The (Continuing) Case for a Rent Rollback

As the city Rent Guidelines Board got ready to begin its annual cycle of hearings and deliberations on April 7, tenants and affordable-housing advocates urged it to reduce rents substantially when it sets this year’s levels for rent-stabilized lease renewals.

“Last year’s 0% increase for one-year renewals, while historic and long overdue, merely froze rents at their unaffordable levels,” declared Met Council director Ava Farkas. “The only way to make New York affordable again to those of us who live here is to reverse decades of unwarranted increases which have driven rents to their current unaffordable levels.” According to the U.S. Census Bureau’s 2015 Housing and Vacancy Survey, more than half of New York tenants are spending more than 30 percent of their income on rent, the federal hardship level, and a third are spending more than half. Low-income families obviously suffer the most, but moderate and middle-income households also pay unaffordable rents, as housing costs have surged all over the city. Homelessness has reached Depression-era levels.


“What’s new?”

At the same time, owners’ profits have continued to skyrocket. Every year, the RGB staff prepares an Income & Expense (I&E) Study, examining landlords’ finances. In 2015, the front page of the I&E study had a box on the top labeled “What’s New?” It pointed out that owners’ net operating income had gone up for the ninth straight year. (In 2014, it had only gone up for eight straight years.) 

What’s really new is that under Mayor Bill de Blasio, the public members of the RGB finally seem to understand that the purpose of the Rent Stabilization Law is to protect tenants from unaffordable rents, not to guarantee ever increasing profits to the insatiable real estate industry.

The mayor has now appointed all nine members of the board. The public members he has chosen include Helen Schaub, state legislative director for the health-care workers’ union 1199SEIU, and Sabeel Rahman, a Brooklyn Law School professor who has written about the corrosive effects of inequality on democracy. Both voted in favor of last year’s rent freeze. On March 29, de Blasio appointed a new chair: Kathleen Roberts, a retired federal magistrate and New York University School of Law adjunct professor. She replaces Rachel Godsil, who stepped down after last year’s vote.


How much of a rollback?

How much should rents be rolled back? It depends how closely you look at the compounded increases that have brought rents to their current levels. In 2014, former RGB executive director Tim Collins presented testimony to the board showing that if 2008 were taken as a base year, rent should be rolled back by 5 to 7 percent to restore normalcy. But 2008 rents were not at a “normal” level. In 1997, then-Public Advocate Mark Green released a report showing that for the previous 20 years, the RGB had increased rents significantly more than would be warranted even if its purpose were to maintain landlords’ profits. That was the last year before the state legislature enacted vacancy destabilization and other provisions that weakened the laws. So by 2008, rents were already way above what had once been considered reasonable.

“It is estimated that as many as 100,000 apartments might become ‘affordable’ under the federal definition if rents were rolled back by 10 percent,” says Farkas. City Councilmember Ben Kallos (D-Manhattan) has suggested a rollback of up to 15 percent.