Landlords Sue RGB Over Mamdani’s Rent Freeze

A group of landlords is suing over New York’s rent freeze.

After New York’s Rent Guidelines Board voted last month to freeze rents in stabilized apartments, six landlords are petitioning the New York Supreme Court to annul the freeze and send the issue back to the board for a rent increase.

The suit argues that the board’s consideration of a freeze was a “sham” process with a predetermined outcome and that the board failed to consider economic conditions for the real estate industry.

The petition is the first legal challenge to the rent freeze, a thorn in the side of landlords but a key campaign promise of Mayor Zohran Mamdani. A successful suit could unwind the decision or potentially change how New York determines rent increases in rent-stabilized apartments.

“[T]he Mayor went to extraordinary lengths to pack the Board with loyalists and then spent millions in City funds to fill the Board’s hearings with tenant advocates,” the petitioners wrote in the complaint. “That Mayor Mamdani preordained this outcome and then took affirmative steps to stack the deck is now undeniable.”

A representative of the Rent Guidelines Board declined to comment. The Mayor’s office did not immediately respond to a request for comment Wednesday.

The Article 78 petition, meant to challenge decisions from state or local government agencies, was filed in Staten Island. The petitioners are building ownership companies, some of which are associated with landlords Michael Fazio, Violet Zharku and Sophia Hepheastou, according to a release.

The petition refers to the resignation of former board member Christina Smyth. Smyth, who represented owners on the nine-member board, resigned the morning of the vote, saying it was only “theater.”

“The Rent Guidelines Board has stopped being a fact-finding body. It has become a body that starts with an answer and vibe codes its way backward to justify it,” Smyth wrote in a statement announcing her resignation.

The petition also refers to the board’s own data showing that the price level of landlord operating costs increased 5.3 percent in the past year. (Tenant advocates point to separate data showing the net operating income of landlords of rent-stabilized buildings rose by 6 percent, a statistic that doesn’t include debt service or major capital expenses.)

The mayor has worked to emphasize the board’s independence in recent months.

“As the mayor has made very clear: the Rent Guidelines Board is an independent body, and he is confident that they will review all of the appropriate information and make an independent decision,” Matt Rauschenbach, a spokesperson for the mayor, said in a statement to The Real Deal in May.