Testimony of Assemblymember Linda B. Rosenthal Before the New York City Rent Guidelines Board on the Adoption of the Final Rent Guidelines from October 1, 2018 through September 30, 2019 Affecting Apartment, Loft and Hotel Dwelling Units Subject to the Re

June 21, 2018

I am Assemblymember Linda B. Rosenthal and I represent the 67th Assembly district, which includes the Upper West Side and parts of Hell’s Kitchen in Manhattan. I write to comment on the New York City Rent Guidelines Board’s (RGB) proposed rent increase of 0.75% to 2.75% on one-year leases and 1.75% to 3.75% on two-year leases. As a longtime advocate for affordable housing and tenants’ rights, it is disheartening to see the RGB doubling down on last year’s decision to abandon a rent freeze and instead increase rents for the second year in a row. A two-year rent freeze is not enough to reverse decades of unfair, unrelenting and economically unjustifiable rent increases. I urge the RGB to change course and reconsider its decision to hand yet another rent increase to rent-stabilized tenants. I challenge the RGB to right a historic wrong and roll back the rent for all rent-stabilized tenants across New York City.

The RGB has proposed rent increases while New York City continues to suffer through a protracted affordability crisis that has seen rents skyrocket. In 2016, the American Community Survey reported that nearly 60% of New Yorkers spend more than 30% of their income on rent, making them "rent-burdened" by federal standards. A study conducted by StreetEasy in 2017 showed that rents in New York City are increasing twice as fast as income. The number of New Yorkers turning to shelters has grown commensurately, with over 62,974 homeless people in the shelter system as of March 2018, over a third of whom were children. Rent-stabilized housing, created to insulate working-class New Yorkers and their families against out of control rents during a prolonged housing emergency, is no longer helping to maintain affordable rental housing stock. According to the 2017 New York City Housing Vacancy Survey, median income for rent-stabilized tenants in New York City in 2016 is $44,560, and the RGB itself has found that the majority of rent-stabilized tenants cannot even afford to pay their rent. In light of these statistics, it is shocking that the RGB would be considering anything other than a rent freeze.

After two years of minute Cost of Living Adjustments (COLAs), senior citizens received a nominal 2% COLA in 2018. For many, this increase will go straight to their Medicare premiums. For hardworking families, too, incomes are not growing. In his analysis of New York City’s preliminary FY 2018 budget, Comptroller Scott Stringer reported that low-wage workers, the very people who rely on rent-stabilized housing the most, saw minimal gains in terms of real income, with teachers seeing no increase in their real income at all. Senior citizens and low-income workers living in rent-stabilized housing cannot weather another rent increase. We should not have to congregate at the RGB every year to state the obvious: teachers, senior citizens, low wage workers should be able to afford to live in the city they help keep running.

The RGB’s proposal is not only untimely, it is economically unjustifiable. Landlords benefitted from years of significant rent increases, with the RGB handing down raises of 7.25% in 2012, 4% in 2013, 7.75% in 2014 and 2.75% in 2015. The RGB’s 2018 Income and Expense Study states that Net Operating Income (NOI) for landlords has increased by 64% since 1990, indicating that revenues have outpaced expenses to such an extent that a landlord’s average monthly NOI is worth 64% more today than it was in 1990, accounting for inflation. Income growth for landlords continues to outpace increases in operating costs by nearly 2%. While tenants contend with stagnant incomes, rising rents and cost of living expenses, landlords continue to reap a healthy profit.

Landlords, ever creative in the pursuit of profit, continue to find ways to raise the rent beyond the RBG’s increases. In January, Carrie, an 80-year-old woman who relies on a wheelchair and the help of her nephew to get around, came to my office wanting to know why her rent had increased by $271 beyond the RGB’s mandated increases. Carrie’s landlord had filed for Individual Apartment Improvements (IAIs) every year since 2009 and Carrie, unfamiliar with IAIs and scared of losing her home, continued signing her lease. As the landlord realized they could raise the rent without opposition, the IAIs grew larger, from $9 in 2008, to $42 in 2014, to $126 last April. Carrie’s rent is now close to the threshold where her landlord could petition to legally deregulate her apartment through the New York State Division of Housing and Community Renewal. This story is particularly galling because Carrie’s rent should be frozen through the Senior Citizen Rent Increase Exemption (SCRIE), but SCRIE does not cover IAIs.

And landlords are not constrained to raising rents at the individual apartment level. Major Capital Improvements (MCIs) continue to be used liberally and unjustifiably across my district and the City. In January, rent-stabilized tenants at 112 West 80th Street were handed an MCI of $100.55 per room per month, payable in perpetuity. In April, rent-stabilized tenants at 46 West 73rd Street received an MCI of $53.14. Landlords do not need the RGB’s annual increases to raise the rent; they are perfectly capable of and do raise the rent hundreds of dollars without the RGB’s help.

The RGB is tasked with balancing the needs of tenants against those of the real estate world, but for years the scales have been tilted in favor of landlords. The RGB’s 2018 Housing Supply Report found that there are some 966,442 rent-stabilized units in the city today, down from over one million units reported in 2017. The RGB’s proposed increases this year tip the scales even further in that direction toward an unaffordable New York. Preserving the socioeconomic vibrancy of our city means protecting rent-stabilized housing. Ensuring senior citizens, firefighters, teachers, single moms, and lower-income New Yorkers can afford to live in the city means protecting rent-stabilized housing. These rent increases do nothing to protect rent-stabilized housing and are as untimely as they are economically unjustifiable.

I urge the RGB to consider the data and implement another rent freeze this year and to roll back the rent for all rent-stabilized tenants.

Thank you.