Did Rudy Call the Shots?
RGB Reverses Itself to Keep ‘Poor Tax’
By Steven Wishnia

Even by Rent Guidelines Board standards, it was a strange night. On May 9, the nine-member panel reversed its initial vote and proposed preliminary rent-increase guidelines of 3% for a one-year lease, 5% for two years, and a $15 surcharge on apartments under $500. The board, packed with three new members picked by Mayor Rudolph Giuliani, initially voted slightly higher guidelines, but returned after a recess to reconsider them. New member Mort Starobin claimed he hadn’t understood what he was voting on, and then cast the deciding vote to add the “poor tax” surcharge to low-rent apartments.

Although the proposed guidelines coincided exactly with what a New York Times article said the Giuliani administration wanted, new RGB chair Steven Sinacori—a former mayoral aide—denied that pressure from City Hall had caused the board to reconsider. “Starobin did not know what he was voting on,” Sinacori told Tenant/Inquilino.” But when asked why he himself had voted for the poor tax, Sinacori replied, “Why don’t you call the City Hall press office?”

Giuliani’s office would not comment on the issue.

The RGB will set the final guidelines June 20. They will apply to leases beginning after Oct. 1, 2001 and before Sept. 30, 2002.

The all-male board’s ritual began as usual, with tenant representative Jeffrey Coleman giving a number-laden speech urging a two-year rent freeze. One-quarter of rent-stabilized tenants pay more than half their income for rent, including 18% of middle-class renters, he said. “Landlord profits are at a record high,” he continued. “Housing prices in New York City are worse than they’ve ever been.”

The board rejected a rent freeze, 7-2.

Next, landlord representative Vincent Castellano urged the board to endorse a rent increase, because the economy is so good tenants can afford it. “I do not find the mountain of human need and misery tenant advocates claim to see,” he declared. “Anybody who wants to work is working.” But instead of proposing a high increase, the owner representatives suggested continuing last year’s guidelines—4% and 6% for one and two-year leases, with the $15 poor tax. They lost 5-2, and public member Bartholomew Carmody then suggested a compromise: the same increase, but without the poor tax.

It passed 5-4 with no debate, and the whole process was apparently over in barely half an hour. Tenants in the crowd barely had time to raise their “Freeze Rents Now” signs. (Police kept 20 or 30 people outside, although the 173-person capacity auditorium at lower Manhattan’s College of Insurance was far from full. They also banned photographers and TV cameras, saying it was a “private building,” although Tenant/Inquilino was able to take several pictures before being told to stop.)

“Watch them come back to vote on the poor tax,” activist Rafael Sencion whispered. Outside, Rent Stabilization Association President Joseph Strasburg was making the same prediction.

They both proved prophetic. When the board returned after a 25-minute recess, Starobin, a former Brooklyn landlord, moved to reconsider the vote, saying he thought he’d been voting on whether to separate the poor tax from the main guidelines. The landlord representatives challenged it, but Sinacori said he’d already talked to the city Corporation Counsel—the Giuliani administration’s legal arm—and been told it was legal.

“Why are we moving to reconsider?” Castellano asked.

“Rudy wants it!” shouted a heckler.

Only the landlord members opposed a new vote. The board then rejected the 4% and 6% guidelines, with Starobin casting the deciding vote. They voted 5-2 for 3% and 5%, with the landlord representatives abstaining, the tenant reps dissenting, and Starobin again casting the deciding vote.

“Can I congratulate the New York Times on printing in this morning’s newspaper what the guidelines would be?” Castellano asked.

New member David Rubinstein, deputy director of the city’s budget department, then proposed a $15 poor tax and $215 minimum rent. Coleman called it “an obscenity” and “an abomination.”

Owner representative Harold Lubell dismissed figures that the average income of tenants in apartments under $500 is under $15,000 a year as the product of “a facetious anecdotal study by some professor in Queens.” “The less you can afford, the higher your increase,” replied David Pagan, the other tenant representative.

The RGB backed the poor tax by 5-4, with public members Agustin Rivera and Carmody also voting no. Once again, Starobin cast the deciding vote.

Starobin also denied any pressure from Giuliani. “There was no pressure from anybody,” he said afterwards. “I don’t even know where the mayor is.” But he wouldn’t explain his support for the poor tax, saying, “I’m exhausted right now.”

The RGB also voted a 10% surcharge on subleased apartments, 7-2; increases of 2% and 4% for lofts, 5-4; and a 2% increase for residential hotels and rooming houses, 7-2, provided that at least 70% of the rooms are rented to permanent tenants and new tenants have the right to become permanent. SRO-tenant organizer Terry Poe was hopeful, saying that the fact the landlords supported a 2% increase might indicate they could get a lower increase at the final vote.

For rent-controlled apartments becoming vacant, the RGB once again proposed that the guideline for fair rent be either 150% of the maximum base rent plus a fuel surcharge or the federal fair-market rent—whichever is greater. This would essentially bring them up to market rate, Coleman charged, and Castellano conceded, “that could happen.”

“I was prepared for worse,” David Pagan said afterwards. Pagan, an official with the housing group Los Sures in Southside Williamsburg, Brooklyn, says that neighborhood—a once Latino and Hasidic Jewish area now increasingly home to artists and yuppies priced out of the East Village—has become so gentrified that buildings there are too expensive to be eligible for Section 8 subsidies.

It is crucial that tenants turn out in large numbers to the RGB public hearing on June 13 and the final vote on June 20. Met Council will be street tabling citywide and phone banking from our office in effort to turn tenants out to these meetings.