Suburban Rent Boards Raise Rents

Last year, at the height of the COVID pandemic, all three Rent Guidelines Boards in the suburban counties covered by the Emergency Tenant Protection Act of 1974 froze rents completely for one-year and two-year leases for rent-stabilized apartments.

But this year all three, in Westchester, Nassau, and Rockland counties, voted for rent increases, despite the fact that many tenants are still out of work or earning less than they were before the pandemic. Meeting remotely over Zoom, they voted to allow rent hikes ranging from 0.5 percent to 2 percent. 

Rockland County

The Rockland County RGB is typically the last of the three to vote, but this year it went first, on June 17. The board has lacked a full cohort of nine members for some years now, with one owner-member seat and one public-member seat vacant. Only five of the seven current members were present for the vote, but because it takes five votes on a nine-member board to pass anything, nothing could pass unless all those present voted for it. Public member Milagros Guzman joined tenant members Kim Foskew and Alejandra Silva-Exias in trying to persuade the other two board members to support another rent freeze, but chair Patricia Caldwell and landlord member Jain Jacob, who both voted for a freeze last year, were opposed.

The voting was chaotic because Caldwell insisted on dealing with the one-year and two-year guidelines separately, and at one point she ignored a motion by the two tenant members. Instead, she made a motion of her own, for 2 percent for two-year lease renewals, even though the board had not yet adopted an amount for one year. Seconded by Jain, it failed 2-3. 

It took nine motions (including the one Caldwell ignored) and eight votes before all five board members approved increases of 0.5 percent for one year and 0.75 percent for two years. This is the first time in six years that the Rockland RGB has not adopted a complete rent freeze, but the tenant members and Guzman effectively forced the other two to come down.

Nassau County

The Nassau County RGB voted June 24. Owner members Andy Cohen and Barry Stein aggressively pushed for rent increases, arguing that landlords are suffering and inflation is at its highest in years and will get worse. Cohen confidently predicted that it would reach as high as 5 percent. 

Public member Martin Melkonian, an economics professor at Hofstra University, countered that Jerome Powell, head of the Federal Reserve Bank, has stated that a 3 percent rate is likely. He pointed out repeatedly that inflation affects tenants as well as landlords. He argued against raising rents, noting that landlords’ net operating incomes were at a peak, the highest in 20 years, despite the pandemic preventing many tenants from paying rent and rents being frozen for the last three months of 2020.

Average Net Operating Income (NOI), the amount left over after paying all costs of operation and maintenance — the amount landlords can apply to debt service and profit — for rent-stabilized buildings in Nassau County rose from 34.6 percent in 2018 to 36.2 percent in 2020, according to Income and Expense reports that suburban landlords must file annually. In Westchester, NOI has averaged about 37-38 percent for the last few years. In Rockland, it has been in the 45 percent range despite several years of rent freezes, while NOI in New York City has been roughly 40 percent for some time. These numbers show that owners of rent-stabilized properties are doing quite well.

Melkonian also argued that asset values have risen significantly for rental properties, enabling landlords to borrow at historically low interest rates. 

The other public members weren’t having it. Adam Mahoney described himself as “someone in the middle trying to reach a compromise.” He argued that inflation is likely to be high sometime during the next two years, so it would be unwise to freeze rents. Owner member Stein praised Mahoney as “precisely what a public member should be,” seeking compromise between the two sides.

Public members Jeanetta Alexander and Garrett Gray chimed in, agreeing with Mahoney that “we can’t do zero and zero” this year. Tenant members Robert Rychlowski and Cathryn Harris-Marchesi moved for no increases on both one- and two-year leases, but it was defeated 6-3, with only Melkonian voting with them. The landlord members then made a motion for 2 and 3 percent, which also failed. 

Gray then moved for 1 percent for one year and 2 percent for two years, which passed 6-3, with chair Michael Miller voting with the majority. Melkonian and the two tenant members voted no.

Westchester County

The Westchester RGB voted last, on June 28. Tenant member Tamara Stewart gave a powerful statement in support of another rent freeze. Landlord members Eliot Cherson and Kenneth Finger made their usual arguments about how landlords are about to go out of business, also focusing on the recent rise in inflation. 

Cherson warned that without another rent hike, landlords would not be able to maintain their buildings. “Let’s not let Westchester become another Miami,” he said, suggesting that the June 24 collapse of a luxury condo in Florida could happen locally. One public member, Evelyn Santiago, expressed agreement, then voted with the landlords throughout the rest of the evening.

Stewart made a motion for a two-year freeze that was defeated 5-4, with new tenant member Sylvia Hamer and public members Lamont Badru and Eddie Mae Barnes also voting in favor. A motion by Cherson for 1.5 and 2.5 percent failed, also by 5-4, with chair Elsa Rubin and Santiago joining the landlord members in support.

Badru then moved for increases of 0.5 percent for one year and 1 percent for two years. It passed 5-4, with the two tenant members joining three public members in the majority. The entire meeting lasted 41 minutes.

Takeaways

A common theme at all three meetings, especially from the public members, was the idea that the boards’ duty is to be “fair to both sides.” Gray of the Nassau board described it as “a balancing act,” and his colleague Alexander said that “both sides have to suffer.” Rockland chair Caldwell and Westchester chair Rubin pushed this storyline aggressively, arguing that it would be unfair to landlords to deny them rent increases.

Melkonian referred to this as a “false equivalency.” He argued that owners of rent-stabilized buildings are clearly in a better position financially than their tenants. But this year at least he was alone.

Another constant refrain by landlord members and some public members was the need to anticipate inflation, to project economic trends a year down the road in order to come up with a two-year rent adjustment. This illustrates why the two-year guideline should be eliminated in favor of an annual rent adjustment, whether up, down, or frozen, that would go into effect for all tenants at the same time each year, regardless of when their leases are due to expire. This would take the guesswork out of the boards’ deliberations.

It would also remove the gambling aspect of the current law for renters. Suburban tenants who took a two-year lease renewal before last October missed out on the rent freeze and are now going to have to pay a rent increase when their leases expire. 

“We are facing several threats ahead: poverty, unemployment, climate catastrophe, reckless militarism. Inflation is among the least of our worries,” Melkonian observed after the Nassau RGB vote.