NYAA Estimates Rent Freeze Will Reduce City Revenue By $1.3 Billion Over Four Years

(New York, NY) – The New York Apartment Association (NYAA) estimates that the city of New York will lose $1.3 billion in tax revenue over the next four years if rents are frozen on all rent-stabilized apartments during that time. The estimate raises real concerns about the cost of politically driven rent freezes — not just for housing providers, but for the city’s ability to fund essential public services.

“There’s no magic formula that lets the city keep increasing property taxes when the rent is frozen,” says NYAA CEO Kenny Burgos. “Costs are costs and if the city doesn't allow rents to keep pace, we shouldn't be surprised when our own tax base starts to crumble.”

The New York City Department of Finance calculates property taxes based on income and expenses of buildings, applying a standard formula to determine the taxable value of the building. If expenses continue to grow while rents are frozen, the building is worth less, and property tax calculations should reflect those conditions — lower income and higher expenses equal lower tax assessments.

“Freezing rents for four years and then crafting policies based on the assumption that revenue has held steady, or even grown, is completely detached from reality.”

To put the impact in perspective: $1.3 billion is enough to buy laptops, smart boards, and tech upgrades for every public school in NYC. It could renovate every single playground maintained by the Parks Department, or even fund a free bus program for the entire city. The opportunity cost of this lost revenue reaches far beyond housing and affects every New Yorker.

NYAA calculated the tax revenue decline by estimating rent adjustments at 3.5%, which is below the average annual inflation of the last four years (4%), but above the rent adjustments of the last four years. We then applied the current estimated average rent of $1,550 to the estimated rent-stabilized units that don’t currently receive property tax breaks (775,000 apartments).