January 25, 2010— In a major victory for New York City’s rent stabilized tenants, New York State Supreme Court Justice Emily Jane Goodman struck down a 2008 supplemental adjustment imposed by the Rent Guidelines Board (RGB), which has been characterized as a “poor tax” against low-income tenants who have lived in an apartment for more than six years and pay less than $1,000 a month in rent. The decision came in response to a lawsuit filed by South Brooklyn Legal Services ("SBLS," a program of Legal Services NYC) Housing Unit Director Ed Josephson and Staff Attorney Rachel Hannaford, along with attorneys from the Legal Aid Society.

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"The court’s decision affirms that the RGB’s responsibility is to protect vulnerable long term tenants, not penalize them with onerous additional rent increases," said Josephson. "In these difficult economic times, the decision will afford some much needed relief for low and moderate income working families who, as always, bear the brunt of the crisis."

On June 19, 2008, the RGB adopted the 2008 Apartment and Loft Law #40, a supplemental adjustment for a new sub-class of housing accommodations.  The RGB plan provided for renewal increases of 4.5 and 8.5 percent for one-and two-year renewal increases respectively.  It also provided for a supplemental increase applicable to persons who have lived in an apartment for more than six years and pay less than $1,000 in rent.  These tenants were required to pay increases of no less than $45 or $85 for one-and two-year renewals, resulting in a higher percentage increase than what is allowed under current RGB guidelines. 

With the support of the City Council, Legal Services NYC and the Legal Aid Society filed a lawsuit in September 2008 against the RGB, charging that it had exceeded its statutory authority. Justice Goodman vacated the portion of Order #40 which provides for the supplemental increase, declaring that the RGB does not have the authority to create a new class of housing accommodations and/or create rent adjustments not specifically authorized by the legislature.  Justice Goodman also granted the motion of the New York City Council to file a memorandum of law as an amicus curiae in further support of the lawsuit.

“The creation of this ‘poor tax’ was a direct attack by the Rent Guidelines Board on low income tenants – the very New Yorkers hit hardest by the current recession,” said New York City Council Speaker Christine Quinn.  “The City Council was proud to work with the Legal Aid Society and Legal Services of New York to help take this unjust burden off of tenants.  I applaud Justice Goodman for recognizing that the Board penalized tenants for failing to move in a city where affordable housing is scarce, and finding that the Board exceeded its authority under City and State housing laws.”

One of the major plaintiffs, Paul Hertgen, who has lived in the same Staten Island apartment for 18 years, praised Justice Goodman for “helping to save our homes.”  Mr. Hertgen, a union truck driver, was laid off from his job recently.  He was the primary caregiver to his wife, who lost her battle with cancer in January 2007.

“As the RGB’s power is in doubt, a court should not permit a quasi-legislative agency, with a nine member board, appointed by the Mayor of New York, to perform a function designated to the legislative body, which enacted the RSL (New York City Rent Stabilization Law), “ Justice Goodman wrote in the opinion dated January 20.