RGB Releases 2015 Operating Cost and Affordability Reports
The Rent Guidelines Board (RGB) is mandated by law to establish yearly rent adjustments for rent-stabilized apartments in New York City. The board holds an annual series of public meetings and hearings to consider research from staff and testimony from owners, tenants, advocacy groups, and industry experts.
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.
The RGB released its 2015 Price Index of Operating Costs on April 16. And on April 2, the RGB released its 2015 Income and Affordability Study.
Income and Affordability Study Highlights
The study highlights year-to-year changes in many of the major economic factors affecting New York City’s tenant population and takes into consideration a broad range of market forces and public policies affecting housing affordability. Such factors include New York City’s overall economic condition—unemployment rate, wages, Consumer Price Index, and Gross City Product—as well as the number of eviction proceedings and the impact of welfare reform and federal housing policies on rents and incomes.
The following summarizes some of the data issued thus far that the RGB will consider before voting on the upcoming rent guidelines for rent-stabilized apartments:
- Results from the 2014 Housing and Vacancy Survey show that median contract rent for rent stabilized tenants is $1,200; gross rent is $1,300; household income is $40,600; and the gross rent-to-income ratio is 36.4 percent;
- Results from the 2013 American Community Survey show that median renter income is $40,908; median gross rent is $1,228; and the median gross rent-to-income ratio is 32.2 percent;
- New York City’s economy grew by 3.1 percent in 2014, compared to a 4.0 percent increase during 2013;
- The city gained 120,700 jobs in 2014, resulting in a 3.0 percent increase from 2013 in total employment levels;
- The unemployment rate fell in 2014, to an average of 7.2 percent, down from 8.8 percent in 2013;
- In 2014, an average of 54,122 people were staying in Department of Homeless Services shelters each night, up 9.5 percent from 2013; and
- The number of nonpayment filings decreased 3.4 percent in 2014, while those actually heard in Housing Court increased 4.0 percent, and the number of evictions fell 6.9 percent.
Price Index of Operating Costs Highlights
The Price Index of Operating Costs (PIOC) measures the price change in a market basket of goods and services used in the operation and maintenance of rent-stabilized apartment buildings in New York City. The goods and services that make up the market basket were originally selected on the basis of the findings of a study of 1969 expenditure patterns by owners of rent-stabilized apartment buildings. Changes to the market basket have been made over time. The relative importance of the various goods and services in the market basket was updated in 1983 by means of a study of expenditure patterns of owners of rent-stabilized apartment buildings. And additional updates to these expenditure patterns have been done throughout the years in order to present a current and relevant analysis of changes in owner expense. Here are the highlights of this year’s report:
- The PIOC for rent-stabilized apartment buildings increased 0.5 percent this year;
- The apartment PIOC expenditure weights were updated using RPIE data;
- Costs in natural gas-heated buildings increased 1.7 percent, and costs in fuel-oil heated buildings declined 0.4 percent;
- The “core” PIOC, which excludes the erratic changes in fuel oil prices, natural gas, and electricity costs, and is useful for analyzing inflationary trends, rose by 3.6 percent this year;
- Fuel costs decreased 21.0 percent;
- Real estate taxes increased 4.2 percent due to a rise in assessments for Class Two properties;
- The utilities component increased by 1.2 percent, due to an increase in water and sewer rates;
- Insurance costs increased by 7.2 percent; and
- The PIOC for rent-stabilized apartment buildings is projected to increase 4.2 percent next year.