shortage of reasonably priced office space. That being the case, they may be forced to downsize or move away from communities they serve as a result of policies that limit availability or raise pressure on the market. Proposals granting nonprofit-specific safeguards or stable rents, on the other hand, would assist in maintaining accessible, mission-aligned spaces and free up groups to concentrate on service rather than financial survival.

The key words here are, “limit availability or raise pressure on the market.” Rent control policies usually fail, but rather than pull back on them, advocates usually pressure government for more controls which pushes new investment and building out of the market creating more inflation.

What are the practical implications of Mamdani’s plans on NYC’s nonprofit sector?

Although the main focus of Assemblymember Mamdani’s housing proposals, rent freezes, permanently affordable housing, and public housing investment, is on residential affordability, organizations may also feel the impact. Employees and clients who have more stable housing could create conditions for stronger, community-based operations.

However, nonprofits may have to deal with fewer reasonably priced commercial options or higher shared building costs if these regulations hinder new development or lessen incentives for landlords.

Rent control helps those who find themselves in a rent-controlled unit. But the wider effects only make scarcity worse, making things worse for everyone else.

Collaborative strategies that help organizations remain resilient amid rising rents: Collaboration, sharing space, combining administrative resources, and establishing partnerships for joint lease or ownership, can help nonprofits remain resilient. Incentives and zoning support for mission-driven tenants are also being pushed by many. As the cost of real estate in the city rises, we observe at The Interchurch Center how shared Class A office space promotes productivity and collaboration, assisting groups in staying steady, creative, and influential.

Communities and neighborhoods can combine their resources to acquire real estate and essentially, be their own landlords. Government can help most by providing seed capital or reducing risk for these sorts of initiatives. I’ve written often about how cooperatives and other strategies that enable fractional ownership of real estate can put residents and communities in control of their own space and destinies.

Bolton’s experience in managing organizations and real estate is a view that any new mayor should tap.

“Having directed both faith-based and nonprofit organizations for many years, I’ve observed how increasing rents can undermine community foundations.” And I would agree with his solution which is better and more sustainable than rent control: “Cooperation among policymakers, property owners, and mission-oriented organizations, allowing affordability and opportunity to thrive together.”