On Thursday, the city’s Rent Guidelines Board listened to testimonies from both tenants and landlords at a public meeting, as that body deliberates between a rent freeze or hikes on the monthly costs for rent-stabilized apartments. Both sides are proceeding as expected: Owners and their representatives are asking for rent increases, and tenants’ advocates believe the city should implement a rent freeze.
There’s one thing they do agree on: there is a housing affordability crisis that needs to be solved.
The city’s population is slightly decreasing, according to Oksana Mironova, housing policy analyst at the Community Service Society (CSS), who cited data from the U.S. census. “Housing affordability is likely contributing to this decline,” said Mironova. According to CSS’s testimony, median asking rents jumped nearly 30 percent above inflation from 2014 and 2017, when that figure had been just 2.1 percent in the previous three years.
“With high rent burdens and limited choice within the market, because low rent apartment vacancy was about two percent in 2017, many low-income New Yorkers find themselves in extremely difficult housing situations,” Mironova added. “Among low-income stabilized renters, nearly half reported being unable to afford a $25 dollar increase in rent in 2018.”
Prior to the meeting, tenants’ advocates rallied on the steps of City Hall.
“I might have to move to another state, where life is cheaper: many people are doing it already, many people move to Massachusetts, or they move to South Carolina, they move to Florida,” said Geronimo Jourdain, a retired Bronx resident originally from the Dominican Republic, who believes the city should implement a rent freeze. “Maybe five or six years from now New York will be a ghost town.”
Tenant representatives cited studies on the city’s housing crisis and rent burden on low-income residents. Stephanie Sosa, senior associate at the Association for Neighborhood and Housing Development (ANHD), said that “about 53.2 percent of rent stabilized tenants are currently paying more than 30 percent or more of their household income in rent, and 26.7 percent are paying over 50 percent of their household income or more.”
Those testifying on behalf of tenants also emphasized on the fact that landlords are, according to available data, making a profit. Mironova cited a Real Property Income and Expense (RPIE) analysis that found that “landlords of stabilized buildings spent about 59 cents out of every revenue dollar on operations, thus generating 41 cents in income.”
Tim Collins, from Collins, Dobkin & Miller LLP (and a former board member) called for new audits on landlords’ reported costs, as the last one, conducted 27 years ago, found that owners overstated costs by eight percent: “The great invisible elephant in this room is the fact that owners know damn well how much money they’re making and they don’t disclose it, and they never have,” Collins said. “And that’s fine, unless it’s creating excessive burden for tenants.”
But landlord representatives argued that that Net Operating Income (NOI) data used by the board is flawed, as it doesn’t account for one- to 10-unit buildings and omits certain expenses, including capital reserves and expenditures, debt service, and business taxes.
Landlord reps also spoke against forthcoming legislative proposals that would drastically change the rules for rent-regulated apartments by eliminating certain funding streams for landlords, including major capital improvements, individual apartment improvements, and vacancy allowance and decontrol.
“If the funding streams that allow owners to maintain and invest in their buildings are eliminated, the RGB would have to raise rents 7.5 percent annually to make up the difference,” John Banks, the president of the Real Estate Board of New York, said in a statement. “New York should move to a new model that utilizes a formula based on actual costs, so that the RGB can operate independent of political machinations and provide predictability in balancing the needs of both tenants and property owners.”
“Do you believe that there is a housing crisis in New York City?” Leah Goodridge, an RGB member representing tenants, asked those testifying on behalf of landlords—and they concurred.
“We are, of course, very concerned about housing affordability,” said Joseph Condon of the Community Housing Improvement Program (CHIP). “We also don’t believe it’s this board’s responsibility to solve that issue and that deliberation should really just focus on the numbers: how much expenses increase, how much of a rent increase is necessary to cover those expenses, and keep it simple.”
The RGB will hold a preliminary vote on May 7 and the final vote is expected to happen at the end of June. Last year, the Board voted to allow rent increases of 1.5 percent on one-year leases and 2.5 percent on two-year leases.