Brooklyn Boro

OPINION: It’s a critical time for common sense in NYC’s rent stabilization policies

May 11, 2015 By Joseph Strasburg, President of the Rent Stabilization Association For Brooklyn Daily Eagle
Joseph Strasburg, president of the Rent Stabilization Association. Photo courtesy of Rent Stabilization Association
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Mayor Bill de Blasio recently declared war on the rental housing industry by supporting tenant-backed state legislation that would cut off the life blood of the city’s existing rental housing. Perhaps the mayor does not realize that the ultimate casualties, if his proposals were to be adopted, will be renters, the city’s economy and his own housing plan.

The mayor’s proposals — straight out of the tenant playbook — would eliminate rent increases when apartments become vacant, prohibit the deregulation of stabilized apartments and limit incentives for apartment and building improvements.

The sources of income that the mayor would eliminate are precisely what keeps stabilized housing alive. They were enacted by the State Legislature because rent increases provided by the City Rent Guidelines Board (RGB) were insufficient to meet ever-rising building operating costs. Long-term, building operating costs have increased by 5-6 percent per year, while the RGB has allowed rents to increase by only 3 percent per year.

To make matters worse, last year, de Blasio’s RGB allowed only a 1-percent increase, when costs increased by 5.7 percent, and looks ready to set even lower increases, maybe even a rent freeze, this year.

The mayor does not seem to recognize that it takes money to operate rental properties, a cost that keeps increasing primarily because of increases in city real estate taxes and water and sewer charges.

These municipal charges make up one-third of building operating costs and are set to increase once again in July.

Mayor de Blasio could have taken action to keep rents affordable by limiting the municipal levy on property owners. Candidate de Blasio campaigned on eliminating the “hidden tax” in water bills, but Mayor de Blasio kept that hidden tax and increased it.

Instead, to keep rents low, de Blasio has decided that owners have been over-compensated in the past and are now making too much profit. There is no basis for making that judgement across the board.

Everyone knows that not all tenants are poor, just as not all owners are rich. Nor was it the purpose of the rent stabilization law to regulate profits. We tried that under the old rent control system which decimated the housing stock and left as its legacy apartments that still rent for less than $100 per month.

It’s time to finally acknowledge that rent regulations are a cause of, and not a cure for, the city’s affordable housing crisis. Rent regulations have been in place in New York City for more than 70 years and they have done nothing to stem the affordability crisis. In fact, the greatest rent burdens are carried by tenants of the city’s one million rent-stabilized apartments.

The affordability crisis (which certainly exists for low-income renters but not across the board), is not a result of excessive rents, but a problem of inadequate incomes. The only way to address this problem is through rent subsidy programs targeted for the neediest tenants. In other words — protect the tenants, not the apartments.

The mayor understands the need for rent subsidy. His administration has asked owners to help house homeless families using rent subsidies and the industry is ready to help. However, even if there are not enough rent subsidies available, the answer is not to freeze rents.

The simplest and most practical way to keep rent increases low is to limit the tax burden on regulated apartments. However, the same elected officials who are calling loudly for limiting rent increases — and even rent freezes and rollbacks — have for years been voting to increase the tax burden on the city’s stabilized renters.

Rent stabilized housing in NYC produced $19 billion in economic activity in 2014, including 153,000 jobs in locally based businesses. Half of this housing is owned by small business owners utilizing other small neighborhood businesses. This housing also generated nearly $3 billion in city taxes to fund municipal services like police, fire and sanitation. Why would anyone want to strangle this industry by cutting off the rental income it needs to meet ever-increasing operating costs and the constant improvements required by a housing stock that is generally more than 70 years old?

Instead of playing to his base, the mayor should join with all stakeholders to recognize that we need to protect tenants, not apartments. As long as the city needs more tax revenue, rents will have to increase. The only way to protect our neediest tenants is for tenant advocates, the mayor and other elected officials need to join with the industry to support an expansion of the existing rent increase exemption programs to cover all income eligible renters. At the same time, rules need to be relaxed to allow the private sector to continue improving and creating affordable housing for the entire spectrum of the city’s growing population.

 

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