Dear Editor:
The City is facing severe financial problems. Bold action is needed.
We have a plan for getting more tax revenue from rental properties. They are taxed not on the basis of their market-value, as are single-family houses and condominiums, but on their income. Income on many of these properties is low because rent control keeps rents artificially low. Here is an actual example: There are two side-by-side buildings that look identical from the outside. One is an 11-unit rental dwelling; the other has been divided into 20 condos. The rental building is assessed at $624,000. The total of the assessments for the condos is $3,954,000. The condominium owners pay more than six times in taxes what the rental owner pays on a building of the same size. (Assessments are public and can be viewed at www.njactb.org.)
It is often said that rent control is necessary because we need affordable housing. What is overlooked is that tenants in privately-owned rent-controlled units, unlike their counterparts in publicly-subsidized housing, are not required to meet income qualifications.
Based on data contained in the Master Plan and the 2000 census, we estimate that nearly 70 percent of rent-controlled apartments with rents under $1,000 per month are occupied by households making more than $50,000 per year, and an astounding 43 percent by households making more than $75,000 per year. We will provide detailed sources upon request. When these low-rent apartments are vacated, which happens very infrequently, they are seldom offered to the public, since owners typically rent them to relatives or friends.
Clearly, rent control does not provide affordable housing to the people who need it. Since no tenants can be evicted because of their incomes, we think the best course of action is to de-control the rents of high-income tenants, and provide for de-control of all units upon vacancy. Assessments and therefore tax revenue would rise. There would be no disadvantage to low and moderate-income tenants, since their rents would continue to be controlled.
Our plan would also serve to slow the pace of condo conversions, which continue rapidly as property owners tire of subsidizing their wealthy tenants. Since property owners would be able to achieve higher returns on their investments, they would be less likely to convert their units to condominiums. Ironically, condominiums bring more revenue to the City than do rental properties, but we believe that the availability of rental housing helps maintain the diversity and vitality that make Hoboken such an attractive community.
We urge the Council to act now.
Mile Square Taxpayers Association