Ever since the owners of Clock Towers, a six-story residential building on 300 Adams St. where rents are regulated by the federal government, announced their intention to sell last January, many of the tenants who live in the block-long edifice have been on pins and needles. New ownership could have meant an end to federal regulation and a dramatic increase in rents charged in the building.
Currently, apartments in Clock Towers rent for an average of $560 a month. The sale of the building could have resulted in rental increases of more than 100 percent in some cases.
But thanks to a deal recently agreed to by the owner, a potential buyer and the city, it appears that as a result of the sale many residents will only face modest rent increases and some will face none at all.
According to several sources involved in the negotiations, Jefferson Adams Rehab, the building’s current owner, ultimately lowered the price they were asking for the building by $1 million to make the deal more palatable to the Low Income Housing Corporation, the Maine-based company seeking to buy the property. While the final papers have yet to be signed, the building is expected to sell for just over $11 million.
If an agreement had not been reached, the city had threatened to take the new owners to court in an effort to ensure that tenants in the building could continue to pay rents at levels similar to those they are paying now. Litigation could have taken years to settle.
The deal, which has been approved by the City Council and the State Department of Community Affairs, will allow lower income tenants in the 172-unit building to continue paying the same rents they are paying now. Sixty-eight tenants use federal Section 8 vouchers to help pay a portion of their monthly rent. Charlie Gendron, the president of the Low Income Housing Corporation, said that his firm was committed to continuing the relationship with the federal government.
“We are currently negotiating with HUD to extend the Section 8 contract from five years to 20 years,” said Gendron. “That means that even if the current tenants leave that unit will be re-rented to another low income tenant.”
The remainder of the tenants could face modest increases that will be limited to 20 to 30 percent above what they are paying now. Once that one-time increase is put in place, the new owner has agreed to limit further increases to the amount that would be allowed under the city’s rent control law.
Although an increase of $100 to $150 a month in rent is nothing to scoff at, it is a far cry from what tenants would have had to pay if a draft regulatory agreement penned by the state last year had been allowed to stand. That agreement called on tenants who do not meet income limits that would qualify them for a voucher to pay 30 percent of their income in rent or fair market value for their apartment.
“Some tenants would have seen an increase of 100 percent of more in five years,” explained Linda Sabat, a city attorney who has worked on the issue for more than a year.
At the time, state officials who penned that agreement argued that wealthier residents should live by the same rules that their less well-off neighbors lived under, since tenants who use vouchers to pay their rents also contribute 30 percent of their income towards rent. Such a proposal was logical since the building had been rehabilitated to serve low and moderate-income families, they said.
But city leaders and city attorneys rallied to those tenants’ aid, arguing that such a dramatic increase would tear apart the fabric of the community, forcing many longtime tenants to move.
“Such an agreement would have had devastating financial effects on many long time Hoboken families at Clock Towers, while at the same time remove forever a large percentage of affordable housing from our city,” explained Mayor Anthony Russo recently.
Tenant pleased
At least one non-vouchered tenant who lives in the building seemed pleased with the new deal.
“I think that it’s fair,” said Ray Falco, whose family was one of the first three families to move into the building when it opened 30 years ago. “It is certainly a much better deal than we were getting originally.” Falco said that he was particularly pleased that the new owner had agreed to leave charges on the buildings limited parking spaces, which go for $40 to $50 a month, unchanged.
The new owners also seemed pleased.
“It’s been a long road, but I think the result is good for everyone involved,” said Gendron, who took a lead role in the negotiations, Friday.
In particular, the Maine native said that he was particularly pleased that the parties involved were able to develop “an internal subsidy” that would help ease the transition for middle income families that live in the building.
According to the deal, Gendron says a number of tenants of the building will be eligible for an enhanced federal voucher to help them pay the 20 to 30 percent rental increase. Whether or not tenants qualify will be based on their yearly income.
But those families who make just above the income limits – and therefore are ineligible for the vouchers – will also receive some help.
“We are going to take some of the funds we receive from the [wealthier] residents and defer the rent increases for the residents who just miss the cutoff,” said Gendron. “That way the people who can afford it are paying a little more. And those in the middle are paying a little less. We just felt that was more fair.” Gendron also said that he hoped to initiate plans to rehab the building’s bathrooms, kitchens and hallways in the coming years. Rental increases are not expected to hit for four to five months.
City officials said that they thought the negotiations and the deal could be used as model agreement for other federally regulated buildings that are sold.
“This sets a precedent, absolutely,” said Councilman Steve Hudock. “This means that these sorts of buildings are subject to rent control. If something like this were to happen in Church Towers or anywhere else this will help.”