BY JOSEPH STRASBURG
Mayor de Blasio recently declared war on the rental housing industry by supporting tenant-backed state legislation that would cut off the life blood of city’s existing rental housing. Perhaps the mayor does not realize that the ultimate casualties, if his proposals were to be adopted, will be renters, the city’s economy and his own housing plan.
The mayor’s proposals would eliminate rent increases when apartments become vacant, prohibit the deregulation of stabilized apartments and limit incentives for apartment and building improvements.
The sources of income that the mayor would eliminate are precisely what keeps stabilized housing alive. They were enacted by the state Legislature because rent increases provided by the city Rent Guidelines Board (RGB) were insufficient to meet ever-rising building operating costs. Long-term, building operating costs have increased by 5 to 6 percent per year, while the RGB has allowed rents to increase by only 3 percent per year.
The mayor does not seem to recognize that it takes money to operate rental properties, a cost that keeps increasing primarily because of increases in city real estate taxes and water and sewer charges.
These municipal charges make up one-third of building operating costs and are set to increase once again in July.
Instead, to keep rents low, Mayor de Blasio has decided that owners have been over-compensated in the past and are now making too much profit. There is no basis for making that judgement across the board.
Everyone knows that not all tenants are poor, just as not all owners are rich. Nor was it the purpose of the rent stabilization law to regulate profits. We tried that under the old rent control system which decimated the housing stock and left as its legacy apartments that still rent for less than $100 per month.
It’s time to finally acknowledge that rent regulations are a cause of, and not a cure for, the city’s affordable housing crisis. The affordability crisis (which certainly exists for low-income renters but not across the board), is not a result of excessive rents, but a problem of inadequate incomes. The only way to address this problem is through rent subsidy programs targeted for the neediest tenants. In other words, protect the tenants, not the apartments.
The mayor understands the need for rent subsidy. His administration has asked owners to help house homeless families using rent subsidies and the industry is ready to help. However, even if there are not enough rent subsidies available, the answer is not to freeze rents.
Rent-stabilized housing in NYC produced $19 billion in economic activity in 2014, including 153,000 jobs in locally based businesses. Half of this housing is owned by small business owners utilizing other small neighborhood businesses. This housing also generated nearly $3 billion in city taxes to fund municipal services like police, fire and sanitation.
As long as the city needs more tax revenue, rents will have to increase. The only way to protect our neediest tenants is for tenant advocates, the mayor and other elected officials need to join with the industry to support an expansion of the existing rent increase exemption programs to cover all income eligible renters.
Joseph Strasburg is the president of the Rent Stabilization Association.