Rent Guidelines Board Reins in Suggested Increase, Proposing 2% to 4% Hikes

Upper East Side residents are facing shocking rent increases as pandemic concessions expire | Upper East Site
Upper East Side residents are facing shocking rent increases as pandemic concessions expire | Upper East Site

By Greg David, THE CITY

This article was originally published on May 5 at 10:13pm EDT by THE CITY

A compromise touted by Mayor Eric Adams leaves nobody happy, with landlords warning about higher costs and tenant advocates pointing to a spike in evictions and homelessness.

A sharply divided city Rent Guidelines Board voted to consider increases of 2% to 4% for one-year leases, as it nears a final decision next month on how much rents can increase for regulated apartments.

The 5-to-4 vote Thursday also established a range of 4% to 6% for two-year leases.

The compromise, forged by board chair David Reiss, didn’t satisfy landlords, who say their finances are being devastated by cost increases that the board’s own research shows are much steeper than the likely rent hikes.

Affordable housing advocates marched through Lower Manhattan, demanding an end to 421-a tax breaks and the passage of Good Cause eviction laws, April 21, 2022.
Affordable housing advocates marched through Lower Manhattan on April 21. | Ben Fractenberg/THE CITY

Tenants and their advocates meanwhile continue to insist that the economic fallout from the pandemic means that many tenants will be unable to pay higher rents and will wind up being evicted. More than 900,000 apartments operate under the city’s rent regulation system.

Mayor Eric Adams took credit for the board’s decision to reduce the increases its staff had recommended last month — which had been between 2.7% and 4.5% for one-year leases and 4.3% to 9% for two-year leases. 

“I believed that the numbers initially reported were much too high, so I called for a better balance — and it is good the board moved lower,” he said after the vote.

Landlords are angry that the board members set maximum rents below the levels suggested by their own staff. The staff recommendations had been based on research that showed landlords’ financial position had worsened in rent years. 

A staff report earlier this year showed that because of higher costs, so-called net operating income, which doesn’t include mortgage payments, dropped by 7.8% between 2019 and 2020, the largest decline in 17 years. Property owners also argued that the sudden surge in inflation this year has sent costs higher, especially for energy.

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“These preliminary ranges have proven our biggest fear — that the RGB continues to believe its duty is to operate solely as an affordability program for tenants,” charged Joseph Strasburg, president of the Rent Stabilization Association, which represents 25,000 owners and managers of rent-stabilized apartments. 

“These preliminary ranges will not make up for this disparity, which is even wider when factoring in millions of dollars in unpaid rent during the pandemic.”

At the Thursday night vote, Sheila Garcia, one of the board’s tenant members, implored the board to keep rents low, or frozen.

“People talk about a 3% rent increase like it’s nothing. And we know that’s not true. It’s the people behind me right now who are impacted by our decisions,” she said via Zoom, surrounded by rent regulated tenants in The Bronx.

“How many tenants in the room know someone who is going paycheck to paycheck, right now?” she asked the crowd.

A half-dozen hands shot up. “I do!” a man shouted, audible over Garcia’s microphone.

Sheila Garcia, a tenant member on the Rent Guidelines Board, testifies before the board’s preliminary rent hike vote on Thursday, May 5, 2022.

Inflation’s Effect

Landlords had been hoping for a more sympathetic atmosphere with the change at City Hall.

In a break from his predecessor Bill de Blasio, Adams had moved away from public support of rent freezes demanded by tenant advocates. 

“My administration is committed to making decisions based on data,” he said in a statement in March.

Financial pressure on tenants is immense. At least $1.6 billion in rent is owed in the five boroughs, according to the National Equity Atlas. Eviction cases have overwhelmed the city’s court systems since a pandemic moratorium ended in January. Unemployment, particularly among Black New Yorkers, remains much higher than the national average.

Earlier Thursday, the Legal Aid Society and Public Advocate Jumaane Williams called on the board to freeze rents, as they had been during the pandemic. 

“Over one million people reside in a rent-stabilized dwelling – including many of our clients who are low-income and predominantly from Black and Latinx communities,” said the Legal Aid Society before the vote. “These are some of our most vulnerable neighbors, and the Rent Guidelines Board must prioritize their safety to ensure that they remain housed. New York is already suffering from an eviction and homelessness crisis.”

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Some tenant groups portrayed the issue as one of hard-hit New Yorkers versus well off landlords. “Any increase that would siphon away money for groceries, medical care or other essentials to pad landlords’ pockets is both unconscionable and immoral,” said the Legal Aid Society.

But others admit that mounting owner expenses are a problem. Williams suggested utility relief could help landlords with rising costs, though he didn’t specify how that could be done. City comptroller Brad Lander similarly said inflation — which was more than 6% in the New York area for the last 12 months — was a serious problem in a statement in which he recommended that the staff’s 2.7% be the highest possible increase. After the vote he reiterated his position, saying any increase above the lower figure would be excessive.

Landlord groups want help as well, with the Rent Stabilization Association, for example, calling for new subsidy programs to help struggling tenants pay rent.

The mayor, too, backs ways to soften the impact of higher rents. “If rents and the other costs of living are going to go up with inflation and other economic issues, then so too must government support, which is why I have been fighting for a more generous housing voucher program, a more robust earned income tax credit, and significant investments in child care,” he said in a statement Thursday night.

Three of the board’s members were appointed by Adams, while six were named by de Blasio.

Rent increases during the eight years de Blasio was mayor averaged only 1% annually.

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