RGB Issues Income & Expense Study, Annual Meetings to Continue
Despite Mayor de Blasio’s announcement in April that the city was working with the state to suspend the Rent Guidelines Board (RGB) meetings, the meetings will be held remotely this year. The mayor said that there were some legal concerns with suspending the board. The RGB is mandated by law to establish yearly rent adjustments for rent-stabilized apartments in New York City. In its duties, the board holds an annual series of public meetings and hearings, which will be held remotely this year, to consider research from staff and testimony from owners, tenants, advocacy groups, and industry experts.
This year, due to the COVID-19 pandemic, de Blasio has advocated for a rent freeze. “We are in the midst of a crisis only comparable to the Great Depression,” he said. “The people of our city are struggling, and a rent freeze is the lifeline so many will need this year to stay above water.”
After the passage of the state’s Housing Stability and Tenant Protection Act of 2019 (HSTPA), more attention has been directed toward the RGB and its ability to raise rents. HSTPA halted owners’ ability to increase rents upon an apartment’s vacancy and curbed the increases applied through renovations. Last year, the RGB voted for a 1.5 percent increase for one-year leases and a 2.5 percent hike for two-year leases for both rent-stabilized apartments and lofts. The year before, the board approved an increase of 1.5 percent, but that increase was preceded by two years of rent freezes.
Income & Expense Study
Throughout the year, the RGB staff is responsible for providing administrative support to the board and year-round research efforts regarding the economic condition of the stabilized residential real estate industry. Section 26-510(b) of the Rent Stabilization Law requires the RGB to consider “relevant data from the current and projected cost of living indices” and permits consideration of other measures of housing affordability in its deliberations.
The RGB annually publishes six research studies that it uses to determine the rent guidelines: Price Index of Operating Costs; Income and Expense Study; Housing Supply Report; Income and Affordability Study; Mortgage Survey Report; and Changes to the Rent Stabilized Housing Stock.
Recently, the RGB released its 2020 Income and Expense Study. The data the report uses comes from Real Property Income and Expense (RPIE) statements from rent-stabilized buildings collected by the Department of Finance. RPIE data encompasses both revenue and expenses, allowing the board to accurately gauge the overall economic condition of the city’s rent-stabilized housing stock.
The report analyzed changes in rent, income, costs, and net operating income that occurred in the same set of 13,658 rent-stabilized buildings from 2017 to 2018.
Net Operating Income. Net Operating Income (NOI) refers to the earnings that remain after operating and maintenance (O&M) expenses are paid, but before payments of income tax and debt service. The report found that citywide net operating income in rent-stabilized buildings declined for the first time since the 2002-03 period, falling 0.6 percent between 2017 and 2018. The decline was preceded by 13 consecutive years of NOI increases. Since 1990-91, when this study first calculated the change in NOI, it has declined just three times: two consecutive periods (2001-02 and 2002-03) and the most recent period (2017-18). Citywide, NOI in pre-war buildings fell 0.7 percent, while newer, post-war buildings fell by 0.3 percent.
Rental Income. The report found that average rent collections in stabilized buildings grew by 3.7 percent in 2018. Rent collections increase for a number of reasons, including increases allowed under RGB guidelines; termination of preferential rents upon vacancy; combining apartments; individual apartments improvements (IAIs); and building-wide major capital improvements (MCIs). In addition, for the period of this study, vacancy increases and termination of preferential rents upon lease renewal were still permitted.
Operating costs. The report found that average expenses in stabilized buildings increased 5.8 percent from 2017 to 2018. Pre-war buildings rose at a greater amount, up 6.2 percent, while post-war building costs rose 5.1 percent.
COVID-19 Pandemic Effect Considerations
This study, published in April 2020, focuses on data from 2018 and prior years. Due to the as yet unknown full impact of the COVID-19 virus, the study doesn’t reflect the current economic condition of the NYC rental market. Future editions of this study will illustrate some of the hardships that our fellow New Yorkers may be experiencing now and in the future.
2020 Meeting and Hearings Schedule
Because of the ongoing COVID-19 public health crisis, the RGB will be convening virtual meetings. The RGB typically holds meetings to discuss its research agenda, review staff reports, and to hear testimony from invited guests including public officials, housing experts, and industry and tenant representatives. In accordance with the Open Meetings Law, every meeting of the board must be open to the public, except when circumstances warrant executive sessions. While the public may attend any public meetings, they’re not allowed to address the board unless invited. The RGB reserves the right to cancel or reschedule public meetings. The upcoming times are listed below.
For access to the meetings, you can livestream the meeting at the RGB’s YouTube channel at www.youtube.com/user/RentGuidelinesBoard or by telephone. To listen to the meeting by phone, the RGB will post specific instructions at least three days before the meeting at https://rentguidelinesboard.cityofnewyork.us/meetings/2020-meetings-and-hearings.
Thursday, April 23 - 9:30 a.m. (Public Meeting): The board will be meeting via videoconference to discuss the 2020 Income and Expense Study and the 2020 Price Index of Operating Costs (report to be posted).
Thursday, April 30 - 9:30 a.m. (Public Meeting): The board will be meeting via videoconference to discuss the 2020 Income & Affordability Study and additional research reports.
Tuesday, May 5 - 9:30 a.m. (Public Meeting): The board will hear testimony from invited tenant and owner groups via videoconference.
- Owners 9:30 a.m. – 12:00 p.m.
- Tenants 1:00 p.m. – 3:30 p.m.
Thursday, May 7 - 7 p.m. (Preliminary Vote): This is a meeting to adopt proposed guidelines. The RGB will hold a series of public hearings before a final vote on adopting the final guidelines is made. At voting meetings, the public may listen to proceedings, but may not address the board.
The RGB says the remainder of the meeting and hearing schedule will be posted at a later date. And meeting agendas will be posted online at least one day prior to each meeting, unless otherwise unavailable.