NYC Rent Guidelines Board Sets Mid-Year Rate Hike for Stabilized Tenants

By David Brand .

Published June 24, 2021

The board voted to freeze existing rents for six months before increasing rates for the remaining half of the year, what some members described as a compromise between what tenants and landlords had each been pushing for. The new rules will take effect Oct. 1.

Adi Talwar
Apartment buildings in uptown Manhattan.

The nine-member panel that sets the rents for New York City’s roughly 1 million stabilized apartments hit tenants with a unique mid-year increase Wednesday, despite an uncertain economic recovery from the COVID-19 pandemic.

The Rent Guidelines Board (RGB) voted 5 to 4 to freeze existing rents for the first six months of one-year leases before hiking the rent by 1.5 percent for the remaining six months. The board voted to make two-year leaseholders pay a 2.5 percent increase. The new rules will take effect Oct. 1.

Last year, the RGB voted to freeze rents as the COVID-19 public health emergency fueled unprecedented job loss, income erosion and an economic crisis that continues to affect New York City tenants and landlords. Renters and their two representatives on the board had proposed another freeze for one-year leaseholders and a 1 percent increase on two-year leases, arguing the city’s economic recovery is still deeply uncertain and imbalanced.

The RGB’s two landlord representatives countered with a plan to raise rents by 2.75 percent on one-year leases and 5.75 percent on two-year agreements. The five public members, whom the two dueling sects attempt to win over, voted down both plans in favor of the mid-year rent hike at the virtual hearing.

Board Chair David Reiss said he backed the compromise because New York City “saw the light at the end of the tunnel” in its COVID recovery but wanted to give hard-hit tenants some time to achieve stability.

Tenants rights advocates slammed the proposal. Board member Sheila Garcia, the director of housing at Bronx-based New Settlement, said the six-month rent increase is based on predictions about a just recovery that provides jobs and opportunities to low-income New Yorkers.

“There’s an assumption that tenants can afford to pay $10, $30 as the cost of landlords continuing to make profits,” Garcia said. “We haven’t seen the total effect of the rent relief program, the total effect on tenants of what the pandemic is doing … Six months doesn’t give tenants the adequate time.”

Garcia addressed the board alongside fellow tenant representative Leah Goodridge, managing attorney for housing policy at Mobilization for Justice, and a few dozen tenants who chanted during testimony at a rally in Cooper Square.

“We are on the precipice of a new mayoral administration and a new New York, and I want to make clear that at this point in time we are not going back, we are moving forward,” Goodridge said ahead of the vote. “We have had decades of rent increases that have created an unjust system.”

For many years, the board did approve significant annual increases — often up to the 3 percent permitted by law for one-year leases. The board became more tenant-oriented under Mayor Bill de Blasio, who appointed each member.

That could soon change, however. Eric Adams, a landlord and the Democratic mayoral candidate with the most in-person first-place votes in Tuesday’s primary election, has said he supports a rent increase.

The RGB decision came after a year-long contest between tenants and landlords vying to demonstrate that they were more financially impacted by the COVID-19 pandemic than the other. Landlords and real estate groups noted that property owners were still forced to make mortgage and insurance payments even if their tenants failed to pay rent consistently. Reiss highlighted cost increases for property owners based on 2019 data, including an 18.8 percent rise in the cost of insurance and a 3.9 percent real estate tax increase.

Renters, meanwhile, described the devastating financial impact of the crisis in a city where the majority of low-income tenants are already severely rent-burdened, meaning at least half of their income goes toward rent. About three-quarters of New York City residents who make less than $15,000 per year are severely rent-burdened, according to the Furman Center. So are more than 60 percent of New Yorkers who make between $15,000 and $30,000, and 25 percent of residents who make between $30,000 and $50,000 per year.

“I’m on a fixed income at present and I’m paying 75 percent of my income for rent,” said Mike Boomer, a Fort Greene senior who testified at a RGB public hearing June 15. “Rais[ing] the rent as per the usual protocol is the wrong thing to do, the entire world has been shaken away from the usual protocols and so should the Rent Guidelines Board.”

He and other tenants had called on the board to rollback rents by as much as 5 percent. “I cannot afford the increase in rent,” he added.

Overall, 44 percent of New Yorkers pay at least 30 percent of their income toward rent, according to a 2018 analysis by the Citizens Budget Committee. The pandemic has only made things worse.

State eviction protections are set to expire August 31, leaving tens of thousands of New Yorkers at risk of eviction after they struggled to pay rent during the COVID crisis.

The state’s Office of Temporary and Disability Assistance has received more than 90,000 applications for emergency rent relief since a new program opened June 1. The $2.4 billion Emergency Rental Assistance Program (ERAP) is designed to make landlords whole and prevent evictions by covering back rents for tenants who earn less than 80 percent of area median income and who missed payments as a result of the pandemic.

East Harlem renter Dennis Osorio, an activist with the Metropolitan Council on Housing, questioned why the board would increase rents now when landlords are set to see a cash infusion from ERAP.

“We have a pandemic that has devastated some of the most vulnerable tenants and workers around the city, and yet we have every level of government willing to bail out the landlords,” Osorio said. “I feel like there’s a disconnect between the folks on the board and regular New Yorkers.”

Osorio said he and his wife pay $1,850 a month for rent — equal to about 40 percent of their income — but can “roll” with the upcoming increase. He added that he is fortunate compared to others in his building for whom even a 1.5 percent increase will pose problems.

Goddard Riverside Organizing Director Larry Wood told City Limits those small rent increases force tenants on fixed incomes to make grim decisions, especially at the end of the month.

“Such a huge percent have high rent burdens so every dollar can make a difference to somebody,” said Wood, who mostly works with tenants in Single Room Occupancy (SRO) buildings (the RGB voted to freeze SRO rents for an 11th straight year). “Even a $10 or $20 rent increase can determine if someone affords their medicine at the end of the month or goes to a soup kitchen.”

Tenant advocates also said the compounding impact of the increase reflects an institutional framework that favors property owners over tenants in New York City.

“One thing that gets lost in the debate is that they only look at it per year and not the big picture,” said Mobilization For Justice housing attorney Justin La Mort. “Every year, the rate of increase for landlords increased but the rate of income for tenants did not.”

Some landlords and tenant rights advocates foreshadowed the potential compromise ahead of the vote after they learned of negotiations among small groups of RGB members and their advisers.

In making their yearly decision, RGB members weigh landlord costs, including property tax rates, water utility prices, maintenance and insurance, as well as broader economic factors. The board considered the $1,300 median monthly rents for regulated apartments in 2019.

Chinatown property owner Irving Lee said he has been forced to pay for major renovations to keep his 111-year-old apartment building safe for tenants on top of daily maintenance issues, but has struggled to collect enough money at the current rate set by the RGB.

“Like many small property owners in Chinatown and across New York City who provide the bulk of affordable housing in New York City we need substantial increases from the rent-stabilized tenants to maintain our property while providing safe and affordable housing for the community.

In some cases, the rents provided by the tenants do not meet the needs of the property,” Lee said at a public hearing June 15.

He said he relies on commercial tenants to generate enough rental income to turn a profit, but has had a hard time finding stable occupants during the pandemic.

“We provide substantial income to New York City coffers by paying our real estate taxes. Losing us would have a negative impact on the stability of the economy,” he added. “Rent freezes will be fiscally irresponsible.”

George Nicholas Sarantopolous, principal of Bay Ridge-based Vista Realty, said he and other landlords have been forced to spend more throughout the pandemic to keep up with increased water use and to clean and maintain their buildings.

“We’re asking for an increase because it’s been about 10 years and at the same time real estate taxes have gone up 55 percent, insurance 35 percent and utilities have gone up 12 percent,” he said during the June 15 hearing.

In his closing remarks Wednesday, Reiss, the RGB chair, acknowledged the many challenges for tenants and landlords that he said complicate the board’s decision-making.

“There’s no fool-proof formula for a fair rent adjustment,” he said.