Fallout from RGB vote increases push for reform

Chelsea Now photos by Jefferson Siegel

Left: Penn South tenant Anita Block, at left, came to lend support to West Side Neighborhood Alliance members that included Upper West Side tenant Vivian Riffelmacher, at right, and others at last Thursday’s contentious Rent Guidelines Board vote. Right: Bronx building owner Martin Richardson stands surrounded by tenant advocates, including members of the WSNA.

By Chris Lombardi

“It’s really a poor tax,” remarked Penn South resident and housing activist Gloria Sukenick, following the city Rent Guidelines Board’s verdict last week to dramatically increase rates on rent-stabilized units. “God forbid you should have a community, by staying in your place a while.”

Suckenick’s sardonic tone came in reference to the board’s decision to charge a special rent increase on rent-stabilized tenants living in their apartments for more than six years, also often known as the “longevity tax.” Last Thursday, the board voted to increase rents 4.5 percent on one-year leases and 8.5 percent on two-year leases, additionally mandating the supplementary increases for long-term tenants. To Suckenick, a central member of the Metropolitan Council on Housing, the decision was less surprising than the furor that surrounded it. “We just know now,” she said, “it’s got to be the fight for new affordable housing.”

Last week, after weeks of campaigning by both property owners and tenants groups, the board not only announced the steepest increases since the late 1980s, but for the first time set minimum rent increases for long-term tenants. For those in place more than six years, the RGB guidelines state, owners may either use the approved increases or simply add a $45 monthly increase for one-year leases or $85 for two-year leases—whichever is greater.

Local legislators, tenants and advocates said the board’s decision was surprising only in its magnitude. “I don’t know anyone who’s gotten a salary increase of 8.5 percent in the past year,” said State Sen. Thomas Duane, whose recently introduced Rent Board Reform Act would drastically change the board’s composition and operations. “Such outrageous increases—that’s all the more reason to reform the Rent Board,” he added.

The longevity tax, first proposed in a 22-page memo distributed at 9 a.m. last Thursday morning, added even more venom to the tenants’ cries. “We’ve never had minimums like that before,” Tenants Political Action Committee treasurer Michael McKee told Chelsea Now on Tuesday. “It shows how desperate they are... They know [tenants] are on a roll, and that their days on this board are numbered.”

McKee and other organizers saw the increases as a direct response to Duane’s bill, which would drastically reorganize the RGB, make approval of its members contingent to approval by City Council, and require all such boards to use actual income-and-expense data before determining rent increases for the year. But neither Duane nor City Council speaker Christine Quinn, who made a point of stressing her support for the bill in front of the RGB two weeks ago, agreed with McKee, saying only that it was further evidence of a broken system. Now, all eyes are on Albany, where many said they would press their case further with Governor David Paterson and work toward changing the rules.

“I’ve never missed an RGB, so I wasn’t going to miss this one,” Quinn told Chelsea Now on Tuesday. “I came forward for the Duane bill because I’ve long thought this needed doing,” she added. “The part of the bill that gave the Council having advice and consent, that was a bill I had passed in the Council that was then reversed.” According to McKee, that reversal in 2003, when the state tightened the Urstadt Law to further restrict the Council’s input, was a direct response to the Council’s action.

That 2003 change came along with the last wave of revisions to rent laws under former governor George Pataki, which also included loosening rent-regulation requirements of government-sponsored financing. The changes in Urstadt, McKee said, “made it so the only action that local governments can take is to raise rents. They cannot ever, ever lower them.”

Meanwhile, since the first RGB was formed in 1969, no board has ever voted for a rent freeze or a decrease in rent. It’s fact attributable at least in part to its composition, some say, in which two tenant representatives face two owners’ reps and three “public” members drawn largely from the financial and banking sectors.

“They’re like the new people moving in: financiers, bankers, hedge-funders,” Suckenick said.

To Hell’s Kitchen organizer John Raskin, director of Housing Conservation Coordinators, last week’s events “show how stacked this process is against tenants. This is exactly why we need to pass Tom Duane’s bill that would reform the Rent Guidelines Board and make it more even-handed.”

Both Duane and Quinn added that in promoting the bill, they were not trying to penalize landlords that are in financial distress. “I have no doubt it’s hard to be a small business owner,” Quinn said. “The city has programs designed for the small property owner. And we recognize that landlords have expenses. But you have to have as much honesty as possible. To many of these it’s a longer-term investment. And interest on your financing, it’s not the same as saying that ‘I have to pay this much for heat, this much for electricity.’”

Quinn added, “More and more, we’re seeing buildings owned by larger and larger entities—commercial landlords getting involved in residential buildings,” such as Tishman Speyer’s purchase of Stuyvesant Town. But those were not the owners protesting last week, holding signs in front of the board reading, “Help Small Owners.” Television coverage came replete with owners of older buildings talking of “water bills, property taxes, you name it.” Still, according to the RGB’s 2007 report, average profit for owners of rent-stabilized properties was well over 8 percent.

The day after the vote, Duane sighed. “They were successful yet again, the big landlords, in pitting the small landlords against the tenants. It happens every year, though they have so many common interests in a long-term, livable space.” As for the small owners’ tales of woe, Duane said simply, “I don’t see a lot of these buildings for sale. I don’t believe they are operating losing businesses. So all they need to do is to open their books, and we’d see what could be done to help them.”

The next step, said legislators and tenants alike, is working to change the State Legislature. Speaking the day after Senate Majority Leader Joseph Bruno announced his stepping down, Quinn would only say cautiously, “The possible changes in the State Senate may have created a minor opening—and certainly it boosts morale” for the fall campaign. But until the coming election brings Democratic Party advocates hope for the majority, last week’s increases may only be the beginning.

Still, given current political trends, both legislators and advocates were optimistic that they would see real change in 2009—starting with the enforcement of universal compliance under the law.

“There’s a long history of people buying buildings with one set of rules and laws in place, and thinking they can somehow bring about a different set,” Quinn said, citing the owners of 47 E. 3rd St., who are fighting in court to turn the tenement into their personal mansion. “If he wanted a mansion, he should have bought a brownstone. They act like the laws and regulations are totally irrelevant,” she added.

“On Perry St., there was a guy who wanted to claim the rent-stabilized studio next door for his daughter’s closet,” Quinn continued. “I told him, it’s nice that your daughter has a lot of shoes, but you can’t do this. She probably needs to lose some shoes.”