The Case for a Rent Rollback

The Case for a Rent Rollback

June 2014

On May 5, the city Rent Guidelines Board—most of whose members, including new chair Rachel Godsil, had just been appointed by Mayor Bill de Blasio—voted 8-1 to suggest preliminary increases for rent-stabilized apartments that might include a rent freeze for one-year renewal leases commencing October 1.

 If the RGB decides to freeze rents at its final vote June 23—and it might not, as the de Blasio administration has been pressuring Godsil and the public members to allow an increase—it would be a historic and long-overdue action. But it would not be enough. The fact is that rents should actually be reduced, because current rent levels reflect 40 years of unwarranted RGB increases. Compounded year after year, these increases have directly contributed to an unprecedented affordability crisis, record homelessness, and the loss of a substantial portion of the housing affordable to low-, moderate- and middle-income New Yorkers, while owners’ profits have skyrocketed.

On May 1, the RGB heard invited testimony from tenant and landlord advocates. The tenants’ side included Patrick Markee, senior policy analyst at the Coalition for the Homeless; Vic Bach and Tom Waters from the Community Service Society (CSS); and Tim Collins, former RGB executive director and now a partner in the tenant-law firm Collins Dobkin & Miller. The evidence they presented shows clearly why rents should be reduced, in order to reverse the unwarranted increases of the last few years, which, as CSS put it, have “contributed to the growing rental affordability crisis since the [2008] recession.” 

Markee highlighted record homelessness in the city—a nightly average of more than 53,000 people in the shelter system as of January, including more than 22,000 children, with an average stay of 14.5 months, up 16 percent in the last year alone. Since 2007, median rents in the city have risen 8.5 percent, while median renter incomes have decreased 6.8 percent. According to data from the city Department of Investigation, city marshals evict 25,000 to 30,000 families each year, mostly for nonpayment of rent—and many of them become homeless. Given the steep vacancy increases built into current law, most of their apartments are then permanently lost as affordable units. Since 2002, the number of apartments affordable to low-income households has been reduced by 39 percent, while the number of low-income New Yorkers has increased substantially.

Collins’ testimony showed that even as rent burdens and homelessness have risen sharply, the RGB has employed a faulty calculus to impose rent increases in excess of owners’ expenses. Compounded in every new or renewal lease, these increases have helped owners’ average profit margins to rise to 38 percent, from about 35 percent in 2008. “This Board must act without hesitation to provide relief where it has inflicted so much unnecessary harm,” Collins warned. He concluded that rents should be rolled back by either 4 percent for both one- and two-year renewals, or by 6 percent for one year and 2 percent for two, in order to restore “the balance achieved in 2008.”

Collins doesn’t go nearly far enough, however, because 2008 was in no way a “balanced” or natural equilibrium. On the contrary, 2008 came after 15 years of an RGB controlled by Rudolph Giuliani and Michael Bloomberg appointees who openly disdained the very concept of rent stabilization, and after the state’s significant weakening of rent and eviction protections in 1997 and 2003. By 2008, owners were already clearing more than one-third of every rent dollar after operating expenses—a profit margin far in excess of other businesses. Before then, as documented in a 1997 study by the office of Public Advocate Mark Green (available on the RGB Web site), RGB increases since 1975 had consistently been higher than what would have been warranted to maintain landlords’ income. And those increases, in turn, came after the City Council declared that housing costs already constituted a “grave emergency.” So restoring the “balance” of 2008 would not nearly go far enough to undo the damage caused by the RGB over the past 40 years.


“A Grave Emergency”

The city Rent Stabilization Law of 1969 was enacted, as stated in its introductory Findings and Declaration of Emergency, to address what it called “a grave emergency.” “Action is necessary in order to prevent exactions of unjust, unreasonable, and oppressive rents and rent agreements and to forestall profiteering, speculation, and other disruptive practices tending to produce threats to the public health, safety, and general welfare,” it declared.

To accomplish this purpose, the law provides that tenants cannot be evicted except for a substantial violation of their tenancy, and that qualified family members can succeed to the tenancy if the tenant moves or dies. In order to keep rents affordable, the law created the RGB, consisting of nine members appointed by the mayor. Since New York City currently lacks home rule to enact stronger rent and eviction protections than the state government allows, the RGB is the only branch of local government that has any direct ability to protect New Yorkers from unaffordable rents. Yet year after year, decade after decade, it has enabled unwarranted increases that have made what was already “a grave emergency” far worse.

At the RGB’s May 5 preliminary vote, when it proposed increases of 0-3 percent for one year, and 0.5-4.5 percent for two years, Rachel Godsil said the board was still gathering evidence from both the advocates of a freeze and the advocates of another increase. It is incumbent on the RGB to also consider the merits of a rollback, in light of the overwhelming evidence that one is justified. Otherwise, it will either be maintaining a terrible situation or making it even worse.

However, tenant advocates say RGB members have told them that the de Blasio administration is pushing for some kind of increase this year. As a candidate, Bill de Blasio stated that he supported a rent freeze. Tenants should not stand silent now, but should contact both the RGB and the mayor’s office and demand that rents be rolled back, or at least frozen where they are.