RGB: Owner costs lowest they’ve been in 13 years

By Maria Rocha-Buschel

On Thursday, The Rent Guidelines Board released its annual report on landlord operating costs, which revealed that landlords only experienced a 0.5 percent increase last year, making it the smallest increase since 2002.

Mike McKee

Mike McKee

Mike McKee of TenantsPAC pointed out that in that year, operating costs were actually in the negatives but the chair at the time had been appointed by Mayor Michael Bloomberg.

“He said that he didn’t care what the price index showed and that we couldn’t have rent increases below 2 and 4,” McKee said. “And that’s what the increases were that year.”

In contrast, the current board that will vote this year was appointed entirely by Mayor Bill de Blasio, who made getting a rent freeze for rent stabilized tenants one of his campaign promises.

The study released last year reported that operating costs had increased by 5.7 percent in 2013, but the board had five new tenant-friendly members and set record-low increase of one percent for one-year leases and 2.75 percent for two-year leases.

The notably small increase in landlord costs in this year’s study is due primarily to a 21 percent decrease in fuel costs throughout last year. The study also noted that there was a 4.2 percent increase in taxes, 7.2 percent increase in insurance costs and 1.2 percent increase in utilities, but these were still outweighed by the drastic decrease in fuel costs.

While the report looks promising for tenants, advocates are still fighting to change the process because they say that the price index is deceptive and shouldn’t even be used as part of the RGB’s process.

“Even though it says there was only a 0.5 percent increase, it was probably actually a lot less,” McKee said. “The price index should be discontinued as unreliable and misleading information. It’s unreliable because it overstates actual operating costs, and is misleading because it gives a misleading picture about the health of the real estate industry.”

Councilmember Corey Johnson introduced legislation in February urging the mayor to reform the board and eliminate the price index altogether.

Louis Cholden-Brown, the legislative director at Johnson’s office, was cautiously optimistic about the report but agreed with McKee that there should still be reforms.

“It’s arguably a good sign but it still doesn’t track income and it doesn’t track what they spend,” he said. “The question they should be asking is has the amount of money they make exceeded the cost? And the answer is usually yes. Income for landlords far exceeds any increased costs.”

The Rent Guidelines Board had a public meeting at 9:30 a.m. last Thursday at 1 Centre Street where tenants and owners  were invited to give testimony.

The preliminary vote on this year’s rent increases will take place on April 29 in the basement of the Graduate Center at CUNY, 365 Fifth Avenue, at 6 p.m.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.