Rent Guidelines and the Myth of Fairness

Sarah Laskow | May 3rd, 2011

Steven Schleider

For the past month, the city’s Rent Guidelines Board has been meeting in a dingy room on the ninth floor of the Manhattan Municipal Building. The room is usually used by the Landmarks Preservation Commission as a conference room, and it features benches of blue seats, which look as if they have been lifted out of an aging movie house. The white paint on the steam radiators is cracked like dry ground.

When the board meets tonight to take a preliminary vote on rent hikes for the city’s rent-stabilized housing, it will occupy the Great Hall of Cooper Union, an august space more reflective of the power the board’s nine members wield. New York City has more than one million rent-stabilized apartments, which house about 30% of the city’s population, according to the city’s 2008 Housing and Vacancy Survey. The board decides each year how much more money rent-stabilized tenants will have to hand over to their landlords, and whatever the number the board comes up with, it generally provokes anger from tenants and landlords alike.

But in preparation for that vote, the board’s members must consider the state of the city’s real estate industry, the taxes levied on building owners, the supply of housing, vacancy rates, cost-of-living information, and, according to the board’s website, “such other data as may be made available to it.” It was for that purpose that the board met at the municipal building this past Thursday.

The board consists of two members representing owners, two representing tenants, and five representing the general public. In the morning session, during which tenant advocates presented testimony, the board’s two owner members, Steven Schleider and Magda Cruz, proved very interested in what “other data” was, in practice, being made available to them. Tom Waters, a senior housing analyst with the Community Service Society, an nonprofit that advocates for low-income New Yorkers, spoke first. “I don’t have as much to say as usual because there isn’t a lot of new data to work with,” he began, sounding a tad nervous. “Rent-stabilized housing is the largest single source of housing for low-income New Yorkers.” 435,000 low-income families live in rent-regulated housing, Waters said, nearly twice as many families as live in public housing.

Like Waters, the other tenant advocates that spoke that morning made a case that rising rents across the city were unsustainable and hurt the most vulnerable. They argued that the Rent Guidelines Board had in its power the ability to push back against those circumstances. But the owner members asked repeatedly about the data underlying that argument and made known their skepticism. (Mr. Schleider was particularly vocal.) In some cases, the tenant advocates allowed that there was not data that explicitly showed the situation they were describing. But, the advocates explained, they were making sound assumptions based on the limited data available.

If the tenant advocates could not make an airtight, data-driven case for the need for lower rates of rent increase, neither could the owners show they definitively deserved a higher rate (although they faced a less restive audience). The data just isn’t there. New York City goes to great pains to obtain information about its housing market—most cities leave the work the city does in the Housing and Vacancy Survey to the less reliable federal Census—but numerous questions about who lives in and owns the city’s rent-regulated housing remain. For instance, it’s difficult, if not impossible, to find detailed information about the city’s landlords as a group: where they live, how old they are, how much money they make.

It was clear at the hearing, however, how the groups representing apartment owners wanted their constituencies to be perceived. Joseph Condon, of the Community Housing Improvement Program, argued against the popular image of landlords as wealthy, corporate speculators pulling in windfall profits. “70% of our owners have owned their buildings for 20 years or more,” he said. “42% have owned their buildings for 40 years or more. 48% are immigrants or the children of immigrants.” Jimmy Silber, of the Small Property Owners of New York, reported that his group’s members own no more than three small buildings and that they live in the buildings they own, “some of the best maintained buildings in the city.” And the two landlords who testified, both connected to the Rent Stabilization Association, were sympathetic owners who seemed to care about their tenants and said, at one point, that they would not necessarily raise rents on their tenants, if given the option.

Despite the emphasis on data, both in the board’s official responsibilities and at Thursday’s hearing, setting the rent rates can be an emotional process. Last year’s hike was a low 2.25% for one-year leases and 4.5% for two-year leases, yet tenant member Adriene Holder reportedly grew teary when she allowed that was the best the board would do for the city’s leaseholders. The board’s decisions for the two years prior to that  were challenged in court. In practice, the orders created a different set of rules for long-term tenants who paid less than $1,000 in rent: Their rents could be increased by a flat amount that would exceed the three or six percent increase that other leaseholders could be charged. It was only this past March that the state’s highest court upheld the board’s right to make that rule.

The background to this year’s vote is the process going on concurrently in Albany to renew the state’s rent-regulation laws. (One of the scheduled guests at the hearing had to send a replacement because he was meeting with state legislators.) By the time the Rent Guidelines Board takes its final vote at the end of June, the current system of rent laws will have expired. Albany seems set to renew the laws, but exactly how state lawmakers will tweak the rules remains to be seen.

No matter what the board decides this year, it seems, neither tenants nor owners ever feel they’ve been treated well. “We’re asking for fairness,” said Silber, of the small property owners group, at one point during Thursday’s hearing. Part of the problem, however, is that promoting fairness is not the board’s job. It is merely to keep rent rates in a certain portion of the city’s housing stock from rising too quickly, precipitating a housing crisis.