This year has to be different. That is the sentiment expressed by the RSA members at the “RSA Round Table Discussion and Dinner” held on June 3, 2008 to explain the rent guideline process and how owners can affect the outcome. By the end of the meeting, the majority of owners had signed up to speak at one of the two public hearings to be held on June 11 and June 19. Other owners, reluctant to speak in public, agreed to attend the hearings and provide moral support to those who would be speaking.
Owners attending the dinner learned that the Rent Guidelines Board (RGB) holds a series of meetings throughout the spring to hear staff reports about the health of the rental housing market. The most critical of these reports examine the year-to-year increase in building operating costs and changes in building income and expenses, as reported by owners to the City.
The RGB then votes on proposed guidelines (this year, a range of 3.5% to 7% for one-year leases and 5.5% to 9.5% for two-year leases) and holds public hearings to give owners and tenants alike an opportunity to comment on the proposed guideline increases.
These public hearings give each and every property owner a chance to affect the final rent guidelines. The outcome is not written in stone, nor directed by City Hall. RGB members listen to the testimony of owners and tenants and they can be influenced by what they hear.
In the past, these hearings have not been well-attended by owners. The loud and disruptive tenant groups have discouraged owner participation and as a result, the RGB assumes that owners aren’t being affected. However, this year it is critical that the RGB adopt a rent-adjustment that will help meet the overwhelming increase in operating costs.
The Price Index of Operating Cost (PIOC), an annual study that measures the change in building operating costs, showed that the skyrocketing 37.4% increase in the cost of fuel was the major factor in the overall 7.8% operating cost increase. During the past six years, costs have increased by 40% while the RGB has only approved rent increases of 20%. Some have called this year the “perfect storm” of operating cost increases. The Water Board just approved another double-digit increase, real estate taxes, insurance, contractor and labor costs are all rising. Factor in a mortgage payment and the cost of fuel, it’s really no surprise that owners of any size building are feeling the pinch.
One RSA member, who owns one, 6-unit building in Brooklyn stressed the fact that high-cost, capital improvements are out of the question this year said, “I replaced a boiler three years ago. I simply wouldn’t be able to pay for it today.”
Owners with long-term tenants are having an especially difficult time dealing with the increased costs. Marvin Markus, the Chairman of the Rent Guidelines Board, has invited public testimony specifically on the low rent adjustment and/or longevity adjustment. The RSA is calling for a minimum rent increase of $60 per apartment per month in addition to substantially higher rent guidelines.
This year is different. Help us achieve higher guidelines this year. All RSA Members are strongly urged to TESTIFY at an upcoming Rent Guidelines Public Hearing. Call the RSA hotline at 212.214.9200 and experienced staff will help answer any questions you may have. RSA staff will assist you if you need help preparing the 3-minute testimony.
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