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.
Recently, the RGB released its 2023 Income and Affordability Study as well as its Income and Expense Study.
This study highlights year-to-year changes in many of the major economic factors affecting NYC’s tenant population and takes into consideration a broad range of market forces and public policies affecting housing affordability, such as unemployment rates; wages; housing court and eviction data; and rent and poverty levels. Here are the highlights of this year’s report:
Data from the 2021 NYC Housing and Vacancy Survey shows that rent-stabilized tenants had a median gross rent-to-income ratio of 32.2 percent. For all rent-stabilized tenants, the median household income was $47,000, median contract rent was $1,400, and median gross rent was $1,547. The vacancy rate for all rental units was 4.54 percent.
As part of the process of establishing rent adjustments for stabilized apartments, the RGB since 1969 has analyzed the cost of operating and maintaining rental housing in New York City. Until 1990 the board measured changes in prices and costs solely using the Price Index of Operating Costs (PIOC), a survey of prices and costs for various goods and services required to operate and maintain rent-stabilized apartment buildings, which include buildings that contain at least one rent stabilized unit.
However, in 1990, the RGB acquired a new data source that enabled researchers to compare PIOC-measured prices and costs with those reported by owners: Real Property Income and Expense (RPIE) statements from rent-stabilized buildings collected by the NYC Department of Finance. These Income and Expense (I&E) statements, filed annually by property owners, provide detailed information on the revenues and costs of income-producing properties. The addition of I&E statements has greatly expanded the information base used in the rent-setting process. I&E statements not only describe conditions in rent-stabilized housing in a given year, but also depict changes in conditions over a two-year period.
Most important, I&E data encompasses both revenue and expenses, allowing the RGB to gauge the overall economic condition of New York City’s rent-stabilized housing stock. This year’s study reflects the appreciable impact of the COVID-19 pandemic on the NYC economy.
And in a methodological change, this study now stratifies buildings based on whether they were constructed prior to 1974, or on or after Jan. 1, 1974. Here are the highlights from the study:
The RGB will hold a series of public hearings to gain insight from tenants and property owners before the board’s final vote in June. However, on May 2, the RGB will hold a public meeting at the Great Hall at Cooper Union to have a preliminary vote on proposed lease adjustments for rent-stabilized apartments, lofts, and hotels.
In 2022, the RGB’s preliminary vote called for a 2 to 4 percent increase on one-year leases, and a 4 to 6 percent increase on two-year leases. Ultimately, the RGB voted for a 3.25 percent increase on one-year leases and a 5 percent increase on two-year leases.
The nine-member Rent Guidelines Board (RGB) is responsible for adjusting rents for the one million New York City apartments subject to the city’s rent stabilization law. The mayor appoints all of the members. Two members are appointed to represent tenant interests. One of these serves a two-year term, and the other a three-year term. Two members are appointed to represent owner interests. Like the tenant members, one serves a two-year term, and the other a three-year term. Five members (including the chairperson) are appointed to represent the general public. One of these serves a two-year term, another a three-year term, and two serve four-year terms. The chairperson serves at the pleasure of the mayor.
Mayor Adams recently appointed Genesis Aquino as a tenant member and Doug Apple as a public member to the NYC Rent Guidelines Board. Genesis Aquino is the executive director of Tenants & Neighbors, a grassroots membership organization that works collaboratively with tenants to preserve and protect affordable housing in New York State. And Doug Apple is the president and CEO of 1811Consulting, representing clients with real estate, health care, and project management services. He works on a range of supportive and transitional housing development projects as well as commercial real estate sales, leases, and acquisitions.
These appointments follow the appointment of Nestor Davidson as the chair of the RGB in March. Davidson is a professor of housing and land use at Fordham University School of Law. He previously served as special counsel and principal deputy general counsel at the U.S. Department of Housing and Urban Development. He also served as a clerk for former Supreme Court Justice David H. Souter. And he was a NYS Housing Finance Agency board member for six years.
On April 20, in a presentation to the nine-member Rent Guidelines Board (RGB), staff of the RGB suggested rent increases between 5.3 percent and 8.5 percent for one-year leases and 11 percent and 16 percent for two-year leases. These preliminary figures are based on formulas applied to PIOC data.
Throughout the board's history, the RGB has used formulas known as commensurate rent adjustments to help determine annual rent guidelines for rent-stabilized apartments. The formulas combine various data concerning operating costs, revenues, and inflation into a single measure to determine how much rent would have to change for net operating income (NOI) to remain constant for rent-stabilized apartments. NOI measures earnings left over after operating and maintenance bills are paid, but doesn’t include taxes and mortgage payments.
The “Net Revenue” formula found a commensurate rent adjustment using a no-vacancy factor is 6 percent on a one-year lease and 11.5 percent on a two-year lease. The same formula with a vacancy factor included offered a 5.75 percent increase on one-year leases and a 11 percent increase on two-year leases. The board’s “CPI-Adjusted NOI” formula, which reflects general inflation, yielded a 8.5 percent hike for one-year leases and a 16 percent hike for two-year leases (no-vacancy factor) and a 8.25 percent hike for one-year leases and a 15.75 percent for two-year leases (vacancy factor included). Using the “traditional” formula, a method used since the creation of the RGB, the board recommends a rent adjustment of 5.3 percent for a one-year lease and 16 percent for a two-year lease.