Squeeze on Regulated Rents Puts Vital Housing Source at Risk

When the New York City Rent Guidelines Board voted on rent increases for 1 million rent-stabilized apartments in the five boroughs on June 26th, the nine-member panel had the opportunity – in Wall Street speak – to implement a market correction. Instead, the RGB, which is supposed to operate independently of City Hall influence, for a fifth consecutive year prioritized Mayor Bill de Blasio’s political agenda by voting for a woefully inadequate 1.5 percent rent increase on one-year leases.

The RGB overlooked the fact that while it was providing historically low rent increases totaling 2.25 percent in the previous four years – which included two consecutive years of rent freezes – de Blasio raised landlords’ property taxes by 31 percent, and building operating costs of owners of rent-stabilized properties increased in excess of 16 percent during that same period.

The RGB also completely ignored other significant data that should have factored into the recent vote on rent regulations – including this year’s 4.5 percent increase in operating costs of rent-stabilized apartments.

It was time to play catch up. It was a time for the RGB to return to a reasonable balance between owner and tenant interests. The findings of the RGB’s own reports begged for a modest rent increase of at least 4 percent for a one-year lease. But once again, the de Blasio appointed (and controlled) rent board fell far short and failed miserably at providing landlords the income they need to repair, maintain and upgrade apartments.

Before taking office five years ago, de Blasio pledged to address tenant affordability through the RGB process by appointing like-minded individuals to the board to carry out his agenda. But owners didn’t expect the degree to which the RGB would tip the scales to the tenant side and completely abandon the metrics that historically have guided this board.

Over the past five years of the de Blasio Administration, the traditional metrics have been disregarded because the critics claim that these metrics only consider owners’ costs and not the affordability issues confronting the tenant population that falls within a certain economic spectrum. But rent stabilization was never intended to be a rent subsidy program.

The RGB’s mandate and obligation is to enact rent guideline increases that are necessary to preserving rent-stabilized housing stock – and that means providing owners with a fair and equitable rent increase to repair, maintain and improve their properties in order to provide quality housing to their tenants. The protections afforded to tenants by the rent stabilization law are the limitations on the level of permissible rent increases set by the RGB, and not the precise level of rent increases.

By virtue of these rent increase limitations, the owners of the 1 million rent-stabilized apartments are the largest providers of affordable housing, particularly in the outer boroughs of Queens, Brooklyn and the Bronx, and in upper Manhattan. But it doesn’t mean landlords should be subsidizing tenants’ rents – which is precisely how the RGB process, under the de Blasio Administration, has evolved.

We clearly understand the plight of low-income tenants, but landlords should not be asked to shoulder the burden of income-challenged tenants. That’s government’s job. What other private industry has its income regulated by government and is saddled with annual increases in government-mandated costs (real estate taxes, water and sewer rates, etc.), then is forced to subsidize consumer costs?

The rent burdens of income-challenged tenants cannot be resolved with political schemes and rent freezes, but rather by rent subsidies and income supplements like the kind proposed in Albany legislation – which has passed unanimously on both sides of the aisle in the Senate, but is stuck in the Democratic controlled Assembly.

Why wouldn’t the Assembly, City Council and tenant advocates support an income-driven rent subsidy program for all tenants – for which a template exists in the existing senior citizen and disabled rent increase exemption programs? Or perhaps the city could model a rent subsidy program after its recently enacted half-price Metrocard initiative for straphangers earning $25,100 or less annually.

To meet de Blasio’s political agenda, the RGB further ignored the results of the 2017 New York City Housing and Vacancy Survey, which shows that affordability has barely budged in nine years. In fact, incomes are finally outpacing rents, rising 10.9 percent vs. 8.1 percent over the past three years. Some will make the case that this is the yield of two rent freezes and historically low rent increases of the past four years. But we know otherwise.

Who are de Blasio and the RGB really protecting? According to the U.S. Census Bureau, 168,000 tenants with annual salaries of $100,000 to $150,000 are occupying 20 percent of the city’s rent-stabilized apartments. But 172,000 families whose annual incomes are below $25,100 can’t find affordable housing. This data validates the irrationality and misguided conceptions of the RGB, which has reached far beyond its mandate to impact affordability without any reference or consideration of tenant incomes and ability to pay.

Furthermore, even with de Blasio-dictated rent freezes and historically low rent increases, homelessness has reached record levels under his administration – well over 61,000, with children representing 40 percent of that number. This is further proof that housing affordability is not the result of high rents, but rather a product of inadequate incomes for those most in need of a rent subsidy lifeline.

It is evident that affordability continues to be an issue despite increasing incomes outpacing rent increases, an improving city economy and all-time low unemployment, as well as rent freezes and historically low increases.

The RGB’s own studies are already forecasting a 3.4 percent increase in next year’s building operating costs – and these costs don’t account for building facade maintenance, increased elevator inspections, lead paint abatement and many other government mandates, including the dozens of requirements imposed on owners over the last four years under the progressive and pro-tenant City Council.

The RGB had the opportunity to right the ship two weeks ago – to fulfill its mission of maintaining the economic health of the regulated rental housing industry by authorizing rent increases to meet the ever-increasing operating costs that the board has fundamentally ignored for four consecutive years. The RGB’s current approach is unsustainable.

The vast majority of the city’s rent-stabilized apartments are in buildings well over 75 years old and in constant need of maintenance, repairs and upgrades. Choking landlords’ primary income denies them the resources needed to keep up with these costs and repairs. In addition, landlords pay close to 50 percent of the rent towards property taxes, water and sewer rates and other city mandates – which translates into revenue totaling billions of dollars that pays for police, fire, sanitation and other municipal services. It’s an economic engine the city can ill afford to lose.

But if the RGB continues to deliberately ignore the facts and, instead, prioritizes the misguided, ill-conceived politically driven agenda dictated by de Blasio, pull up a chair and get a front-row seat to the largest segment of quality, affordable housing falling into abandonment and deterioration. Remember Jimmy Carter’s 1977 visit to Charlotte Street – a stretch of vacant lots and burned out, abandoned buildings in the South Bronx? It became the poster child for urban blight in America. Thanks to the RGB and de Blasio, we aren’t far from repeating history.

Rent Control May Help a Few, But Does More Harm Than Good

If other studies have not proven in the past, this new study, targets all the points that RSA has made in the past: rent control ultimately hurts the housing supply.

As the students in this study learn, rent control could be very harmful to neighborhoods. In the end, the strongest argument against rent control is that there are better ways to protect vulnerable renters.

California Housing Crisis Shows How Elected Officials Still Cannot Find a Solution

With all the talks of the lack of affordable housing in New York City, California’s housing woes far exceeds the crisis in our city. But just like in California, local politicians in New York City still cannot figure out a solution that will increase affordable housing, and rent control certainly does not help the issue.

According to this article in Forbes, “rent control delivers tenants benefits through lower rents, but in the long-run, affordable housing actually shrinks and the losses far outweigh the gains.” This statement could not be any more accurate. New York City elected officials should take note.

The Inevitable Results of Rent Control

Rent control has become an unsuccessful measure to insure affordable housing in New York City, but nowhere near the catastrophic effect it has had on buildings and tenants in Mumbai.

At an average of 12 pence ($20) per month, it is not surprising how tenants are forced to live in poor living conditions in buildings that are decades old. Many buildings have collapsed and claimed lives and many others are in conditions so bad, that they are nearing collapse.

With rent so low though, the “it’s better to die” mentality has tenants willing to sacrifice their lives. The poor conditions of these buildings is a clear indication that building owners cannot maintain and make necessary repairs to their buildings because of the binding rent control laws.

From RSA President Joseph Strasburg: Memo to New York City Council: Right to Counsel Act Won’t Curb Homelessness

On the surface, guaranteeing the right to counsel in housing court appears to benefit tenants and affordable housing. But free legal representation for low-income New Yorkers facing eviction is more quick-fix-politics than sound long-term policy – and the politicians pushing these gimmicks, like New York City Councilman Mark Levine, couldn’t be more disingenuous.

Levine crows about a tenfold increase over the past three years under the de Blasio Administration in the amount of resources the city allocates towards anti-eviction legal services. He gushes about the mayor’s “historic” $155 million commitment to the program.

But Levine neglects to mention that during this same three-year period of historic right to counsel funding, New York City’s homeless population has reached historic levels – the highest since the Great Depression – with 61,935 New Yorkers (including 23,445 children) in the city’s shelter system.

How, then, can Levine say with a straight face that the right to counsel initiative is the cure for homelessness? The argument can be made that it’s having the opposite effect.

No one is saying that guaranteed free legal service isn’t a benefit to poor tenants, but here’s the reality: non-payment of rent comprises approximately 90 percent of housing court cases. Non-payment cases boil down to one factor – does the tenant have the funds, either on their own or from governmental rental assistance programs, to pay the rent? The answer is no – not because the rent is too damn high, but rather tenant income is too damn low.

Levine also conveniently fails to acknowledge that the number of evictions in recent years have actually declined by 24 percent, according to the city’s recent “Turning the Tide on Homelessness” report – not because of the increase in the number of tenant attorneys in housing court or the increase in right to counsel funding, but because rental assistance has never been higher for tenants who face eviction due to non-payment of rent. The city has increased rental assistance by 200 percent from 2011 through 2016.

With annual expenditures of more than $100 million on lawyers, $200+ million on one-shots, and millions in funding for the Family Eviction Prevention Program – coupled with the decline in evictions – why then are homeless numbers surging? The answer: Perhaps because homelessness has nothing to do with housing court.

The fact is, even with all of the free legal representation available, it’s not keeping low-income tenants in their homes – because no matter how low the rent is, these tenants still need even more government subsidy.

This begs the question: Why isn’t Levine, Mayor Bill de Blasio, City Council Speaker Melissa Mark-Viverito, the City Council and Democrats in the state Assembly supporting the Hevesi-Klein “Home Stability Support” initiative proposed by Assemblyman Andrew Hevesi and State Senator Jeffrey Klein?

This proposal would directly address the city’s record homelessness by providing a federal and state-funded rent subsidy for tenants who are facing homelessness or eviction. It’s a solid rent relief program – and a real cure for homelessness – that would keep the poorest and income-challenged families in their homes.

The Right to Counsel bill will also require a huge increase the number of judges, law secretaries, clerks and other staff to avoid the administrative quagmire that has already begun to strangle housing court. Housing court gridlock does nothing for tenants, who lose days of wages from missed work, or small owners, who are denied the rental income they need to repair, improve and maintain their buildings and pay property taxes and water rates that de Blasio has raised 17 percent and 12 percent, respectively, since taking office.

Isn’t it time that the mayor and City Council realize that working with the 25,000 owners of 1 million rent-stabilized apartments in the five boroughs – the largest providers of quality, affordable housing and one of the city’s major economic engines in good times and bad – are part of the solution, and not the problem to homelessness and other housing issues?

Until Levine and other politicians realize that throwing good money after bad to fund politically expedient, minimal impact programs like the Right to Counsel – rather than support sound initiatives like Hevesi-Klein Home Stability Support – tenants and owners can just expect more politics over policy when it comes to affordable housing.

New York Housing Crisis Overshadowed by California Emergency

It is no secret that affordable housing has become a hot topic in New York City and the centerpiece of many elected officials’ campaign platforms.

In comparison, however; the housing crisis in California is far worse than any state in the country. Imagine being a nurse, making $180,000 per year, and still having to live two hours away from your job because you cannot afford to live anywhere near it.

The affordable housing crisis is not just a problem in New York City.

Mayor de Blasio Hypocritically Touts Another Affordable Housing Development

Mayor de Blasio recently announced another “affordable” housing project that blatantly runs counter to housing policy directions he has strongly supported.

The Mayor has consistently voiced his opposition to the “two door” policy in which publicly subsidized affordable housing developments provide two separate entrances: one for market rate apartments and another for the “affordable” housing units.

In a recently announced housing development in Brooklyn Heights won the right to build market rate apartments above a public library but the “affordable” housing units will be built ‘offsite’, that is, in a totally different neighborhood. Offsite housing runs counter to another strongly held de Blasio belief: that subsidized market rate developments should further the goals of income equality and economic integration by offering “affordable” housing in the same development.

Even though this project clearly runs counter to the basic housing policies the Mayor is pushing city-wide, housing advocates have stayed conspicuously silent on the Mayor’s hypocrisy on this particular housing development approval.