Introduction
In attempting to validate the value of our analysis for uncovering previously unknown or under-reported instances of landlord intimidation, our team conducted analyses based on the portfolios of several CUSP students' landlords. While most of these portfolios did not seem to indicate a significant amount of harassment across the various dimensions we analyzed, one portfolio did stand out. After the analyses were completed and our team determined that this portfolio seemed to have signs of landlord intimidation, we were able to determine through a quick internet search that the landlord of the portfolio in question was indeed a landlord with a history of tenant harassment who was at one point in the past few years featured in a New York Times report on tenant harassment. We have chosen not to reveal the name of the student or landlord to preserve anonymity, but this finding is an anecdotal demonstration of how our analysis can be used to uncover instances of landlord intimidation unknown to those using it.
Property Identification
The portfolio of the anonymous CUSP student's landlord has an average Renovation Index score significantly above the city-wide mean of 25. This suggests that many buildings in this portfolio are in areas that are seeing more new development and a higher pace of gentrification. The increased demand for units in these areas represented by this score suggest a strong financial incentive to deregulate rent-stabilized units in order to achieve the large financial gain associated with deregulated, market rate rents in gentrifying neighborhoods.
Only 10% of units in the CUSP student's portfolio are rent stabilized as of 2016, 14 percentage points higher than the citywide baseline of 24%. However, the amount of rent stabilized units declined by 70% from 2007 to 2016, which is dramatically higher than the city-wide baseline of 1.9%. While it is hard to say based solely on the data presented above that the precipitous decline in rent stabilized units is a result of illegal or predatory tactics, this profile is characteristic of a landlord who's financial strategy is founded upon the gains to be made from deregulating rent stabilized units, putting in place a strong incentive to harass rent stabilized tenants out of their units that appears to have been.
Property Financing
37% of buildings in this portfolio received at least one loan from one of the eight banks known to support the practices of predatory equity. This stands in stark contrast to the city-wide baseline, where only 2% of all residential buildings received a loan from one of these banks. Furthermore, one of the buildings in this landlord's portfolio appeared on our list of properties advertised on StreetEasy using one of the terms we believe to be indicative of a property suitable for predatory equity investors. Given that the total number of buildings on this list is around 1000, even one building is a substantial red flag of predatory equity. This fact along with the significantly high percent of buildings in this portfolio related to banks known to facilitate predatory equity suggest a landlord utilizing predatory equity as a financial strategy.
Construction
The indicators presented above indicate that a) the financial strategy of the landlord in question is that of the deregulation of rent stabilized units, and b) that the landlord has been effective in this by substantially reducing the number of rent stabilized units. However, they do not get at the extent to which this landlord may have engaged in illegal or predatory tactics to coerce rent stabilized tenants out of units.
An examination of DOB complaints data shows that this landlord has complaint counts much higher than the city average. 25% of buildings in the portfolio had more construction complaints than the city average plus one standard deviation, and 20% of buildings had more than the city average plus two standard deviation. Focusing on complaints that are the top five most over-represented in the Croman and Kushner portfolios, 28% of buildings had more of these complaints than the city average plus one standard deviation, and 25% of buildings had more than the city average plus two standard deviation. Assuming that the count of construction complaints data by building is normally distributed, this means that between 20-25% of buildings in this portfolio are in the top 2% of buildings by over-represented and construction complaint count. These rates are some of the highest out of all the portfolios we examined. At best it is an indication that this landlord engages in construction and other building ownership practices that are illegal and harmful; at worst it is an indication that the landlord uses illegal and predatory strategies around construction and building ownership as part of a larger scheme to coerce tenants out of their units.
Legal Proceedings
The portfolio of the anonymous CUSP student's landlord has a much higher rate of evictions per building than the citywide baseline. 45% of buildings in the portfolio have at least one eviction on record between 2013 and 2015, compared to just 5% of all residential buildings citywide. The ratio of evictions per unit for the portfolio is .23, which is around one standard deviation greater than the city-wide average. While the motivation of these evictions cannot be determined with certainty solely based on these statistics, the significant differences to the citywide baseline suggest some underlying mechanism or incentive to motivate this. Given all the information known about this landlord, it is not difficult to reach the conclusion that this incentive may be the deregulation of units rather than the standard eviction based on lack of payment or disorderly conduct.
Illegal Deregulation
About 8% of buildings in the portfolio of the CUSP student's landlord are on the list of buildings suspected of illegal deregulation through the misreporting of rent stabilized units. This is about half the rate of appearance of all rent stabilized buildings in New York City on this list (16%). This does suggest that, while illegal deregulation may have been conducted by this landlord, it is not necessarily a practice done systematically across the portfolio. Given the precipitous drop in rent stabilized units seen from 2007 to 2016, the high rate of construction complaints and the high rates of eviction, it would seem as if the primary tactic is construction-as-harassment and evictions without just cause.
Discussion
Across almost every dimension of predatory landlord behavior analyzed, the landlord of the anonymous CUSP student seems significantly more likely to be engaged in wrong-doing than the average landlord. The motive for predatory behavior is established through the presence of buildings in neighborhoods with high rates of development (as proxy for gentrification and high market rents), the reliance on banks known to support predatory equity investors for loans, and the purchase of a building listed using coded language to suggest a predatory equity opportunity. All these facts point to an underlying financial incentive scheme reliant on the conversion of rent stabilized units to market rate. The precipitous drop in rent-stabilized units over the past decade, the substantially large number of DOB complaints, and a high rate of eviction all indicate that this landlord uses the tactics of eviction without just cause and construction-as-harassment to coerce rent-stabilized tenants out of their units, enabling them to convert these units to market rate and complete their predatory equity scheme.
While not every portfolio we tested had a set of indicators that clearly seemed to indicate a certain type of landlord (good or bad), this example does demonstrate the way our analysis can be used to generate an intuition about a previously unknown landlord's financial motives and likelihood of engaging in predatory behavior towards their tenants