The Rent Guidelines Board met last Thursday ahead of voting to determine the maximum allowable rent increase for rent regulated apartments throughout New York City. The same review happens annually, but this year there’s a special sense of urgency as rents continue to rise amidst falling incomes and a precipitous drop in rent regulated housing stock, which account for some 1 million homes in the city. Proponents of rent regulation agree that the system is badly in need of reform, but it remains to be seen what exactly that might look like when Albany revisits the rent regulation laws, which expire on June 15. Many affordable housing advocates are worried that powerful real estate interests might prevail. But for now, it’s up to the RGB to decide whether or not to continue on a course of raising rents for rent regulated tenants or take the advice of some lawmakers and freeze rents.
The RGB set aside Thursday’s meeting to hear testimony from representatives of both landlords and tenants. Arguments were generally quite polarized, but Tim Collins, an attorney who previously served as a member of the RGB from 1987 to 1994, offered some sense of middle ground.
He reiterated that the RGB’s mandate is to simulate “normal market rates where abnormal market rates prevail.” He added: “Your job isn’t to run a social welfare agency.” But he acknowledged the “elephant in the room,” i.e. “the simple fact that wealth has shifted dramatically in this country.” He said: “This is not simply a housing crisis but a decline, perhaps even a disappearance of the middle class.”
Collins presented data demonstrating that over the last several years, particularly under the previous administration, the board has voted in favor of landlord interests. “Balance is tipped greatly in favor of owners,” he said. “The case for overcompensation is overwhelming.”
He argued that the RGB serving under Bloomberg had deviated from the mandate and spent the administration’s lifespan “trying to gradually deregulate the stabilized housing stock.”
Though Collins declined to offer any specific recommendations for the board, he hinted that striking a balance between addressing the inequities and dramatically shifting course would be ideal. “I don’t think rent should be reduced by 10 percent this year, but something short of that.”
He cautioned against a full 10 percent reduction which he deemed too radical. “I think the industry would use that as part of their arsenal to convince Albany the RGB has become a newly radicalized board.” Instead, Collins suggested that a 2 to 4 percent reduction would be a “reasonable start” but that redress “could be a little deeper.”
This progressive stance, one that seeks to maintain if not altogether revamp the rent control system in New York City, reflects Mayor de Blasio’s 10-year housing plan “to build and restore 200,000 affordable units” which cites the importance of strengthening rent control protections at the state level.
According to the Furman Center, rent for rent-stabilized and -controlled units has increased just slightly behind the pace of rent increases for market rate apartments. Between 2002 and 2011 rent for market-rate apartments increased by 58.9 percent whereas rent for rent-stabilized units increase by 49.4 percent.
Poignantly, Collins presented data demonstrating that operating costs for landlords over the past several years have remained steady.
According to 2012 figures, rent for rent-stabilized units eats up approximately 33.8 percent percent of median yearly income. Tenants are considered “rent burdened” if housing accounts for 30 percent or more of income.
Last year, the first RGB under Mayor de Blasio enacted the lowest ever rent increase— just 1 percent for the resigning of one-year leases and 2.75 for two-year leases. Between 2002 and 2014, the RGB has made increases between 2 percent and 4.5 percent. If the board were to freeze rents or even reduce rents the move would be an unprecedented one.
But the revelation earlier this year that top Department of Buildings officials accepted bribes to eject lower income tenants is a reminder that despite vocal affordable housing advocates at the city level, the reach of real estate interests is undeniable. At a break in the RGB meeting, which was a typically stale bureaucratic affair, an old woman with frizzy gray hair cleared her throat and started chanting, “Oh where, oh where has our affordable housing gone?” No one seemed to acknowledge the woman — instead everyone filed quietly out of the room for lunch.