Rent Guidelines Board Prepares for Large Rent Hikes

Steven Wishnia May 24, 2011

Rent Guidelines Board tenant representatives Adriene Holder and Brian Cheigh unveiled a string of proposals to restrict rents at the board’s preliminary-vote meeting on May 3. Their efforts were shot down by the usual 7-2 margin, and the board instead endorsed plans to slam tenants with massive rent hikes.

By a 5-4 margin—all five public members voting in lockstep—the RGB proposed preliminary rent increases of between 3 to 5.75 percent for a one-year lease renewal, 6 to 9 percent for two years, and a 1 percent surcharge for buildings with oil heat. These increases, which would also apply to lofts, would be higher for some apartments than the increases suggested earlier by the two landlord representatives.

The proposed increases are significantly higher than last year’s guidelines of 2.25 percent for one year and 4.5 percent for two years. If the final guidelines are at the high end of the range, they’d be more than 2008’s.

The board also voted 7-2 to propose increases of 3 to 5.75 percent for SRO tenants, who usually get either a rent freeze or increases of 2 percent or less. “When the landlord representatives vote with the public members, you know we’re getting screwed,” said Larry Wood of the Goddard Riverside SRO Law Project.

Holder and Cheigh attempted to turn the tables on the recent state court decision in Casado v. Markus, which upheld the Rent Guidelines Board’s power to set different rent increases for different types of apartments. If the RGB could use that power to raise rents on long-term, low-rent tenants, they reasoned, it could also declare “circumstances where rent increases are not warranted.”

First, they proposed a rent freeze on apartments that rent for $1,000 or more a month. That is significantly higher than the $679 median operating cost for rent-stabilized apartments, Cheigh explained, and “you should not provide excess profit for landlords who are already charging high rents.”

Landlord representative Magda Cruz said it was “ironic” and “absurd” that the tenant representatives who had fought against the poor tax were now advocating higher increases for low-rent tenants. Holder responded that even some of the formerly homeless people she represents as a Legal Aid lawyer are paying more than $1,000, and Cheigh said he wanted to slow the process of apartments reaching the $2,000 decontrol threshold.

The board rejected this, 7-2.

Second, they suggested that landlords should not be able to raise rents in buildings where more than 20 percent of the units are deregulated. These buildings should be producing a more than adequate return for their owners, Cheigh explained.

The board rejected this by 6-2, with one public member abstaining.

Third, they proposed that rent increases should not be permitted in buildings with outstanding serious or hazardous violations. “Why would we be protecting this group of owners?” Holder wondered.

The board rejected this, 7-2.

Fourth, they urged the board to freeze rents on apartments that have received one or more vacancy increases in the last four years. Increases on vacant apartments are poorly policed, said Cheigh, and new tenants “are forced to pay far higher rents.”

The board rejected this, 7-2.

Fifth, they proposed freezing rents in buildings where 10 percent or more of the apartments are rented as “scatter-site housing” for the homeless. The Department of Homeless Services pays owners $3,000 a month for those apartments, Holder said.

The board rejected this, 7-2.

Finally, they called for increases of 0.5 percent for one year and 1 percent for two years, but with a maximum of $6 or $12 respectively—thus, capping increases on apartments renting for $1,200 or more.

The board rejected this too, 7-2.

Cheigh said after the meeting that his priority in trying to limit increases on higher-rent apartments was stopping them from “accelerating towards decontrol.” That process is “fueling the speculative market,” he explained. In 2008, the latest figures available, 42 percent of rent-stabilized apartments went for $1,000 or more, and that proportion has certainly risen since then.

That priority was the opposite of what the board voted. The 1 percent oil-heat surcharge it proposed (which would not be used to calculate future rent increases) would mean that tenants renewing leases for one year might face rent increases of up to 6.75 percent—higher than the 6 percent maximum the landlord representatives had urged. That set of guidelines, which would have also included a “poor tax” minimum on apartments under $1,000, was defeated 7-2.

“It’s crazy,” Holder said afterwards. “In light of owners’ profits, it’s really outrageous to propose such an inflated range.”

Cheigh, whose background is in energy efficiency, said the proposed fuel surcharge was “extremely burdensome. We’re actually passing on the costs of energy inefficiency by landlords.”

Outside, about 150 people protested before the meeting. Four were arrested after they chained themselves to the entrance of the Cooper Union building to demand that the rent laws be strengthened and expanded to cover more tenants. The crowd was bigger than it’s been the last few years, especially considering that many tenant activists were in Albany that day, lobbying for stronger rent laws. But as one longtime East Village resident lamented, “there are a million people affected by this. There should be thousands here.”

“We’re here to see the annual circus that these guys put on, where they hand it all over to the landlords,” said Andres Mares Muro of the Mirabal Sisters community group. Still, he hoped that “our presence here will improve the rent laws.”

Manhattan Borough President Scott Stringer, asked how the rent laws could be strengthened given the real-estate majority in the state Senate, said tenants have to “organize, organize, organize,” and “legislators have to say no. No compromise.” The great mistake they made when the rent laws were weakened in 1993, 1997, and 2003, he said, “is that we caved.”

“I’ve never been involved in something like this before, but I’m feeling a little desperate,” said Rose, a rent-stabilized tenant from Park Slope. “I think it’s disgusting that they can destabilize housing.” She and her husband pay $940 for the apartment they’ve lived in for 30 years.

“We’ve got to save what’s left of our city. It’s already been ruined by real-estate interests and greed,” said Lucille Krasne, a 40-year East Village resident wearing green peace-symbol earrings.

“The gist of this is that this is home for me,” said Maria Cortes, 60, a native New Yorker who has lived in the East Village for 34 years. “I can’t buy it. I don’t want to go anywhere. I’m part of a community.” In her building, she says, one-bedroom apartments have been converted to three-cubicle units that rent for $4,000 a month to young adults who “can only stay one year.”

Ruby, a 27-year-old artist, considers herself lucky for her generation. She got a rent-stabilized apartment in Chinatown a year and a half ago. No one else her age she knows has one, she said—“they all live with their parents, or they live in the outer boroughs and pay $1,200 to $1,600 for places smaller than mine.”

“I don’t think they’re going to listen,” she said of the RGB, “but at least I showed up and tried.”

“I think I probably agree,” said Michael Ibok, a Cooper Union student checking out the demonstration. His friends, he said, find housing by “mostly subletting. A lot of people live in Chinatown. None of it is rent-stabilized.” Typically, he said, four of them share a two-bedroom apartment, paying $500 to $800 each.

Pointing at one of the signs, he wondered, “What would a rent strike look like?”

This article was originally published in Tenant/Inquilino.

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