Current rent stabilization laws expired on June 16, and were extended until June 20. The expiration of these rent laws should not impact tenants whose current leases are in effect, and does not allow landlords to terminate leases or raise rents during the term of a current lease.
Over 100 speakers registered to comment on the new adjustments, which will affect lease renewals from Oct. 1, 2011, to Sept. 30, 2012.
The proposed renewal adjustments for lofts and apartments are a 3 to 5.75 percent increase on a one-year lease and 6 to 9 percent increase for a two-year lease. In addition, a 1 percent monthly rent increase was proposed to supplement fuel costs where heat is provided to apartment units at no charge to tenants.
Congressman Jerrold Nadler said he was dismayed by the proposed adjustments and that the increases were “exorbitant.”
“The guidelines that RGB has proposed are significantly higher than last year’s increase of 2.25 and 4.5 percent for one and two years,” Nadler said. “Even if the increases approved are well below proposed ranges, they would still be too high and have bad consequences for more than one million rent-stabilized units in New York City.”
The 2011 Price Indexes Operating Costs reports a 6.41 percent increase from last year in costs to operate a rent-stabilized apartment building, mostly due to fuel costs.
Nadler says that many other components of running a building of rent-stabilized apartments, like insurance, have decreased.
“Their profits far outweigh expenses,” Nadler said.
A number of other elected officials not present at the meeting, including Councilwoman Rosie Mendez, Councilwoman Margaret Chin, and Councilman Daniel Garodnick, were against the increase as well, and joined tenants in a march and rally in Lower Manhattan, ending at the public hearing site Monday afternoon.
While Nadler proposed that there be no increase in lease renewal rates, City Council Speaker Christine Quinn said the adjustment should be limited to 1 percent at most.
“Even in a bad economy, building owners have been doing quite well,” Quinn said. “Net Operating Income, the amount of money received by owners after expenses, by reports has gone up consistently.”
Net Operating Income went up by 5.8 percent in 2009 and has seen an average increase of 7.4 percent in the last four years.
Not So Simple
Building owners say the math isn’t quite so simple.
Steven Schleder, an owner member of the RGB, said that the Net Operating Income takes into account the income from deregulated apartments, factoring in profits from luxury apartment units as well.
“You’re recognizing that revenue and then holding Net Operating Income constant, in effect confiscating that extra income [from deregulated apartments],” Schleder said.
Patrick Siconolfi, executive director of the Community Housing Improvement Program, said 42 percent of rent-stabilized buildings were financially endangered, and proposed a low-rent supplement for building owners and property tax reduction.
He said the reason so many buildings were distressed or in danger of being distressed was because of the high property taxes, which are the largest expense, rising faster than fuel prices.
“Net Operating Income is not profit. Capital costs, infrastructure, those must be paid for with Net Operating income, same with taxes. So if there is any profit, it’s a much smaller number,” Siconolfi said.
Quinn said a property tax reduction was not possible with the city’s current revenue stream.
Suggestions will be taken up until June 24, and the final vote will take place on Monday, June 27. It will be open to the public and take place in the Great Hall at Cooper Union at 5:30 p.m.
