Inadequate rent adjustments, the Democratic primary & changes to HVS

Plus, we recap some smart ideas proposed in Gov. Hochul’s new Aging Master Plan. 

And it’s summertime, which means we’re trying to take it easy. To that end, the Housing New York podcast will now publish every two weeks through the end of August. So the next EP will drop on July 22. 

This is your New York Apartment Association weekly update with CEO Kenny Burgos.

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Send us questions or comments at podcast@housingny.org 

On The Agenda

1:22: The Rent Guidelines Board

3:37: Housing and Vacancy Survey switchup  

5:05: Governor Hochul’s Master Plan for Aging

→ REGISTER HERE for City & State’s July 24 Aging Summit

6:30: NYC Charter Revision Commission’s interim report suggests changes to ULURP and open primary elections

7:39: Reflecting on the the mayoral race

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Transcript

This week on Housing New York: Rent adjustments below inflation for more than a decade… What could possibly go wrong? Governor Hochul rolls out an Aging Master Plan with some good ideas about increasing housing supply and helping the elderly. Plus, we recap the Democratic mayoral primary and what it means for housing. 

Let’s start Housing New York

[THEME]

“We need 800,000 units to meet the demand today. What we have right now in the United States and what we have right now in New York City is almost a crisis of absurdity. Hundreds of thousands of renters are at risk, and there is literally no plan. The distress of rent-stabilized buildings is going to be one of the biggest stories for the next 12-18 months.”

[INTRO]

Welcome to the Housing New York Podcast. I am your host Kenny Burgos. We are taping this on Monday, July 7. 

We took last week off because there was a lot happening on Monday and Tuesday, and we didn’t want to tape the pod until we saw what happened. 

This summer we are going to be taping every two weeks as things slow down. So our next episode will come out on July 22nd. That will be the 50th episode I have taped. So we’ll think of something special to do for that episode and be sure to tune in for that. 

Okay, let’s get to the news. 

[01:22] [The Rent Guidelines Board]

We start the pod with the Rent Guidelines Board. Amidst tremendous pressure to freeze rents, even though inflation is at 4% based on the RGB’s analysis, the final vote was a 3% increase on a one-year lease, and a 4.5% increase on a two-year lease. 

For more than a decade the RGB has adjusted rents below inflation. Before 2019, this was often justified by the fact that there were vacancy bonuses and adequate room for Individual Apartment Improvements (IAIs) to increase rents. When factoring in those things, with rent adjustments about seven tenths of a percentage point (0.7%) below inflation, the idea was that buildings were able to remain adequately funded.   

Since 2019, the RGB has actually defunded buildings faster — despite the elimination of these other revenue streams for buildings. The result has been plummeting net operating income (NOI) to a point where thousands of buildings – especially in the Bronx and Northern Manhattan – are bankrupt and in physical decline. Violations and complaints are up. Foreclosures are up. Banks that hold the loans are collapsing and private lenders are fleeing the market, which means there is no access to capital for a building that needs to make emergency repairs.  

In short, this is a crisis. 

Hundreds of thousands of renters are at risk. And there is literally no plan to help them that has been put forth by an elected official. 

Literally no plan. 

None of the mayoral candidates have a plan to address the scale of this crisis. Nothing from the governor, the current mayor or anyone in the state Legislature. 

The distress of rent-stabilized buildings is going to be one of the biggest stories for the next 12 to 18 months. We will see more foreclosures; buildings going into receivership, which is awful for tenants. We will see more buildings collapse and be vacated because there is no money to maintain them. We will see the city budget gutted by this crisis at a level that will be on par with the migrant crisis that’s strained the budget the last few years. 

The RGB, to their credit, has started to gather more information to highlight this crisis. The hearings included a lot of third-party housing experts who warned of horrible long-term consequences if nothing is done. 

It’s not just the Bronx. They are in the worst situation, but data suggests Brooklyn and Queens are only two-to-three years away from being in the same place the Bronx is in right now.

So we’ll continue to beat the drum on this and we sincerely hope that elected officials start to take this emergency seriously. 

[03:37] [Housing and Vacancy Survey hypocrisy] 

Okay, we have a story about Housing and Vacancy Surveys and hypocrisy. 

Since the 1960s, the City of New York has contracted the U.S. Census Bureau to do Housing and Vacancy Surveys. These are conducted every three years, with some exceptions, and they are used to declare a ‘housing emergency’.

New York is the only place in the world that ties its rent stabilization scheme to housing scarcity. If New York ever built enough affordable housing to reduce the rents, the current stabilization system would end for most buildings. 

This has been the case since 1974 and it is the main reason the city has had a housing shortage for 50-plus years. 

In 1990 and in 2020 the state Legislature delayed the Housing and Vacancy Survey because they claimed that the U.S. Census needed to conduct the survey, even though the law doesn’t require the U.S. Census bureau to do it. 

It turns out that the city Department of Housing Preservation and Development – HPD – has indeed confirmed this, by announcing last week that they are ditching the U.S. Census and have struck a new deal to have a survey conducted by the University of Michigan.  

This move may be a response to federal budget cuts, which could have made the U.S. Census Bureau less capable of handling the survey. But either way, this is a huge shift in how the city will gather data about the ongoing housing crisis. 

We’re hopeful that the 2026 survey will be better than the 2023 survey, which had a bunch of clear flaws in it. We could see these flaws when comparing the same data to RGB reports, which had a sample size that was 125x larger. 

[05:05] [Governor Hochul’s Master Plan for Aging]

We want to talk about something that didn’t get a lot of attention when it was announced: Governor Hochul’s Master Plan for Aging. This report details several concerns and action plans to make sure that aging New Yorkers are protected. 

The plan includes a lot of things that would make housing better. 

One idea she has is to expand the Senior Citizen Rent Increase Exemption or SCRIE program. Currently it is only in place in New York City — and it is a huge success. What it does is freeze the rent for elderly people on fixed incomes. Instead of higher rents, the city gives the property owner a tax credit in the amount of the difference between the frozen rent and the actual rent. 

This is great because the rents need to increase to keep pace with operating costs so the buildings can afford to be maintained and upgraded, which is very important for aging people. For example, this rent freeze program ensures there is enough revenue for the building to repair or upgrade elevators to make sure they are always working, which is vitally important for many elderly New Yorkers. 

Freezing rents without a property tax offset forces buildings to cut back on maintenance and repairs, and that means the elevator has a higher chance of being out of operation for a much longer period of time. 

This summer, we are going to be really stepping up our efforts to promote SCRIE and its partner program for the disabled (DRIE). 

Later this month, we will be on a panel for an event that is being presented by City & State to talk about this issue, and we also hope to be partnering with several elected officials to make sure more people are signed up.

[06:30] [Charter Revision Commission update]

We have an update on the Charter Revision Commission. This was formed by the mayor at the start of the year with a clear directive to propose changes to the City Charter that would increase housing supply. 

They are out with a report that has a bunch of good ideas in it. 

It proposes a streamlined process for publicly funded projects: an expedited review process to replace ULURP, which is often criticized as too slow. This would apply to smaller projects, like converting a three-family home into a 12-unit apartment building.  

It also creates a veto on ULURP, if the City Council votes it down: The mayor and the borough president could override the veto from the Council and let the project move forward. 

The Charter Commission also proposes a reform to elections. They are suggesting that the party primaries are eliminated and the city conducts one open primary for all residents to vote in. The top two winners in the primary would face off in the general election in November. 

The Commission also is suggesting that the elections for mayor and other city-wide positions be moved to the same year as presidential elections, which they believe would increase turnout.   

These proposals will be finalized in a few months and will be on the ballot in November. We will have a lot more insight on this when it’s official. 

[07:39] [Reflecting on the mayoral race]

We are going to end the podcast talking about this year’s primary elections. 

We all know the Democratic primary was won by Assemblyman Zohran Mamdani, shaking up the political world. The key part of his platform has been a rent freeze, which will accelerate the financial and physical decline of thousands of buildings that house hundreds of thousands of renters. 

So, we were obviously disappointed. 

What happens next? 

There is going to be a general election. The favorite to win is Mamdani, but Eric Adams is definitely running. Andrew Cuomo may be running. Curtis Sliwa, the Republican in the race, has said he is not dropping out unless he dies. 

My take is, at this current moment, with all these competitors in the race and absent an act of god, Mamdani is on a path to becoming the next mayor of New York City. 

Now, obviously there is a conversation to be had about a one-on-one campaign, but unless candidates decide to drop out and there is a major effort – and a major coalition building with millions of dollars spent to create this effort – Mamdani will likely be the next mayor of New York City. 

[OUTRO]

That’s the podcast for this week. Reminder: Our next episode will drop in two weeks. 

I hope you keep following us on X, Instagram, and TikTok, and you can find us @housingny. 

We love hearing comments from you. You can post in the comments section of where you are listening to this, or engage on social media platforms.  

You've been listening to Housing New York with Kenny Burgos and I'll see you all in two weeks.

And remember, good housing policy starts with good conversation.