A group of New York landlords sued the city’s Rent Guidelines Board Wednesday, claiming its decision last month to freeze rents on 1 million regulated apartments for the next two years was the result of a “sham process with a predetermined outcome.”

The lawsuit filed on Staten Island accuses the nine-member panel of delivering the city’s first-ever two-year halt on rent increases to satisfy a campaign pledge made by Mayor Zohran Mamdani. It seeks to stop the freeze and force the Rent Guidelines Board to instead implement a rent increase.

As a candidate, Mamdani made his promise to “freeze the rent” a key pillar of his successful campaign. But he backed off his public advocacy after taking office, instead saying he would defer to the independent board and its decision-making.

The panel approved the freeze on new two-year leases on June 25, eliciting celebrations from tenants in rent-stabilized apartments and scorn from landlords who say they need to charge higher rents to offset their own rising operating costs and continue to profit. The decision was also marked by the sudden resignation of one the board’s landlord representatives.

Mamdani appointed six of the board’s nine members after his predecessor Mayor Eric Adams' failed attempt to pack the panel with his own appointees on the final day of his tenure. Adams’ former top deputy mayor, Randy Mastro, is now one of the lawyers representing the aggrieved landlords in their lawsuit.

“As thousands of property owners continue to struggle with skyrocketing costs, this irrational and illegal decision by the Rent Guidelines Board cannot stand,” Mastro said in a written statement Wednesday.

City Hall spokesperson Matt Rauschenbach said the Rent Guidelines Board arrived at its decision independent of the mayor.

“We are confident that the Board evaluated all of the relevant data and considered the factors facing both tenants and landlords across New York City,” Rauschenbach said. “The Law Department is prepared to defend the RGB’s decisions.“

In their complaint, the landlords say the board forfeited its independence and “manipulated” its own data on ownership costs to justify an “irrational” decision and “do the mayor’s bidding.”

“That Mayor Mamdani preordained this outcome and then took affirmative steps to stack the deck is now undeniable,” they wrote in the lawsuit.

The landlords filed a demand for all communications between the board and City Hall, the Mayor’s Office to Protect Tenants and a new “Office of Mass Engagement,” which encouraged New Yorkers to testify at Rent Guidelines Board hearings.

The plaintiffs include seven limited liability companies that own rent-stabilized apartments across four boroughs:

  • Kenilworth Holdings LLC, which owns two rent-stabilized apartments on Staten Island and is linked to landlord Michael Fazio, according to the lawsuit.
  • 43rd Street Associates LLC, which owns a building in Queens. Mortgage documents for the property are signed by Carmela and Thomas Muratore.
  • 1369 College LLC is linked to Demetrios Antonopoulos and owns one building in the Bronx.
  • 593 Park Place Management Inc., which owns a building in Brooklyn. Mortgage documents and a deed to the eight-unit building are signed by company president Janice Hamilton.
  • Three other companies – 21-45 23rd St. LLC, 39-12 62nd St. LLC and 42-59 Bowne St. LLC — own buildings in Queens and are linked to landlord Violet Zharku.

“Freezing the rent does not freeze my mortgage, property taxes, insurance, water and sewer bills, utility costs or the cost of repairs,” Zharku said.

The lawsuit cites a resignation letter from former Rent Guidelines Board member Christina Smyth, a landlord attorney, who dramatically quit the panel the morning of the annual vote in June. Smyth charged that the board “has become a body that starts with an answer and vibe codes its way backward to justify it.”

The complaint also disputes the way the board used data on landlord and tenant expenses to make its decision.

Rent Guidelines Board data shows that landlords with at least one rent-stabilized unit saw their net operating incomes increase by more than 6% overall. Landlords that filed the lawsuit said that data masks lower increases for buildings where every apartment is subject to rent stabilization, especially buildings in the Bronx, where net operating income decreased by 0.1%.

The figure measures total revenue from rent and other income sources after expenses, like insurance and taxes, but excludes mortgage payments.

The board also reviewed data showing owners’ insurance, maintenance and utility costs all rose, as well as statistics on tenant financial hardship, which showed income increases did not keep pace with inflation and that the city’s cash assistance caseload — a measure of extremely low incomes — spiked by 7.4%. The board also uses data from the city’s most recent housing survey, which shows tenants in rent-stabilized apartments had a median income of $60,000.

The board’s June decision was the first-ever freeze on new two-year leases, but not the first time the board had voted for a 0% increase. Members approved a freeze on one-year leases three times, all during Mayor Bill de Blasio’s tenure.

In four years under Adams, the board approved a combined 12% hike.

New York City’s system of rent stabilization applies to roughly 1 million apartments across the five boroughs. Annual rent increases are determined by the nine-member Rent Guidelines Board.

The rules cover apartments with six or more units that were constructed before 1974, as well as newer apartments where owners receive government funding, low-interest loans or property tax breaks.

But not all apartments in older buildings are covered by the regulations because state law from 1994 to 2019 allowed owners to lift units out of rent-stabilization once prices reached a certain threshold.

A suite of tenant protection laws that took effect in 2019 ended that practice, and curbed many of the ways that landlords could increase rents beyond what the Rent Guidelines Board approves each year. One major change eliminated a so-called vacancy bonus rule that allowed owners to raise rents by 20% every time a tenant moved, died or was evicted.