Many towns in New Jersey adopted rent control laws after World War II in order to keep landlords from jacking up rents and putting tenants in a tight spot. But when landlords themselves end up struggling, the law allows them to apply to the towns to pass along costs such as water surcharges and property tax increases.
Adjusting and amending the laws around rent control is never easy. Townships have to strike a balance between protecting tenants, and still allowing property owners sufficient funds to maintain their buildings.
After weeks of discussions between Weehawken township and landlords, the Town Council again last week introduced an ordinance that deals with how property owners get a return on their investment.
Ron Simoncini, a landlord advocate who has been paid to fight against rent control in various towns throughout New Jersey, recently formed Weehawken Taxpayers for Fairness in response to a ordinance the council adopted Sept. 13, immediately suspending a 34-year program letting property owners pass their property tax increases to tenants.
Mayor Richard Turner said the town originally stopped the surcharge program because rent increases in town have surpassed inflation, without proof property owners were reinvesting in or upgrading their properties. Instead, landlords can apply to a new town program in the works to get money to improve their buildings, which will come from the town’s affordable housing fund that comes from new developers.
Reaction and fightbacks
Partly in response to concerns from the property owners’ group, the Weehawken Town Council voted Nov. 8 on a new measure related to the old one. They voted to introduce an amendment that will allow landlords to include previous tax surcharges in the base rent for tenants just for the current year. But they will not be allowed to pass on any additional tax increases in future years.
“We put a cap on the tax surcharge,” Turner explained.
The measure will be up for a final vote at the next council meeting, either later this month or in December.
“He did what he said he was going to do,” said Simoncini of Turner, after the council meeting. “He also expressed that there were different owners who have different circumstances, and he wanted to be sensitive to that.”
In the weeks before the meeting, there was tension between Turner and WTFF. Simoncini created an official webpage denouncing the decision to end the tax surcharge program, questioning its constitutionality, and alleging the mayor is quietly forcing landlords to go along with his revitalization plans, punishing those who openly speak against him.
Simoncini said that the proposed ordinance solves “99 percent of the problem.” But he said that some property owners are reluctant to speak out because they don’t want to run afoul of local leaders.
Turner did not agree with the statement. “We had individual meetings with everyone of them,” he said, “and had constructive dialogues.”
One WTFF member said, before the meeting, “We’ve had terrible rent control; we can’t even fix up our buildings. We’re trying to be good owners, and they passed this ordinance. It’s almost like they were punishing us.”
But he said that he appreciates the more recent changes.
“It’s the first time anybody is aware of someone actually reducing rents.” – Ron Simoncini
Simoncini has previously worked as a spokesman for the Mile Square Tax Association, which got involved in the town of Hoboken after the town made amendments to rent control in 2014. He is president of Axiom Communications, a PR firm located in Secaucus, and has supported over 30 different rent control opposition campaigns statewide.
“In New Jersey, rent control is legal, but only if you let a property owner make a profit,” Simoncini said a few days before the meeting.
In the case of the town suspending all tax surcharges, he said, “It’s the first time anybody is aware of someone actually reducing rents [for tenants]. The municipality is saying, ‘You [landlords] must make less money now than you made before.’”
Simoncini’s group also took umbrage with Weehawken offering PILOTS (Payment in Lieu of Taxes) to new developments on the waterfront. These are payments agreed to in advance that will go directly to city coffers, but may mean less money for school and county taxes – which other taxpayers may have to chip in for. Also, because Weehawken is scheduled to undergo a property revaluation next year, older rent-controlled properties may be revalued and have to pay higher taxes according to their assessment, while some newer properties may not.
However, he noted that there’s a state law, amended in 1999, that exempts newer developments from rent control for a certain period.
Charles Gormally, a lawyer for the taxpayers’ association, believes the original Weehawken amendment may have violated constitutional law.
He charges the town did not properly communicate it to the public beforehand.
“If you look at the agenda for the Aug. 15 council meeting [where the ordinance was introduced], there’s no mention of the ordinance and, in fact, that meeting itself was rescheduled without properly notifying members of the public. We believe that makes the ordinance itself improperly adopted.”
The agenda for the Aug. 15 meeting does not appear to mention the ordinance. However, it is noted on the agenda for the Sept.13 meeting, where it was adopted after a final hearing.
Town Attorney Richard Venino said the public hearing for adoption was well advertised and the Association did not show up.
Are tax surcharges needed for profit?
Matt Shapiro, president of the New Jersey Tenants’ Organization, countered that tax surcharges aren’t needed for property owners. “The environment for landlords is really good because mortgage interest rates have been at historic lows for the last 10 years,” he said.
“The biggest single cost to renting a residential property is the mortgage. Traditionally, it’s paid for by approximately half the rent. That’s no longer true. Because of the lower interest rates, just about every property owner has refinanced at a significantly lower rate.”
Shapiro also believes that “they want the regular rent increases and the surcharge, they want it all. But the purpose of rent control is not to maximize landlord profits, but protect tenants from unreasonable rent increases.”
The Weehawken Taxpayers for Fairness had argued that dropping the surcharges would keep tenants from paying their fair share of municipal services, which Shapiro argues that tenants already do.
“When a tenant pays their rent, they pay for every expense that the landlord has in running that property,” Shapiro said. “That includes property taxes, it includes the mortgage, it includes insurance, maintenance. For many years in Weehawken, the rent increases were four percent, way higher than inflation. These guys are crying all the way to the bank.”
Turner said last week, “We are trying to upgrade the housing stock without putting all the burden on the tenants. So we’re trying to get the landlords to be active participants with us in a variety of programs where they can upgrade their units without burdening the tenants. The town decided it was time to push landlords to pay more attention to quality of life in their buildings, and keep expenses down.”
He added, “As we’ve said in meetings, we met with a dozen big, multi-family landlords, which is what this ordinance applies to. What we found out is very few landlords use the surcharges. Those that do use it, a lot don’t even use the full amount.”
Weehawken Taxpayers believes suspending tax surcharges will lead to property owners filing tax appeals and successful tax refunds, forcing the town to increase its tax rate.
“They say that all the time,” Turner responded. “Some of them file tax appeals every year.”
He added, “The hardship application [for landlords] is complicated because we want to verify they have a hardship,” Turner said. “It’s all scare tactics.”
Hannington Dia can be reached at email@example.com