By Steven Wishnia
For the first time since rent stabilization began 46 years ago, the New York City Rent Guidelines Board voted to freeze rents.
By a 7-2 margin, with the landlord representatives the only dissenters, the board voted last night to prohibit rent increases for rent stabilized tenants renewing their leases for one year, beginning October 1st. Tenants renewing their leases for two years will face 2 percent increases.
“It’s a huge victory for tenants,” Harvey Epstein, one of the RGB’s two tenant representatives, said after the meeting. “It’s at least a statement that tenants have power and were able to speak up to real estate interests.” The combination of “getting the data out before the board” and the personal stories told at public hearings in Manhattan, the Bronx, Queens, and Brooklyn earlier this month, he added, made the five public members “understand the plight of tenants who are struggling to pay their bills.”
The vote was the first time in at least 20 years that the RGB has approved guidelines proposed by the tenant representatives. It was also the first time in at least 20 years that tenant protesters in the crowd chanted a pro-RGB slogan: “Cuomo betrayed us, the RGB can save us.”
RGB chair Rachel L. Godsil said the main change since last year, when the board nixed a widely expected rent freeze, was a 21 percent drop in owners’ fuel costs. The board allowed the increase on two-year leases, she said, to avoid locking owners into this year’s rents if costs rise in the next year.
In front of more than 400 people in the Great Hall at Cooper Union—many of whom chanted loudly for a rent rollback for almost half an hour before the meeting officially started—the tenant representatives opted for pragmatism. “The data supports a rent rollback,” Sheila Garcia said while proposing the one-year freeze, “but we don’t have the votes to make that happen tonight.”
Owner representative Sara Williams Willard called the freeze “myopic and biased.” But the landlord presence in the crowd was minimal; about 20 people in a far corner of the auditorium, one holding a sign that read “Free Market” and another “Bills Too High, Rents Too Low.”
Godsil gave a three-page spiel before she cast her vote for the freeze, rattling off statistics to explain her position. The board’s data, she said, indicated that landlords’ operating costs rose by only 0.5 percent last year, the lowest increase since 2002, and their net operating income before debt payments went up by 3.4 percent, the ninth year in a row it has increased. The board’s “commensurate” estimates indicated that owners could sustain that net operating income even with a rent reduction of 2 percent for a one-year lease and 1 percent for two years, at least with an increase of 0.75 percent for one year and 2 percent for two.
Landlords’ net operating income has increased by 34.4 percent since 1990 after adjusting for inflation, while homelessness rose by almost 10 percent in 2014. And over the last three years, rents have gone up almost five times as much as tenants’ incomes: With a median income of $41,500 a year and a median rent of $1,300 a month, half of the city’s 1 million rent-stabilized tenants now spend more than 36.4 percent of their income on rent.
“Ensuring that rents provide owners with sufficient revenue to meet operating expenses and receive a fair rate of return is critical to maintaining the rent-stabilized housing stock,” Godsil concluded. “However, in light of this year’s current data, a guideline which grants a 0 percent increase for one-year leases is appropriate.”
That data, particularly the generation-long increase in landlords’ net operating income and the fact that most rent-stabilized tenants spend more than one-third of their incomes on rent, could also be used to argue for a rent rollback. Tenant groups contend that the RGB under mayors Rudolph Giuliani and Michael Bloomberg allowed rent increases far above the rise in landlords’ costs, and it’s time to compensate for that.
“The landlords have gotten more increases than their costs have justified,” Alan Podhaizer, 69, of Coney Island, said before the meeting. “They’ve never opened their books.”
“We understand that argument,” Godsil responded, but said a rent reduction would be “potentially really harmful to small owners.”
“It’s a historic day,” said Manhattan Councilmember Corey Johnson. “Finally the RGB is accurately looking at the numbers and coming down on the side of tenants.”
“They actually asked the question of whether there should be an increase, instead of how much of an increase should there be,” said Brooklyn Councilmember Jumaane Williams.
“This is a big deal in a time when Albany didn’t do anything for us,” said Manhattan Borough President Gale Brewer. The rent freeze won’t stop harassment of tenants, she said, but it shows that “people understand the threats tenants are under.”
With the state government’s refusal to repeal vacancy decontrol last week preserving the prime incentive for landlords to force tenants out, harassment was on the minds of many in the audience. Ruth Riddick of Midwood said his Brooklyn neighborhood has seen landlords “harassing tenants out of their buildings, making shoddy improvements, and raising the rent up high.” Rents for new residents are getting close to the $2,700 deregulation threshold, while for longtime tenants—she’s lived in her apartment for 35 years—“the landlords are not making repairs. That’s part of the harassment.”
“The landlord is trying to kick us all out,” said Jenny, a 16-year-old girl who lives with her parents and grandparents in Chinatown. Several tenants in the building have taken buyouts, she added, and the new residents are paying between $2,000 and $3,000.
Still, the mood before the meeting was festively angry, with the Rude Mechanical Orchestra marching band playing in the courtyard of the luxury high-rise across the street, as protesters streamed in from Flatbush, Sunset Park, West Harlem, the Bronx, and the Lower East Side. “La renta sube, sube/ El pueblo sufre, sufre,” they chanted as the drummer pounded a four-on-the-floor tom-tom beat. (“The rent goes up, up/The people suffer, suffer.”)
“It’s been a long time coming,” said Wasim Lone of Good Old Lower East Side. “A rollback would have been justice, but getting a rent freeze for the first time in the history of the Rent Gouging Board is a victory. We’ll take zero percent, and keep on organizing.”