[Recently], a handful of landlords sued New York’s Rent Guidelines Board in an effort to overturn the rent freeze it imposed on the city’s nearly one million rent-stabilized apartments.
Every year, the nine-member RGB sets a percentage cap on how high property owners can raise rents on their rent-stabilized units. In making this decision, the board is required by law to consider both landlords’ operating costs, tenants’ cost of living, and the overall supply of housing.
This year, in the face of data showing owners’ rising costs and strong growth in tenant income, the board voted to impose a 0 percent cap on rent increases.
The new lawsuit filed by petitioning landlords in Richmond County Supreme Court (which covers Staten Island) alleges that the board’s freeze ignores the data on landlords’ rising costs, or otherwise leans on its prejudiced data, to justify a rent freeze promised by New York Mayor Zohran Mamdani.
“To do the Mayor’s bidding, this Board then made a mockery of its statutory mandate, resorting to multiple manipulations of its own data to try to justify this irrational result,” reads the petition. “And this all comes amid unchecked inflation and rising costs that struggling landlords will have to bear to survive.”
The Petition
“That Mayor Mamdani preordained this outcome and then took affirmative steps to stack the deck is now undeniable,” the petition continues, citing as evidence a statement of Christina Smyth, a member of the board appointed by Eric Adams who resigned hours before it voted to freeze rents.
“The Rent Guidelines Board has stopped being a fact-finding body. It has become a body that starts with an answer and vibe codes its way backward to justify it,” Smyth said in her resignation letter.
Arpit Gupta, an associate professor of finance at New York University, was the sole member of the RGB to vote against the rent freeze.
Gupta told Reason in a recent interview that he believed the Mamdani administration didn’t place any undue pressure on the board to vote a certain way. Even so, he says, the independent board still voted for a freeze even after considering data showing landlords’ expenses rising faster than incomes and increased financial distress of rent-stabilized buildings.
Christian Browne, an attorney at the firm McLaughlin & Stern, says the new challenge to the rent freeze might face a difficult time, given how reticent judges are to overturn the decisions of independent boards.
“The courts don’t typically second-guess administrative bodies. You usually have to have a glaring [legal] error” on the body’s part, Browne tells Reason. In order to succeed, petitioners will need to make a strong showing that the board ignored the data it was required to consider and instead based its decision on arbitrary political concerns.
Mamdani’s repeated promises of a rent freeze and the voluminous data showing landlords’ spiking costs give landlords a “strong case” that the enacted rent freeze violates the law, says Browne.
Even if a court looks skeptically at the rent freeze, the question then becomes what kind of remedy it would provide, says Browne.
When decisions of an administrative body are tossed out because of some conflict of interest, a judge will typically send the case back to that same body with instructions to decide again without the votes of the conflicted board members.
That’s not really possible in the RGB’s case, given that the accusation is that a majority of the board has been compromised by Mamdani’s political influence.
He says a court could theoretically dig through the data itself and set a new rent cap, although it’s unlikely it’ll want to do that. Another option would be that the court sends the case back to the RGB with instructions to make another decision that puts more weight on data that would justify some level of rent increase.
In addition to this latest challenge to the rent freeze, a constitutional case challenging New York’s rent limits on vacant apartments, in which the RGB is a named defendant, is ongoing.
Christian Britschgi is a reporter at Reason magazine and author of Reason.com’s Rent Free Newsletter, where this article first appeared.