‘Rollback is warranted’: Pols and tenants ratchet up pressure on rent board

BY LINCOLN ANDERSON | When he was running for mayor, Bill de Blasio campaigned on the pledge of a rent freeze for rent-regulated tenants.

He pulled it off last year, in his second year in office, when the Rent Guidelines Board — now with all of its nine members appointed by him — voted for a rent freeze for one-year lease renewals.

It was a historic event — the first time the R.G.B. in its nearly 50 years of existence had backed a rent freeze.

Fast-forward one year, and the R.G.B. is now once again poised to vote on Mon., June 27, in the East Village at the Great Hall of The Cooper Union, at 7 E. Seventh St., at 6:30 p.m. It promises, as usual, to be a raucous affair. But this year, tenants’ calls are likely to be even more thunderous — not for a rent freeze, but for a rent rollback.

Tenant activists and a slew of local politicians have been urging the R.G.B. to take things one big step further than a rent freeze — and roll back rents, meaning tenants’ rents would actually be cut, and they would be keeping more dollars in their own pockets. The calls for a rollback were loud and long at last year’s vote — but, in the end, tenants had to settle for a freeze.

Monday’s vote will impact the city’s 1 million rent-stabilized apartments, which house close to 3 million New Yorkers, or nearly 36 percent of the city’s entire population.

Tenant activists called for a rollback at last year's Rent Guidelines Board vote. The board, however, voted for a rent freeze for one-year lease renewals. Photo by The Villager
Tenant activists called for a rollback at last year’s Rent Guidelines Board vote. The board, however, voted for a rent freeze for one-year lease renewals. Photo by The Villager

De Blasio has made the city’s affordability crisis a keystone of his mayoralty, and has repeatedly said average New Yorkers are paying far too much toward their rent.

If the R.G.B. actually votes for a rollback this time, it would be another historic first.

And this year, tenant activists and politicians say a rollback is, in fact, entirely justified. Tenants continue to struggle, with many defined as either “rent burdened” (paying more than 30 percent of their income for rent) or “severely rent burdened” (paying more than 50 percent of their income for rent).

According to a 2014 Housing and Vacancy Survey, the most recent data available, the median income of the city’s rent-stabilized households was only $40,600 in 2013. According to that study, one-third of the city’s renter households paid 50 percent or more of their income toward rent.

Meanwhile, the Price Index of Operating Costs a.k.a. PIOC, which New York City uses to measure landlords’ average operating expenses for rent-stabilized buildings, actually decreased by -1.2. percent between March 2015 and March 2016 — mainly due to a sharp drop in the price of fuel.

However, the R.G.B., at least in its initial recommendations in May, did not indicate it thinks a rollback is appropriate at this time. The board’s proposed recommendations this year call for 1-year increases for rent-regulated apartments to be somewhere in a range between 0 percent to 2 percent and 2-year leases to be between 0.5 percent to 3.5 percent. In fact, these are the same as last year’s preliminary recommendations, which resulted in a historic rent freeze for one-year renewals and a 2 percent increase for two-year renewals.

The year before, the board recommended a 1 percent increase for one-year renewals, which was the lowest ever at that point.

Ratcheting up the pressure on behalf of tenants, however, this past Tuesday, 20 New York City councilmembers wrote to the R.G.B. urging them to support a rent freeze. Among the joint letter’s signers were all of the local councilmembers in The Villager’s coverage area, Margaret Chin, Corey Johnson, Rosie Mendez and Dan Garodnick. The others included Ben Kallos, Laurie Cumbo, Antonio Reynoso, Brad Lander, Daniel Dromm, Deborah Rose, Donavan Richards, Carlos Menchaca, Stephen Levin, Mark Levine, Vincent Gentile, Vanessa Gibson, Daneek Miller, Jimmy Van Bramer, Ydanis Rodriguez and Matthieu Eugene.

“In the past, the Rent Guidelines Board gave far more attention to landlords’ costs than to tenants’ ability to pay,” the councilmembers wrote. “The Board overestimated landlords’ fixed costs, and voted for rent increases that far outstripped the growth of the local economy. The Board’s good work over the past two years has begun to address these issues, but there is more to do. This year, striking a fair balance for tenants and landlords means voting for a rent rollback.”

While this year, the landlords’ PIOC was measured to be -1.2 percent, the councilmembers noted that this annual figure actually had been overstating landlord costs by 11 percent since 2005, “so this negative PIOC is still an underestimation, and landlords’ costs are even lower than the already negative 1.2 percent suggests.”

In addition, also affecting landlords’ profit, mortgage interest rates are the lowest in decades, at 3.97 percent. Meanwhile, the councilmembers added, landlords’ net operating income has increased for the 10th year in a row — rental income for landlords rose by 4.8 percent.

“All of these data points show that a rent rollback is feasible, warranted, logical and fair,” the 20 councilmembers stated. “But the rollback is also necessary for the well-being of this city’s residents. Tenants’ struggles and the continuing housing crisis [the low number of vacant units] in New York City prove that the board must vote in favor of a rent rollback.”

New York City renters are also hurting worse than others, the pols added.

“Since the market crash in 2008, [New York City] tenants faced average yearly rent increases of 3.1 percent while the average national asking rent increase during that period was only 0.6 percent.

“Furthermore, we are suffering from the highest rent burdens ever recorded,” the politicians continued. “The median amount of rent paid by stabilized tenants has increased to 36.4 percent of household incomes. In 2014 alone, average rent collections in stabilized buildings rose by 3.5 percent. This unbearable rent burden leads to tenant displacement, as we saw 221,988 evictions and possessions in 2015, 43 percent of which were evictions of rent-stabilized tenants. These numbers are not sustainable and bring New York to the verge of being an exorbitant city.”

In conclusion, the pols wrote: “While there is endless data to consider, the story is clear: Past rent increases have far outstripped both landlords’ operating costs and tenants’ spending powers. This injustice has not only placed undue burden on New York residents, but has also contributed to the loss of an estimated 250,000 to 400,000 rent-stabilized units over the past 20 years. It exacerbates our city’s current affordable housing crisis.”

At last year's Rent Guidelines Board vote in The Cooper Union's Great Hall, R.G.B. members, above, heard it from tenants who were demanding a rent rollback. But the board instead voted for a rent freeze for one-year lease renewals. Photo by The Villager
At last year’s Rent Guidelines Board vote in The Cooper Union’s Great Hall, R.G.B. members, above, heard it from tenants who were demanding a rent rollback. But the board instead voted for a rent freeze for one-year lease renewals. Photo by The Villager

Local politicians also called for a rent rollback at an R.G.B. hearing earlier this week, on Mon., June 20. Among those offering testimony were state Senator Brad Hoylman, Councilmember Rosie Mendez and Borough President Gale Brewer.

“Year after year the R.G.B.’s own statistics do not support the landlords’ primary argument that increased rents are necessary to meet increased operating costs,” Hoylman told the R.G.B. “An honest assessment of the real numbers shows not only that landlords can afford — and will still profit from — rents remaining constant, but also that most regulated tenants cannot afford any rent increases.

“Therefore, I urge the R.G.B. to impose a rollback or, at minimum, a freeze on rents for all rent-regulated apartments,” Hoylman testified, “as well as for lofts, hotels, rooming houses, single-room occupancy buildings and lodging houses.”

In her testimony before the board, Mendez said, “In many years past, the R.G.B. gave more weight to landlords’ costs than to tenants’ ability to pay, at one point setting the increase as high as 8.5 percent during my time in the City Council. These were overestimations that far exceeded the growth of the local economy. And as we look at recent numbers, we see that this year landlords actually saw operating costs that are even less than they were in 2015. The Price Index of Operating Costs (PIOC) was at half a percent [last year]. This year it’s at negative 1.2 percent. So in considering the feasibility of a rent rollback, this is the year to do it.

“This board has done a good job listening to tenants,” Mendez continued, “but I think we all know how long the balance has been in favor of landlords. With a decrease in our low-income housing stock and not enough programs to incentivize truly affordable housing, the income inequality in our city continues to grow. This rollback is a step in the right direction.”

Not every politician is calling for a rent rollback, though, including Assemblymember Deborah Glick, for one.

“We’re probably going to call for a rent freeze,” she said. “Even though people would like a rollback, I think that it’s very hard to advocate for more than a freeze. That’s going to be our position. I’m hopeful that they will consider that,” she said of a rent freeze. “Though the early recommendation, of course, is for modest increases, I’m hoping we can get a second year of a rent freeze.”

Harvey Epstein, a tenant member of the R.G.B., said he doesn’t see a rollback in the cards.

“It seems very unlikely to me — not that a rollback isn’t deserved,” he said.

In fact, Epstein and the board’s other tenant member had recommended rent reductions of -4 percent and -2 percent for one- and two-year lease renewals, respectively. The board’s two landlord members of course opposed a rent freeze. The R.G.B.’s other five members, including its chairperson, voted for the current preliminary recommended ranges of increases.

Epstein said, given that the board’s preliminary offerings don’t include a rollback, it’s unlikely they would vote for one.

But Kenny Schaeffer, vice chairperson of Met Council on Housing, said the point of the R.G.B. holding public hearings around town the past few months was precisely to solicit public input. That input — specifically, tenants’ persistent calls for a rent rollback — needs to be factored into the board’s considerations when it casts it vote on Monday night, he stressed — otherwise, why even hold public hearings?

“They’re supposed to pass preliminary guidelines and then listen to the public,” Schaffer stressed. “They’re fully able to pass a rollback. And, hopefully, after listening to the public testimony at all the public hearings they’ve held, they’ll come to their senses.”

Schaffer added that the New York City Rent Stabilization Law of 1969 — which created rent regulation — was enacted specifically because of “sharp increases” in rents that were jeopardizing New Yorkers’ right simply to enjoy a tolerable standard of living.

Specifically, the text of the 1969 law states that it is intended “to prevent exactions of unjust, unreasonable and oppressive rents and rental agreements and to forestall profiteering, speculation and other disruptive practices tending to produce threats to the public health, safety and general welfare.”

Currently, landlords are making 40 cents profit on every rental dollar, he noted, far more than most other businesses could even imagine. If any landlord feels a rent rollback would unfairly burden her from making a “fair profit,” she can claim hardship and open her books, Schaffer noted, and if a hardship is found, she can get a “hardship increase.”

“Less than 10 landlords a year do this,” he noted.

“This is a business that the Legislature has decided needs to be regulated because, otherwise, left to its own, they charge rent people can’t afford,” he emphasized.

“It’s a business, and the R.G.B.’s job is to protect the public from their apparently insatiable desire for higher and higher profits. Even 40 percent is not enough — because they want more.”

However, Vito Signorile, a spokesperson for the Rent Stabilization Association, which represents landlords of rent-stabilized buildings, said the association doesn’t expect a rollback to be approved on Monday.

“A rent rollback is no longer on the table,” he said. “The board’s job is to make rates consistent based on the data and increased costs for property owners. This board is claiming owners have been overcompensated. But owners have, on average, received one-year rent increases of 3 percent despite overall cost increases of 7 percent over the history of rent stabilization.”

Furthermore, Signorile said the R.S.A. thinks that many so-called “rent burdened” tenants are, in fact, paying very low rents yet also making very little income.

“A lot of these tenants are paying under $500 a month in rent,” he maintained. “It’s an income issue.”

Looking at the prospect of a second de Blasio term and more years of rent freezes, if not rollbacks, isn’t encouraging for R.S.A.

“He’s running for a second term. He has appointed every member of the board,” Signorile said. “Consistent rent freezes will be detrimental to rent-stabilized housing. Then it will become public housing, in terms of conditions. Look at the condition of public housing. If you don’t invest in buildings for maintenance, they become decrepit. Public housing is not maintained.”

Schaffer countered that public housing has fallen on hard times largely due to federal funding cuts. More to the point, he said, the 1969 Rent Stabilization Act says that tenants — and their safety and health — are to be protected from landlords’ profiteering. In other words, under the law, it doesn’t matter what the tenants’ income is — they have to be protected, Schaffer said.

Schaffer said that, in fact, rent-stabilized units should have been kept much more affordable — and that a massive rent cut of one-third is warranted based on the figures. In short, rents for rent-regulated housing should be closer to those in public housing, he said.

Signorile countered, “Then that would turn rent stabilization into a public benefit — which it is not.”

For his part, R.G.B. member Epstein said he does think a rollback could happen at a future date.

Asked what amount of rollback the 20 councilmembers are advocating, a spokesperson for Corey Johnson said they are leaving it up tenant advocates to set that figure. However, Ben Kallos, who represents the Upper East Side, has aggressively called for a rent reduction of up to 15 percent.

Perhaps a rent rollback of that much is, in fact, not realistic. But tenants will be demanding more than just another freeze from the R.G.B. on Monday evening. Whether the board will heed them remains to be seen.