Rent Guidelines Vote Draw Ire of All Sides

If that final vote holds true to this week's preliminary action, tenants can look for increases in rent bills anywhere from 2% to 4.5% on one-year leases, while two-year signers will be hiked as much as 4% to 7.5%. The board said it had found through its own research that the cost of running a rent-controlled apartment building in the city had increased by an average of 4% over the past year.

To arrive at its price index of operating costs, the board averages together expenses like labor, fuel, utilities, contractor services, administration, insurance, parts and replacement costs as well as sewer/water and taxes. The board said that while some costs, like fuel and insurance had decreased, the decreases were offset by increases, more notably, real estate taxes, which went up by 11.7%.

But further fueling what's become a legacy of adversarial unhappiness over rent guidelines is the deep recession that has wreaked economic havoc on tenants as well as landlords and owners throughout the real estate community. "People have been losing jobs or facing cutbacks," an organizer and spokesperson at the tenant advocacy group Tenants and Neighbors tells GlobeSt.com. She adds that she had "conversations right after the RGB announced the increase range, and those tenants were shaking their heads saying they don't know how they will be able to pay the added expenses."

Saying her organization and others had hoped for a possible rent freeze considering the downturn, the organizer recalls that "last year, the owner/landlord argument was about operating costs." She noted that according to numbers that come from the RGB reports, "landlords and owners are still making 38 cents on the dollar."

A similar argument, albeit with a very different outcome, comes from the owners' perspective. Marilyn Davenport, SVP of the Real Estate Board of New York, tells Globe St.com that her organization does not think the 4% price index increase figure that the RGB came up with was accurate. She notes that landlords, like tenants, are not only dealing with a particularly harsh recession, but increased volatility in pricing that's been seen in essentials like utilities, maintenance and fuel.

"To the extent that these proposed increases are based on the board's estimates of cost increases, we think they aren't capturing the full extent of difficulties that are associated with the cost of running a building," says Davenport. "I think everyone knows, from their own life experiences--whether it's paying the electric or heating bill--that a lot of costs are going up. While it's a little cheaper at the pump right now, there's no way to guarantee that's going to continue."

Add to that a rise in assessments and a tax rate for Class Two real estate properties that increased by 11.7%. Some say the tax increase couldn't have come at a worse time.

"Of course this is a terrible time to raise property taxes," Patrick J. Siconolfi, executive director at Community Housing Improvement Program, tells GlobeSt.com. He notes that property taxes are the fastest growing cost component to running a building in New York City.

Saying most economists would probably agree, Siconolfi adds that to raise taxes in the middle of a recession is counterproductive. He says that tenants should probably be directing some of their anger "toward the city, not the owners, because owners don't set these rates. If the city was serious about maintaining affordable housing, they'd freeze property taxes."

Not only that, "we have a lot concern about the city's added expenses, like water and sewer and the dozens of other fees and expenses that get paid to the city," says Siconolfi. "About 35% of every dollar that owners spend to maintain their property just goes back to the city of New York. It just doesn't make any sense."