RGB OKs Rent Increases, Raises Poor Tax
by Jenny Laurie

In an unusually fast vote June 24, the city Rent Guidelines Board voted to increase the rents of apartment tenants and SRO hotel tenants by amounts that far outstrip what landlords’ costs showed guidelines should be. The board voted 5-4 to set apartment guidelines of 2% for a one-year lease and 4% for a two-year lease, a “poor tax” surcharge of $15 on apartments renting for $500 or less and — for the first time ever — a minimum rent of $215 a month. Chairman Edward Hochman cast the deciding vote, joined by public members Edward Weinstein and Justin Macedonia and the two landlord representatives, Harold Lubell and Vincent Castellano.

Weinstein and Macedonia, both Giuliani appointees, voted consis- tently through the evening with the landlord representatives. Siding with the tenant representatives against the guidelines were Agustin Rivera, a Koch appointee, and Bartholomew Carmody, a Giuliani appointment.

The two tenant representatives, both Giuliani appointees—Jeffrey Coleman, a lawyer with the firm of Hughes, Hubbard and Reed, and David Pagan, the director of Los Sures, a Brooklyn housing organization—argued strenuously for no increase for one-year leases and against the poor tax.

“Mortgage rates are the lowest they have been in 17 years, the price index is zero, including an 18% drop in fuel costs last year, and landlords’ profits are higher than ever,” Coleman argued. He explained that in addition to the surveys showing landlords should get no increase for one year, there was ample evidence that rents have become more and more unaffordable. “In 1970, the average tenant paid 20% of his or her income for rent; today the average tenant is paying 32%.”

The RGB rejected that proposal, 6-3, with Hochman voting yes after it was clear it would be defeated.

The group of tenants who will suffer most from the guidelines this year are those living in single-room-occupancy hotels. The RGB passed guidelines of 4% a year for all categories of SRO/hotel housing. This increase appeared to be motivated by Ed Weinstein, who at previous meetings had spoken with sympathy about SRO owners who get hundreds of dollars a night from tourists and only that much per month from rent-regulated tenants.

SRO tenants had received 0% guidelines from the RGB every year for the past five years, because of concern that even small increases would cause additional homelessness in the very fragile population of people who live on low, fixed government-benefit incomes.

These tenants did get a break when Coleman and Rivera proposed a stipulation that SRO owners could only collect these guidelines from tenants if they had at least 70% of their rooms rented to rent-regulated tenants paying legally registered rents. This rule passed despite Weinstein’s no vote; he explained that he didn’t like the restriction because it “created a regulatory atmosphere which I, in principle, am opposed to.”

Intense rhetoric about landlords going broke as a result of renting apartments below $400 and $500 a month surrounded the proposals for increasing the poor tax. The RGB voted to allow landlords to collect an extra $15 surcharge on apartments renting for $500 or less. Setting a very dangerous precedent, it also passed for the first time a minimum rent. Starting on October 1, any rent-stabilized tenant with a rent below $215 will have their rent go up to that amount with the lease renewal. This again was engineered by Hochman with support from Weinstein and Justin Macedonia.

In addition, the Board voted for increases on lofts of 1% for one year and 2% for two years. It voted—after some debate—a zero sublet allowance, and left the vacancy allowance at the state-legislated level of approximately 20%.