Tenants to Rudy’s RGB: Kill the Poor Tax
By Kenny Schaeffer

With landlord profits at an all-time high following back-to-back 11% increases, and with rents spiraling out of range for both the poor and the middle class, New York City tenants are calling on Mayor Giuliani’s Rent Guidelines Board to retreat from the preliminary increases it proposed on May 8. The RGB called for the highest increases since 1996: 4% for a one-year renewal, 6% for a two-year renewal, and an additional “poor tax” of $15 a month on rents below $500.

The “poor tax,” or low-rent surcharge, has been imposed in all six years of the Giuliani administration, and its compound effect has contributed to the loss of half of all apartments renting for below $500 since 1993. Based on the federal rent-hardship level of 30% of income, a $500 apartment is affordable only to families making at least $20,000 annually, yet the median income in households with rents under $500 is only $15,000. According to 1999 US Census Bureau data, 68.6% of families living in these apartments are African-American or Latino.

For this reason, groups which previously have not been directly involved in Rent Guidelines Board issues, like the Coalition for the Homeless and the Community Food Resource Center, are joining Met Council and other housing advocates in demanding that the RGB kill the poor tax in 2000.

In the last two years alone, owners’ “profit” per apartment—the difference between what it costs to maintain an apartment and what they collect as rent, also known as “net operating income”—has risen, from $250 a month to almost $300. Additionally, many studies have shown that the RGB has always overcompensated owners, in several ways. For one thing, following the sharp fuel-price increases of the 1970s, the board imposed steep permanent rent increases, based on assumptions that owners would use the same amount of fuel as when it was cheaper, and that their costs would therefore go up.

What studies have shown, however, is that owners simply cut back on heating their buildings, and fuel expenditures rose hardly at all—yet rents rose sharply, and of course did not come down when fuel costs dropped.

Additionally, in years when owners’ costs did not rise, the RGB increased rents anyway, based on projections that costs might rise in the coming year. For example, in 1998, owners’ costs rose only 0.1%, yet the board raised rents 2% for a one-year lease and 4% for two years, based on projections that owners’ costs might rise sharply in 1999. They did not, rising a virtually invisible 0.03%, yet the RGB last year voted the same increases as in 1998.

So tenants have already paid for the somewhat higher costs owners claim this year, based on a temporary spike in fuel costs. Additionally, if history is any guide, landlords will continue to compensate for higher fuel costs by simply providing less heat, as they did in the 1970s. Indeed, the continuing decimation of the city’s code-enforcement apparatus under the Giuliani administration ensures that owners will feel confident that they can get away with that.

To protest, tenants have planned a vigil at Gracie Mansion on June 13, and massive turnout at the RGB public hearing on June 15 and the final RGB vote on June 22. It remains to be seen whether Mayor Giuliani, who claims to be doing some soul-searching following a series of personal crises, will revisit his disastrous housing policies during the last year of his administration, starting by abolishing the punitive “poor tax.”