Testimony: Rent Justice, Now More Than Ever
Samuel SteinTheo Ham
Before the New York City Rent Guidelines Board
Thank you for the opportunity to speak with the board about the crisis facing tenants today – a crisis with long reaching roots, which were exacerbated tremendously during this unprecedented year of pandemic, recession, and calls for greater racial and economic equity across our society.
Our names are Samuel Stein and Kate Ham, and we are housing policy researchers at the Community Service Society of New York. CSS is an independent nonprofit organization that addresses some of the most urgent problems facing low-income New Yorkers, including the effects of the city’s chronic housing crisis. Since 2002, CSS has administered our annual “Unheard Third” survey to document the hardships of low-income New Yorkers, including rent-regulated tenants.[1]
The guidelines this board enacts are some of the most important factors that determine the stability and well-being of low-income New Yorkers.[2] About 365,000 low-income households live in rent stabilized housing, the most of any other housing type and roughly double the number who live in public and subsidized housing. 76 percent identify as Black, Hispanic, Asian, or Other, and nearly half are immigrant households.[3]
On top of our city’s housing crisis, New York is also facing historic levels of unemployment. At points during 2020, unemployment reached nearly 20 percent. Over the course of 2020, employment declined 11 percent, or 516,600 jobs, which would be as if almost the entire city of Atlanta lost their jobs in one year. Meanwhile, real wages fell 1.8 percent, while consumer prices rose 1.7 percent.[4] In other words, the cost of living in New York got more expensive as the pandemic and related recession plummeted workers into under-employment and unemployment and pushed renters into an even deeper affordability crisis. Under these circumstances, tenants simply cannot afford to pay more in rent.
According to pre-pandemic ACS data, while rent burdens have slowly declined overall in recent years, 72 percent of low-income tenants have been rent-burdened for the past seven years, and the proportion of low-income renters paying a majority of their income in rent has risen to nearly 50 percent. We know that low-income tenants and tenants of color are faring worse since the pandemic. As the Household Pulse Survey shows, throughout the pandemic lower-income renters in the New York Metro area have consistently had greater housing insecurity than higher-income renters by as much as 44 percentage points.[5] The survey also shows how Black and Latinx tenant households have consistently had little to no confidence making their rent at much higher rates than White tenant households since August, by as much as 45 percent higher for Black tenants and 46 percent higher for Latinx tenants (see chart below).[6] Clearly, low-income tenants have not been sharing equally in the gains of their higher-income neighbors.
Indeed, we know that 2020 brought an astonishing scale of hardships to rent stabilized tenants. CSS’s annual Unheard Third survey was fielded in July 2020 and was thus able to capture some of these dynamics in ways that, unlike the surveys in the 2021 Income and Affordability Study, can distinguish between stabilized and unregulated tenants.
Some of our key findings include:
- In 2020, 42 percent of rent regulated tenants reported having their incomes reduced. 30 percent lost their jobs altogether.
- 72 percent of rent stabilized tenants who permanently lost their jobs during the pandemic reported receiving no rent relief from their landlord, either in the form of a rent reduction or rent delay.
- 40 percent of rent regulated tenants reported falling behind in rent, including a majority – 52 percent – of low-income rent regulated tenants.
- 38 percent of rent regulated tenants reported having less than $1,000 in savings.
- 44 percent of rent regulated tenants say they are classified as “essential workers”, including 46 percent of low-income rent regulated tenants.
- 76 percent of rent regulated tenants reported being on pre-pandemic public assistance programs, compared to 56 percent of unregulated tenants.[7]
- The percentage of tenants who were able to receive Covid-related federal aid (such as stimulus checks and enhanced unemployment) was 10 percentage points lower for rent regulated tenants than for unregulated tenants. It is worth noting that, with one-third of the city’s immigrant population living in rent regulated housing, a significant percentage were unable to access federal relief programs due to immigration status.
- 36 percent of rent regulated tenants reported having problems with their landlord in the past year. Notably, this is much higher than unregulated tenants, and that itself is a departure from previous years. In 2017, there was just a two percentage point difference between regulated and unregulated tenants in terms of problems with landlords; in 2020, that gap widened to 13 percentage points.[8]
These effects are compounded in low-income neighborhoods. We know from public health data that some of the neighborhoods with the highest share of rent regulated units also had some of the highest rates of Covid-19 in the city. For example, in Kingsbridge Heights in the Bronx where 92 percent of rentals are rent regulated, 1 in 9 rent-regulated residents were also infected by Covid. In Washington Heights in northern Manhattan where 87 percent of units are rent regulated, 1 and 12 residents of that neighborhood were infected.[9] Reductions in rent, however, have been less pronounced in these hardest-hit communities, and have instead been more pronounced in high-end Manhattan markets that escaped the worst outbreaks, and exist almost exclusively for new leases rather than for current tenants.[10]
Federal, state and city actions may staunch some of the bleeding, but this crisis will not be resolved quickly, and certainly not within the coming year. As the latest Income and Affordability Study notes, both the New York City Comptroller and the city’s Office of Management and Budget estimate that employment, especially for the hardest hit industries, will not return to pre-pandemic employment levels for at least another year.
Of course, this has not been an easy year to operate rent stabilized apartments either, as landlords’ representatives will no doubt attest momentarily. But the scale of the hardships facing tenants and landlords, as well as the context of what preceded it, are in no way equivalent. According to pre-pandemic data detailed in the latest Income and Expense Study, rent collections across the city rose 3.3 percent, more than double the RGB guideline for that year, and Net Operating incomes (NOI) increased 2.9 percent, rising as high as 45 percent in Bushwick. In fact, overall NOI increased 14 out of the last 15 years. While the Price Index of Operating Costs study shows some increased costs for landlords in this disastrous year, the 3.9 percent increase in property taxes – a highly weighted factor in the index – deserves some scrutiny, as it was also reported that these tax rates are expected to fall significantly in the coming year. Despite landlords’ claims about the devastating impact of rent freezes and the 2019 rent laws, it is clear from the pre-pandemic data that rent stabilized housing continued to be profitable.
Most importantly, while some landlords have seen rent shortfalls because tenants have lost work and been unable to pay rent, the state and federal governments have budgeted enough funds to cover the entire total estimated gap – an unprecedented amount of rent relief which is ultimately geared toward making landlords whole. As outlined in the state’s new rent relief program, landlords who receive such funds must freeze rents for the coming year. Any 2021 RGB rent increase, then, would not apply to those landlords, and would instead apply to those landlords who either refuse this substantial aid, or those whose tenants paid the full rent for the past year. The RGB should not create any financial incentives for landlords to opt out of the rent relief program, nor should it reward only those landlords who faired the best during the pandemic.
This has been a year like no other. Now more than ever, access to housing means access to life itself. Meanwhile, employment has diminished, disappeared, or became dangerous for most rent stabilized tenants. For tenants to recover – and for the city itself to recover – we cannot conscience an increase in rents before either the pandemic or employment have meaningfully improved. Given these findings, we encourage the rent guidelines board to reject calls for a rent increase of any kind, and instead to either freeze rents or go farther. If there is any time to consider a rent rollback, it is now, during the worst economic downtown since the great depression. The life of the city depends on it.
Footnotes
1. The 2020 Unheard Third survey was designed in collaboration with Lake Research Partners, who administered the survey by phone using professional interviewers. It was conducted from July 7 through August 4, 2020, and reached a total of 1,632 New York City residents, ages 18 or older. The sample included 1,002 low-income residents (up to 200 percent of federal poverty standards, or FPL), and 630 moderate- and higher-income residents (above 200 percent FPL). The data were weighted slightly by income level, gender, region, age, party identification, education, immigrant status, and race to ensure that it accurately reflects the demographic configuration of these populations. Interviews were conducted in English (1,475), Spanish (90), and Chinese (67). The margin of error for the entire survey is +/- 2.42 percent, for the low-income component is +/- 3.09 percent, and for the higher income component is +/- 3.9 percent, all at the 95 percent confidence interval.
2. CSS defines low-income households as those earning below twice the federal poverty threshold, or about $43,000 for a family of three.
3. CSS analysis of 2017 New York City Housing Vacancy Survey
4. 2021 Income and Affordability Study
5. 2021 Income and Affordability Study
6. CSS analysis of the Household Pulse Survey. Not confident indicates the respondent has little or no confidence in paying their rent next month or has already deferred.
7. Public assistance programs include: (1) public assistance, welfare, or family or safety net assistance, (2) Medicaid or the Essential Plan for yourself, (3) Medicaid or Child Health Plus for your children, (3) food stamps or SNAP, (4) SSI/SSD, and (5) Medicare.
8. Landlord problems include: (1) Repeated efforts by your landlord to pay you to move out of your apartment; (2) Long delays in making necessary repairs; (3) Had the heat or hot water cut off; and (4) Problems caused by prolonged construction like excessive debris, dust, and blocked entrances.
9. Most likely the real rates are much higher, but these rates reflect test results by Community District. New York City Coronavirus Map and Case Count. (2021). New York Times. Retrieved April 25, 2021, from https://www.nytimes.com/interactive/2020/nyregion/new-york-city-coronavirus-cases.html
10. Iverac, M. (2021, February 18). Report: Pandemic Rent Dip in NYC Hasn’t Made Much Difference For Essential Workers. Gothamist. https://gothamist.com/news/report-pandemic-rent-dip-nyc-hasnt-made-much-difference-essential-workers