Tenants Make Case for Rent Freeze,
Poor-Tax Moratorium
By Kenny Schaeffer

As the city Rent Guidelines Board moved closer to its final vote on June 20 for rent increases affecting 2.3 million tenants in over 1,000,000 stabilized apartments, tenants made a strong case for a rent freeze.

At the RGB’s invited expert testimony on June 5, and at the public hearing June 13, tenants laid out the stark facts: Housing affordability has gone from bad to worse over the last eight years, and the Giuliani-appointed board, which is supposed to "prevent unjust, unreasonable and oppressive rents," has been asleep on the job. Landlord profits have risen 35% just in the last three years, following the drastic compromising of rent and eviction protections under the 1997 Pataki-Bruno-Silver deal in Albany.

On June 5, the RGB held a an abbreviated version of the invited expert testimony--which had been scheduled for April 30, but was canceled when Mayor Giuliani announced that he was going to fire RGB chair Ed Hochman, who resigned instead. Tenants were allotted only 60 minutes, instead of the two hours that had been slated in April.

Patrick Markee, policy analyst at the Coalition for the Homeless, documented the loss of 510,000 affordable apartments and the widening gap between median rents and household income over the past decade, leading to a lack of 400,000 affordable apartments for poverty level households. This has led to "an enormous rise in the number of homeless New Yorkers," he said; the population sleeping in city shelters has risen to its highest level since 1988.

Liz Krueger, a national expert on poverty, hunger and eviction protection, informed the RGB that steadily rising rents, in particular the "poor tax" surcharge on apartments under $500 a month, have contributed to a sharp increase in hunger as measured by increased food lines at pantries throughout the city.

Gina Cuevas, Bronx coordinator for the City-Wide Task Force on Housing Court, testified eloquently about the hardship visible every day in Bronx Housing Court, where thousands of families face eviction because they cannot afford their rents, as well as how difficult it is to feed and clothe her own children as a single mother paying 40% of her income as rent. Michael McKee of New York State Tenants & Neighbors blasted the RGB’s reliance on a price-index formula to guarantee owners ever-increasing profits, while ignoring the plight of the tenants the board is supposed to be protecting.

Met Council and the Legal Aid Society urged the RGB to freeze rents at their current level and to not impose the poor tax this year, allowing RGB staff and the new city administration being elected in November an opportunity to study the housing-affordability crisis and identify new strategies and resources to address it. Three of the four leading Democratic candidates for the mayoral nomination (Mark Green, Fernando Ferrer, and Alan Hevesi) have endorsed the call for a rent freeze, as has the Working Families Party’s bcandidate.

With the departure of three poor-tax supporters (Hochman, Edward Weinstein and Justin Macedonia) from the RGB, it may be possible to stop it this year. With four of the nine RGB members known to oppose the poor tax (tenant representatives Jeffrey Coleman and David Pagan, as well as public members Augie Rivera and Bart Carmody) it would only take one vote from the three new members to defeat the poor tax at the June 20 final vote.

Opponents of the poor tax point out that it falls disproportionately on those least able to pay more rent. Owners and Giuliani claim that it preserves affordable housing by increasing the rent rolls in marginal buildings, but present no evidence that the rental income in buildings that have one or two low-rent apartments is not already sufficient. Owners already have a remedy, known as the hardship increase, for getting additional rent increases if they open up their books and can demonstrate that the rent for an entire building is insufficient to guarantee a reasonable return.

Raising rents for all low-rent apartments, knowing that many low-income families will face grave hardship if forced to give their landlords another $15 each month, is not a reasonable way to deal with those few hypothetical cases where the entire rent roll of a single building is insufficient. There are other means available to assist genuinely distressed properties, particularly in view of the announcement on May 31 by 120 groups--including the Coalition for the Homeless, major banks and developers, and housing advocates--of an initiative known as Housing First!, calling for a $10 billion investment in affordable housing.

Landlord representative Vincent Castellano asked whether the panel thought it was the job of the RGB to redistribute wealth. But by setting high rents, the RGB is enabling the redistribution of wealth from tenants to property owners. Three years ago, with an average industry-wide profit of $250 a month per apartment, rent-stabilized apartments transferred $3 billion annually to the real-estate industry ($3,000 a year for 1 million apartments). With a 35% increase in profits since then, the figure has grown to $4 billion.

For their part on June 5, owners presented an elaborate slide show suggesting that the way for the RGB to preserve housing affordability is to raise rents.