Next big debate: How much can rents rise?
City Council to analyze contentious laws going back to 1973
by Timothy J. Carroll
Reporter staff writer
Oct 04, 2009 | 3372 views | 1 1 comments | 15 15 recommendations | email to a friend | print
TO RENT – Rent-controlled tenants can have their rent calculated at City Hall to see if they are being overcharged. Court battles are calling into question how the city managed the law in the past.
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A City Council subcommittee is holding a series of hearings to analyze city’s rent control regulations, and advocates for both landlords and tenants are gearing up for what promises to be contentious debate over potential changes.

Hoboken’s Rent Leveling and Stabilization Ordinance, passed in 1973, limits how much a landlord of a multifamily building (built before 1987) can raise the rent each year. Usually the increase is limited to between 1 and 7 percent, the amount of the federal Consumer Price Index.

As of five years ago, rent control still applied to roughly 8,500 rental units in Hoboken.
_____________

The law limits rent increases to 1 to 7 percent, depending on the economy.
________

There are also provisions to help landlords: They can apply to the city’s Rent Control Board for a “hardship increase”; they can raise the rent 25 percent upon vacancy if it hasn’t been raised in three years; they can include an increase if they “substantially renovate” the building; and they can pass along tax and water increases.

But every few years, property owners and tenant advocates in Hoboken clash on how to adjust the laws for modern times. It is never easy.

This year, there are a number of matters being discussed. Most recently, a group of landlords wound up in court saying they shouldn’t be held accountable for past mistakes in rent calculations by the city. They say that a tenant should not be able to win big sums of money because they discovered mistakes inadvertently made several years ago.

At the same time, the City Council subcommittee is trying to work out the kinks in the 36-year-old ordinance.

Tenants are afraid that any changes made will start to erode the very protections they have been provided. But City Councilman Ravi Bhalla, who has worked as an attorney for the city’s Rent Leveling Board, said those fears are unfounded.

“Rest assured that whatever changes we make will not violate the intent of the ordinance,” he said. The intent, he said, is to “protect tenants.”

Changes considered

Bhalla, who sits on the subcommittee, said the focus of the upcoming committee meetings will be to hear community feedback about rent control, identify any deficiencies in the ordinance, and recommend legislative changes to the council.

Several attempts by the council to change the law in the 1980s and 1990s were overturned after protests and petitions from local tenant advocates.

Councilpersons Michael Russo and Beth Mason sit on the subcommittee with Bhalla. Their next meeting is this Monday, Oct. 5.

Promises have been made by past mayors to re-examine the law – a task force formed during ex-Mayor Anthony Russo’s administration actually produced a 350-page report – but changes have been scarce and hardly address the changing needs of the community.

These hearings are scheduled to carry past the Nov. 3 election, and some insiders believe the review process has been drawn out so that none of the mayoral candidates have to appear to be on the either side of the issue.

Why rent control?

“The City of Hoboken has determined that a critical shortage of housing space exists in the City of Hoboken and therefore, hereby declare[s] that an emergency exists within the City of Hoboken with respect to the rental of housing space by reason of such shortages,” reads the preamble to the 1973 ordinance. “Undue bargaining power has been obtained by landlords, resulting in numerous increases in rent which are determined by said government body to be exorbitant, speculative, and unwarranted...”

The “undue bargaining power” that once belonged to landlords is now swinging back the other way, according to landlord advocates. They claim some tenants and their lawyers are cashing in by exploiting “deficiencies” in the rent control ordinance. They say tenants are going back years, finding out their rents were too high, and getting gigantic reimbursements.

Court case

A recent court decision could open the flood gates to call into question the city’s administration of the law.

Ron Simoncini is the public face of the Mile Square Taxpayers Association (MSTA), a group of local property owners who are all concerned with rent-control related landlord liability.

Simoncini said many landlords in the past were not willing to pay for their legal defense in rent control cases even though they were fairly certain the city wasn’t correctly following procedure. Instead they opted to just pay back the overcharged rents and move on.

But because of another New Jersey court decision regarding rent control, landlords can be charged with a violation of the Consumer Fraud Act for overcharging rent and face three times the penalties, plus the cost of legal fees for the tenant.

Now there is an incentive to fight the cases and try to point out the failures of the system itself. The MSTA, he said, is using the recent case of Bloomfield 206 v. Hoboken to set a precedent that the city’s rent control administration was “arbitrary and capricious” in calculating rents.

In that case, the property owner is arguing that the city – that is, the Rent Control Board as part of the city – used a flawed process to calculate legal rents for tenants of the building.

After determining that the calculation method was flawed, the court has since sent the matter back to the city’s Rent Leveling and Stabilization Board to decide what to do.

Bhalla said that a possible outcome in this case will be an increase in rent for the tenants, but that the board will make that decision.

Simoncini said at least one other property owner is so concerned about the liability issue that he has sold off multiple rent-controlled properties that are now being converted to condos and will most likely be exempt from rent-control regulations.

“Compelling conversion doesn’t preserve affordable housing; it ends it,” he said.

Decontrol issues

When the MTSA challenged the local ruling in Superior Court, the court found that there were issues with the way the city had kept records in the 1980s.

Landlords are required by the law to present documentation that their unit was “voluntarily” vacated in order to raise rents 25 percent (once every three years). This part of the law ensures that landlords do not coerce or force tenants to leave so that the landlord can raise rent.

The city was accepting alternate forms of proof for vacancy decontrol in the 1980s, rather that the required form. Over time, the city allowed some of the required forms to be presented retroactively.

This has presented a problem because current rent calculations are based on calculations made in the past. If past calculations are wrong, or were based on missing forms, the whole calculation process may be wrong.

The ramifications of the decision, should it stand, will only affect a small portion of rent-controlled apartments, but one city official called it a “crack in the dam” that landlords will try to hammer away at.

The issue is whether the city was keeping rent increase records correctly in the 1980s, and the court decided that the city was not.

Bhalla said the decision only pertains to rent calculations done between 1981 and 1985. “I don’t anticipate any sort of domino effect,” he said.

City Attorney Steven Kleinman made clear that the court “did not find the ordinance itself illegal, unconstitutional, or improper in any way” as the MSTA suggested.

For the overwhelming number of tenants and landlords, this decision will have absolutely “no impact whatsoever on rent control within the city of Hoboken,” according to a statement from City Hall. “However, the city is analyzing the decision carefully as to whether any further legal proceedings are necessary or warranted in this specific matter, and will continue its already ongoing review of the Hoboken rent control ordinance.”

Amendments needed

The MSTA is calling for changes to the law. Some changes, Simoncini said, will ensure better administration of the law. Other changes will limit landlords’ liability.

Surprisingly, the MSTA is asking for penalties to be instituted against landlords who have not complied with record-keeping regulations. Simoncini said they should be fined and possibly restricted from requesting a 25 percent “vacancy” rent increase.

Tenants can request a rent calculation by the rent control officer at any time to determine if they are being overcharged. If they are being overcharged, there is currently no statute of limitations on how far into the past they seek restitution.

Defending rent control

Longtime Hoboken-based tenant advocate Cathy Cardillo believes the recent decision may be revisited and possibly altered.

Cardillo started a small tenant’s rights group Citizens for Retention and Affordable Housing in Hoboken (CRAHH) and has twice been denied intervention into the Bloomfield 206 case by the court, but a recent legal motion may grant her access to the case.

She believes that if she is allowed to intervene on behalf of CRAHH, she may be able to bring new arguments to the court and, more importantly, she may be able to appeal the case.

But Cardillo agrees that there is room for improvement in the law.

“Could it stand clarification? Yes,” she said. “But it has already found to be plain and unambiguous [by a court]. No radical changes are necessary.”

“The problem historically with the [rent control] board is that they’ve tried to get around [the ordinance],” she added. “No one disputes that the board has tried to get around it when they could.”

Timothy J. Carroll may be reached at tcarroll@hudsonreporter.com. The following is the meeting schedule for the Rent Control and Affordable Housing Committee and the agenda topic slated for each date. All meetings will be held in the Council Chambers of City Hall from 7 to 8 p.m. Monday, Oct. 5, 2009 – CPO standard and alternative methods to monthly calculation

Monday, Oct. 19, 2009 – Requirement of disclosure statement/certificate and filing fees

Monday, Nov. 9, 2009 – Statute of limitations

Monday, Dec. 7, 2009 – Vacancy decontrol; certification requirements, timeliness of filing, procedures

Monday, Jan. 11, 2010 – Re-establish demand year / base rent and registration requirements

Monday, Jan. 25, 2010 – Exemptions; qualification and approval procedure

Monday, Feb. 8, 2010 – Committee / legislative review / Other topics as needed

Monday, Feb. 22, 2010 – Committee / legislative review / Other topics as needed

The meetings will follow the guidelines used by the N.J. State Assembly for public hearings:

• Hearings are open to all members of the public

• Participants are asked to sign up with the City Clerk’s office no later than 3 p.m. on the day of the meeting, by phone to (201) 420-2073/2074 or by email to cityclerk@hobokennj.org

• Testimony will be given under oath and will be limited to 5 minutes per person

• Participants are asked to prepare a typed text of their remarks and bring 10 copies to be distributed to the committee members, city clerk and council

• Committee members may question presenters or discuss points made during testimony

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GaryGar
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October 05, 2009
why is the city picking njow to revisit this? just because of the suit or is there more to this story??? the law has been working for 30 years. if it aint broke dont fix it. why are zimmer and her admin focusing on this all of a sudden?