A lawsuit contends that New York City’s Rent Guidelines Board violated the law by predetermining the result in an arbitrary manner.
More than anything else, the reputation of New York City Mayor Zohran Mamdani has been tied to his now-famous pledge to keep rents at their current level for rent-stabilized apartments in the city. Throughout his campaign, Mamdani issued bold commitments, including the claim: “As mayor, I will lock rents at their current level every year I serve. That’s a guarantee.”
In June of this year, roughly half a year after Mamdani took office, the rent freeze the mayor had promised finally materialized. Yet even as Mamdani celebrated what looked like a victory, the rejoicing may have been premature. In July, a coalition of landlords initiated a lawsuit challenging the freeze, contending that the outcome had been prejudged and arbitrary by the independent regulatory body known as the Rent Guidelines Board, which is lawfully obligated to weigh a range of factors when setting NYC rent adjustments.
To grasp the lawsuit, one first needs to understand the context of how New York City’s rent-stabilized market operates. Despite Mamdani’s campaign rhetoric, the ultimate decision about whether stabilized rents are frozen or increased rests with the Rent Guidelines Board (RGB). This nine-member panel traditionally comprises two representatives of landlord interests, two representing tenants, and five “public members” who are ostensibly neutral.
The RGB votes yearly on whether landlords of stabilized units in the city may raise rents, and if so, by how much. Casting a 0 percent increase constitutes a rent freeze—a move that, prior to Mamdani, had occurred only three times since the RGB’s inception in 1969.
Although the RGB holds the final say on freezing or increasing rents, it cannot act in a vacuum. By statute, the board must take into account “the economic condition of the residential real estate industry” in NYC, which includes examining factors such as real estate taxes, sewer and water charges, gross operating costs for landlords, financing interest rates, housing supply and vacancy rates, cost-of-living data, and more.
The issue is that, under Mamdani, it appears the board overlooked these factors rather than earnestly weighing them. If anything, the RGB’s own data indicate that operating costs for properties with rent-stabilized units are rising—up 5.3 percent this year with a projected 4.1 percent increase next year—pointing toward the need for a rent hike rather than a freeze.
As the lawsuit notes: “According to the Board staff’s own Price Index of Operating Costs report…expenses across all relevant data points were up this cycle: fuel up 11.0 percent, insurance up 10.5 percent, maintenance up 6.0 percent, utilities up 5.6 percent, administrative costs up 4.8 percent, and taxes up 2.6 percent.”
Even in areas where the RGB predicted future decreases in operating costs—for instance, a 1.7 percent projected decline in utility costs—actual on-the-ground data pointed in the opposite direction. Merely 15 days before the RGB’s final vote to freeze rents, the NYC Water Board approved a 6 percent increase in water and sewer charges for the coming year.
Moreover, while the board’s topline data suggested a net operating income rise for rent-stabilized landlords of 6.2 percent citywide—which would imply landlords were earning substantial returns on stabilized units—the dataset was so flawed that it was almost unusable. The RGB data include all buildings with at least one rent-stabilized unit; a building with 99 market-rate units and a single stabilized unit would be included in the net operating income dataset.
When this reality—along with inflation—was taken into account, the net operating income for rent-stabilized units hovered near zero or around one percent (and was actually negative in the Bronx).
Despite this evidence, the RGB pressed ahead with the rent freeze. Six of the nine members were appointed by Mamdani, who, during his campaign, declared he would only appoint Board members who “understand that landlords are doing just fine.”
Several of those individuals, predictably, had publicly taken anti-landlord stances before their appointments, such as one who in 2023 claimed that “landlords have indisputably been wildly overcompensated over the last 31 years.” Another stated in 2021 that “we don’t need to prioritize ‘mom and pop landlords’ either.”
Once in office, Mamdani established the so-called Office of Mass Engagement (OME), intended to boost participation in local governance. As part of OME, the administration created Organize NYC, which was tasked with canvassing to encourage attendance at RGB hearings in the months leading up to the rent freeze. Reports from one canvasser suggested that former Mamdani campaign aides—and current OME staffers—were involved in the canvassing, and that the outreach list targeted only tenants of rent-stabilized units (and included no landlords).
Just hours before the RGB’s final vote on the rent freeze, board member Chrstina Smyth—a holdover appointee from former mayor Eric Adams—resigned in protest. “This rebuilt board was tasked with delivering a rent freeze,” she said. “Everything since has been theater.” Smyth said she repeatedly asked the Board to explain their methodology, but “those questions went unanswered.” Rather than remain a “fact-finding body,” she argued the Board “has become a body that starts with an answer and codes its way backward to justify it.”
The landlords’ lawsuit asks the courts to determine that the RGB’s rent-freeze decision was arbitrary and capricious under state administrative law. (The Manhattan Institute, where I work, has also joined in supporting an intervention in the case, arguing that the board’s apparently preordained rent-freeze decision violated due process of law.)
Last month, the judge overseeing the case ordered the Mamdani administration to turn over all emails and text messages exchanged between City Hall officials and RGB staff. The city was given five days to produce the communications, which appear to show interactions between Mamdani administration personnel and RGB members in the months leading up to the rent freeze (though no direct orders from Mamdani officials to freeze were disclosed).
Mamdani’s outspoken advocacy for a rent freeze may have helped him win election. Yet it could also prove costly in the long run. By law, the RGB has the authority to freeze rents, but it must do so through a genuine, independent decision—not through theater of vibes or a predetermined outcome.
