It might be a long night
Rent control hearing, budget introduction scheduled for council meeting Wednesday
by Ray Smith
Reporter staff writer
Feb 27, 2011 | 4096 views | 3 3 comments | 16 16 recommendations | email to a friend | print
CHANGE ON THE WAY – The rent control subcommittee held a public meeting in early February before presenting the amendments to the council.
CHANGE ON THE WAY – The rent control subcommittee held a public meeting in early February before presenting the amendments to the council.
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The City Council may take a final vote this Wednesday night on changes to Hoboken’s 38-year-old Rent Control Ordinance. The hearing is expected to draw heated comments from people for and against the amendments, which evolved after approximately 18 months of work by a council subcommittee.

Rent control has been a controversial issue in Hoboken over the last several decades, with landlords saying it prevents them from making a fair profit on their properties, and housing activists saying that any attempt to change the laws may encourage landlords to force existing tenants into the street. The current law limits annual rent increases to a few percent a year, but allows landlords to apply for larger increases based on certain criteria. Landlords can also pass along tax and water surcharges.

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“Both sides seem to be unhappy, so we probably have something down the middle.” – Beth Mason

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Minor changes have been made to the law over the years, but many attempts to make bigger changes have stalled.

A major impetus for the proposed changes was the fact that tenants were finding out that they were – technically – overcharged for rents through the years, and being able to file lawsuits to gain thousands of dollars in back rent from landlords. Other lawsuits have successfully maintained that the landlords were not at fault because the city did not keep adequate rent records.

Recently, some Hoboken landlords were notified of a class action lawsuit by Brach Eichler LLC, a firm representing one landlord suing the city of Hoboken, the Hoboken Rent Leveling and Stabilization Board, and other involved parties.

The lawsuit charges that owners of multi-family properties regulated by the rent control ordinance have been victimized by the city’s enforcement of the rent control law “in a manner inconsistent with its express language” and in a manner landlords can comply with.

The suit asks the court for damages and to stop the rent calculation process as defined in the ordinance.

When the revised rent control ordinance was introduced on Feb. 16, the plaintiff’s lawyer, Charles X. Gormally, told the City Council amending the ordinance to the landlords’ satisfaction might solve some of the city’s legal problems.

One advocate for local property owners pointed out that one court has ruled that the city’s administration of the rent control law has been “arbitrary, capricious, and unreasonable” – yet successive city councils have failed to make changes.

The changes

Under the existing law, if landlords charge a rent higher then what is legally allowed, they must pay back the overcharge for all the years of the violation, as well as consumer fraud penalties, which often results in the payment tripling. However, some landlords say it’s impossible to tell if the rent is illegal because of missing and incomplete documents in the city’s rent leveling office.

One proposed change would limit payments for rent overcharges to two years, a time period Council President and Rent Control Subcommittee Chair Beth Mason said is a middle ground for tenants and landlords that was reached after months of subcommittee meetings.

Cathy Cardillo, a tenant advocate and attorney who represents the Citizens for the Retention of Affordable Housing in Hoboken (CRAHH), issued a letter to Mayor Dawn Zimmer and the council members on Feb. 16, the day of the first reading of the ordinance, criticizing the council for bowing to “monied interests.”

“Who benefits when you limit all excess, which means ‘illegal,’ rents paid to a cheating landlord, to only two years – can you reconcile yourself to that?,” Cardillo wrote in her letter. Cardillo added that she believes the proposed changes “will not only disserve a large portion of [their] constituency – it will actually harm them.”

Landlords, of course, disagree, believing it has taken far too long to make changes to the existing system.

When attorney Gormally spoke at the Feb. 16 council meeting, he thanked the council for having “the courage to act.” Gormally said previous councils didn’t change the law even after “one judge in Jersey City found the ordinance was unconstitutional as applied.”

A second proposed change would make it easier for landlords to apply for a vacancy decontrol. Currently, landlords can raise rents 25 percent every three years if there has been at least one vacancy. The change would broaden the types of documents used to prove a vacancy.

The third and final change would require landlords to distribute a pamphlet outlining tenant’s rights and to obtain signatures from tenants whenever a change in rent price or tenancy occurs.

Gormally told the council that the changes could solve some of the city’s legal problems.

But a tenant advocate said that this statement made her feel “uncomfortable.”

“[Gormally said] if you want the lawsuits to stop, you’ll basically do what they want you to do, and that makes me a little uncomfortable,” said Eileen Lynch, a tenant advocate, at the Feb. 16 meeting. “Because what power do the tenants have? This is a group of well-funded individuals who can afford to run class action suits.”

Local real estate organizations have sent out pamphlets to amplify their views about rent control. On the opposite end of the spectrum, tenant advocates have recently begun taping small pieces of paper around town that read: “Save your community, save Hoboken rent control.”

‘Down the middle’

Mason believes the changes are important for Hoboken’s government.

“The council was asked to look at this [ordinance] years ago,” Mason said. “It’s an older law. There’s a number of things that need to be addressed because every law needs to be looked at to make it compliant…you need to regularly review these regulations so there’s not a detriment to the city overall, especially where a court is bringing it up.”

Mason doesn’t think the changes appeal to one side of the debate.

“Both sides seem to be unhappy so we probably have something down the middle,” Mason said.

The council can take a final vote on the measure after listening to comments from the public at Wednesday’s meeting.

Budget introduction

Mayor Dawn Zimmer’s administration will also formally introduce a budget for 2011 on Wednesday evening at the council meeting. This is the first budget introduction since Zimmer lost control of the council majority, and the council has been steadfast in their demand that the budget be delivered on time.

The budget will cover spending from Jan. 1, 2011 through Dec. 31.

While not spelling out specifics, Zimmer said in her state of the city address that taxes will go down “significantly more this year.”

The City Council will convene on March 2 at 7 p.m. in the City Hall Council Chambers.

Ray Smith may be reached at RSmith@hudsonreporter.com

Comments
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njcounsel
|
March 01, 2011
Hoboken's City Council is poised to take corrective action to begin repairs to its outdated and mis administered rent control ordinance after 25 years of inaction and exploitation by self interested "tenant advocates". Even though the pervasive problems with the ordinance were known to previous administrations that commissioned extensive studies as far back as 1996, previous elected officials failed to act out of an overblown fear of tenant reprisals. This council deserves to be recognized for finally reacting to the inherent inequities of maintaining the status quo.



Without doubt the courage of this council was fortified by class action plaintiffs---born and bred Hoboken resident landlords---that galvanized all landlords into a class action lawsuit to expose this flawed ordinance to the bright light of judicial scrutiny. The facts to support this class action have already evaluated by one judge who concluded that that Hoboken was applying the ordinance in an unconstitutional manner. Like this City Council, the class representatives have the courage to put their names on the effort to begin the repair to this unfair rent control regime. As a direct result of actions taken by the class action plaintiffs, all of the council members will be permitted to vote on this vital issue since it affects all of the residents landlord and tenant alike.



Some of the voices I've read here continue their attempts to preserve the status quo. You report that Cathy Cardillo has written to the council objecting to the changes in the ordinance. This should come as no surprise. Changes to the ordinance will directly impact her ability to use the status quo as leverage against landlords, that had the misfortune to rely on the directions of the Rent Control office in trying to comply with the law. The resulting onslaught of lawsuits against landlords as well as the City has cost the taxpayers hundreds of thousands of dollars and landlords even more. The doubt about compliance with the ordinance and its wildly erratic interpretations has destroyed family owed properties, inheritances, and real estate transactions in the midst of the worst real estate recession in memory. Ms. Cardillo and her clients are the only beneficiaries of this chaos as they reap windfall recoveries and legal fees under the cover of "protecting tenant rights." The true tenant advocates and the class plaintiffs that participated in the process leading to this proposed amendment know that it strikes a balance between the interests of the landlord and tenant and begins the process to reform the ordinance. As the council president noted, it does not give either side everything that they wanted. Fortunately, it does address the most egregious problems with the ordinance and for that, the class plaintiffs and City Council deserve the thanks of all the residents of Hoboken
HobRebeccaL
|
February 27, 2011
I know your paper heavily relies on real estate advertising, but I would think you would still try to be impartial in your news stories. This one heavily quotes Gormally, who is paid very well by wealthy real estate moguls to gut Hoboken's rent control law, and does nothing to check the facts of what he says. As your own paper wrote at the time of the lawsuit he claims found "the ordinance was unconstitutional as applied", only one tiny minor section of the ordinance was found to be that by a lower court judge who found the rest of the ordinance - which was most of it - to be constitutional. The one small part affected a small percent of all rent calculations and a higher court might well even turn that over. In fact higher courts have ruled in favor of the ordinance. The repeated court actions is not because of problems with the ordinance, as Gormally would like voters in Hoboken to think, it is because they are trying to coerce the city council to give in to their demands to immunize landlords who have shamefully violated the ordinance for decades. They love to talk about how much rent control costs the city - when they are the ones driving the cost up with baseless lawsuits.

And the City Council hasn't helped those costs by failing to defend those suits, such as allowing them to get class action status without objection leaving the court with no choice but to grant it. The City Council, many members of which could stand to gain financially from greatly weakening the rent control ordinance, is doing nothing to defend it. They are using the excuse that if they change the ordinance they won't have to defend against the lawsuits giving the impression that they are serving the voters the council members vowed to represent by pretending that they had no choice. Their refusal to challenge the request for class action status and allow the case to proceed is outrageous and benefits only those who stand to profit from their changes to the ordinance.

Beth Mason's claim that there is some fairness in both sides protesting is a joke. The ordinance change is very bad for tenants. The side of the real estate moguls who are behind the Mile Square Tax Association are only mad because they haven't yet totally gutted the ordinance. The the Council promises more to come.

I hope everyone enjoys fake St Patricks Day next weekend because if the council continues to allow big moneyed real estate interests free rein in changing the law this town will mostly consist of transient renters who live here because they see it as a party town. Every weekend can be just like St Patricks Day, which will do nothing to drive down taxes - only property values will decline. But hey, the rich get richer and wealthy law breakers get to keep their ill-gotten over payments, so Ayn Rand would have been proud, right?
hfha
|
February 27, 2011
An article that was not slanted to favor developer and real estate interests would have read as follows:



...A major impetus for the proposed changes is a well-funded group of developers and landlords, Mile Square Taxpayers, MSTA, repeatedly suing the city over the rent control laws. This group claims that it is a fact that tenants were finding out that they were – technically – overcharged for rents through the years, and being able to file lawsuits to gain thousands of dollars in back rent from landlords. In one, and only one, lawsuit, which is currently on appeal, a judge found for the landlords in a very narrow circumstance. That circumstance applies to building owners that claim they were entitled to a vacancy decontrol in connection with a tenant turnover between 1982 and 1985. Members of MSTA reference this case as one where the judge found that Hoboken’s rent control ordinance was ‘unconstitutional as applied...’ and never finished the sentence. In that same case the judge ruled against MSTA on all other counts.



Recently, some Hoboken landlords were notified of a class action lawsuit by Brach Eichler LLC, a firm representing one landlord suing the city of Hoboken, the Hoboken Rent Leveling and Stabilization Board, and other involved parties.



The lawsuit charges that owners of multi-family properties regulated by the rent control ordinance have been victimized by the city’s enforcement of the rent control law “in a manner inconsistent with its express language” and in a manner landlords can comply with. The class action suit was filed on behalf of anyone that owns or has owned rental property in Hoboken in the last 25 years whether or not they currently own property. In order for landlords’ to abstain from the class action they must fill out a form, get it notarized (something that is, to say the least, very unusual) and mail it in.



The suit asks the court for damages and to stop the rent calculation process as defined in the ordinance.



When the revised rent control ordinance was introduced on Feb. 16, the plaintiff’s lawyer, Charles X. Gormally, told the City Council amending the ordinance to the landlords’ satisfaction might solve some of the city’s legal problems.



One advocate for local property owners pointed out that one court has ruled that the city’s administration of the rent control law has been “arbitrary, capricious, and unreasonable” – yet successive city councils have failed to make changes. As is always the case when MSTA representatives speak on behalf of landlords, the advocate did not qualify the specifics of the case, perhaps erroneously giving some the impression that this was a wide sweeping case instead of the very narrow circumstances specified in the referenced case.



The changes



Under the existing law, if landlords charge a rent higher then what is legally allowed, they must pay back the overcharge for all the years of the violation. If they fail, or refuse to do so, the tenant can take them to court where they can also be awarded consumer fraud penalties, which often results in the payment tripling. However, some landlords say it’s impossible to tell if the rent is illegal because of missing and incomplete documents in the city’s rent leveling office.



One proposed change would limit payments for rent overcharges to two years, a time period Council President and Rent Control Subcommittee Chair Beth Mason said is a middle ground for tenants and landlords that was reached after months of subcommittee meetings.



Cathy Cardillo, a tenant advocate and attorney who represents the Citizens for the Retention of Affordable Housing in Hoboken (CRAHH), issued a letter to Mayor Dawn Zimmer and the council members on Feb. 16, the day of the first reading of the ordinance, criticizing the council for bowing to “monied interests.”



“Who benefits when you limit all excess, which means ‘illegal,’ rents paid to a cheating landlord, to only two years – can you reconcile yourself to that?,” Cardillo wrote in her letter. Cardillo added that she believes the proposed changes “will not only disserve a large portion of [their] constituency – it will actually harm them.”



Landlords, of course, disagree, believing it has taken far too long to make changes to the existing system.



When attorney Gormally spoke at the Feb. 16 council meeting, he thanked the council for having “the courage to act.” Gormally said previous councils didn’t change the law even after “one judge in Jersey City found the ordinance was unconstitutional as applied.”



A second proposed change would make it easier for landlords to apply for a vacancy decontrol. Currently, landlords can raise rents 25 percent every three years if there has been at least one vacancy. The change would broaden the types of documents used to prove a vacancy. One tenant advocate, Dan Tumpson, pointed out how absurd this proposal was questioning which landlord would certify that a tenant was harassed from the apartment and underscoring that it would be the tenant and not the landlord that could certify this...