One Rent Adjustment. Two Different Worlds

Full prepared remarks to the NYC Rent Guidelines Board. Delivered by NYAA CEO Kenny Burgos

Chair, board members — thank you for the opportunity to testify.

My name is Kenny Burgos. I want to begin by acknowledging the affordability crisis facing renters in this city. It is real, it is serious, and it deserves a serious response. Many tenants who are struggling are eligible for support through programs like SCRIE, DRIE, and expanded voucher programs, and we support those tools. We believe tenants who need help should receive it.

But rents must still cover operating costs. That is not a landlord argument — it is a building maintenance argument. New York is unique in that its rent regulation system does not require rents to cover the actual cost of operating the properties subject to it. That makes us a global outlier, and over time, it is not sustainable.

I want to be precise about where the system is breaking down, because it is not breaking down uniformly. This board will vote on a single rent adjustment percentage that will apply to every rent-stabilized lease in New York City commencing between October 1, 2026 and September 30, 2027. One number. Applied uniformly. Across roughly one million apartments in buildings that bear almost no meaningful financial resemblance to one another.

That is the problem I am here to address.

When you look at the RGB’s own data, and the data presented by the NYU Furman Center earlier this year, you see structurally different buildings, operating under completely different financial conditions, being subjected to a single policy instrument that was calibrated for an average that ignores the dire fiscal reality of the majority.

Two Different Buildings

Let me make this concrete.

Consider two buildings that will both receive the rent adjustment this board will vote on.

Both of these buildings are “rent-stabilized” under New York law. Both will receive the same rent adjustment. The owner of the Pre74 Legacy building will apply that percentage to $1,344. The Post 73 building — with tax breaks, market-rate tenants paying $5,500 a month, and most of the building’s major systems with 20 to 30 years left on their useful life — will apply the rent adjustment to $3,200.

One of those owners needs a meaningful rent adjustment. The other doesn’t. This board will give them the same one, if any.

Two Different Rent-Stabilized Worlds

The concrete comparison I just walked through — the Pre1974 Legacy building and the post-1973 new construction — is not a rhetorical flourish. It describes a structural distinction in how these two building types entered the rent stabilization system, how they operate under it, and how they ultimately exit it. The fundamental problem with the data this board uses to set its annual adjustment is that the data does not see that distinction at all.

This pie chart shows where the rent-stabilized units are in the survey sample from the Income & Expense Report. And it shows the large difference between net operating income for the different building types.

The pre-1974 stabilized, majority stabilized stock was pulled into the system involuntarily, by operation of state law, based on when the buildings were constructed. These owners did not enter into an exchange. They did not receive a tax benefit. They did not accept stabilization in return for anything.

They inherited a regulatory obligation because of the age of the building, and they operate under that obligation indefinitely — with no sunset, no subsidy, and in most cases no cross-subsidy from unregulated units because the entire building is stabilized.

The post-1973 stabilized stock entered the system on an entirely different basis. These buildings, through voluntary agreements, are in stabilization because their owners received something in exchange for it. These buildings are also typically mixed-income, with a market-rate portion whose revenue cross-subsidizes the regulated units. And they exit stabilization when the abatement expires.

The Furman Center, in its March testimony to this board, demonstrated that this segmentation is possible and that it produces dramatically different financial pictures.

A Decade of Defunding

When you separate the pre-1974 stock from the rest, you see a troubling trend of net operating income decline — gross income growing at roughly ten percent against expenditures growing at roughly thirty percent from 2019 to 2025, in inflation-adjusted terms. This is in large part due to the RGB defunding majority stabilized, Pre-1974 buildings for a decade, as this chart breaks down.

The RGB’s mandate is not to calibrate a rent adjustment to a weighted average. It is to set an adjustment that produces a sustainable outcome for the majority regulated stock.

When the RGB’s definition of “regulated stock” contains two regimes with opposite financial profiles, the result is a systemic defunding of the majority stabilized, Pre-1974 stock.

No Help Is Coming

This board has heard from HPD last week about rising building distress across the city. They are doing great work trying to help preserve buildings. But they don’t have the capacity to meet the need of the distress. The analogy we use is 100 hard working firefighters trying to put out blazes in 5,000 buildings. It’s just not possible.

Additionally, there is work underway with the administration on longer-term structural solutions — insurance market reform, property tax relief, Local Law 11 cost mitigation. That work matters and we support it. But those solutions will take years to materialize.

Owners cannot fund emergency repairs today based on promises of future relief. A rent freeze now would not hold the line — it would deepen the problem immediately, in the buildings that are already closest to the edge.

And in case you are wondering, yes, we do believe more than 5,000 buildings are currently in severe fiscal distress.

A Call to Action for the Rent Guidelines Board

A tax-abated post-1973 building and a financially distressed pre-1974 Legacy building are not the same thing. They do not have the same costs, the same revenue, the same capital access, the same tax burden, or the same operating risk profile.

They have almost nothing in common except the legal label “rent-stabilized”. They shouldn’t be lumped together.

The Income and Expense Study clearly shows this. The Furman Center has documented it. The PIOC component data shows it. And this board, with full access to all of it, is preparing to vote one number for both.

We have two asks of you:

First – base your decision on the condition of Pre-1974 housing outside the core of Manhattan. This is the segment that represents the majority of the regulated housing and faces the greatest risk.

Second – be willing to think differently.

The RGB has the ability to consider differentiated adjustments by building type, rather than a single across-the-board number.

You also have a platform to guide policymakers toward a more sustainable system.

Everyone agrees the current system is not working-for tenants or for owners.

If we want to preserve this housing, rents must cover costs, and tenants who need help must be supported directly.

That is the path to a more stable and equitable system.

Thank you, board members.