(photo: William Alatriste/NYC Council Media Unit)

Here we go again. On Wednesday, June 21 the New York City Rent Guidelines Board (RGB) will vote on how much landlords can raise rents on people living in rent-stabilized apartments. In its second year of operation under a new pro-landlord mayor, all indications point to another round of unjust rent hikes on our already overburdened tenants — like last year’s 3.25% and 5% for one- and two-year leases.

The sham scenario has already been set up by a public complaint from Mayor Eric Adams that a 7% increase (the upper range of the preliminary proposals adopted by the RGB on May 2) would be “too high,” so tenants are expected to breathe a sigh of relief when the final numbers land in the 3% to 5% range.

Media reports will focus on the theatre, with tenants chanting and holding up protest signs. As they do every year, TV reporters will interview one tenant who will explain they can’t afford another rent increase and one landlord who will explain they are going broke because of rent stabilization.

With rare exceptions the coverage will be superficial — few reporters are familiar with the subject matter, in part because few editors think it is important enough to assign a deep-dive before the vote. This is a shame, as the reports published by the RGB staff are extensive and rich in data that show what’s really happening: landlords are doing quite well and tenants are being hammered by inflation, and less able to survive the rising cost of living than their landlords.

RGB staff research for 2023 shows that:

1. Since 1990 landlords of rent-stabilized apartments have seen their Net Operating Incomes (NOI) increase by 49.9%, after adjusting for inflation. In the 33 years since the RGB began calculating NOI, it has hovered around 40%, meaning that the average landlord spends 60 cents of every dollar of income on all costs of running their buildings, leaving 40 cents for debt service and profit. An astonishing net compared to other industries; and a profitability that belies landlords’ annual cries of near poverty.
   
2. Instead of looking at NOI over time—it goes up a bit in some years, down in others—the RGB members are justifying another round of unaffordable rent hikes based on the slight decline in NOI from 2020 to 2021, which was of course the height of the pandemic when people were giving up their apartments and leaving the city.
   
3. No doubt next year’s Income and Expense Study, which will look at I&E changes from 2021 to 2022, will show that landlords have fully recovered from this temporary covid dip. There is nothing in the law that describes the Board’s job as keeping landlords’ net incomes steady. In fact, according to the Rent Stabilization Law that created the RGB, its statutory charge is to “prevent speculative, unwarranted and abnormal increases in rents” and “forestall profiteering, speculation and other disruptive practices tending to produce threats to the public health, safety and general welfare."
4. The 2023 RGB Mortgage Survey Report demolishes the landlord argument that the 2019 changes to the rent laws, when Albany closed multiple loopholes, have made their buildings less valuable. The opposite has occurred: sales of rent-stabilized properties rose by 14% over last year, and the average sales price went up; it’s now higher than it was in 2016.
   
5. An astronomical 39.5% of rent-stabilized households now pay more than 30% of household income on rent, and more than one-third are paying more than half their income. Between 1991 and 2021 median contract rents for stabilized apartments have risen from 28 to 36.2% of household income. Thousands of stabilized tenants have descended into a state of economic chaos, in large part because of actions of this Board.

But these facts are missing from almost all of the daily newspaper reporting and nightly local TV news. Too often in this process, year after year, we simply get short on-the-one-hand, on-the-other-hand narratives.

The mayor appoints all nine members of the Rent Guidelines Board, and unfortunately the mayor does not have to submit his choices to the City Council for vetting and confirmation. The RGB has two tenant representatives, two landlord reps, and five so-called public members including the chair.

This 5-2-2 composition was designed to limit the influence of tenants on decisions of the Board. The annual charade goes like this: the two tenant members vote no because the proposed rent adjustments are too high, the two landlords vote no because they are too low, whereupon the five public members come in somewhere in the middle with “a reasonable compromise,” and the rent hikes are approved 5-4.

In most years, the vote plays out this way, but occasionally the scheme breaks down. Last year one of the public members rebelled and voted against the 3.25% and 5% hikes for one- and two-year leases, forcing the chair to go to one of the landlord members for the fifth vote. All too predictably, Mayor Adams has replaced that public member with a new one who is certain to play by the rules. The fact that a landlord member had to furnish the fifth vote proves what savvy observers already knew: this entire process is rigged in favor of the property-owning class.

Under pro-landlord mayors such as Adams, Ed Koch, Rudy Giuliani, and especially Mike Bloomberg, we have had large rent increases. With pro-tenant mayors like David Dinkins and Bill de Blasio, rent hikes were much more moderate. In four of his eight years as mayor, de Blasio’s board enacted a partial rent freeze, for one-year leases.

Except for Dinkins, all mayors have interfered in the RGB process, while claiming that they maintain a strict hands-off posture. Like his predecessors, Adams claims that he only appoints the Rent Guidelines Board members, that they operate without interference from City Hall. But overt instructions are not even necessary: the public members understand what City Hall expects of them. Three of de Blasio’s public members, who had happily gone along with his rent freezes, followed the change of regime and Adams’ pro-landlord approach by voting for last year’s punishing increases. Before his four-year term is up, Adams will be able to replace all nine RGB members.

Landlords are doing quite well and don’t need another rent hike, whereas most tenants are struggling to make ends meet. Regardless of any short-term trends, a full rent freeze is both warranted and essential to stabilizing neighborhoods and keeping families in their homes. The data even justify a negative rent adjustment, to compensate for past rent hike excesses.

Under this system, designed by the real estate industry itself (the 1969 Rent Stabilization Law was drafted by a committee of three major real estate players and three members of then-Mayor John Lindsay’s administration), the data do not ultimately matter. What matters is who gets appointed to this Board as a public member. Steel yourself for another round of rent hikes.

It is high time that organized tenants and pro-tenant elected officials at every level of government advocate for structural reform of this unfair system.

One vital change would be to transfer the responsibility for choosing RGB members to the City Council, which would conform the law to the system outside the city where local legislative bodies choose the rent board members, with no involvement by the executive. At a minimum, the mayor should be required to submit his appointments to the City Council for a public hearing and vote.

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Michael McKee is treasurer of the Tenants Political Action Committee. He has been involved in the Rent Guidelines Board process since the 1970s. On Twitter @McKeeTenantsPAC & @TenantsPACNY.