RGB rent increase challenged.

While the Rent Guidelines Board (RGB) has voted increases of two percent and four percent for new one- and two-year leases respectively, an RGB-approved low rent supplement of $15 for apartments renting for less than $450 (provided the new rent plus guidelines increases does not go over $465), as well as a 5 percent sublet allowance and a two percent increase for rooming house units, are under legal attack by tenants.

RGB tenant members Kenneth Rosenfeld and David Pagen began challenging the new rent guidelines in a court action that was to be heard this past Monday, June 29. If successful, it could block issuance of the new orders effective for over 900,000 stabilized units, beginning with leases beginning on October 1, 1998.

But owner organization representatives did not believe this legal action would be upheld on Monday's return date in court, as Justice Louis York's temporary restraining order on the guidelines vote was already overturned once, after New York City's Corporation Counsel sought an Appellate Division ruling last week.

The conflict began on June 5th, when RGB chair Edward Hochman declined to release a partially completed report he had commissioned staff members undertake. This was a survey of newly rented apartments that had gone out to 8,000 tenants and was returned by 2,200.

But when Hochman looked at the survey data, he realized no one had been asked what rent they had been paying previously, and his misdirection to staff was to compare the answer to Division of Housing and Community Renewal (DHCR) data from 1996, when he meant 1997.

That data, however, is not yet available.

The idea of the report was to determine what effects, if any, the new rent law was having on rents.

Hochman refused to issue the report to the board members, as it was not a "required" report.

Rosenfeld said that doesn't matter, because the rules allow all available data to be considered. After the Appellate Judge spoke with Hochman, he agreed to allow Rosenfeld to see the raw data, even though it would not be part of the formal ruling. Hochman also agreed to let the members vote on the guidelines once again, which they did, declining to make any changes.

Rosenfeld finally got to look at the raw survey data sheets last week, and of 20 he perused, found that 10 respondents were paying from $1,500 to $6,000. The raw data was "useless" he agreed, but he would like to hold off the RGB from issuing its formal order until all of the original report is issued for the board to see.

"I would like to see the judge throw out this year's guidelines," he said last Friday, June 26th.

"It's silly," said Jack Freund, executive vice president of the Rent Stabilization Association. "The rent guidelines have been established not once but twice by members of the Rent Guidelines Board. It's not an issue that should be decided in the court."

Complained Rent Stabilization Association (RSA) President Joseph Strasburg, "Tenants are looking for an issue to generate political support and interrupt the guidelines."

Dan Margulies, executive director of the Community Housing Improvement Program (CHIP), said "The Rent Guidelines Board agreed on June 2nd not to release the report, and it would be misleading. Tenants weren't satisfied with that because they lost the vote."

Along with the other changes in guidelines, the RGB has also voted on a different first rent for those units leaving rent control and entering stabilization. Previously, the increase was the Maximum Collectible Rent (MCR) plus 50 percent, or the Maximum Base Rent (MBR) plus 40 percent, whichever is greater.

The new formula will be the MBR plus 80 percent or a minimum of $650, whichever is greater. Additionally, DHCR will also look at comparable rents, but if the rent is under that number, the new rent will not be subject to a successful challenge.

When someone gets a "fair market rent," the tenant is entitled to file a fair market rent appeal, and the first thing they look at is the special guideline, so if the rent is less, they accept it, explained Margulies. If it is more, the owner has to provide additional evidence, including apartment improvements and rents on comparable improvements, and DHCR will consider all the factors in determining the fair market rent.