City RGB Evades Further Discussion Despite Guidance
As the rental housing industry continues to dissect the latest rent laws and await further guidance from DHCR, RSA turned to the City Rent Guidelines Board (RGB) for clarification with regard to the ability to apply guideline increases to vacancy leases.
According to the Housing Stability and Tenant Protection Act (HSTPA) of 2019, the context of the law appears to have eliminated rental adjustments for vacancy leases. However, according to the recently updated DHCR Fact Sheet #26, guideline increases would be applied to vacancy leases in Rent Guidelines Board jurisdictions outside of New York City and would also apply within New York City pending the approval of the City RGB.
RSA believes that it could not have been the intention of the State Legislature to eliminate all rent increases upon vacancy, leading to a situation where rent-stabilized apartment owners are penalized for vacancies and could result in a situation where apartments that consistently become vacant would not be eligible for any rent guideline increases for years at a time.
Rather, we believe it was the intention of the Legislature to eliminate the statutory 20% vacancy allowance and the long-term occupancy allowance. With the recently updated Fact Sheet #26, this is clearly the interpretation that is now supported by DHCR and is the only rational way to read the language of the new statute.
Given the recent guidance by DHCR, RSA urged RGB Owner Representatives Scott Walsh and Patti Stone to raise the issue at an October 17th public meeting to issue a clarification that guideline increases also apply to vacancy leases commencing between October 1, 2019 and September 30, 2020. The owner representatives suggested that the Board should have a thorough discussion for the guidelines issued this past June and believe that pushing the matter off until next year’s rent guideline process for RGB Order No. 52 is irrational and would create an economic burden for building owners with current vacancies.
The timing of the June 14th enactment of the HSTPA and the subsequent RGB Final Vote on June 25th left no time for the RGB to consider the consequences of eliminating the guideline increases for vacancy leases. The proposed and final guidelines of 1.5% for a one-year lease and 2.5% for a two-year lease were largely considered in the context of an existing 20% vacancy allowance and a history of guideline orders in which lower renewal guidelines were partly justified by an additional rent adjustment available upon vacancy. The Owner Members stressed to their fellow Board Members that they would not be altering the approved guideline for RGB Order No. 51 in any way, but would merely be allowing the application of guidelines to vacancy and renewal leases equally and consistent with DHCR’s interpretation.
Tenant Member Leah Goodridge dodged the recommendation from Owner Member Stone, insisting that the Board had not convened at that meeting to discuss Order No. 51, but to discuss data for next year’s deliberations. Chairman David Reiss suggested that he and RGB Executive Director Andrew McLaughlin look into the matter further and continue conversations with the Board Members at a later date.
Because of how the discussion was handled at the meeting, RSA does not expect the RGB to issue any clarification on guideline increases for vacancy leases for RGB Order No. 51. However, we will do everything in our power to ensure that rent guidelines issued for Order No. 52 at the Final Vote next June will apply to both renewal and vacancy leases as a result of the guidance and clarification from DHCR.
We will keep you apprised on any updates in the ensuing months.