Inside the small Hoboken City Hall basement conference room on Wednesday evening, a landlord from New York City sat across from the Hoboken Rent Leveling and Stabilization Board and tried to make the case that he was charging his tenants a perfectly legal rent. But the tenants had refused to pay, saying it was an illegal amount.
The city’s documents showed that the rent had to be based on an amount rooted in what was charged in 1985. The city found one document saying that the unit was paying $350 a month back then, one document saying the rent was $380, and a more recent document saying the rent being paid was “allowable” but not stating the number. So what should the current rent be based on?
While landlords in Hoboken are able to increase the rent a few percent each year, and they can apply for additional increases based on renovations and other matters, current rent control laws and the city’s ability to enforce them have caused much confusion over the years.
“If I’m getting $700 a month as a landlord and I’m only allowed to raise it to $875, I’m not even going to replace the sink.” – Ron Simoncini
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The landlord responded, “I have to go tell my attorney that I couldn’t rely on [the city’s documents].”
These sorts of problems commonly plague the rent control discussion.
What it is
During World War II, with resources limited, prices – including rents – threatened to spike so high that President Franklin D. Roosevelt enacted the federal Emergency Price Control Act in 1942. After the act expired, and subsequent federal rent control measures expired over the next three decades, states began deciding whether towns could pass their own laws.
Hoboken began enforcing its Rent Control Ordinance in 1973 in order to stop rent hikes that would price out residents, before the real estate boom of the late ’70s and 1980s.
Rent control limits the amount that landlords can raise the rent on many units built in Hoboken before 1987. The rents may be increased annually by the amount of the increase in the Consumer Price Index, usually 2 or 3 percent. There are several exceptions, however. After a tenant has vacated a unit voluntarily, property owners can apply to the Rent Leveling and Stabilization Board for a vacancy decontrol to increase the rent by 25 percent once in a three-year period. They can also apply for other increases or surcharges based on renovations or on the landlord’s financial losses.
Over the years, both landlords and tenants have urged the city to fine-tune the law and the way the city enforces it. However, any changes that were seen as weakening it were often overturned by massive tenant protests.
Recently, landlords have complained that the city did not keep adequate paperwork on the original rents, leading to modern confusion and lawsuits over what is a fair rent.
Council President Beth Mason, who is the chair of a subcommittee charged with reforming the ordinance, said the goal is to have a first reading of a revised ordinance on the agenda at the Jan. 19 City Council meeting, which would be this coming Wednesday.
Mason had told the Reporter that she would release the proposed changes last week, but later said that the subcommittee is waiting for an attorney to review them first.
“We’re looking at legislatively how to address ongoing concerns that involve both tenants and landlords that both sides agree are not fair,” Mason said.
Also on the subcommittee are Councilman Ravinder Bhalla, who has dealt with these issues in his job as an attorney, and Councilman Michael Russo.
Mason said the public should not expect a total overhaul when the ordinance is introduced, but said it’s the start of a bigger process.
Eagerly awaiting word
Both tenants and landlords are eagerly awaiting word on what is proposed.
Cheryl Fallick is a tenant advocate. Ron Simoncini is a spokesperson for Mile Square Taxpayers Association, an organization of landlords in Hoboken. While Fallick said the subcommittee was charged with only looking at addressing a few specific problems, Simoncini hopes the changes are bigger.
“They need a full scale reform to respond to contemporary issues and fix mistakes they had made in the past,” Simoncini said. “Instead, we have more political expedience to just put a few Band-Aids on it. The Band-Aids are what got us in trouble in the first place.”
Parties close to the process said four to five topics will be addressed when the ordinance is proposed to the council this week.
Fallick, Simoncini, and other interested parties said they hope to see the changes before they are presented to the council, since they took part in subcommittee workshops over the summer.
“We were all told in no uncertain terms that there would be another public subcommittee meeting so that before these changes and this proposal went forward they would get our input,” Fallick said.
Simoncini said although he is unhappy with how long it’s taken to bring the changes forward, he understands the political world that the council lives in, and appreciates that they have decided to bring the issue to the forefront of the agenda.
Tenant issues
One issue Fallick quibbles with is the provisions about a landlord’s financial hardship. If a landlord is losing money on his building, the city can allow the rent to be raised. Fallick said it comes down to whether or not the landlord made “a prudent investment.”
“I’ve seen cases where landlords get a $2,000 increase [in rent] overnight,” Fallick said.
Fallick supports a change that would phase in a rent increase to cover hardships over three years.
Another issue for Fallick is a tax surcharge that landlords can impose on top of a rent. The charge is based on a formula that takes into account both current taxes and the tax rate back in 1988.
“I believe [landlords] should get their tax surcharge, but there should be some protection to tenants,” Fallick said.
Fallick also believes there are administrative issues, similar to the one that took place last week with the New York City-based landlord.
“There are landlords trying to follow the law but didn’t file the right paperwork, and then they lose,” Fallick said. “The ordinance needs to be clearer.”
Though not all of her fellow tenant advocates agree, she believes the reformed ordinance should allow for landlords to prove that they followed certain vacancy decontrol measures with different documentation than the city allows, such as cancelled checks from tenants.
Landlord issues
Simoncini takes issue with the fact that he hasn’t been granted access to the proposed changes yet.
“Why on earth would you have a first reading [council introduction] when tenants and landlords haven’t seen the [ordinance]?” Simoncini said. He said the council’s recent actions have formed a mutual respect between the two opponents in the rent control debate.
“We trust each other more than we trust the council,” he said. “We are far better to fix these issues together.”
One issue Simoncini believes in is allowing landlords to raise the rent 25 percent after every turnover, not every three years.
However, tenant advocates have said in the past that this only encourages landlords to try to kick tenants out.
Simoncini said it is also reasonable to expect the new ordinance to exempt one- to four-family units from the law once they get a vacancy.
Simoncini believes the larger the rent increase, the more likely it is that the buildings would get necessary renovations.
“If I’m getting $700 a month as a landlord and I’m only allowed to raise it to $875, I’m not even going to replace the sink,” he said. “If I can get up to $2,000, I’ll renovate the whole building.”
Landlords currently can be forced to pay back-rent to tenants if they charge more than the legal rent, or if a previous landlord also charged illegal rents, a charge known as phantom liability. Simoncini said there have been problems with the record keeping, making it difficult for landlords to find the legal rent.
One expected change is a two-year time limit on when a claim can be made against a landlord. Currently, if a tenant claims a landlord has been charging illegal rents, the tenant could be awarded back rent, no matter how long it has been going on.
Another expected change is an alteration of the definitions to update the ordinance to current codes.
The examples given are just a small sampling of the many problems seen by landlords and tenants with the current ordinance.
A compromise
Mason noted that landlords have sued the city in the past.
“The success of passing this will assist the city in saving thousands of dollars in legal fees,” Mason said.
A major difference lies in what each side sees as the intention of the law. Fallick and other tenant advocates believe the law is in place to balance something that is unfair, and should protect tenants. Simoncini believes the law should be equitable and fair in general.
Mason believes the issue will be on the agenda this Wednesday. If it is, the sparks can – and most likely will – fly.
To read the Reporter’s award-winning comprehensive story on the history of rent control in Hoboken, “Three decades of rent control,” click on http://tinyurl.com/4v64d33
Ray Smith may be reached at RSmith@hudsonreporter.com