NYU Furman Center’s Senior Policy Fellow Mark Willis Delivers Testimony Before NYC’s Rent Guidelines Board 

NYU Furman Center’s Senior Policy Fellow Mark Willis delivered testimony to New York City’s Rent Guidelines Board on the status of the City’s rent-stabilized stock, outlining the need for policymakers to use more accurate data so they can thoughtfully analyze how each segment of the stock is doing.  The NYU Furman Center remains focused on ensuring the nearly one million rent-stabilized units remain affordable, high quality and financially stable. 

In his testimony, Willis emphasized the need for a more nuanced policymaking environment, and he raised concerns about data quality issues that may undermine the process. Willis stressed the importance to policymakers of understanding the specific vulnerabilities across all the different subsegments of the City’s rent-stabilized stock to craft sound policy. 

“Policymaking requires an understanding of how owners and tenants are facing different challenges in each subsegment of New York City’s rent-stabilized stock,” said Mark Willis, Senior Policy Fellow at the NYU Furman Center. “To properly design interventions to meet the goals of affordability, quality, and financial stability, policymakers also need more accurate data on expenses that have not been artificially capped.”  

The first part of Willis’ testimony focused mainly on what researchers have now learned about the two subsegments–previously identified by the NYU Furman Center–that are of the most concern. The second part of his testimony re-emphasized the importance of analysis at the subsegment level and laid out a growing issue with the expense data upon which the RGB has based its analyses.

For some buildings, the city’s Department of Finance (DOF) caps expense ratios, effectively cramming down how high expenses can be as a share of gross revenues, regardless of what the owners are reporting on their Real Property Income and Expense (RPIEs). Over the last six years, these caps have increasingly been applied to more buildings, limiting expenses artificially, according to a data analysis by the NYU Furman Center.

As DOF has capped expenses, the RGB has been limiting rent increases below the rate of increase in operating costs and inflation. This impacts property tax burdens and it prevents policymakers from getting a clear picture on the financial stability of the buildings. 

“With more and more buildings apparently exceeding these caps, the DOF’s adjustments  have also been limiting the amount of expenses they will take into account when determining the market value of buildings for property tax purposes,” said Willis. 

In his closing remarks, Willis offered several recommendations to the panel and the policymaking community that is focused on this stock. He emphasized the need to avoid relying only on DOF’s adjusted expense data because it increasingly does not accurately reflect the levels and trends over time in expenses and net operating income. He also encouraged the panel and policymakers to use more nuanced data analysis by dividing the rent-stabilized stock into subsegments and analyzing each of them separately, and to even consider breaking down the stock further by rent level or building age to better design policy interventions.