The ABCs of the RGB

A Primer on the City’s Rent Guidelines Board

The I&E is considered flawed because it relies on landlords' honesty in reporting to the DOF. A 1992 audit found that 15 percent of the costs landlords claimed were not legitimate business expenses, and a later audit found landlords generally exaggerated costs by 8 percent.

  • Mortgage Survey: One of the board's most straightforward reports, this is usually the first presented each year. The study surveys lenders to see how much financing costs landlords. Last year, the staff sent surveys to 68 lenders; 27 responded. They found an average interest rate of 8.71 percent for a multifamily mortgage—the biggest jump in three years. But even so, a robust market meant that mortgages remained affordable. Foreclosures and nonperforming loans were also down.

  • Income and Affordability (I&A): This is the only study devoted exclusively to tenants, quantifying how much they earn and how much rent they pay. While last year's report found that most stabilized tenants paid about 30 percent of their income for rent (in line with federal guidelines), nearly a third paid at least half their income or more. Despite the booming economy that ushered out the '90s, the inflation-adjusted income of stabilized tenants slipped .5 percent. While jobs and wages were up, so were the population and demand for housing. A close look reveals the city's ever growing dual economy: From the late 1970s to the 1990s, the inflation-adjusted income of the poorest 20 percent of New Yorkers fell 21 percent; in that same time, the richest fifth gained 43 percent.
    The Times calls RGB chair Ed Hochman a nail-biter. His mother calls him a disgrace. Those are kind words compared to what tenants and landlords say.
    photo: Hiroyuki Ito
    The Times calls RGB chair Ed Hochman a nail-biter. His mother calls him a disgrace. Those are kind words compared to what tenants and landlords say.

  • Housing Supply: Relying on the triennial Housing and Vacancy Survey (HVS) completed by the federal census bureau, this RGB report measures just how scarce New York City apartments are. Key to the housing supply issue is the state-set standard that defines a housing emergency as a vacancy rate below 5 percent. A rate above 5 percent would mean rent regulation could cease. The current vacancy rate, based on 1999 figures, is 3.19 percent, with variations among the boroughs: Queens was the tightest (2.11 percent), Staten Island the roomiest (5.82 percent).

    The 2000 Housing Supply report noted an increasingly tight market even as new construction meant more apartments. The reason: Most of those apartments were for sale, not for rent, and even the 12,000-plus new units could not keep pace with the population. Among stabilized apartments, there was a drop of 6000 units; rent-controlled units plummeted by 18,000. As of 1999, of the city's 2,018,000 rental units, 52 percent were rent-stabilized.

  • What are the board's politics?

    While staff research provides the board with empirical, unemotional evidence, in the end the RGB is arguably less blinded by science than pummeled by politics. The assault comes on three levels.

    First, the entire debate takes place within the context of what may be the city's most enduring hatefest, the one between landlord and tenant. Landlords argue that government is already overreaching its bounds by regulating their profits, that rent laws are a communist instrument, and that tenants by and large can afford to pay more. Tenants hold that as long as profit-seeking private landlords control the supply of an essential and limited commodity, regulation is a must and is too lax as it is.

    Then there's City Hall, which observers say exerts the greatest political influence. Since RGB members are mayoral appointees, most Gracie Mansion residents have not been shy about making their interests known. Under David Dinkins, for instance, the board did not pass an additional "low-rent supplement"—also known as the poor tax—on cheaper apartments. Giuliani's board reinstated the surcharge. Mayors themselves walk a fine line, trying to avoid making enemies with either tenants, who make up a large voting bloc, or the real estate lobby, a major political contributor.

    Giuliani has removed at least three RGB members for political reasons. At the board's final meeting in 1995, public member Jane Stanicki expressed her "dismay and disappointment at the attempted interference of the city administration in the final decisions of this board."

    "We are," she proclaimed, "by law an independent body and the efforts of City Hall to get us to do their bidding in my view is a blatant attempt to compromise our freedom." Six months later, the mayor dismissed her. In 1999, he opted not to renew tenant rep Ken Rosenfeld's term after Rosenfeld sued board chair Ed Hochman for failing to release a report on how rents spiraled after the revised rent laws of 1997. In December, Giuliani notified public member Edward Weinstein that his services were no longer needed; Weinstein had complained about the administration's lobbying regarding the 2000 rent hikes.

    Finally, there are the politics within the board itself. With four members representing specific constituencies, the five "publics" are the swing voters who can be lobbied. Often, deals are cut around the margins: adding or dropping a percentage point on the rates for stabilized apartments, trying to ditch or retain the poor tax, adopting or avoiding special rules regarding things like sublets or fuel surcharges.

    Memorable moments

    The RGB is more than just statistics and politics. It's theater. For those who suffer through the stultifying early meetings, the last rounds—sometimes 13-hour marathon sessions—are bursting with action. In one late round in 1990, two landlords donned kangaroo costumes to show the kind of court they consider the board to be. A fistfight broke out between a landlord and a tenant. After a particularly raucous series of RGB hearings held at Brooklyn Borough Hall in 1998, which included a landlord's arrest for attacking a tenant who was filming the proceedings despite the presence of a phalanx of cops, the board was asked not to return the following year. Last year, three senior citizens were arrested after chanting antilandlord slogans. In October, tenants protested the implementation of the board's hikes—4 percent for a one-year lease and 6 percent for two years—with a sleep-out at City Hall.

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