Michael Appleton/Mayoral Photography OfficeMayor de Blasio appoints the nine members of the Rent Guidelines Board.
While Mayor de Blasio is busy campaigning in Iowa as the candidate for working people, he was notably absent from one of the most progressive victories this year: the monumental overhaul of the rent laws, which will benefit 2 million New Yorkers who are mostly low-income and people of color.
While he does not have power over the rules of rent stabilization, the mayor does have influence over the nine members of the Rent Guidelines Board (RGB) whom he appoints, and who will be voting Tuesday on the increases on one- and two-year leases that start on or after Oct. 1, 2019. Troublingly, there are indications the board he has appointed may side with landlords this year.
It should come as no surprise that landlords are complaining to the nine members of the Rent Guidelines Board about the recent changes to the rent-stabilization law. For the past 25 years, they got rich off of a business model that rewarded deregulation, harassment and eviction. Real-estate values were inflated based on projections of how many apartments could be flipped, and how many building improvements could be cashed in on. Yes, landlord profits might now take a slight hit, but that’s because they were profiting off of unfair loopholes that exploited tenants and led to displacement and homelessness.
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Shut out of Albany for the first time, landlords are now appealing to de Blasio’s appointed Board hoping to find a sympathetic ear. Despite seeing their net operating income increase for 13 straight years (even during the 2 years of rent freezes), they hope the members of the mayor’s Rent Guidelines Board (RGB) will pass higher increases than usual to offset the “losses” in profit they claim will result from the changes to the rent laws. Their arguments are predicated on misinformation and conjecture. The mayor and his public appointees should not be swayed.
For example, landlords would have the RGB members believe that there will no longer be an incentive for landlords to maintain or improve their buildings due to reforms for Individual Apartment Improvements (IAIs) and Major Capital Improvements (MCIs). But the truth is that landlords will still recoup more than the cost of improvements. They will still make a profit, just not an obscene profit. Tenants will still continue to pay for these improvements for 30 years – long after landlords have recouped their investment. Instead of making the previous 10 percent return on investment for MCIs they will now make a 6 percent return — still a decent rate. If they have problems doing repairs with that kind of profit, the problem isn’t lack of rent money; it’s lack of will to do repairs.
We should remember that landlords painted the same doomsday scenario when the RGB passed a rent freeze one one-year leases in 2015 and 2016. They even tried to sue the city. RGB decisions must be based on facts, not the alarmist claims landlords are making about a future that hasn’t happened yet. Ultimately their case was dismissed and the data now shows that during the rent freeze period of 2015-2017, landlord net operating income still went up!
The reality is that most New Yorkers are struggling to make ends meet. A majority of renters spend over a third of their income on rent, making them officially “rent burdened,” and a third pay over half their income in rent. A seemingly small increase is a huge deal to most New Yorkers. A 3.75 percent increase (which is one proposal on the table for the RGB) could be the catalyst that evicts a family from its home.
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The people of New York City are calling on the mayor to use his considerable influence to urge the RGB to be fair to tenants on June 25th, and vote for the lowest increase possible. Employees who work for the city of New York, the elderly living on a fixed income, struggling single parents, contract workers who don’t always command high wages, people with chronic illnesses who pay a lot for important medication, aspiring artists, and many others, who do not have a trust fund at their disposal—but need a roof over their head—are the people that keep this great city running and are looking to the Rent Guidelines Board to understand our plight. We are the people who built this city up, while many landlords either tried to burn the city down or abandoned it in the past, and are threatening to do so again.
The recent rent-law reforms strengthened tenants protections and closed loopholes that allowed landlords a back-door method of raising the rent other than the RGB. If landlords can now come crying to the RGB for those same excessive increases, then the changes will be meaningless. In order for the reforms in Albany to be powerful, the city has to do its part and help keep rents affordable. This is a chance for the Rent Guidelines Board to do the right thing and follow the numbers, and a chance for the mayor to show that he is truly the candidate for working people.
Ava Farkas is the executive director of the Met Council on Housing and Delsenia Glover is the executive director of Tenants & Neighbors.