As Rents Climb, Tenant Protections Needed

Tenants getting raw deal as landlords' profits surge

Let's be frank: Tenants in New York are getting a raw deal.

Despite the continuing toll of the recent economic recession on average New Yorkers and clear evidence that landlord profits continue to surge, the New York City Rent Guidelines Board (RGB) voted on June 20 to approve rent increases of 4.0% for one year lease renewals and 7.75% for two year lease renewals for rent stabilized apartments.

These increases are not easy to absorb for most of our city's 1.3 million rent regulated tenants. According to data in the RGB's own "2013 Income and Affordability Study," the median income of rent-controlled households was $28,000 and the median income of households in rent-stabilized units was $37,000. Moreover, housing costs constitute a huge percentage of these tenants' income. Housing is considered "affordable" for a household when it constitutes no more than 30 percent of its total income. The same RGB study found that slightly more than one-third of renter households in the City paid 50 percent or more of their household income for gross rent in 2011, the highest ratio in the history of the study. This means a third of New York's renters were already cutting back in other areas of their lives, like healthcare, food and other necessities, to meet the rent. More than 68 percent of New Yorkers rent their apartments, and we, as a city, are slowly slipping behind on our ability to afford our own homes. Rent increases are simply outpacing New Yorkers' ability to pay them.

With the citywide apartment vacancy rate at a meager 3.12% ? under State law a vacancy rate of less than 5% constitutes a housing emergency ? those looking for a decent, affordable apartment will find the only place for them to move is out. These increases force New York's middle class further and further from our city's core.

You might ask how the RGB can rationalize these endless rent hikes. Historically, the RGB has justified annual rent increases by citing its "Price Index of Operating Costs" (Price Index). This year's Price Index found that operating costs for rent stabilized buildings increased by 5.9% in 2012 ? on top of a 2.8% increase in 2011. However, the Price Index measures changes in the cost of items landlords typically purchase to run their buildings rather than actual expenditures, and it contains no information about the income landlords collect from tenants.

A more meaningful measure of how well landlords in New York are doing is hidden in the RGB's "Income and Expense Study." It shows landlords' income after all operating and maintenance expenses are paid ? the Net Operating Income (NOI), which the RGB notes is "the surrogate measure for profit." In fact, the RGB's 2013 study shows that landlords' operating costs from 2010-2011 increased by only 4.1% while NOI increased by 5.6%. This is the seventh consecutive year that NOI ? read profit ? has increased. The discrepancy exposes the degree to which the system is skewed against tenants and shows a fundamental anti-tenant bias. Tenants have been forced to support the constant demand for an increased profit margin, including through the "great recession" when many other industries saw their margins shrink.

In my testimony before the RGB this year, I strongly urged the board members to impose a freeze on rents for all rent regulated apartments as well as for lofts, hotels, rooming houses, single room occupancy buildings and lodging houses.

Year after year the RGB's own statistics do not support the landlords' primary argument that increased rents are necessary to meet increased operating costs. An honest assessment of the real numbers shows not only that landlords would have been able to afford ? and would have still profited from ? rents remaining constant, but also that most regulated tenants cannot afford any rent increases. Yet once again, the RGB ignored these facts.

I will continue to fight for stronger rent regulation and for fundamental RGB reform. Ensuring the existence of viable housing options for all New Yorkers, including those with low and moderate incomes, is a proven way to keep our neighborhoods diverse, dynamic and vibrant. Remember: We're not just talking about arcane statistics. We're talking about how many of New York City's 1.1 million public school students have a permanent home in which do their homework, how many people with debilitating illnesses and disabilities have a stable home in proximity to their doctors and support networks, and how many longtime residents can afford to stay in the communities they helped build.

State Sen. Brad Hoylman represents the 27th District, which includes part of the Upper West Side.