Amicus Brief: Kenilworth Holdings LLC v. New York City Rent Guidelines Board

During his mayoral campaign, Zohran Mamdani expressly and repeatedly promised to freeze rents for New York City’s roughly 1 million rent-stabilized apartments. He said he would achieve that result by appointing members to the Rent Guidelines Board (the Board) who shared his view that landlords were “doing just fine.” After taking office, he appointed a majority of the Board, which then adopted Order No. 58, which permits no rent increase for either one-year or two-year leases. A group of affected property owners filed suit to challenge the rent freeze.

Manhattan Institute is financially supporting an intervention in the case by DiFiore Realty, LLC, owned by Gandolfo DiFiore, a longtime New York real-estate developer who owns and manages multifamily and rent-stabilized properties.

In addition, MI has submitted an amicus brief explaining the broader context of New York City’s housing market. In 2019, New York enacted the Housing Stability and Tenant Protection Act (HSTPA), which eliminated vacancy allowances and high-rent deregulation and sharply restricted rent increases tied to apartment and building improvements. These changes made the Board’s annual rent adjustment the principal remaining avenue through which building revenue can keep pace with inflation and mounting operating expenses.

MI’s brief explains that a rent freeze will accelerate disinvestment in New York’s aging rent-stabilized housing stock by reducing the resources available for maintenance, capital improvements, and apartment rehabilitation. These effects will fall most heavily on older, heavily stabilized buildings with low rents and few or no market-rate units to offset rising operating and maintenance costs.

The rent freeze, if allowed to stand, will also worsen the effects of New York City’s housing shortage. By widening the gap between regulated and market rents, a freeze gives incumbent tenants a stronger incentive to remain in place. In turn, this reduces unit turnover and the apartments available to prospective tenants, forcing demand into the limited stock of unregulated housing. The resulting system benefits those fortunate enough to have a stabilized unit, while leaving those seeking an apartment to face fewer available options and higher market rents.

In light of these circumstances, Order No. 58 should not receive ordinary judicial deference, particularly because the Board failed to explain how a zero-percent increase could be reconciled with its own research and the statutory factors it was required to consider. At a minimum, the court should annul Order No. 58 and remand the matter to the Board for a new determination. As a matter of basic due process, the Board should produce a written justification demonstrating that it rationally weighed the statutory factors and economic evidence.

John Ketcham is a legal policy fellow and director of Cities at the Manhattan Institute.

Cameron Macdonald is associate general counsel at the Manhattan Institute.

Ilya Shapiro is a senior fellow and director of Constitutional Studies at the Manhattan Institute. Follow him on Twitter here.