The Rent Guidelines Board released its annual report on landlord operating costs yesterday, and the results are promising for tenants of NYC's one million rent-stabilized apartments. Landlords only experienced a .5% increase in operating costs last year, the smallest increase since 2002. Come June, this might result in the first rent freeze on stabilized apartments in the Board's 46-year history.
This tiny increase in landlord costs is due primarily to an incredible 21% decrease in fuel costs over the last year. The report also outlines a 4.2% increase in taxes, 1.2% increase in utilities (due to an increase in water and sewer rates) and a 7.2% increase in insurance costs, which were all outweighed by the cheap fuel.
The .5% announcement is good news for de Blasio, who included "Rent Freeze!" on his long list of campaign promises. The mayor came close last year, after appointing five new tenant-friendly members to the nine-person board (leaving just four from the less-sympathetic Bloomberg administration). As a result, even though operating costs increased by 5.7% in 2013, the board set record-low increases of 1% for one-year lease renewals, and 2.75% for two-year renewals. Landlords were pissed, or pretended to be.
Rent Guidelines Board Director Andrew McLaughlin pointed out this morning that this year, all of the board members have been appointed by de Blasio. Jack Freund, vice president of the landlord-repping Rent Stabilization Association, told the Post that he doesn't like his odds. “We presume again that the mayor will be calling for zero [increase], and he now controls the entire board," Freund said. "So the prospects for a reasonable guidelines board don’t look good to us." The RSA was behind that "rent freeze hurts everyone" campaign from last year.
In June, the Board will also have to consider the 4.2% predicted increase in landlord operating costs for next year. It's a significant bump, but the report is careful to stress that these sorts of predictions are tenuous:
Projecting changes in the PIOC has become more challenging in recent years. Energy prices — which represent about one-eighth of the market basket of operating costs measured in the index — have become increasingly volatile. Unpredictable geo-political events, recession and changing weather patterns are some of the forces behind large changes in fuel-related costs (heating fuel oil, electricity, gas and steam) that have in turn hindered the accuracy of the PIOC projections in recent studies. The tax component, which accounts for roughly a quarter of the entire Price Index, has also become harder to project due to changes in tax policy, such as tax rate reductions and changes to the City’s tentative assessment roll, after the period covered in this Price Index.
There's a lot of conjecture when it comes to cost estimates, especially when you're dealing with housing in Anthropocene.
The Board will hold public hearings before deciding on the rent freeze question this summer.