By former Assemblymember Steven Sanders
It is said that a good deal is one in which neither party is entirely satisfied. More about that in a moment.
Rent regulations in New York City has been a thorny issue for decades. So a little recent history. The Rent Guidelines Board (RGB) was established in 1969 and modified by the passage of the Emergency Tenant Protection Act of 1974. There are nine members of the RGB all appointed by the mayor. Of the nine, two are from the real estate industry, two representatives of tenant groups and five “public members.”
The RGB will meet on June 26 to set rent increases for leases that will expire beginning on October 1 through September 30, 2019. Currently, increases are set at 1.25 percent for a one-year lease and two percent for a two-year lease. Based on the proposals that have been recommended for public comment by the RGB, next year’s guidelines will be similar. There have been years where the rent increases rose into the double digits and there have been years that rents have been frozen. Generally speaking whatever the RGB decides, both tenants and owners cry foul. This year will be no different.
The fact is that try as they may, the RGB satisfies nobody. Moreover, it is difficult to do any planning because nobody knows what the rents will be set at from year to year. It is also a very dubious claim that the decision by the RGB is tied to any real economic data in terms of owners’ costs or profits and certainly not taking into consideration the financial burdens on tenants. In short, it is an arbitrary and often political process.
Bill de Blasio campaigned for mayor in 2013, embracing the idea that there ought to be a rent freeze. And wouldn’t you know it, for two years the RGB did exactly that, for one-year leases.
There is no ideal process for setting rents. Owners must have enough operating capital in order to maintain buildings in decent repair. And since owning a building is not a charitable enterprise, they also need to realize some profit. If not, existing building stock will deteriorate and be abandoned. And tenants need to have access to affordable rents. Government bears some responsibility to make those two imperatives balance out, best as possible.
After studying this imperfect system for about 40 years serving on the Housing Committee in the State Assembly, and before that as president of the Stuyvesant Town-Peter Cooper Village Tenants Association, I know there will never be a system that will satisfy everyone or even most. But reliability is important and equity for all parties should be the goal. So here is a proposal that nobody will like, but might ultimately be fair, simpler and understandable.
First, abolish the Rent Guidelines Board. Then establish dependability, simplicity and end unnecessary bureaucracy by eliminating all lease renewal paperwork. Keep all the tenant and owner protections contained in those initial leases. Adjust rents by 2.5 percent bi-annually. If that is insufficient to adequately operate their building, require owners to open their financial records to show that their revenue is insufficient. End permanent rent increases associated with Major Capital Improvements so that the rent surcharge is eliminated five years after the MCI project cost has been recouped. Expand the Senior Citizen/Disability Rent Increase Exemption to include families with very low incomes under defined circumstances and index the income eligibility ceiling to the inflation data bi-annually.
Of course this proposal would be criticized by both sides. But perhaps that means it is good?