We reproduce here a letter from John Edward Dallas, a Cooper Square Committee staff member, in response to an inquiry from a rent-stabilized tenant about the Rent Guidelines Board’s controversial minimum increases. The latter, after nearly a year and a half of being disputed in the New York State court system, were declared lawful by the state’s highest court in April of this year. We believe the information John provides in his e-mail will be helpful to the many rent-stabilized tenants who seek — and should have — more information about the minimum increases.
from John Dallas firstname.lastname@example.org
date Fri, May 20, 2011 at 8:01 AM
subject Rent Guidelines Board – Minimum Increases
hide details 8:01 AM (4 hours ago)
New York, NY 10003
Dear Ms :
Thank you for stopping by yesterday. As promised, I am writing to provide you with further information about the Rent Guidelines Board minimum dollar and percentage increases upheld in a landmark final (that is, unappealable) decision handed down last month by the Court of Appeals, the state’s highest court.
As the RGB Web site reports, the minimum dollar increases adopted by the RGB in Orders 40 and 41 are valid and in effect for leases covered by those orders.
Order 40 covers leases that started or were renewed between October 1, 2008 through September 30, 2009. This Order requires that tenants (1) who do not have to pay for heat, (2) are paying less than $1,000 a month and (3) have lived in their apartment for six years or more pay two increases, a maximum and a minimum. The maximum increase is 4.5% for a one-year lease and 8.5% for a two-year lease. The minimum increase is 4.5% or $45, whichever is greater, for a one-year lease or 8.5%, of $85, whichever is greater, for a two-year lease.
Order 41 covers leases that started or were renewed between October 1, 2009 through September 30, 2010. This Order requires that tenants (1) who do not have to pay for heat, (2) are paying less than $1,000 a month and (3) have lived in their apartment for six years or more pay two increases, a maximum and a minimum. The maximum increase is 3.0% for a one-year lease and 6.0% for a two-year lease. The minimum increase is 3.0% or $30, whichever is greater, for a one-year lease or 6.0%, of $60, whichever is greater, for a two-year lease.
The RGB did not adopt minimum increases for leases started or renewed between October 1, 2010 and September 30, 2011 (Order 42). Instead, there is only a maximum increase of 2.25% for a one-year lease and 4.5% for a two-year lease. Again, there are no minimum increases.
For the period that will begin on October 1, 2011 through September 30, 2012, the RGB is proposing only maximum increases for vacancy and renewal leases (Order 43): between 3% and 5.75% for a one-year lease, and between 6% and 9% for a two-year lease. Although, for the second year in a row, the RGB is not contemplating minimum increases, it is considering a 1.0% proposed fuel adjustment for all those tenancies where the landlord provides heat “from a central or individual system that is operated by fuel oil at no charge to the tenant.” It appears that the 1% will be calculated based on the amount of the rent after the maximum increase.
As to whether or not you will have to pay the minimum increases for the periods covered by Orders 40 (October 1, 2008 through September 30, 2009) and 41 (October 1, 2009 through September 30, 2010) depends on your lease, according to my colleagues at the Metropolitan Council on Housing, one of the city’s leading tenant advocacy groups. Here is an excerpt from an article they released last month, which you might find helpful:
The ‘Poor-Tax’ Ruling: What It Means for Tenants
How will rent-stabilized tenants be affected by the Court of Appeals’ reinstatement the Rent Guidelines Board’s 2008 and 2009 minimum increase/”poor tax” orders? It remains unclear. It may come down to how your lease was written.
If you signed a lease containing the minimum increase:
If you have been paying the higher amount all along, you will have to continue doing so. If you paid the lower percentage increase while the case was being litigated, your landlord may demand that you pay the difference, and initiate a nonpayment eviction proceeding if you fail to do so. It will be up to the court to determine if you owe anything and how much time you’ll have to pay it.
If you signed a lease with a rider or provision
Many landlords offered renewal leases to tenants with rents based on the lower percentage-rate increases, but inserted language to preserve their right to collect the higher minimum increases if courts ruled that they could. Some landlords called the percentage-rate increase the “preferential rent” and the minimum increase the “legal rent.” In other cases, landlords charged the lower amount but inserted language saying that they were not waiving the right to collect the higher amount in the future if a court decision permitted it. Each circumstance may play out differently, but if your lease had such a clause, you’ll likely be hit with the higher amount sooner or later.
If you signed a lease with the lower amount only
If you signed a renewal lease based only on the lower percentage-rate increase, and your landlord failed to put anything in to protect their future right to collect the minimum amount, you may be able to argue that they waived their right to do so. There is much debate as to how the courts would handle such an argument. Ron Languedoc, a tenant attorney and former Rent Guidelines Board tenant representative, says that he “can’t see what the legal rationale would be” for the courts awarding a rent higher than what’s indicated on a lease. However, if your landlord seeks such an adjustment in your rent or uses the higher amount when calculating your next renewal, be prepared to face an eviction proceeding if you choose to fight it—and find a lawyer.
It’s unclear whether New York State Homes & Renewal (formerly the Division of Housing and Community Renewal) will issue an opinion on these matters.
One thing that advocates agree on is that the largest implications for tenants are yet to come. The Court of Appeals ruling certainly permits the RGB to issue similar orders with minimum increases. Ellen Davidson of the Legal Aid Society, who argued for tenants in this case, says the ruling does not allow “means testing”—setting different rent levels based on the tenant’s income—but many are afraid that the RGB could go further in ordering different increases for different classes of housing.
The RGB’s order and the court’s ruling are an attack on the rent-regulation system at its core. Tenants should see them as a call to action to reform the laws governing the system.
If you need further information or assistance, please do not hesitate to contact me. I hope this has been helpful.
John Edward Dallas
Cooper Square Committee
61 East 4th Street
New York, NY 10003
Tel: (212) 228-8210
Fax: (646) 602-2260
Web site: www.coopersquare.org
———- Forwarded message ———-
Date: Fri, May 20, 2011 at 11:37 AM
Subject: Re: Rent Guidelines Board – Minimum Increases
To: John Dallas <email@example.com>
Dear Mr. Dallas,
Thank you so much for explaining what is happening now, especially for me, who was under the impression that I would be getting dollar amounts, not just percentage amounts. In these tough times it is so important for tenants to know our rights so that we can go forward as one. I have already called Cuomo’s office and Jerry Nadler in behalf of extending rent stabilization to tenants. I think the next big fight is to change the composition of the RGB. We need to have a mayor that is tenant friendly.
Thank you again for your help.