By Cafo Boga/
Mr. Boga is a Certified Public Accountant, former banking executive, and owner of rent-regulated housing in New York. The views expressed are his own.
Most New Yorkers have never heard the accounting term “going concern.” Yet it describes a concept that may become increasingly relevant to the future of affordable housing. A going-concern opinion is among the most serious conclusions an independent Certified Public Accountant can reach. It does not mean that a business is about to fail. Rather, it means there is substantial doubt about its ability to continue operating over the foreseeable future unless underlying financial conditions improve.
As a CPA and former commercial banking executive, I spent much of my career evaluating the financial health of businesses. That experience has led me to ask a question that extends beyond accounting and into public policy: Could New York’s approach to affordable housing eventually place portions of its rent-regulated housing stock under the equivalent of a going-concern warning?
Each year, New York revisits the same debate. Tenant advocates argue that rent increases threaten affordability. Property owners respond that rapidly rising operating costs make it increasingly difficult to maintain their buildings. Both concerns are legitimate, yet both focus on the annual dispute rather than the larger issue.
The real question is not whether rents should increase this year. The real question is whether New York’s current model can preserve affordable housing over the long term. Affordable housing is one of society’s most important public commitments. Stable neighborhoods, decent housing, and protection for working families strengthen communities and benefit the economy as a whole.
Every public commitment, however, carries a cost.
Schools, police and fire protection, highways, parks, libraries, and public transportation are financed collectively because society recognizes them as public goods. Affordable housing is also a public good. The difference is that New York finances much of its affordable housing by limiting the revenue of private property owners while allowing many of the costs of operating those buildings to continue rising with the marketplace.
Whether that is good public policy is open to debate.
Whether it is financially sustainable is a question that deserves equal attention. Throughout my banking career, every commercial real estate loan began with the same analysis. Before discussing collateral, interest rates, or repayment schedules, we asked one simple question:
Would the property’s income generate sufficient cash flow to cover operating expenses, maintain the building over time, and service its debt?
Everything else came later.
The reason was straightforward. Buildings are not maintained by good intentions. They are maintained by adequate cash flow.
That same principle applies to affordable housing.
A rent-regulated apartment building faces the same economic realities as every other enterprise. Roofs wear out. Boilers must be replaced. Elevators require modernization. Insurance premiums increase. Property taxes rise. Water and sewer charges rarely decline. Labor, utilities, financing costs, and regulatory requirements continue to grow regardless of whether rents keep pace.
Those expenses cannot simply be legislated away.
When operating costs consistently outpace operating revenue, the financial strain is gradual but predictable. Capital improvements are postponed. Aging systems remain in service longer than they should. Maintenance is deferred—not because owners prefer neglect, but because available resources no longer support the level of reinvestment the buildings require.
Eventually, tenants pay the price as well.
That is why the long-term financial health of rent-regulated housing should concern everyone, not only property owners. If the buildings themselves become economically unsustainable, the public policy designed to preserve affordable housing ultimately begins to undermine it.
That possibility should concern all New Yorkers, regardless of where they stand in the debate over rent regulation. The purpose of rent regulation is to preserve affordable housing—not to undermine the financial viability of the buildings that provide it. That distinction is often lost in the annual debate over rent increases.
A financially healthy building is not merely in the owner’s interest; it is in the tenant’s interest and the public’s interest as well. Buildings require continuous reinvestment. Roofs, boilers, elevators, plumbing, electrical systems, façades, and safety improvements all have finite lives. Delaying those investments may balance a budget temporarily, but it does not preserve housing over the long term. The challenge facing many owners today is not the result of a single year’s rent adjustment. It is the cumulative effect of years in which operating costs have risen faster than rental income. The New York City Rent Guidelines Board’s 2026 Price Index of Operating Costs reported an overall increase of 5.3% in operating expenses, including a 10.5% increase in insurance costs and an 11.0% increase in fuel costs. Property taxes, labor, utilities, financing costs, and regulatory compliance continue to consume a growing share of operating revenue. These are not estimates produced by landlord organizations or advocacy groups. They are findings reported by the New York City Rent Guidelines Board itself.
Economics is indifferent to politics. Revenues and expenses ultimately determine whether any enterprise—public or private—can remain financially sustainable.
When expenses consistently outpace revenue, the margin available for maintenance and capital improvements steadily erodes. At first, the changes are almost invisible. A project is postponed. Equipment is repaired instead of replaced. Modernization is delayed until next year. Eventually, however, those individual decisions accumulate into a pattern that affects the building itself. The consequence is not simply reduced profitability.
It is the gradual deterioration of the very housing stock public policy is intended to preserve.
One unintended consequence of the 2019 Housing Stability and Tenant Protection Act has been the growth of what a practice commonly known as “apartment warehousing”. When long-term tenants vacate older rent-stabilized apartments, owners often face renovation costs that can run into tens of thousands of dollars to bring units into compliance with current building, safety, and habitability standards. Yet current rent regulations frequently limit the ability to recover those investments over a reasonable period. Faced with that economic reality, some owners leave apartments vacant because returning them to the market would result in a financial loss. Whatever one’s view of rent regulation, an apartment that remains empty while families search for housing represents an unintended consequence that deserves serious public discussion.
Public policy should be judged not only by its intentions, but also by its unintended consequences.
This is why the debate should not be framed as landlords versus tenants. Both depend upon the same reality: financially sustainable buildings. Tenants deserve safe, well-maintained homes, and owners need sufficient financial capacity to provide them. One objective cannot exist without the other.
The issue, therefore, extends well beyond the annual decision of the Rent Guidelines Board. It raises a broader policy question: How should society finance one of its most important public goods?
Every public benefit has a cost. Schools, police protection, highways, parks, libraries, and public transportation are funded collectively because society recognizes that everyone benefits from them. Affordable housing produces similar public benefits. It strengthens neighborhoods, supports the workforce, reduces housing instability, and contributes to the economic health of the city.
Yet unlike most public goods, affordable housing is financed in an unusual way. Rather than distributing much of its cost broadly through public revenues or targeted incentives, New York has increasingly relied upon private property owners to absorb a significant share of that burden while limiting the growth of their principal source of income.
Whether one agrees with this approach or not, it remains a policy choice—and like every policy choice, it should be periodically evaluated to determine whether it continues to achieve its intended purpose.
That, ultimately, is the question raised by the going-concern analogy.
A going-concern warning does not suggest abandoning the enterprise. It calls for corrective action before the underlying financial condition becomes irreversible. Affordable housing deserves the same careful attention. Public policy succeeds when it balances social objectives with economic reality. Compassion and financial discipline are not competing values; they are complementary principles. One defines the objective. The other determines whether that objective can endure.
That is why New York should broaden the conversation beyond the annual debate over rent increases. Policymakers should devote as much attention to reducing the cost of providing affordable housing as they do to regulating its price. Property tax relief for rent-regulated buildings, targeted tax incentives for capital improvements, low-interest financing for rehabilitation projects, and measures to address escalating insurance costs would strengthen the long-term viability of the housing stock while preserving the protections upon which millions of tenants depend.
These are not subsidies for property owners.
They are investments in preserving one of New York’s most valuable public assets. Every dollar that reduces unnecessary operating costs is a dollar that can be reinvested in safer buildings, modernized infrastructure, improved energy efficiency, and better housing conditions. Strengthening the financial health of apartment buildings ultimately strengthens the security of the families who live in them.
The purpose of this article is not to question New York’s commitment to affordable housing. It is to question whether the current financing model remains the best way to achieve that commitment over the long term.
Every responsible auditor understands that a going-concern opinion is not a prediction of failure. It is an early warning that corrective action may be necessary before financial conditions deteriorate further. The prudent response is not denial, but action.
Public policy deserves the same discipline.
If New York waits until the deterioration of its affordable housing stock becomes unmistakable, the cost of preserving it will be far greater than the cost of acting today.
Affordable housing has long been one of New York’s proudest public achievements. Preserving it requires more than regulating rents. It requires ensuring that the buildings providing that housing remain financially capable of serving future generations. No responsible CPA waits until a business fails before issuing a going-concern warning. The purpose of the warning is to encourage corrective action while there is still time. Public policy should be no different.
The purpose of rent regulation is to preserve affordable housing—not to undermine the financial viability of the buildings that provide it. If New York truly wants to preserve affordable housing for future generations, it must devote as much attention to the cost of providing affordable housing as it does to keeping that housing affordable.
That is not simply good economics.
It is good public policy.