NYC rent freeze challenged in court by landlords represented by ex-Deputy Mayor Mastro

Mamdani’s Rent Freeze Goes to Court

A lawsuit argues that the Rent Guidelines Board’s rent freeze decision was arbitrary and unlawful.

Topics: Politics and Law | States and Cities | Economy, Finance, and Budgets

Zohran Mamdani was elected mayor on his promise to freeze the rent. His stunts to popularize his slogan included running the New York City Marathon in a shirt reading “Zohran Will Freeze It,” plunging into the Atlantic on New Year’s Day, and publicly vowing to appoint to the Rent Guidelines Board (RGB) only members who “understood landlords are doing just fine.”

Shortly after taking office, Mamdani appointed a majority of the nine-member RGB. Last month, the members fulfilled the mayor’s campaign promise, voting to impose 0 percent rent increases for both one-year leases and—for the first time ever—two-year leases for tenants in the city’s 1 million rent-stabilized units.

Last week, a group of affected property owners, represented by former First Deputy Mayor Randy Mastro and his law firm, filed a challenge against the RGB’s action, asking a state court on Staten Island to nullify the rent freeze. Mastro’s exhaustive complaint sets forth a series of strong arguments demonstrating that the RGB’s decision was arbitrary and capricious, an abuse of its discretion, and riddled with unlawful procedural irregularities.

Legal Framework

By law, the RGB must weigh evidence of certain economic factors when it decides whether, and by how much, to increase stabilized rents. Section 26-510(b) of the city Administrative Code requires the RGB to consider the “economic condition of the residential real estate industry,” including:

• Operating costs
• Taxes
• Financing
• Vacancy rates

As attorney Christian Browne explained in City Journal after the rent-freeze decision, the RGB must make impartial determinations in a manner akin to a court. A failure to do so could constitute a violation of due process.

Defenders’ Argument

Defenders of the freeze point to the fact that courts have interpreted the Administrative Code to allow the RGB to consider tenants’ ability to pay. While this proviso undoubtedly affords the board discretion, it doesn’t permit it to set aside all the other factors. Doing so would effectively read all other considerations out of the statute, leaving tenants’ ability to pay the sole determining factor—despite the law’s clear text. If such political considerations could be dispositive, why didn’t the law’s drafters simply give the RGB’s powers to the mayor?

Evidence Against the Freeze

As the challengers emphasize in their pleadings, the evidence before the RGB—based upon the board’s own research—does not support a 0 percent increase. Key findings include:

• The board’s Price Index of Operating Costs report showed landlords’ expenses increased by 5.3 percent in the most recent year.
• According to the report’s findings, owners need increases of 3.4 percent on one-year leases and 4.8 percent on two-year leases to hold net operating income constant.
• About two weeks before the RGB vote, the city’s Water Board raised water and sewer rates by 6 percent.
• The RGB, however, ignored the actual increase and continued to rely on an assumption that utility costs would fall by 1.7 percent.