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Freezing rent is easy. Making NYC housing affordable isn't.
Freezing rent is easy. Making NYC housing affordable isn't.

Japan Times

time2 days ago

  • Business
  • Japan Times

Freezing rent is easy. Making NYC housing affordable isn't.

Among the campaign promises that helped propel Zohran Mamdani to the Democratic nomination for mayor of New York City, his pledge to "freeze the rent' is at once the most radical sounding and the easiest to accomplish. In fact, it's been accomplished multiple times over the past decade. The mayor chooses the nine members of the city's Rent Guidelines Board, which every year determines the allowable rent increase for the city's nearly 1 million rent-stabilized apartments. The members' terms are staggered, so a new mayor can't replace them all immediately, but with the two tenant representatives certain to favor a freeze, it would take only three of the five members appointed to represent the public to get to a majority (there are also two owner representatives, who would, of course, oppose a freeze). During Bill de Blasio's tenure as mayor, the board voted for no rent increases on one-year leases in 2015, 2016 and 2020 — as well as 0% for the first six months and 1.5% for the last six in 2021. So, yes, Mamdani could deliver a rent freeze. Whether he should requires a longer answer. This year's Rent Guidelines Board deliberations, which resulted in a vote earlier this month to allow a rent increase of 3% on one-year leases starting from October 2025 to September 2026, and 4.5% on two-year leases, provide a fascinating window (which one can gaze through on YouTube) into the crosscurrents buffeting tenants and landlords in New York. On average, New York's rent-stabilized landlords appear to be raking it in, with net operating income up 12.1% — 8% after adjusting for inflation — in 2023, the most recent year for which the board's staff has compiled income and expense data. But those averages mask a lot of variation and testimony about the struggles of nonprofit affordable housing providers since the pandemic seems to have been crucial in bringing about the 3% increase. The appointees of the next mayor, whoever he turns out to be, will confront the same dilemma. New York City rents have been regulated since 1943, with the rent-stabilization system — and Rent Guidelines Board — dating to 1969. As of the most recent New York City Housing and Vacancy Survey, conducted by the U.S. Census Bureau in 2023, rent stabilization covered 779,000 occupied rental apartments in buildings constructed before 1974 (apartments covered by the pre-1969 system of rent control pass into rent stabilization when the tenant moves out or dies) and 181,700 in newer buildings that accepted rent regulation in exchange for tax breaks or other subsidies. Together that amounts to 48% of the city's occupied rental apartments and 28% of occupied housing units overall. This makes rent stabilization by far the city's (and the nation's) biggest affordable-housing program, with almost six times as many rent-stabilized units as there are apartments in the New York City Housing Authority's public housing projects. A 2023 study by economists Ruoyo Chen, Hanchen Jiang and Luis E. Quintero estimated that the monthly rent-stabilization discount in New York City averaged $450 a unit in 2017. Multiply by 960,700 apartments, and that's a $5.2 billion annual subsidy from New York City's landlords to its rent-stabilized tenants. That has surely grown since 2017 as market rents have outpaced stabilized rents. This is, economically speaking, an extremely inefficient way to keep housing affordable. By reducing the return on housing investment, rent regulation reduces investment in housing. Politically, though, it has proved much more achievable than the outright subsidies that economists recommend. The city's annual contribution to its second-biggest affordable-housing program, NYCHA, is not much more than $200 million (the federal government has been chipping in close to $3 billion a year, but that is likely to fall). The job of the Rent Guidelines Board, then, is to balance affordability for rent-stabilized tenants with enough income for landlords to keep their buildings in good condition. Avoiding the fate of NYCHA, where decades of underinvestment have left buildings in grave disrepair, is an oft-mentioned priority. For owners of many rent-stabilized buildings in affluent parts of the city, bringing in enough rent revenue to cover costs became a lot easier after the state legislature voted in 1993 to remove apartments from rent stabilization when the rent passed a threshold ($2,000 at the time, higher in subsequent years) and the apartment became vacant or the tenants' household income exceeded $250,000 (later dropped to $175,000). Over the next 27 years, this deregulation removed 177,048 apartments from the rent-stabilized rolls, 69% of them in Manhattan. High-rent deregulation came to an end with the Housing Stability and Tenant Protection Act of 2019, approved by a state legislature that Mamdani had not yet joined (he was elected to the state Assembly in 2020) and signed into law by none other than the governor at the time, Andrew Cuomo, who after losing to Mamdani in the Democratic mayoral primary announced that he would run as an independent in the general election. The bill's passage (and especially Cuomo's decision to sign it) came as a shock to real estate investors who had been piling into rent-stabilized buildings in hopes of cashing in as more apartments were deregulated — Bloomberg's Patrick Clark and Prashant Gopal did a great job last year of depicting the market turmoil that has resulted. The deregulation of the previous three decades, meanwhile, left the city's rent-stabilized housing stock bifurcated between a bunch of buildings concentrated in Manhattan south of Harlem ("Core Manhattan' in Rent Guidelines Board parlance) where most of the apartments are market rate and the 50% of rent-stabilized buildings citywide where 100% of the apartments are regulated. Which brings us back to the dilemma faced by the Rent Guidelines Board. Over the years, the board has tried to keep rent increases in line with increases in operating costs, which generally rise with inflation. Rent was frozen in 2015 and 2016 because costs weren't rising — the nonshelter consumer price index for the New York area actually fell both years. But the increases approved by the Rent Guidelines Board in 2021 and 2022 fell far short of inflation and the increases since then have only more or less kept up. Rents on market-rate apartments in the city have risen faster than inflation since just before the pandemic, in part because the 2019 rent law cut off what had been a steady stream of newly unregulated apartments coming on the market each year. As a result, rent-stabilized buildings in Core Manhattan — most of which, remember, are majority market rate — experienced a whopping 23.1% gain in net operating income in 2023. In the Bronx, where 75% of rent-stabilized buildings have only rent-stabilized units, net operating income rose just 0.8%, a decline in inflation-adjusted terms. On average, even the 100% rent-stabilized buildings in the Bronx still turned a monthly operating profit of $325 a unit, but 476 buildings there, 12.7% of the total, reported negative net operating income in 2023. These financial struggles are accompanied by increasing signs of physical decay, with the average number of maintenance deficiencies in pre-1974 rent-stabilized buildings up 45% since 2017, according to the Housing and Vacancy Survey. This is not just a tale of greedy landlords: Representatives of two large affordable-housing nonprofits, the Community Preservation Corporation and Enterprise Community Partners, told the Rent Guidelines Board that the New York City buildings they're involved with are increasingly struggling to keep up. Nearly 60% of the 160 buildings in Enterprise Community Partners' New York City Low-Income Housing Tax Credit portfolio were "cash-flow negative' in 2023, senior director Tania Garrido said, up from 20% in 2019. One big reason these buildings are struggling is that, while insurance costs are up for real estate owners nationwide, for less-than-clear reasons they rose a shocking 103% from 2019 to 2023 for owners of affordable housing in New York City. Another is that the share of tenants paying their rent on time fell in 2020 and 2021 and hasn't fully recovered. The COVID-19 pandemic hit working-class New Yorkers especially hard, with employment in construction, retail, leisure and hospitality in the city is still below pre-pandemic levels. Raising rents doesn't seem like the optimal solution to a problem caused in part by people not being able to afford the rent. But it's the only arrow the Rent Guidelines Board has in its quiver. The city and state have more arrows. In his campaign literature, Mamdani stresses reforming New York's property tax system, which taxes apartment buildings much more heavily than single-family homes but also gives inexplicably large tax breaks to some high-end condominiums and coops. He wants to "put our public dollars to work' building 200,000 new rent-stabilized apartments over the next decade, offering a set of wonky suggestions for how to fund this and has some interesting ideas for pooling rental assistance funds currently distributed as vouchers to tenants (or not distributed; utilization rates are quite low) to support struggling affordable buildings directly. None of these is as catchy or easy to deliver as freezing the rent. It's understandable why Mamdani chose this as a campaign pledge, and probably inevitable that the Rent Guidelines Board will deliver at least one 0% annual rent increase if he is elected. Whether he succeeds in making housing more affordable in New York City, though, will depend on what else he does. Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts.

Can Democratic socialists get Zohran Mamdani across the finish line?
Can Democratic socialists get Zohran Mamdani across the finish line?

The Guardian

time3 days ago

  • Politics
  • The Guardian

Can Democratic socialists get Zohran Mamdani across the finish line?

Was it his charisma, communication skills or his captivating short-form videos? His high-profile endorsements or his clothing style? These elements were said to have contributed to Zohran Mamdani's record-setting success in New York's June mayoral primary. But another major factor in his win may have been his ties to the local chapter of the Democratic Socialists of America (DSA). Known for its endorsement of the Vermont independent senator and socialist Bernie Sanders's run for president, as well its role in electing the New York congresswoman Alexandria Ocasio-Cortez, the group has re-energized US left political movements in recent years, even while eliciting critique and fear from conservatives and some Democrats. In Mamdani's campaign, a stunning 60,000 volunteers knocked on 1.6m doors across New York City, home to 3.6m housing units. The effort reportedly led to conversations with a quarter of all New Yorkers who voted in the primary. Though the campaign has not yet released data showing how many of those volunteers were mobilized by NYC-DSA itself, Gustavo Gordillo, a co-chair of the chapter, says his organization turned out thousands. Though other organizations, such as the grassroots political group Drum Beats, also brought out volunteers, he said the chapter had an 'unparalleled field operation in New York City'. 'New York City DSA formed the heart of the field team,' he said. But the road ahead for Mamdani, who is a state assemblymember, may still be bumpy. Mainstream Democrats have been slow to embrace the democratic socialist, who ran on universalist material policies like a rent freeze and fast and free buses. In the past, centrists and conservatives have defeated DSA primary winners in elections that looked eminently winnable, such as India Walton in the 2021 Buffalo mayoral race. And rightwingers have already launched heavy smear campaigns against Mamdani, with polls showing the race could be tight. Fellow Democrat and former New York governor Andrew Cuomo, whom Mamdani defeated, switched to an independent party run just to stay in the game, and incumbent Eric Adams is vying to keep his seat. The Democratic strategist Hank Sheinkopf, a centrist, said: 'Mamdani's primary victory in the nation's cultural financial and media capital is the greatest challenge faced by traditional Democrats in more than 50 years. 'The future for the Democrats is unclear,' he said. Asked if mainstream Democrats should embrace the young socialist, he said much of the base the party needs to energize to win elections in New York and elsewhere is moving to the right, and 'will not accept' a socialist. Even so, NYC-DSA says it is ready for the battle, and if Mamdani wins, it could catapult the group from the sidelines to the center of the party. 'The opposition is in total disarray right now [and] their fragmentation is only going to be a source of weakness,' said Gordillo. 'We're ready to mount an offensive campaign that replays a lot of what succeeded in the primary with the army that we've amassed.' When formed in 1982, DSA had 6,000 members nationwide; that number grew modestly over the next 25 years. Then, in the mid-2010s, in the wake of democratic socialist Sanders's run for president – and Donald Trump's subsequent 2016 presidential victory – membership began to soar. Today, DSA boasts 80,000 members who oppose capitalism and advocate for the public ownership and democratic control of key sectors and resources such as healthcare, and the shift of power to workers from corporations. Though socialism was once a dirty word in the US, especially after crackdowns on socialists and communists in the 1950s, more than half of young Americans hold a positive view of it today, according to the rightwing Cato Institute thinktank. Though DSA factions have often sparred over the role elections and endorsements should play in the movement, the group has increasingly entered the sphere in recent years. The national group is supporting candidates in municipal elections from Ithaca, New York, to Atlanta, Georgia, with local chapters backing additional candidates in Boston's mayoral race, council runs in Richmond, California, Detroit, Michigan, and others. In Minneapolis, a DSA-backed mayoral candidate, state senator Omar Fateh won his primary this month, ; unlike Mamdani, Fateh has also won endorsement from local party officials. The New York City chapter, now home to 10,000 members, began prioritizing elections in 2017, creating an electoral working group. Since then, it has secured two New York City council seats and six New York state assembly seats, including Mamdani's, which he has held since 2020. Another 250-plus DSA-backed officials hold office nationwide, including progressive 'Squad' democrats in Congress: Rashida Tlaib and Greg Casar, and Chicago's mayor, Brandon Johnson. NYC-DSA employs a methodical volunteer model for each of its endorsed candidates. It has also been highly selective about who it chooses to support. 'You have to go speak to multiple branches of the chapter, talk to the electoral working group, go through multiple rounds of votes within DSA,' said the DSA-backed New York state senator Jabari Brisport, who represents a Brooklyn district. The robust endorsement pays off, Brisport said. 'When you're running with a DSA endorsement, you really have a whole operation of dedicated volunteers who want to advance socialism,' he said. 'They help with everything from field organizing to comms to fundraising.' For NYC-DSA, electoral campaigns are not only focused on single candidates but also on building support for their movement, said Phara Souffrant Forrest, another DSA state assemblymember from Brooklyn. 'When DSA campaigns for a candidate … we're organizing their district around shared values like housing justice, healthcare for all and workers' rights,' she said. The chapter does not use paid canvassers, though Mamdani's campaign hired roughly 50 for specialized outreach. 'Our main asset, which money can never buy, are volunteers who are passionate, who feel ownership over a campaign because the win would be personal for them,' said Sarahana Shrestha, a DSA assemblymember representing a south-eastern New York district. Her campaign brought in many voters who had otherwise 'given up on electoral politics', she said. DSA members appeared to do the same in the mayoral primary, mobilizing thousands of new voters. Some DSA endorsees – such as Ocasio-Cortez, who the group supported in her 2018 campaign – receive DSA backing upon request once they have launched their campaigns. Others, like Mamdani, are 'cadre candidates' who have strong pre-existing ties to the organization and are recruited by and from the chapter. Since joining NYC-DSA in 2017, Mamdani has been deeply involved with the organization, helping lead other electoral campaigns and working closely with the chapter on his successful 2020 assembly run. Once in office, Mamdani became an integral part of NYC-DSA's socialists in office committee, designed to facilitate chapter communications with elected socialists. Today, many of his staffers are chapter leaders. And when launching his mayoral campaign, 'he said that he would not run at all if he did not receive our endorsement,' the NYC-DSA organizer Michael Thomas Carter wrote in Drop Site News. 'While the coalition that coalesced around his campaign was much broader than NYC-DSA, in this very direct sense our organization is responsible for his mayoral run,' he wrote. This commitment to the chapter has been a throughline in Mamdani's career, said Gordillo. 'He's been really tested to learn how to exercise leadership while also being accountable to a base, because he's done that in DSA pretty often,' he said. Mamdani has championed some NYC-DSA campaigning efforts he did not pioneer, such as the successful fight for a bill to expand publicly owned renewable energy, which Gordillo helmed. But he has been a leader on other initiatives, such as the 'Not on Our Dime!' bill, which aims to pressure Israel to follow international law and on which he was the lead sponsor. (Ending US support for Israel's military is a key issue for DSA, whose national organization ended its support for Ocasio-Cortez and former New York congressman Jamaal Bowman over insufficient support for the issue.) That back-and-forth has continued through the mayoral campaign, with the chapter's political operatives also helping him make connections and shape his platform. 'He met with our Labor Working Group a lot to learn more about what were the top demands for different unions where we have a lot of member density,' said Gordillo, who is a union electrician by day. Mamdani won more votes than any other mayoral candidate in New York City primary election history. Brisport said that's a testament not only to the power of NYC-DSA's organizational skills, but also to the popularity of their political values. 'Clearly there is something in the air that is shifting, because open socialists are running for office and winning, showing that our ideas are good, workable things that people actually need,' he said. Mamdani's embrace of the democratic socialist label has been a boon for NYC-DSA, with about 4,000 members joining since he launched his mayoral campaign. It will also be a test for the chapter and for American socialism. 'Zohran ran as an open democratic socialist and the billionaire class, the most powerful forces in the world and in the city, are aligning against him,' Gordillo said. 'They will be finding every moment to amplify anything that they can say is a mistake or a failure, and because he ran in a way that was so tied to the movement, I think that any of his shortcomings will also be attributed to us.' The chapter is now preparing to mobilize volunteers around the general election, but also organizing to support Mamdani's key policies like a proposal to increase taxes on the rich. The organization is prepared to hold Mamdani accountable to socialist values, but also to communicate his successes to the public, said Gordillo. 'We will make sure that the billionaire class and corporate interests can't just fearmonger about him, or hide it when he fulfills his campaign promises,' he said. 'The fate of the left in New York rests on the success of the Mamdani administration, so ensuring that there is a successful mayoralty is going to have to become our top priority.'

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