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Key RGB Staff Reports Support Need for Highest Rent Increase Since 2013

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RSA Testifies Before Board, Preliminary Vote Delayed Until May 7th 

In advance of the City Rent Guidelines Board (RGB) vote on Preliminary Rent Guidelines on May 7th, RSA called on the Board to enact rent increases based on their own data’s recommended guideline ranges. 

On April 18th, the RGB released the 2018 Price Index of Operating Costs (PIOC), which continues to increase under the de Blasio Administration as taxes and other costs rise. This year, the PIOC increased by 5.5%, the third time costs have increased over 5% since Mayor de Blasio took office.

This year’s high PIOC is a direct result of increases in all components calculated by the RGB. This includes increases in property taxes (+7.1%) and fuel costs (+13.8%). Additionally, there were increases in labor costs (+6.0%), utility costs (+0.4%), administrative costs (+3.5%), insurance costs (+6.0%) and maintenance costs (+3.8%).

Although last year’s guideline increase of 1.5% was the largest since Mayor de Blasio took office, the inadequate one-year increase in the face of much higher operating costs was further proof that the RGB had long-steered away from their mandate to approve rent increases based on increased costs incurred by building owners.

However, it is important to remember that last year, the Public Members of the Board considered a higher rent increase after they met directly with RSA members at our monthly membership meeting. Although an additional .25% increase than the year before was nowhere near substantial enough, it was certainly a step in the right direction considering the recent history of the RGB.
Including this year’s PIOC, owner expenses as calculated by the Board under Mayor de Blasio have increased 21.2%. During that time (excluding this year’s impending guidelines), the Board has approved a total of only 3.75% increases on one-year guidelines.

Another key study factored into the RGB’s decision-making is the Income and Expense (I&E) Study. The 2019 I&E report was released at the RGB’s first meeting on April 4th and shows that owner net operating income (NOI) was essentially stagnant, increasing by 0.4% from 2016 to 2017, a much lower increase in NOI from last year’s calculation of 4.4% and a far cry from the year before when it increased 10.8%. The Board calculates NOI based on Real Property Income and Expense (RPIE) Statements filed by owners with the Department of Finance (DOF).

Since 2014, the first year of RGB deliberations under Mayor de Blasio, the tenant-friendly appointees to the Board have suggested that any rise in NOI implies that owner profitability continues to increase. In fact, the RGB under this Administration has emphasized owner profitability rather than owner expenses, something that had not been done in the first 45 years of this Board’s existence.

On April 25th, RSA presented invited testimony before the Board and spoke about the negative effects that zero-to-minimal rent guidelines have had on owners over the last five years. Aside from the fact that owner operating costs continue to rise, owner revenue, which is vital to maintaining and improving aging buildings, has failed to keep pace with operating cost increases due to historically low guidelines. This is something that RSA predicted would happen just after the first rent freeze in 2015.

Vito Signorile, RSA’s Director of Communications, also argued that the RGB Income and Affordability (I&A) report highlights improving economic conditions for tenants. Last year, the Housing and Vacancy Survey (HVS) pointed out that incomes have risen faster than rents (10.9% versus 8.1% over the previous three-year period) and the economy continues to improve year after year. Furthermore, inflation-adjusted wages are up 3.5%, the City gained 86,000 jobs in 2018, the unemployment rate fell from 4.6% to 4.1% and most importantly, non-payment filings in housing court decreased 4.7% and evictions fell 13.9%.

Although RSA acknowledges that an affordability issue still exists for low-income tenants, it is up to City and State lawmakers to address this ongoing problem and should strongly consider subsidy programs for these tenants. With all of the positive news for tenants and the alarming data against building owners, RSA believes that the Board is in a strong position to return to the normalcy that existed before this Administration and properly compensate owners for the recent inadequate guidelines.

This year, rather than make an immediate recommendation of what the one and two-year guidelines should be as we have done in the past, RSA called on the Board to set Preliminary Ranges of 3.0% to 4.75% for one-year guidelines and 4.7% to 9.25% for two-year guidelines. Over the past five years, this Board has deliberately ignored their own commensurate ranges, prioritizing a set agenda rather than consider the facts. This year, RSA has put them in a position where they must consider the guidelines recommended by the Board’s own data. Any rent guidelines short of the RGB’s very own recommendations would be unacceptable.

Unfortunately, RSA went to press on this edition of the Reporter before the Preliminary Vote on May 7th. Once the Preliminary Ranges are set, we will notify members via email blast. The ranges set by the RGB will set the tone for the remainder of the deliberations through the end of June. Although the public hearing schedule has not been finalized, we have been told that it will be the following: June 11th (Bronx), June 13th (Brooklyn), June 18th (Queens) and June 20th (Manhattan). As soon as we receive the final schedule and locations, we will notify members via the RSA Reporter, email blast and social media. In the meantime, save the dates!

We will also be hosting another RSA membership meeting dedicated to preparing our members for the RGB public hearings (see page 3 of the April 2019 RSA Reporter). We plan to once again invite the Board’s Public Members so that the new appointees can hear about the every day struggles that RSA members have with rising costs and stagnant rents. We saw some success last year by hosting RGB members and we hope to carry that momentum into the remainder of this year’s deliberations. 

 

2019 RGB Meeting & Hearing Schedule

Thursday, April 4, 2019

Public Meeting
Time: 9:30 am
Location: Landmarks Preservation Commission*
Conference Room
David N. Dinkins Municipal Building
1 Centre Street, 9th Floor
New York, NY 10007

*This location has the following accessibility option(s) available: Wheelchair Accessible
Map & Directions

Thursday, April 18, 2019

Public Meeting
Time: 9:30 am
Location: Landmarks Preservation Commission*
Conference Room
David N. Dinkins Municipal Building
1 Centre Street, 9th Floor
New York, NY 10007

*This location has the following accessibility option(s) available: Wheelchair Accessible
Map & Directions

Thursday, April 25, 2019

Public Meeting (Invited Group Testimony)
Time: 
9:30 am
Apt. Tenants 9:45 A.M. – 11:45 A.M.
Apt. Owners 1:00 P.M. – 3:00 P.M.
Hotel Tenants 3:00 P.M. – 3:45 P.M.
Hotel Owners 3:45 P.M.
Location: Landmarks Preservation Commission*
Conference Room
David N. Dinkins Municipal Building
1 Centre Street, 9th Floor
New York, NY 10007

*This location has the following accessibility option(s) available: Wheelchair Accessible
Map & Directions

Tuesday, May 7, 2019, 7:00 P.M.

Public Meeting (Preliminary Vote)
*Location: The Great Hall at Cooper Union
7 East 7th Street
at corner of 3rd Ave. (Basement)
New York, NY 10003
*This location has the following accessibility option(s) available: Wheelchair Accessible
Map & Directions

 

Thursday, May 16, 2019, 9:30 A.M.

Public Meeting
*Location: Landmarks Preservation Commission 
Conference Room
David N. Dinkins Municipal Building
1 Centre Street, 9th Floor
New York, NY 10007
*This location has the following accessibility option(s) available: Wheelchair Accessible
Map & Directions


 

NOTE: The Rent Guidelines Board reserves the right to cancel or reschedule public meetings and amend meeting agendas.

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CALENDAR
May 2019
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27 May 2019 00:00
Memorial Day
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29 May 2019 12:30
Special RSA Membership Meeting
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31 May 2019 00:00
Heating Season Ends
  


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