NYCLT testimony on Rule 2-06.2 Interim Rent Guidelines & Total Rent

There are some very good things in Rule 2-06.2. We applaud the Loft Board for listening to tenants and deciding to set the interim rent adjustment at 0% for tenants who hadn’t had an increase in years. This is fair because there was always a reason why landlords weren’t able to extract more rent in a lawless market where they held all the leverage. The most common reasons were rent already being high and poor maintenance.

Another point in this rule that is a great relief to tenants is that it spells out so clearly and concisely that any increases they took after June 2010 will be refunded.

However, there are still a couple of glitches in this rule. One is that tenants appear to be still liable for paying those illegal increases until they file an overcharge claim. This makes them vulnerable to collections claims and eviction if they refused to pay extra rent they did not in fact owe. We request that the rule clearly state that it is permissible for tenants to withhold rent they don’t actually owe, rather than having to pay until winning an overcharge claim.

Another messy point in this rule is that it gives the landlord the choice of either refunding the overcharge in a lump sum or discounting the rent by 20% until the overcharge is returned. We feel that this will create a bookkeeping nightmare which will be unenforceable and may prompt tenants to withhold rent where they should not. The full amount should be returned as a lump sum or on a payment schedule, not offered as a rent reduction.

Rule 2-06.2 also allows the landlord to continue charging whatever escalators are in the tenant’s lease that were being paid in June 2010. A brief survey of our membership revealed that many tenants are paying outrageous garbage charges (whether or not they had curbside pickup), water charges, disproportionate real estate taxes, sub-metered gas and electric with very little accountability, gas or electric charges based on proportionate square footage, service charges on top of utilities, and more. The Loft Board should expect to see some “interesting” overcharge proceedings based on these escalators. Please consider this language carefully.

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