Why Is the Rent Guidelines Board Vote Always Like This?

Photo: Michael M. Santiago/Getty Images

This year, the Rent Guidelines Board voted for the biggest rent increase in a decade, with a 3.25% increase on one-year leases and a 5% increase on two-year leases. years, but once again landlords and tenants left unhappy. It is a dramatic annual ritual that always, no matter how high or low, ends in universal discontent, giving at least an appearance of fairness to the proceedings. If everyone is unhappy, then the board has to do its job and balance everyone’s interests, right?

So you think. But although the process of determining increases each year is based on so many financial and economic data – on landlords, tenants and the economy in general, including but not limited to expenses, net operating income, unemployment and inflation – it has no set guidelines on how to weigh the many different data points, all of which are supplemented by testimonial anecdotes from tenants and landlords collected in public hearings. Inevitably, the process comes down to the personal and political opinions of the nine council members. They are all appointed by the mayor; the president serves an unlimited term at his pleasure, is often but not always replaced at the start of a new administration, and tends to reflect his views. The Bloomberg years saw significant annual increases during a period of low inflation, for example, while de Blasio’s rent guidelines board voted for the first rent freeze and otherwise kept increases to a minimum. Even though many board members still remain de Blasio, that early move under Adams was widely seen as evidence of the new mayor’s pro-ownership inclinations, indicating a strong likelihood of future raises.

“The law is very vague as to what you’re supposed to look at – affordability and the market. You look at landlord economics and tenant economics and they don’t give you the same answer, so you have to sort of reconcile you,” said Mark Willis, senior policy fellow at NYU’s Furman Center. Virtually no one agrees on how we should calculate these numbers or even what data to use to do so, so that every year we get a repeat of the same performance.

“It’s a charade by design,” added Michael McKee, treasurer of the Tenants Political Action Committee, a tenant activist for more than 50 years. “It plays out the same way every year – the two tenant members vote against higher increases, and the two owner members vote for them, and the five public members fall somewhere in the middle.”

Although rent stabilization has been decried by the real estate industry over the years, it was actually designed as a landlord-friendly alternative. another bill this would have extended rent control to post-war housing, McKee pointed out. At that time, in the late 1960s, rent increases on unregulated housing were (just as they are now) reaching such outrageous levels that there was broad support for new regulations; in 1969, when rent stabilization was passed, a mayoral committee found that the median increase in unregulated apartments was 26.5%. “It was designed by the real estate industry to be the weakest form of rent regulation, and some of it was fixed by the state legislature, but the worst part, the Rent Guidelines Board, was not. “, he added. McKee would like to see members confirmed by city council as a balance to the mayor’s control.

In its early years, rent stabilization was widely popular. The owners also believed it would be a temporary measure after a deregulation bill was passed by the state legislature in 1971. Time in 1973. Instead, it became the flawed way to preserve, mostly without subsidies, much of the city’s affordable housing stock. The problem is that council increases, whether small or substantial, are in no way tied to tenant income. Rent-stabilized tenants are not, for better or worse, means-tested, and rents vary widely depending on how long the tenant lives, how often the apartment has been flipped since 1969 and the aggressiveness with which the landlord raised the legal rent. . The idea of ​​vouchers, which exist for the elderly in one form or anotherwas launched, but it is a political impossibility because no one would pay for it.

That said, rent-stabilized tenants are not, despite a handful of Job stories over the years on millionaires in rent-regulated apartments, overall, rich. They have a median household income of $47,000 a year, compared to $62,960 for unregulated housing, according to the city’s 2021 report. Housing and vacancy survey, and more than half of all renter households in the city are rent-gated, meaning they spend between 30 and 50 percent of their income on rent. And yet, says Andrea Shapiro, director of programs and advocacy at the Met Council for Housing, the Rent Guidelines Council frames every discussion around preserving landlord profits. “They look at the owners’ income, income and costs and decide what to do from there,” she said. “We have a housing crisis, and they’ve organized it like this: ‘We have to make sure the landlords keep making money.’ They look at renter income, unemployment rate and affordability, but this seems to be largely ignored in favor of landlord income and keeping landlord income at a certain level.

And what level should that even be? Rent Guidelines Council statistics show that, on average, an apartment in a stabilized apartment building generated $545 in net revenue per month in 2020, that is, revenue after paying all operating expenses. But net operating income also fell 7.8% between 2019 and 2020. Since 1990, when the Council started tracking the NOI, it has fallen in just four more years. Tenant advocates see the numbers as proof that landlords are consistently earning good income on their homes and that rundown claims that rent-stabilized buildings are falling apart because landlords don’t have the money to maintain them. are false. Landlord advocates see the numbers as proof that, especially at this time, increases are needed to offset falling revenues. Others, like Willis, argue that the rent-stabilized RNE is not a reliable indicator because it includes buildings that have only one rent-stabilized unit and others that are almost entirely rent-stabilized.

It might be fairer to link rent stabilization increases to the consumer price index, because Willis proposed. This has been done in other places with rent stabilization, making decisions, if not necessarily more favorable to tenants, at least less political. Or they can be indexed to tenant income levels, which are broadly, if not individually, tracked by the vacancy survey the city conducts every three years. Does a 3.25% increase protect family homeowners and ensure they can provide safe, modern housing stock, as Adams argued after the vote? Or is it pushing tenants out of their homes in favor of huge property companies? As the Time underlinewe can’t even determine whether large or small landlords own the city’s rent-stabilized housing stock: the council says that, according to his analysis, over 61% of stabilized units are owned by owners of ten units or less, but a study by another group, JustFix.nyc, puts that number at less than 1%. (He also says more than 60% is owned by owners of over 1,000 units.) All of this means that next year will almost certainly bring another rowdy vote with hand-made signs, whistles and an increase in rent that no one is satisfied with.