CLARIFICATIONS APPENDED (*)
City tax bills with a 47 percent overall increase were mailed to thousands of Hoboken property owners last week – and those who think they are exempt because they rent rather than own can still have some of the increase passed along via a special formula if they live in rent-controlled units.
Hoboken’s Rent Control Ordinance, passed in 1973 and revised several times since then by the City Council, limits how much landlords can raise the rent each year on apartments built before 1987. Rent control laws originated after World War II when there was a shortage of apartments and landlords were jacking up rents.
In Hoboken, rent controlled units are usually limited to a 2 to 6 percent rent increase annually, determined by the rise in the cost of living index. But landlords also can apply to the city to tack on a portion of a tax increase.
Rent control formula
A landlord can apply the amount of the tax increase by subtracting the amount that was paid on the same building 20 years ago from the amount paid the last calendar year. The 20-year-old tax figure is called the “base tax,” because 1988 was the last time a home value reassessment, or “reval,” was done citywide.
Properties that have been reassessed since 1988 – due to home improvements, etc. – use the taxes paid the first year of the newest assessment as a “base tax.”
Then, the result (2008 taxes paid minus 1988 taxes paid on the location) is divided by the number of units at the location, and divided again by 12 months to determine the amount of the tax increase passed on for each month.
Both rent-controlled and non-rent-controlled apartment dwellers could see an increase in 2009.
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According to the city, landlords should wait until January of 2009 to request the surcharge calculation from the Rent Control Office, because the determination is based on the last calendar year’s taxes (not the fiscal year). So all of 2008, which would include the big increase that is coming for these last two calendar year quarters, would be taken into account. If a landlord seeks a calculation before then, it would not include this year’s significant tax hike.
If renters are unsure whether the surcharge is correct, they can inquire to the Rent Control Office.**
Landlords also can apply to pass along increases in water and sewage bills.**
For more information, call the city Rent Control Office at (201) 420-2062.
Market-rate apartments
Of course, residents of non rent-controlled apartments are subject to any type of increase when their lease is renewed.
Ravinder Bhalla, the former attorney for the Rent Control Board, said landlords typically will include the tax increase in the next lease in addition to any yearly rent increases that would have been passed along anyway.
According to state guidelines, landlords can raise the rent on tenants at any time with 30 days notice, so long as the increase is not “unconscionable.”
If a renter believes the increase is “unconscionable” or that it would be “so unreasonable as to shock the conscience of a fair and honest person,” as state regulations state, he or she can then file a complaint with the Rent Control Board.****
CLARIFICATIONS APPENDED – 11/04/08
* – The surcharge is applicable for 12 months from the date the surcharge is enacted, not when the application is received.
** – There is no mechanism for a formal appeal of a surcharge. The city does not, as policy, send out a detailed explanation of the surcharge determination, but residents are encouraged to call the Rent Control Office if they suspect a case of rent gouging.
*** – Surcharges are available for taxes, sewage, and water, but not heating or other utilities.
**** – State regulations taken from a guidebook “Truth in Renting,” available at the Rent Control Office in City Hall or online.
– TJCFor questions or comments on this story, e-mail tcarroll@hudsonreporter.com.