THE ASSEMBLY STATE OF NEW YORK ALBANY

MICAH Z. KELLNER th 65 Assembly District

COMMITTEES Banks Cities Consumer Affairs and Protection Steering Corporations, Authorities, and Commissions Racing and Wagering

Hold Rents Steady for 2011-12: Landlords Do Not Need a Rent Increase!
Testimony of Assembly Member Micah Z. Kellner Before the New York City Rent Guidelines Board Public Hearing on 2011-2012 Proposed Guidelines Monday, June 20th, 2011 My name is Micah Z. Kellner, and I represent the 65th Assembly District in Manhattan, including parts of the Upper East, Yorkville and Roosevelt Island. Thank you for the opportunity to testify today. In New York City, landlord profits continue to rise, while middle class New Yorkers are paying ever higher proportions of their income towards rent. As you decide on this years proposed rent increases, I expect that you will consider the challenges faced by our tenants. According to the data released by this Board, it is clear that landlords do not need another round of rent increases and any increase would only continue to work to the detriment of the citys seniors and middle class. The loss of the middle class means splitting the city between the very rich and the very poor, which history has illustrated, will set us on a path of urban decline that will push New York into a Detroit-like decay. I, for one, do not want to see this happen. As our economy entered the most recent downturn, landlords, with a secure supply of income through rent regulation, saw increased profits while the markets around them sharply declined. In the Boards report on Income and Expenses you stated very clearly that landlords profits have grown over the years. Net Operating Income, a statistic that takes into account increases in operational expenditures, increased by 5.8% from 2008 to 2009 and has increased over 9.3% since 1990, even after being adjusted for inflation. This indicates that an ever growing percentage of rents are going directly to lining landlords pockets and additional increases are unnecessary. Rent regulation is designed to protect those tenants who are most vulnerable: those who cannot afford to or are too elderly to move. In other words, to protect those tenants who simply do not have the leverage to negotiate on even ground with landlords. All too often dishonest landlords take advantage of tenants, using any means necessary to force hard working families from their homes. I deal with this everyday as East Siders stream into my free legal clinic in the hopes of evening the balance of power. These folks have enough on their 834 Legislative Office Building, Albany, NY 12248 (518) 455-5676, FAX (518) 455-5282 315 East 65 Street, New York, NY 10065 (212) 860-4906, FAX (917) 432-2983
E-mail: KellnerM@assembly.state.ny.us

plate and forcing them to defend their right to live in their home at every turn sends the message that they are not wanted in New York, when in fact, theyre the ones we need the most. The Real Estate and Developers Group of New York recently reported that market rates for a two-bedroom, non-doorman apartment have remained nearly constant over the past year. In fact, they have actually declined by a few dollars. The market has clearly reacted to the economic conditions that New Yorkers landlords and tenants alike face and it is time that the Rent Guidelines Board does not issue an increase for the first time in its history. For years this Board has increased rent and acted in a way that is utterly counter-productive to the goal of rent regulation: to establish stable and affordable communities throughout our city. Housing is considered affordable when it comprises no more than 30% of a residents income. The Board outlined this year in its Income and Affordability Study that, with unemployment reaching 9.5%, more than half of New Yorks citizens are paying more than 30% of their income for rent. Unfortunately, these tenants have been forced to sacrifice in other ways to make up the difference; often compelling them to give up their homes and move further and further from their communities and livelihoods. Each year, you have approved increases that build up the profits of landlords while harming the families who rely upon the Board for protection. It is a shame that an organization created and designed to defend affordable housing in New York has strayed so far from its mission by continually failing to maintain stable and affordable rents for those who need it most. For this reason I am co-sponsoring legislation with my colleague Assembly Member George Latimer, which would bring much-needed reform to the Rent Guidelines Board requiring the Board to use Income and Expense data, not the flawed Price Index of Operating Costs; preventing landlords with serious violations from collecting rent increases; abolishing the need for lease renewals; and rebalancing the board so that mayoral appointees no longer hold more power than tenants and landlords. The Rent Guidelines Board must be independent and objective enough to make decisions that are truly fair for all stakeholders. As of now it is fundamentally a politically influenced body, not one dedicated to maintaining rent regulations in line with the reality of New York Citys housing market. With residents facing decreasing incomes and rising unemployment, and landlords reaping increased profits, I expect the Rent Guidelines Board to make the right decision for both. I urge you not to issue any increase for this year. Thank you again for the opportunity to testify today.