Rex Tompkins

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Good evening and welcome to you and your landlord these transcribed programs broadcast over the station on the second and fourth Friday of each month our guest for this series is Frederick asprin the commissioner of New York City's Department of rent and housing maintenance Good evening commission of Armin Joe commissioner Berman you brought a guest with you this evening so I won't you please have the honor of introducing to ours on the program yes I'm delighted to have with me tonight a very distinguished representative of the real estate community Mr Rexford Tompkins who is the president of the firm of Brown Harris Stevens also the treasurer of the New York real estate board Rex Tompkins has been I think one of the most eloquent and articulate spokesman for the real estate industry in the content in the continuing controversy between the city and the industry over rent controls and other matters pertaining to the development of real estate in the city of New York Mr Tompkins and I have had the opportunity of a debating on many occasions and I have to say in all honesty that while we often disagree I respect him for for his views and for his integrity and I'm delighted to have you have you with me today Rex on this show Thank you Mr Commissioner. I must admire your diplomacy after some of the heated discussions we've had and maybe tonight we could use the opportunity to talk a little bit about housing philosophy and avoid some of the real shark controversy and I know that you recognize that. If we shift over to philosophical discussion it doesn't mean that I'm any the less enthusiastic about the industries position on a specific controversy or find why don't we do that we have a an audience I think that probably have heard many of the arguments I've read many of the discussions in the papers they probably are thoroughly confused about where we go. Of housing what the role of government should be what the role of the private sector is what do you see realistically knowing the problems of the urban communities the political problems the social problems what do you see as the future directions for major cities in this country and particularly New York with respect to real estate Well I I really for see the necessity of re educating the public on the subject of housing and the relationship of housing to government unfortunately New York City since it was the city having the most tenant occupied units after the war was faced with a peculiar political problem in that housing became in everybody's mind something that was provided by the government and gradually there has evolved in this. Kind of a feeling that housing should be available at a price that a tenant thinks is fair with no relevance to any economic criteria and it's gone so far in terms of this Suttles switchin in community opinion that now the city itself has been forced to sue under. Some of the Mitchell Lama jobs just to persuade tenants they do have to increase charges even though it's a nonprofit organisation which the directors are running they somehow feel that. The city government whether it be the council or the administration is able to wave a wand and produce housing it can't happen and it's not fair to the city that this belief has grown up. And I think that one of your take off point. Thanks for. Recognizing the enormity of the problem is that New York City is paying much less on an overall basis for housing than any other city in the country and that I'm talking about the consumer in other words the consumer has lost the feeling that he must pay a fair share of the consumer income in order to maintain housing stock but it so from what I can see. The ratio of about one week's salary for rent is still a valid one economically and. And whether the city provides the housing or whether private owner provide enterprise provides it that is a fundamental rule of thumb as to what housing has to cost and I think that's that's probably the chief problem facing the city of New York housing is not a political commodity housing is an economic commodity and if the money doesn't go to pay for materials and labor all the other cause the housing will suffer. Rex let me ask you this one of the big problems that we have a New York as you know of course is that we we are operating today in one of the tightest housing markets we've ever had I think they have been probably a variety of reasons why we seem to have a few units then are desirable and that our vacancy rates are at an all time low I'm wondering what you as a real estate man sees for the future are we going to we're going to lick this this shortage of how we going to start revving up the new construction of residential units which apparently in the last few years. Have come to to a halt or at least decline substantially and as a result we now face this very tough market that we're in the one nine hundred sixty eight Well I think there are two ounces. As far as New York City itself is concerned in the first place we did have a zoning change a while back and under it the buildable area plot age was reduced and so it's no longer possible to. Put as much housing on a particular square foot a land on the island of Manhattan as it used to be when the industry have suggested that perhaps there should be some selective relaxation of the zoning codes to enable a higher ratio. Thing which I see in New York from a long run point of view is that it's still a dynamic town in which people wish to live and what we're witnessing I think is a change in the composition of the population in the free market sector now I'm talking about because I'll come to the controls actor in a moment but you get more and more people coming back from the suburbs who want to work in New York want to use a guy who is. It's museums and they are willing to accept less land her dwelling square foot then the family the family wants land and room to roam and so they go out in the suburbs and they raise their children there they want open space but a person who's past. Let's say past the age where his children are grown are setting out on their own that person is gravitating back to New York he's perfectly willing to accept an urban environment which is quite different and a much greater vertical development than you had in the past so I think New York can properly go to a greater density in its downtown sections it's near to work locations and the families should be going out into the boroughs The problem is now that the families have to go way out on Long Island and that's because a lot of the old housing stock is gradually passing into disrepair and now we're in the second phase of it. We have said for a long time that unless the rents were permitted to rise to cover the costs responsible investors people who believe that real estate should be a part of the portfolio the old families have always sustained housing. When they're driven out and the biggest problem in rank control and I'm not I'm now talking in terms of an objective view trying to please. The biggest problem is that the way the rent control laws are set up they force the owner investor out because he can get an increase which a buyer can get and so what happened until just about five years ago was that buildings Purcell and you got a lot of people who came in and said well gee I'll buy this in two years all time. I get a fifteen percent increase I'll turn it over and so now all of a sudden what has happened is that the city then said No you have to have a two year waiting period so the fifteen percent increase could no longer cover increased costs so the housing had passed to people who were not essentially owner investors with enormous resources to keep the housing going the other people had a choice they could put their money where it would pay it wouldn't pay and control the housing so they took it out and they sold it to these people these people didn't have the wherewithal to sustain it then they got trapped so they naturally started to try to cut services and do anything they could stay alive and the reason that you had the vast really that is to waste land in some sections which were used to be very good sections of the city is chiefly because owners just walked away they literally walked away and the real and the real problem I've heard some of these fellows and I must say they are desperate to follow the other day was saying he's going to board up a two bedroom apartment somebody said how can you afford to board it up and he said simply look I get thirty eight dollars to go in and clean it up make it run a bill I have to spend three fifty five put in the cheapest kind of equipment that's another two hundred fifty dollars so I'm putting in six hundred dollars to a thirty eight hour apartments I'll get fifteen percent in something for his equipment but the real vice the real vice is that he'll put that money in but it will be gradually taken away from him because his other expenses are going to rise to absorb any increase that he's gotten out of that and that's the fundamental difficulty now. It seems to me that we've got to. Take some basic approach which applies across the board to private housing to public housing to all housing and all of us have got to say that Rand is a price it's a price it's a price of occupying a piece of space and of the price is less than the cost. It's going to not be it'll disappear either through waste or failure to get and what people somehow you know there's a fable and I think the city's housing policies have largely subscribed to the fable that the real estate owner is wealthy and should be a fall and just may be. I certainly know that a lot of real estate people who are not in control of housing are philanthropist but when it comes to investing money they're like anybody else General Motors won't put or Ford stop putting money into ads sold because he couldn't collect the price and the capital community those who supply investment funds are not going to put money into housing if they can't collect the price Well let me ask you one quick question because unfortunately we're coming near the end of our time and I only wish we had another fifteen minutes the candidates are I guess I'm the only philosopher. One of the big problems Rex that I think you know those of us in government have been concerned about is the people question and that is what do you do in a situation where rents of necessity must or should go up but tenants who are particularly the lower income people suddenly find themselves pushed into a position where they're going to be paying thirty thirty five even forty percent of their income for rent and they can't afford to do it how do we make that problem that's one that has been terribly troublesome to us in government and I and I'm sure the industry is not unsympathetic to that probably Well Fred I would say that first step it would be to let rents rise at least in generally to people until people are paying twenty or twenty five percent whatever I think the in the in the low income housing program people must pay twenty five percent. And and then we can deal with the people right now you have such an under utilization. And of space we don't know how severe the problem is you don't for example. Control the price of milk you let the milk go and then you enable the person to buy the milk and fundamentally I think that's what you have to do with housing because if you don't have the housing supported by economic prices it isn't going to be there for the poor people anyway so I think that we've got to take the approach that we must get. As much of the consumer dollar as he can properly afford for housing and then worry about well Rex I want to thank you very much I want you to NOLA Leigh given you much more time usually than we do given you a chance tonight to really state your position which I've been interested in hearing and I'm sure our audience says and I want to thank you for being my guest on the program Mr Rexford Tompkins treasurer of the Real Estate Board of New York president of Brown Harris Stevens. Thank you gentlemen you've been listening to you and your landlord with Frederick Asper I'm a New York City's rent and housing maintenance commissioner this transcribes series brought to you at this time on the second and fourth Friday of each month and we invite you to join us again three weeks from tonight that's on December thirteenth at nine thirty at which time Commissioner Frederick S. Behrman will return for another edition of you and your landlord.

Audio courtesy of the NYC Municipal Archives WNYC Collection

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