Mayor Makes New Appointments to the Rent Guidelines Board (Finally)

Mayor de Blasio took it right down to the wire, making five new appointments to the Rent Guidelines Board just two hours before the first meeting of the board on March 27th.

The Mayor replaced one of the two owner representatives of the RGB without any consultation with industry representatives. The new owner’s representative appointee is Sara Williams Willard, who will join Magda Cruz, the other owner representative. Joining the RGB as the Mayor’s two public member appointees are Cecilia Joza, who is currently the housing counseling program director at Mutual Housing Association of New York and Steven Flax, who has spent over 30 years involved in community housing and development projects.

The Mayor’s newly appointed tenant representative is Sheila Garcia, who is the Community Organizer at the Community Action for Safe Apartments (CASA) New Settlement and has over 20 years of experience in tenant advocacy. The second tenant representative is Harvey Epstein of the Urban Justice Center, who has been serving on the RGB since April 2013 and was officially re-appointed by Mayor de Blasio.

Although we still await the Chairperson of the RGB to be appointed, the other members are in place. Now that the rent guidelines process is underway, we cannot ignore the elephant in the room, which is Mayor de Blasio’s campaign promise of a zero rent increase. A de Blasio spokesperson downplayed the Mayor’s campaign promise, stating that these appointees were chosen to produce balance on the board based on their experience in the housing field. The truth is, these are in fact Mayor de Blasio’s appointments and the Mayor has called for a zero rent increase.

The next public RGB meeting will be taking place in two weeks on April 10th, with a Preliminary Guidelines vote expected at the May 5th meeting. In the last twelve years, former Mayor Michael Bloomberg typically stayed out of RGB discussions of rent increases. Mayor de Blasio now also seems to be taking a hands-off approach to the RGB, having appointed members who presumably are in-tune with his thinking.

Will the Rent Guidelines Board Remain Impartial?

The Rent Guidelines Board season is scheduled to begin on March 27, 2014 and the rental housing industry will be watching closely to see how Mayor de Blasio fills the vacant seats for Chairman and a Public Member (one Tenant seat is also vacant). The choice of RGB members may indicate whether Mayor de Blasio will carry through on this campaign pledge to freeze rents.

If the Mayor chooses Public Members who are obviously biased towards tenant interests and zero rent guidelines, this will send catastrophic signals to the real estate industry and could well lead to disinvestment in existing and new rental housing.

The RGB is supposed to play an impartial role in approving rent guidelines. With two Tenant Members and two Owner Members on the Board, the rent guidelines are usually enacted by the five Public Members who steer a course between the tenant demand for zero rent increases and owners’ call for rent increases equal to the ever-increasing cost of operating rental properties. As a result, while building operating costs have increased in excess of 6% per year, rent increases have only averaged 3% per year.

Zero guidelines this year will provide a clear indication that the rent setting process is now part of the political process. We may see zero guidelines stretching into the future regardless of real increases in building operating costs. Existing owners will not be able to maintain their buildings. Developers will not be able to count on reasonable increases going forward to sustain their new projects.

The fact of the matter is that some level of rent increase is necessary and justified as long as real estate taxes, water charges, oil, insurance and other operating costs continue to increase.