Ramos for Applied Councilman blasts suit; tenant activists suspicious

In a fight that pits the city’s tenant activists against the city’s largest affordable housing developer and many of his tenants, 4th Ward City Councilman Ruben Ramos Jr. came out in favor of the developer last week. Ramos is the first politician in the city to openly pick a side in the dispute – a move that took his political allies by surprise and has left tenants’-rights activists crying foul.

The dispute centers around a suit the Public Interest Law Center of New Jersey has filed on behalf of a half-dozen local and statewide tenant’s rights organizations against Applied Housing, a local development company that manages almost 1,000 affordable housing units in town (see sidebar).

The plaintiffs contend that Applied is backing out of a long-term commitment to provide affordable housing, while Applied argues that the tenants-rights’ activists don’t know what they are talking about.

For nearly 30 years, rents at more than a dozen building complexes managed by Applied have been regulated by the federal government. But two years ago, that regulation ceased after the developer paid off a 30-year low interest loan it had received from the federal government to construct the complexes.

Once federal regulation ceased, Applied managers went to the state and signed a deal that will allow them to raise the rents on some apartments once current tenants leave. According to the terms of the deal, Applied must make any apartment that opens up available to a tenant who uses a government subsidy to pay his rent before it can be offered to the public at large. If no such “vouchered” tenant steps forward, the developer can charge whatever rent the market will bear, the deal says. If that apartment becomes vacant again, Applied again must search again for a tenant with a voucher.

The agreement also binds the developer to setting aside at least 20 percent of the units in his building to low- and moderate-income tenants no matter what.

Joe Barry, the President of Applied, has argued that the deal is good for current tenants since it will bring new income in that can be re-invested into the buildings. It also ensures that a baseline of affordable, high quality housing will always be available, he says.

If the agreement is overturned, Applied officials warn that anything could happen, including even a giant rent increase for current residents.

Longtime affordable housing activists have filed suit in Hudson County Superior Court to block its implementation.

They argue that in a tight housing market like Hoboken’s, the loss of so many affordable housing units could be devastating. Furthermore, they argue, if Barry is allowed to keep his deal, other developers that once operated similar building complexes are likely to follow suit, reducing the amount of affordable housing available all over the state.

Last week, in a three-page letter sent to Renee Steinhagen, the Executive Director of the Public Interest Law Center, Ramos said that while he has worked with many of the tenants’-rights activists on other issues, he agrees with Applied on this one.

“I believe that after speaking with the tenants of Applied I can safely speak on their behalf and kindly ask that you withdraw your current suit because it leaves an uncertainty for far too many tenants,” the councilman wrote. “That is a risk that they are just unwilling to take.”

The letter asks the lawyer to press the suit with the state of New Jersey but to leave Applied out of it.

Political allies surprised

Steinhagen, who was reached Wednesday, said that she didn’t think it was possible to leave Applied out of the fight. She said that she called the councilman as soon as she got his letter Monday, but that he had not returned her call.

Ramos, who has a grandmother and a handful of aunts, uncles and cousins who live in Applied Housing, said he wrote the letter one night two weeks ago after returning from a City Council meeting. Ramos said that for weeks, residents of Applied had been calling him urging action. “Nobody was standing up for the tenants,” said Ramos last week. “This was something I felt that I had to do. Not just for my family, for everyone.”

There are no Applied Housing buildings in Ramos’ ward.

Apparently Ramos was in such a rush to get the letter out that he did not even take the time to tell his closest political allies, including city councilmen Tony Soares and Dave Roberts. This has resulted in some consternation in that camp.

“I wish he had told me about it before he went and did it,” said Soares.

Roberts, Ramos and Soares had been the most outspoken critics on the council this past spring against rent control amendment legislation that would have provided developers the opportunity to sign agreements with the state similar to the one Applied had signed.

Ramos said last week that he thought his position was “consistent.” He pointed to the fact that there were other aspects of the legislation the City Council considered, including pro-landlord “vacancy decontrol” language that he was more concerned about.

The first-term councilman said that the situation with Applied was different since it revolves around an agreement that was already signed.

“The outcome of a suit like this is unknown,” he said. “It’s like an X factor. No one knows what it could come out to if Applied were to lose. No one knows what that could mean for the people that live there now.”

Tenants write to Rutgers dean

When told of Ramos’ letter, Annette Illing, a housing activist that supports the suit, said she thought it may be part of a larger Applied Housing-engineered effort to take the punch out of the legal action against the company. Illing said that Ramos’ missive was not the only letter sent recently that was intended to put the plaintiffs on their heels.

She pointed to a letter that had been sent by a just-formed tenants committee at Applied to Stuart Deutsch, a dean at Rutgers University, where Steinhagen’s Public Interest Law Center is housed.

The letter, which is signed by a dozen tenants of Applied buildings, asks if the dean would meet with them to discuss “the way that Rutgers funds this organization.” It also attacks the law center, which it calls “irresponsible” for filing the suit “without talking to a single tenant [of Applied]” first.

Illing sees Applied President Joe Barry’s fingerprints all over the letter. After all, she points out, the tenant organization that sent it was only formed at a meeting he called a few months ago.

“It seems that the ‘affable’ Joe Barry has a heavy-handed response to this lawsuit,” said Illing, pausing deliberately at the word “affable” to show her distaste for the description of the longtime Applied president that appeared in this newspaper earlier this year.

“Mr. Barry’s heavy handed tactics include scaring tenants, creating a sham tenant organization and having the sham tenant organization attack a legitimate organization,” Illing added. “These groups involved in this suit would never do anything to harm tenants.”

Ramos’ letter and the tenants’ letter to Rutgers are tied together in her mind.

“A bunch of people are lashing out in response to being pushed [by Applied] in ways that they know nothing about,” said Illing. “They have been conned by Applied into acting like this.”

When asked if he had somehow forced or “conned” Ramos or the tenants’ organization into sending letters, Barry said, “absolutely not.”

While he admitted that he has a close relationship to the tenants who are supporting his company in the suit, Barry pointed out that Ramos is “no buddy of mine.”

“He is opposed to other projects of ours,” said Barry, in a reference to a residential building his company hopes to build on the North Pier. “He has been beating my head in at City Council meetings for months.”

Ramos said he doesn’t plan to run for citywide office this year, and that the letter was not an attempt to curry political or financial support from Applied.

“There is no idea of me running citywide,” Ramos said.

While some chose to look for a darker political motive behind Ramos’ letter, Barry thought it was motivated simply out of Ramos’ compassion for the tenants.

“He is Latino and so are the vast majority of the tenants that live in our buildings,” said Barry. “I think there is a connection there.”

The nature of the dispute

Joe Barry, the President of the Applied Companies, likes to explain the genesis of a dispute he and his company are in with local tenants’ rights organizations by saying, “to really understand this you would have to take an entire course on housing policy – or maybe several courses.”

It’s a complicated battle that seems to have its roots in a federally subsidized loan the Applied Companies took out almost 30 years ago to begin constructing subsidized housing for low- and moderate-income families in Hoboken.

Under the terms of the loan, which was extended at favorable rates, Barry had to submit to federal regulation of the rents he charged in his buildings. In addition, the amount of profit that the Applied Companies could take out of the properties was limited.

In the 30 years since then a lot has changed. The housing market in Hoboken has boomed, making the rents that Barry charges at Applied buildings seem preposterously low when compared to the rate that a comparable one, two, three or four bedroom unit would rent for on the open market.

The federal government has also changed the way that it hopes to help low- and moderate-income families meet their housing needs. Rather than regulate projects like the ones that Applied runs, the federal government has chosen to give vouchers directly to tenants. Government officials say that this way tenants will have more flexibility since they can take their subsidy with them wherever they move.

Under the new policy, developers like Applied were encouraged to pay off their 30-year loans, an action Applied took two years ago.

The question, though, is what happens to rents in buildings like Applied? Could they go to market rate? Would they be subject to the city’s rent control laws?

Rather than hash it out with city lawyers, Barry went to the state then and cut a deal that would allow Applied to raise the rents in certain situations, but that would also guarantee that a certain number of apartments would still be reserved for low- and moderate-income tenants.

According to the terms of the deal, Applied would not be allowed to charge any tenant more than 30 percent of his or her income in rent.

The deal also allowed the developer to raise the rents on units that become vacant to market levels so long as that unit is first made available to tenants who have vouchers. If after 30 days, no tenant with a voucher steps forward, then Applied can rent it to whomever it wants. If that apartment later becomes vacant again, Applied again must search again for a tenant with a voucher.

Finally, the deal posits that the company must reserve at least 20 percent of the units in its complexes for low- and moderate-income families. If 80 percent of the units get to the point where they are being rented at market rates and another unit opens up, Applied must rent it to a low- and moderate-income family even if it means that the developer himself has to lose money on the apartment.

In a separate agreement, an adjustment was also made to the way the complexes are managed. Ostensibly the adjustment allows the developer to take a larger profit as a percentage of total earnings out of the buildings than was taken previously.

A number of local and state tenants’-rights organizations have objected to the arrangement, saying that it puts more money in the pocket of the developer and potentially reduces the number of affordable units available in the complexes by as much as 80 percent.

They say that there are other solutions. They point to a recently passed City Council ordinance that mandates that buildings that come off federal subsidies in the future must immediately fall under the auspices of the city’s rent control law, which limits rent increases to a few percent each year.

They also worry that if they let the deal stand with Applied in Hoboken, similar deals will be cut all over the state, jeopardizing New Jersey’s affordable housing stock. Hoboken is a logical first place for this sort of an agreement to pop up since the pressure of the booming housing market means that there is a lot of money to be made on apartments. But as the markets pick up in places like Jersey City and Newark, the tenant organizations worry that similar deals will be struck.

Barry scoffs at those concerns. He argues that the changes in the profit margins have allowed him to re-invest in his buildings. The developer recently launched a $30 million refurbishment plan that includes bathroom and infrastructure upgrades in many of his buildings. If he can’t raise more money to invest more in his buildings, Barry says, they will soon look like run down public housing projects.

No court date has been set for the lawsuit.


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