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Likely Rent-Stabilized Rate Hikes Could Anger Landlords and Tenants Alike

By Amy Zimmer | June 26, 2017 7:21am
 Tenant advocates and elected officials at ally before the Rent Guidelines Board meeting in 2015.
Tenant advocates and elected officials at ally before the Rent Guidelines Board meeting in 2015.
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DNAinfo/Lisha Arino

MANHATTAN — As the city’s Rent Guidelines Board gears up for its vote Tuesday determining the rent increases on the city’s nearly 1 million rent-stabilized apartments, tenants are pushing for a rent freeze while landlords are clamoring for a big hike.

Few expect the board to freeze rents for a third year in a row.

When members of the board cast their preliminary vote in April, they recommended raising rents for one-year leases between 1 percent to 3 percent, and 2 percent to 4 percent on two-year leases.

The Rent Guidelines Board based its proposal on research that showed, for instance, the price of operating costs for rent-stabilized buildings jumped last year more than 6 percent, with fuel costs rising nearly 25 percent.

The increases under consideration are far above what affordable housing advocates want. But they are far below what landlords have asked for, and many landlords believe the board — all nine members of whom were appointed by Mayor Bill de Blasio — will ultimately approve increases on the lower end of the range.

The Rent Stabilization Association, which represents landlords, called for a 4 percent increase on one-year leases and an 8 percent hike on two-year leases. The group says it needs higher rents to be able to cover their buildings’ upkeep.

Matthew Engel, president of Community Housing Improvement Program (CHIP), which represents more than 2,500 apartment-building owners in the city, said if the board fails to take operating costs into account it could lead to the “crumbling” of the city’s housing stock as well as an uptick in small-scale landlords selling to larger investment equity firms.

“I’m optimistic there will be increases,” Engel said, “however, unless there’s a significant increase, it will be a joke. A 1 percent increase in a year with 6 percent operating cost increases, doesn’t do much for an owner to recoup their expenses. It doesn’t do any good for a man or woman who owns a 17-unit building in East New York trying to pay oil costs or [real estate] taxes, which have gone up probably 30 to 40 percent over the last 7 or 8 years.”

He believes that the rent freezes have been hastening the pace of long-time owners — who often have known their tenants for years — to sell to equity firms that “don’t have institutional knowledge of the city and are not in it for the long haul.”

Rather, these firms are often looking at an investment of 3 to 6 years, Engel said, while owners “who scraped together” money to buy buildings decades ago are now retiring to Florida or buying small buildings in places like Indianapolis, where they don’t have to deal with “100 rent riders” and other policies that frustrate them here, he said.

Engel believes the city and state should protect affordability in other ways, like expanding rent freeze programs for seniors or disabled New Yorkers or increasing tax break programs for landlords who preserve affordability.

“Stabilization laws as a whole don’t really reward people who need affordable apartments. They reward people who have tenure,” Engel said. “It maintains an 83-year-old woman who lives in a four-bedroom on the Upper West Side but can’t afford a studio on the next block.”

The city is trying to improve its existing rent freeze programs, also known as the Senior Citizen and Disability Rent Increase Exemption Programs (SCRIE and DRIE), which provide tax credits to landlords that effectively freeze rent for low-income seniors and people with disabilities living in rent-regulated apartments.

Last week, de Blasio announced that a dedicated team of 10 specialists within the city’s public engagement office will conduct door-to-door outreach and make phone calls to eligible New Yorkers.

Last year, 5,800 households were enrolled into the rent freeze program. The goal is to enroll 10,000 New Yorkers this year.

Housing advocates, however, believe there’s a bigger problem at play with landlords of rent-stabilized housing increasingly turning to tactics of intimidation and harassment to push long-time tenants out and make way for those paying higher rents.

Harvey Epstein, director of the Community Development Project at the Urban Justice Center and a member of the Rent Guidelines Board, said that landlords are making more profit while tenants struggle.

“Tenants in rent-stabilized apartments too often are forced to choose between paying their rent and buying groceries to feed their family,” he said in a statement after a Rent Guidelines Board hearing earlier this month in Queens.

Steve Janawsky, a retired MTA worker who lives in a rent-stabilized apartment in Ridgewood, recounted at that hearing how he has taken his landlord to court three times for repairs and for overcharges.

“He has cleared out my building of all the old tenants except for me and two others and now he has high rents in all those apartments,” Janawsky said. “He's harassing my disabled neighbor so that he leaves, too. So, while I'm on a fixed income and spending my retirement taking my landlord to court, my landlord lives in a building with a tennis court and a pool. He does not need any more of my money."

Rent stabilization tends to cover apartments in buildings that were constructed before 1974 with six or more units, and apartments in some buildings with three or more units that were built or renovated with special tax benefits since 1974.

The board’s vote will apply to all lease renewals after Oct. 1, 2017.

The Rent Guidelines Board will hold its public meeting and vote on rent increases June 27 at Baruch College, Mason Hall, 17 Lexington Ave., at 7 p.m.