The first legal challenge to the Rent Guidelines Board’s (RGB) decision to freeze the rent for New York City’s stabilized apartments was filed this week. A group of landlords filed a petition in New York State Supreme Court on Staten Island to annul the board’s June 25 approval of 0 percent increases on one- and two-year leases. The suit claims the board manipulated data to overstate property income for owners to meet Mayor Zohran Mamdani’s rent freeze promise.
Last month, the RGB voted to approve a rent freeze for one- and two-year leases for the city’s one million apartments that are stabilized, the first time 0 percent increases were approved for multiple-year leases.
The board includes two members representing tenants, two representing owners, and five representing the general public. Every year, the board releases guidelines on potential rent increases by looking at the economic conditions for both landlords and tenants.
Before he left office, Mayor Eric Adams attempted to block Mamdani’s rent-freeze pledge by appointing and reappointing four members to the board. But three members resigned, allowing Mamdani to appoint new members once he took office.
As mayor, Mamdani refrained from explicitly saying the board should freeze the rent, since the members operate independently, but he did encourage tenants to testify during public meetings held by the board.
The Article 78 petition was filed on behalf of several landlords and limited liability companies that own stabilized buildings. The plaintiffs include Michael Fazio of Kenilworth Holdings, LLC; Violet Zharku of 21-45 23rd St. LLC, 39-12 62nd St. LLC, and 42-59 Bowne St. LLC; Sophia Hepheastou of 1369 College LLC; 593 Park Place Management Inc.; and 43rd Street Associates LLC.
The petition also mentions RGB member Christina Smyth, who quit on the morning of the final vote because the board “stopped being a fact-finding body.” She explained later: “It has become a body that starts with an answer and vibe codes its way backward to justify it.”
Randy Mastro, former deputy mayor under Adams, is one of the lawyers representing the landlords.
“To deliver on the Mayor’s campaign promise of a rent freeze, the Board then had to disregard its statutory mandate and manipulate its own data, intentionally underestimating operating costs and intentionally overstating income of landlords,” Mastro said. “In other words, there is no actual basis for an across-the-board rent freeze here, and the Board’s decision must be overturned.”
A report released by RGB earlier this year found the net operating income (NOI), which is the revenue landlords earned after operating costs, rose 6.2 percent between 2023 and 2024 citywide. Property owners have long said NOI is a flawed metric for small rent-stabilized buildings because it does not factor in mortgage debt and major capital expenses. Owners also argue that buildings that are 100 percent stabilized saw revenue increase by just 4 percent.
Tenant advocates argue that under Adams, the board voted to increase rents four years in a row, for a total of 12 percent, increasing income for rent-stabilized landlords by 30 percent during that period.
Sumathy Kumar, the executive director of the NYS Tenant Bloc, called the lawsuit a “desperate attempt to protect their profits.”
“Tenants won a rent freeze because the economic data and tenant testimony clearly supported one. Landlords had no problem with the RGB’s process when it was rigged in their favor,” Kumar said in a statement. “Under the Adams administration, the RGB hiked the rent again and again, ignoring tenants’ economic reality and helping landlord profits soar. Now the RGB has the data as well as a democratic mandate to provide tenants with relief, and landlords want to change the rules.”
Kumar added that the group is ready to protect the rent freeze “in every arena necessary from the courts to the legislature.”
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