Landlords call for rent increases on rent-stabilized apartments

The mayor has asked the Rent Guidelines Board to freeze rents

New York /
May.May 05, 2020 11:53 AM
CHIP's Jay Martin, RSA's Joe Strasburg and REBNY's James Whelan

CHIP’s Jay Martin, RSA’s Joe Strasburg and REBNY’s James Whelan

While tenants call for a rent rollback and the mayor calls for a freeze, landlords are asking for a more than 2 percent increase on stabilized apartments.

The Rent Stabilization Association is asking for a 2.5 percent to 4.5 percent increase on one-year increases and a 3.5 percent to 5.5 percent increase for two-year leases, the group testified on Tuesday during the Rent Guidelines Board’s third meeting. In its own reports, the board projected that increases of 2.5 percent and 3.5 percent for one-year leases and 3.3 percent to 6.75 percent for two-year leases would be needed to maintain net operating income for landlords of rent-stabilized buildings. According to one of the board’s reports, net operating income declined by 0.6 percent from 2017 to 2018 to $535 monthly per apartment, the first drop since 2003.

“It is simple math,” RSA’s Vito Signorile said. “When rent is not paid, building expenses are not paid.”

Mayor Bill de Blasio has urged the board to freeze rents, and board members — including one of the landlord representatives — have indicated that they see the logic in doing so. Tenant advocates, citing the coronavirus pandemic, want rents reduced, something the board has never done. Signorile said that if the board moves forward with a “politically motivated” freeze, it should only do so temporarily, between Oct. 1 and Dec. 31. As it stands, the board’s actions apply to one- and two-year leases signed on or after Oct. 1, 2020.

The Real Estate Board of New York is calling for a minimum 2.4 percent increase on one-year leases. REBNY pointed to the board’s reliance on old data — collected from 2017 to 2018 — and noted that it doesn’t account for the state’s Housing Stability and Tenant Protection Act of 2019, which restricted how landlords can increase rents on regulated apartments.

The board’s data, which also doesn’t reflect the impact of the coronavirus pandemic, overstates net operating income in stabilized apartments because it excludes smaller apartment buildings, debt service and other costs incurred by landlords, REBNY’s Paimaan Lodhi said during Tuesday’s hearing. He also pointed to the rising cost of property taxes, which represent an average of 30.4 percent of costs at rent stabilized buildings.

“This deficit was previously balanced by other statutorily available revenue streams beyond RGB annual increases,” he said. “Now that the State has eliminated those revenue streams with the passage of the HSTPA, the role of the RGB is more critical to maintaining the economic viability of the city’s rent stabilized apartment stock.”

Leah Goodridge, a supervising attorney with the Housing Project at Mobilization for Justice and one of the board’s tenant representatives, said the Housing Stability and Tenant Protection Act was designed to correct unfair advantages enjoyed by landlords to hike rents.

“These in reality are protections for tenants from abuses that tenants have suffered for decades,” she said. “There’s no balancing of the scale.”

Goodridge has expressed support for going beyond a rent freeze by actually rolling back rent rates in stabilized apartments.

RSA and the Community Housing Improvement Program, another landlord group, also asked the board to apply increases to vacant apartments. The state Division of Homes and Community Renewal indicated last year that the board will have to specifically authorize the application of rent increases upon vacancy.

Community Service Society’s Oksana Mironova asked the board to consider freezing rents on both one- and two-year leases. She cited a survey her group conducted, which found that nearly half of low-income rent-regulated households (about 175,000) reported in the past three years that they couldn’t afford a $25 increase in rent. She said increases approved by the RGB under the Bloomberg administration, as well as “loopholes” in the state’s rent-stabilization law have led to a “rapid rise of stabilized rents over the past two decades.”

“The RGB cannot address systemic issues like wage stagnation or federal disinvestment in the affordable housing sector,” she said. “But, addressing tenant hardships in rent-stabilized apartments is within the board’s purview.”

Tenants who testified also criticized the fact that the board held its meetings remotely. Advocates had called for the board to cancel its meetings and freeze rents, citing the fact that many tenants wouldn’t be able to participate in virtual hearings.One of the tenants, Kim Statuto, said low-income New Yorkers are being overlooked.

“I didn’t have money for April, and I don’t have money for May,” she said. “What’s going to happen after June 20, when the eviction moratorium is lifted? I’m going to be in court. What can I do?”

Tuesday’s hearing is the final RGB meeting before the board’s preliminary vote, scheduled for Thursday.

Write to Kathryn Brenzel at [email protected]


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