NEW YORK CITY—Following a contentious battle and much discussion of “will they or won't they,” the Rent Guidelines Board has voted to raise rents on rent-stabilized apartments. The organization made history when it enacted the lowest hikes in its nearly half-century history, prompting some CRE executives to cry foul.
The Board voted to raise rents on nearly 1 million rent-stabilized apartments by 1% for new one-year leases and 2.75% for two-year leases, according to the New York Post. The Mayor's office was not available at press time.
While the increase is record-breakingly small, it runs counter to Mayor de Blasio, who had suggested a freeze on rents after saying Mayor Bloomberg had been overly generous to landlords. “We need a course correction — a one-time action to clearly rectify the mistakes of the past,” de Blasio said hours before the vote.
The idea for the modest increase came from RGB member Steven Flax, a de Blasio appointee who is vice president for community development at M&T Bank. “It costs money to run buildings and I do believe that my proposal is sincerely a historic change. It is not a political win for the mayor.”
Indeed, Mayor de Blasio expressed his disappointment Tuesday with the decision—though he wasn't surprised by it. "It was not a surprise to me that there would be a difference of opinion and we knew it would be a close vote either way you slice it. But I was trying to make very clear what I thought was the right way to go."
Still, industry attorney Sherwin Belkin, a founding partner of NYC real estate law office Belkin Burden Wenig & Goldman LLP—who represents property owners—suggests politics played a key role in the decision.
“The RGB has certain criteria that it is obligated to assess and analyze in order to determine the annual increases,” he says. “As best as I can understand the numbers that were to be considered, the appropriate criteria dictated rent increases far above those that were granted last night.”
“Unfortunately,” he continues, “the legal analysis seems to have been overshadowed by overt political concerns and pressures. The call by elected officials for a rent freeze right before the vote was taken seems intended to skew the percentages below what the analysis dictated should actually occur. This does not portend well for the call for increased affordable housing – which, in the final analysis, requires a partnership by the city with the real estate industry.”
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
