Landlords’ Profits Booming;
RGB Keeps Poor Tax, Proposes Rent Increase
by Kenny Schaeffer

Ignoring economic data calling for a rent freeze, the city Rent Guidelines Board voted May 13 to recommend allowing rent increases far above the minuscule increase in owners’ costs. The RGB also voted to continue the “poor tax,” an additional $15 a month on rent-stabilized apartments renting for under $450 a month.

The vote was 5-4, with RGB Chair Edward Hochman breaking the tie and voting with the landlord representatives to pass the proposal, which also recommended increases of 2% for tenants renewing a one-year lease and 4% for a two-year renewal. The “poor tax” has a disproportionate impact on low-income families, predominantly African-American and Latino, who make up the overwhelming majority of households in these low-rent apartments. “We will fight to stop these unconscionable increases, which destroy housing affordability and deepen New York’s housing crisis,” declares Met Council director Jenny Laurie. “The rent-stabilization law specifically requires the RGB to prevent oppressive rent increases, not impose them on tenants who are already paying, on average, more than 32% of their income in rent.”

Following an all-day public hearing on June 22 at Cooper Union’s Great Hall, the Board will conduct its final vote on June 24, also at Cooper Union, beginning at 5 PM. Tenant turnout on both dates is critical. The “poor tax,” imposed every year that Rudolph Giuliani has been mayor, has resulted in the loss of about half of the stock of apartments renting below $500. In 1993, there were just under 400,000 rent-stabilized apartments in New York City renting for under $500, according to the Housing and Vacancy Survey conducted every three years by the US Census Bureau. That number had been reduced to 270,000 by 1996, and when the 1999 HVS is completed later this year, it is expected to show that less than 200,000 remain, even as 1.8 million New Yorkers continue to live at or below the poverty level.

Poor Tax “An Abomination”

Jeffrey Coleman, one of two tenant representatives on the nine-member board, calls the poor tax “an abomination.” Met Council is working to pressure City Hall—which controls the RGB’s five so-called “public members”—to rescind the poor tax in the final vote on June 24, and to pull back the other unjustified rent increases contained in the May 13 preliminary vote.

Studies prepared by the RGB staff showed that owners’ costs rose only 0.03% from 1998 to 1999, while their income rose by 11%. Owners’ net operating income—the difference between what they take in on rent and what they spend on maintenance—rose about 10%, from an average of about $250 a month per apartment to about $275 a month.

However, the RGB rejected tenant representatives’ bid for a one-year rent freeze, 6-2. With Hochman casting the deciding vote, it also voted down public member Bartholomew Carmody’s proposal for 1% and 2% increases on one-year and two-year lease renewals, with no poor tax. The voting patterns revealed that Hochman and public members Justin Macedonia and Edward Weinstein agreed with the owners’ view that despite the lowest cost increases in the history of the board, landlords must always get a rent increase.

The 2% and 4% increases and $15 poor tax recommended are identical to the RGB’s guidelines from last year, when owners’ costs rose only 0.1%. One of the reasons for the 4% increases on two-year renewals approved last year was that the RGB predicted that owners’ costs would rise this year by 3.5%, rather than the 0.03% increase that actually took place. SROs Targeted

In a shocking setback for tenants in single-room occupancy hotels, the board also voted for the highest preliminary guidelines in years: 5% increases for rooming houses and SROs, and no increase for class A and B hotels and lodging houses. The vote appeared to be a mistake: After it was finished, Hochman asked if it could be retaken, with the class A hotels getting the 5% increase instead of the SRO category, but the motion’s sponsor, Edward Weinstein, refused to allow reconsideration.

Weinstein had earlier explained his reason for giving SROs a 5% increase by describing an article in the New York Times showing that transient tourists pay up to $100 a night, what many long-term tenants pay in a week. The SRO population is one of the most vulnerable in the city, one step from homelessness, and in recent years a consensus had emerged to preserved this scarce supply of affordable housing. However, with the ascension of Giuliani ally and former Deputy Mayor Fran Reiter to the position of city tourism commissioner, SROs are once again under the gun, as Reiter has openly supported the displacement of existing SRO tenants to make room for tourists.

To help fight these unjustified rent increases, which threaten to further devastate New York City’s shrinking supply of affordable housing, call Met Council at (212) 693-0553.