Rent Board to Tenants: Take a Hike

For landlords, the news from the city's Rent Guidelines Board is good: rents are up, the market is tight, and the costs of most items, from fuel to push brooms, is down. For tenants, the reports are mixed: about 9000 new apartments are coming on line, but most are high-rent. More tenants have work, but many are competing for lower-paying jobs in a market where rent hikes continue to outpace wage raises.

The news will probably continue its current trajectory--upbeat for landlords, and mixed to poor for tenants--after next week's vote at the RGB, the agency that sets annual rent levels for the city's 1,052,300 stabilized apartments.

Though no law requires that the RGB hike rents, never in its 30-year history has it done anything but that. This year will likely be no exception: the board is considering a 2 per cent hike for tenants who sign a one-year lease, and 4 per cent for a two-year lease. The rates apply to leases beginning after October 1, 1998. The board's final vote is at 10 p.m. on Monday, June 22.

Other proposals include a $15 supplemental monthly fee on apartments renting for $400 and less, and no hike for vacant apartments beyond the 20 per cent granted by the state legislature. The measures are identical to the rates adopted by the board last year, and were proposed by RGB chair Ed Hochman as a ''starting point'' after no consensus could be reached at a contentious May meeting.

(Indeed, this year the RGB has worked under conditions that make it seem like a stepchild. It wasn't until May that Mayor Rudy Giuliani filled three of four vacancies, forcing the board to scrap several meetings for lack of a quorum. Hochman had already truncated the board's schedule and whittled the usual two public hearings to one. At press time, the mayor was almost ready to fill the remaining vacancy, avoiding a tie vote. ''It's ridiculous,'' says one board member. ''How can they expect this person in good faith to get up to speed in so little time? They just want him to vote the way City Hall tells him to.'')

While the proposed rent levels might seem a modest pocket-liner for landlords and an arguably moderate rise for tenants, they beg a fundamental question: Why give landlords an increase when their costs are stable and the market robust? This year's studies of the rental market by the RGB staff found good financial conditions for landlords on virtually all fronts. The key study, called the Price Index of Operating Cost (PIOC), measures landlords' costs for things like insurance, fuel, toilet seats, taxes, and lawyers, and found they rose a scant 0.1 per cent--a statistical zero.

''A 2 or 4 per cent rent hike is at least 20 to 40 times more than landlords would be justified in getting based on the PIOC,'' says Ken Rosenfeld, one of two tenant representatives on the RGB. ''The unfortunate thing is that many tenants appear to be relieved at the idea of 2 and 4 per cent, even though it's totally contrary to the facts before us. In this case, the rational result would be a rent freeze. That's not a political thing I'm saying because I represent tenants; it's a rational fact.''

Vince Castellano, who is one of two landlord representatives on the board and who advocates primarily for small landlords, calls the proposal ''rational'' and ''on track.'' While landlord representatives on the board wanted rent hikes of 4 and 8 per cent for one-and two-year leases, Castellano says he's more concerned about the ''low-rent supplement'' (tenant advocates call it a poor tax), in which the board usually adds $15 or $20 a month to rents under $400. ''My proposal is to raise the rent $100 on apartments that rent for $100,'' says Castellano. Apartments renting for $400 would be raised by $50.

''I had no choice but to go against it,'' David Pagan, the RGB's second tenant representative, said of even the $15 low-rent supplement. ''I just don't feel comfortable doing that to the lowest end of the renters.''

Indeed, in a sea of giddy news about the current booming market, an RGB study of tenant income and affordability offered sobering data: government cuts to welfare and housing programs have eroded an already limited rental supply, and even with last year's additional 54,000 new jobs, sectors that are hiring--like construction and the service industries--are paying less. From 1992 to 1995, the median rent for stabilized apartments jumped 14 per cent, while the income of rent-stabilized tenants slipped 1 per cent. And among single adults, homelessness is steadily rising, with shelters taking in 7096 men and women on a typical night.

''The extra $15 will come from people's food budgets,'' says Pagan, who is the executive director of Los Sures, a nonprofit agency that owns and manages about 1500 apartments in Williamsburg. ''I see it every day, people making minimum wage or well below. I try to understand what owners are saying because we also manage buildings. But I'm here to represent the people who can't make it.''

Pagan laments that the landlords who typically attend RGB hearings own small amounts of property, ''but most apartments are not owned by small landlords.'' Indeed, about 70 per cent of all apartments are owned by about 12 per cent of all landlords. Castellano, too, complains that the RGB fails to address the diverse population among both landlords and tenants, treating big owners and rich renters the same as struggling landlords and tenants.

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