Testimony By New York State Senator Thomas K. Duane Before New York City Rent Guidelines Board Hearing on Proposed Rent Increases

June 19, 2007

My name is Thomas K. Duane and I represent New York State's 29th Senatorial District, which includes the Upper West Side, Hellfs Kitchen, Greenwich Village, Chelsea, the East Side, Stuyvesant Town, Peter Cooper Village and Waterside Plaza. This mixed-income district is composed largely of tenants, thousands of them rent-stabilized, many of whom already allocate too high a percentage of their incomes to pay their rent.

New York continues to be in a housing crisis with the affordable housing stock in our City rapidly dwindling. According to the Rent Guidelines Board (RGB) report entitled, "Changes to the Rent Stabilized Housing Stock in New York City in 2006," there was a decrease of 6,022 rent-stabilized apartments throughout the five boroughs. At the same time, the most recent New York City Department of Housing Preservation and Development Housing and Vacancy Survey found that the median income for rent-stabilized households in New York City is $32,000. That's a reduction in real dollars of 5.6% since the last survey. On the other hand, the median rent for a rent-stabilized apartment is $844, an increase of 8.2% over three years ago. Even worse, 28.8% of New York City's households are now paying more than 50% of their income for gross rent.

Meanwhile, the RGB's own studies show that landlords continue to make profits. Furthermore, landlords have greatly benefited from the Statefs vacancy decontrol law, so they can now charge "sky's the limit" rents on thousands of deregulated apartments. The Division of Housing and Community Renewal (DHCR) rent registration records indicate 9,983 units were deregulated in 2006 because of the decontrol law, an increase of 8% from 9,272 in 2005. And loopholes in State law, including allowances for phony demolitions and owner occupancy scams, permit landlords to empty buildings of rent-regulated tenants whose former homes become fair game for exorbitant, non-regulated rents.

Given these facts, it is absurd that the Board is even considering passing additional financial burdens onto tenants. This yearfs proposed rent increases of 2 to 4.5% for one year and 4 to 7.5% for two year leases would be an unfair and unnecessary hardship to many tenants still reeling from last year's increases.

Tenants have invested their lives in our City and have improved our neighborhoods. The Board should be proactive in preserving New York City's affordable housing so that poor and middle-class working people can continue to live here. Towards that end, I strongly urge you to impose an immediate freeze on rents for all apartments, lofts, hotels, rooming houses, single room occupancy (SRO) buildings and lodging houses.

The Board is meant to decide on rent increases based on the relative cost of maintaining and financing buildings, the available housing supply as defined by the vacancy rate, and the cost of living. If the Board bases its decision on these standards, rents should not be raised this year. First, while the cost of maintaining buildings has risen, it has not outpaced landlords' profits. Second, New York currently has a vacancy rate of 3.09%, which legally constitutes a housing emergency. Finally, the cost of living has increased while tenants' incomes have not risen. If the Board votes to raise rents, the only reason would be to increase landlord profits, and doing so would effectively serve to further destabilize New York City's affordable housing stock.

Landlords have already been sufficiently compensated for rising maintenance costs by RGB's consistent votes to raise rents in prior years. Another rent increase could not only hurt those who live in rent-stabilized apartments, but also SRO residents, many of whom are formerly homeless and at great risk of becoming homeless again. The 2% rent adjustment the RGB approved last year has already jeopardized the homes of SRO residents and I strongly urge the Board to freeze SRO rents in the year ahead.

Raising rents for New York City's long-term residents is a back-door effort to force them out of the neighborhoods and communities they have built. Landlords have been trying for years to chip away at rent regulation laws, endangering the individuals and families who live in the approximately one million rent-stabilized apartments in New York City. It is not sound public policy to endanger the quality of living of hundreds of thousands of people. Because New York City is in the middle of a horrible affordable housing crisis, it is essential that the Board impose an immediate rent freeze for all apartments, lofts and SROs so that tenants will not be priced out of their homes and our neighborhoods. The primary landlord argument, that increasing rents are necessary to meet increases in operating costs, is simply not true. Rent regulations have been stripped away in recent years and landlordsf profits have been consistent for the last ten years. The numbers show that landlords can afford for rents to stay the same, but tenants cannot afford any rent increases.

The importance of this vote cannot be overstated. The only acceptable outcome of this Boardfs vote is no rent increases.

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