By Emma Whitford

Law360 (June 23, 2021, 10:40 PM EDT) -- New Yorkers who live in the city's nearly 1 million rent-stabilized apartments will face rent increases as soon as this fall, though they can opt for a six-month delay under unusual terms adopted Wednesday by the city's nine-member Rent Guidelines Board.

In a 5-4 vote that veered from precedent, the board adopted a rent increase of 0% for the first six months of any one-year stabilized lease signed on or after October 1, and a 1.5% monthly increase for the second half. Tenants who opt for a two-year lease will see increases of 2.5%.

Alex Schwartz, one of the board's five public members alongside two who represent tenants and two who represent property owners, said Wednesday that the split one-year lease structure is "intended to provide additional time for economic recovery, before any rent increase goes into effect." 

Last year, the board adopted a one-year freeze. The waning coronavirus pandemic took center stage for the second year running in the leadup to the annual vote, which for more than half a century has set maximum allowable increases for regulated apartments in buildings with more than six units that pre-date 1974, as well as certain lofts and hotels.

Both tenants and landlords expressed frustration and skepticism. Tenant advocates had called for a rent rollback or freeze in 2021, citing pandemic-era unemployment and limited savings among regulated households. 

Gladys Gyamera, a rent-stabilized tenant and medical assistant from the Bronx, attended a rally and vote watch party in Manhattan Wednesday. "Some of my [neighbors], they lost their jobs and with the rent increase it will bring a lot of hardship on them," she told Law360. "They are afraid they may end up being homeless."

Landlord groups, meanwhile, said that their operating costs had increased during the pandemic, while some tenants moved out or fell behind on rent, contributing to the need for larger rent increases.

"The RGB has once again failed to approve a rent increase that keeps up with skyrocketing expenses," Jay Martin, director of the Community Housing Improvement Program, or CHIP, said in a statement Wednesday night.

Wednesday marked the board's final vote of Bill de Blasio's mayoralty — an era that has seen the only one-year rent freezes in the board's history, including in 2015, 2016 and 2020. The mayor-appointed Rent Guidelines Board holds public hearings and analyzes a range of expenses each year.

Under the Rent Stabilization Law of 1969, landlord costs that the board must consider include taxes, maintenance, fuel and water. On the tenant side, the board's annual income and affordability study looks at factors including homelessness, unemployment rates and average wages.

This year, landlord groups urged the board to consider extra costs incurred during the pandemic, noting with frustration that the board's annual income and expense report has a one-year lag.

CHIP, a landlord trade group, says it represents 4,000 New York City landlords with some mix of rent-stabilized apartments. They conducted a member survey for 2020, reporting that about 80% of members saw their expenses go up.

"Because of COVID, everything has gone up … building materials, oil, gas, everything," Joyce Holland, founder of Dutch Atlantic Property Group and a member of Small Property Owners of New York, told Law360 prior to the vote.

The Rent Guideline Board's report on income and affordability is more current, stating that average unemployment was at 12.3% last year, up from nearly 4% in 2019. Tenant advocates also presented data to the board, including a July survey by the Community Service Society that found that more than a third of rent-regulated tenants have less than $1,000 in savings.

A recently-launched program to cover pandemic-era rent arrears with $2.4 billion in federal funds includes a one-year rent freeze for qualifying tenants, but it's not clear how many rent stabilized households it might reach. Officials have predicted the program will serve between 170,000 and 200,000 households across the state.

Leah Goodridge, a managing attorney at Mobilization for Justice, is one of the Rent Guidelines Board's two tenant members, both of whom voted against the increases Wednesday. 

"The zero percent for the first six months makes it seem attractive, but when you actually average it out … it's really a pyrrhic victory," she told Law360 afterwards. "We would have preferred a more simple rent freeze, at least for the first year."

Goodridge also expressed skepticism about how the mid-lease adjustment will play out in practice. "Honestly, I'm on the board and it's unclear to me," she said.

--Editing by Regan Estes.

Update: This story has been updated with additional context.

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