With Second Straight Rent Freeze, de Blasio Will Never Learn

The “politics before policy” reputation of the City Rent Guidelines Board (RGB) continued once again this year as Mayor Bill de Blasio’s Board voted in favor of another rent freeze for one-year leases at the RGB Final Vote on Monday, June 27th. Mirroring last year’s guidelines, there will be a 0% increase on one-year leases and a 2% increase on two-year leases commencing October 1, 2016 and ending on September 30, 2017.

The majority of the Board, excluding Owner Members Scott Walsh and Mary Serafy, continued to stand by the notion that owners have been overcompensated by past rent guideline increases and that a negative Price Index of Operating Costs (PIOC) as a result of a dramatic decrease in fuel costs, as well as an increase in property owner Net Operating Income (NOI), were grounds for an unprecedented second consecutive rent freeze.

The motion for the rent freeze, which was put on the table by Chairwoman Kathleen Roberts, was approved with 7 votes in favor and two abstentions coming from the Owner Members. Chair Roberts stood strongly by the notion that the Board determined these numbers based off of the data that was analyzed throughout this year’s deliberations. This is also the second year in a row that all members of the Board, excluding the Owner Members, voted in favor of a rent freeze. Prior to last year, RGB Final Votes were typically 5-4. Once Mayor de Blasio began appointing more members to the RGB, Public Members of the Board have fully committed their votes to tenant friendly guidelines, resulting in votes of 7 to 2.

Chair Roberts’ motion was the third to be placed on the table, following motions by the Owner Members and Tenant Members. The Owner motion was the first to be heard and was proposed by Scott Walsh, who called for a 3% increase for one-year leases and a 5% increase for two-year leases. Mr. Walsh defended the Owner proposal, saying that the numbers were determined based off of zero-to-minimal increases approved the previous two years, as well as continued increases in all other building operating costs. Ultimately, the Owner proposal was denied by a vote of 7 to 2.

It’s important to note that Mr. Walsh began his proposal with recommendations for State and City lawmakers that could assist rent burdened tenants throughout the City, as well as assist rent stabilized building owners burdened by severe property tax increases. After hearing hundreds of tenants testify throughout the public hearings in June, Mr. Walsh believed that elected officials should be doing more to enhance current rental assistance programs and develop additional subsidy programs for tenants, rather than calling for rent freezes that will ultimately hurt the City’s existing affordable housing stock. Although Mr. Walsh’s proposals were logical and ideas that elected officials such as Mayor de Blasio should consider, such common sense proposals do not advance progressive political agendas. So more than likely, we will never see such proposals come into fruition.

As a result of the RGB’s adoption of yet another rent freeze, RSA announced that we will initiate a lawsuit against the RGB to seek the invalidation of the new guidelines. The vast majority of the RGB, as well as Mayor de Blasio, ignore that fact that owners continue to be burdened by increasing costs to maintain their buildings. The difference between this Administration and those of the past is that reasonable rent increases were awarded to offset the increasing operating costs, while de Blasio’s RGB is merely carrying out a political agenda.

Despite publicly applauding the RGB’s vote for a rent freeze once again, Mayor de Blasio oddly urged tenants to take a two-year lease, saying the “two-year lease in particular gives you two years of security in knowing that your rent will go up very little.” Mayor de Blasio unexpectedly acknowledged that it is uncertain what the rent guidelines will be next year and that fuel costs are already on the rise.

Next year’s RGB deliberations will commence as Mayor de Blasio begins his campaign for re-election in the fall. Although a rent freeze and housing affordability have been the platform for this Mayor’s Administration, it will be incredibly difficult for the Mayor and RGB to justify a third consecutive rent freeze when the PIOC is expected to rise. It is also important to keep in mind that next year’s RGB data will finally reflect the then-historically low 1% increase on one-year leases in 2014 when the PIOC was 5.7%.

This Mayor will never learn. His grand affordable housing plan is not a feasible one without helping the owners of the existing housing stock. By helping, we mean not raising operating costs, particularly devastating property tax increases, while cutting off the only source of income for property owners.

Throughout the two days following the Final Vote, Mayor de Blasio basked in his glory over the rent freeze publicly. Come on Mr. Mayor, can you make it any more obvious that these unheard of rent guidelines were all your doing? The puppet strings that you hold over this RGB are easy to see and now we are not the only ones who see it.

RSA’s public relations campaign has made a big impact in 2016 and it has resonated not only with several elected officials, but with the media as well. Take these powerful editorials by the New York Post and New York Daily News for example. A rent freeze might sound good to the public, particularly tenants, but the sound of two straight rent freezes even has the media calling out Mayor de Blasio on his political agenda. Even the press knows rent freezes are not healthy for the City’s aging housing stock. It may not show right away Mr. Mayor, but in the long run, rent freezes are not the best idea.

And we told you so.

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