Owners Must Act Now for Reasonable Rent Increases

It has been a little over a week since the Rent Guidelines Board has proposed the possibility of a zero rent increase, a first in the 46-year history of the RGB. The proposed Preliminary Rent Guidelines are as follows:

For a one-year lease, a range between 0% and 3%.

For a two-year lease, a range between 0.5% and 4.5%.

A sublet allowance between 0% and 10%.

A Special Guideline for decontrolled apartments equal to Maximum Base Rent (MBR) + 30% or the HUD Fair Market Rate (FMR) whichever is greater.

A 0% increase for all classes of hotels, rooming houses and Single Room Occupancies (SRO’s).

Although Mayor de Blasio campaigned on a promise of fighting for zero rent increases, that promise may now become a reality. The Mayor packed the Board with five new “impartial” appointees. The guidelines listed above are the direct result.  Just as unprecedented as the proposal for a zero rent increase was the unprecedented vote of eight in favor and one opposed to the Preliminary Guideline.

Guideline proposals are historically carried by the five Public Members of the Board, with the two Tenant Members and the two Owner Members opposed. However, the six members appointed by Mayor de Blasio, including Chairperson Rachel Godsil, were joined by two holdover Public Members to vote in favor of the proposal with only long-time Owner Member Magda Cruz courageously voting against this irrational proposal. Even more outrageous is the fact that any owner representative would vote in favor of zero Rent Guidelines, as newly appointed Owner Member Sara Williams Willard, did.

Despite the Price Index of Operating Costs (PIOC) showing a 5.7% increase, which includes increases in all categories for property owners, Rachel Godsil laid out the rationale for the zero guideline vote. Godsil suggested that, based on the RGB staff Income and Expense Study, owners’ “profits” increased by 9.6% and by 31.5% between 1990 and 2012 while tenant income in the last six years had barely increased. Although the sympathy towards tenants was obvious, Godsil stressed that this was only a Preliminary Guideline and that the RGB will continue to listen to testimony and stories from owners and tenants at next month’s public hearings.

It is absolutely essential that owners come out to share your stories at these public hearings. It is even more important to join as at the final vote, which will take place on Monday, June 23rd.