A number of NYC associations serving the multifamily building owner community have been offering encouragement for owners to participate in this year’s public testimony hearings in front of the Rent Guidelines Board (RGB). Since I rather enjoy pontificating about the challenges and headaches of building management, particularly in a regulated environment, I figured I’d give it a shot this year. As I understand it, these meetings have been a bit toned down in recent years, but traditionally have been a circus of tenant activists and politicians who think it realistic to ask for 0% rent increases. Typically, owners/landlords are under represented, but I keep hearing that our participation can make a difference. If you are an owner and reading this blog, consider coming to the Emigrant Savings Bank Building at 49-51 Chambers Street (Between Broadway and Centre Street) on June 13. Testimony starts at 10AM and, I believe, may continue all day until 7PM. If you’d like to get on the speakers list, you can call the RGB directly at 212-385-2934, or just drop a line to Courtney Ronner, Director of Communications at RSA, cronner@rsanyc.org. (I think going through Courtney, as I did, is the easier route.) Click here to download RSA’s RGB Talking Points if you need a little help formulating what you want to say.
The following is my intended talk:
Good morning. My name is Michael Vinocur and I come here as a modest-sized landlord with a fractional interest in a few
buildings in upper Manhattan. The early 20th century walk-ups we own were decrepit when we first purchased them, with hundreds of HPD violations each. They now are significantly improved buildings, with zero or close to zero violations. We consider ourselves good landlords and good stewards of the housing stock we manage. However, these improvements happened only by digging into our own pockets and forgoing any real return on our investments, as RGB increases have continually lagged our increased operating costs.
Though I appreciate the struggles to pay rent encountered by some of our lower income tenants, many of them are, in fact, well insulated from rent increases though things like the SCRIE and DRIE programs. And I’ve been amazed at how readily those who find themselves in court for non-payment of rent can get “one shot” deals wherein the city will pay their back rent if they get themselves in a jam.
I know there is little sympathy for landlords in this room, but I’m here to appeal to you to consider an increase this year that at least keeps pace with the Price Index of Operating Cost. Though this index understates the real cost of maintaining a building, leaving out things like capital expenses and legal costs related to difficult tenants, it still, as you know, was pegged at 5.9% this year. Thus, I think it fair that your one-year renewal rate should at least be in this ballpark. I’d also encourage you to maintain a minimum dollar increase for apartments under $1000, of which we have quite a few. Subjecting a $600 apartment to a straight percentage increase just doesn’t generate enough dollars to be fair to the landlord.
From 2007 to 2012, the Rent Guidelines Board one-year renewal increases have totaled 17.5% while my water and sewerage bill has gone up almost 76%. That’s over a 4 to 1 ratio! Heating costs have gone up far more than 17.5% during that time frame. So have material costs for repairs. So have salaries for supers. Insurance premiums are climbing faster than recent RGB guidelines, and this was further exacerbated by tropical storm Sandy. I have one building where my tax bill in recent years went up over 80%, despite less than a 20% increase in my rent revenues. And don’t forget that in many parts of the city now, taxes are pegged to around 30% of gross rent revenue. So, when you grant us a 5.9% increase, realized that only leaves a little more than 4% after property taxes to cover operating expense increases.
In light of last year’s absurdly lean 2% increase, I ask you to, at a minimum, allow us to keep up with our increased annual expenses. If you want a healthy housing stock in New York City, RGB increases should genuinely keep pace with the real increased cost of properly operating and maintaining our nearly 100-year-old buildings. Thank you.
NYC Multifamily Property Management - Tips from the Trenches 