Some buildings may come off rent control

Proposal will either go to City Council or voters

by Stephen LaMarca | Reporter Staff Writer | 07.15.12 – 12:05 am

A property owners’ group has petitioned for a measure lifting rent control from certain Hoboken apartments, and the City Council must decide whether to hold a special meeting to schedule a public hearing on the proposal or let the voters cast their ballots on a referendum question this November.

City Clerk James Farina informed the council on Wednesday night that a petition circulated by the Mile Square Taxpayers Association (MSTA), a nonprofit alliance of property owners, has acquired enough signatures to force the council to take action on it.

If approved, the proposed changes would remove certain rent control restrictions that have been a mainstay of Hoboken apartments since the early 1970s.

“Obviously, nobody is playing fair.” – Ron Simoncini
The amendment would remove rent control completely for new tenants moving into condos or buildings with four or fewer rental units. For all other buildings, the amendment would allow landlords to raise the rent by any amount when a current tenant moves out. However, the new rent would be subject to rent control laws after that. Currently, landlords can apply for a “vacancy decontrol” of 25 percent every three years or longer, when a tenant moves out.

The city’s longstanding Rent Control Ordinance, passed originally in 1973 and slightly amended several times since then, limits annual rent increases to a few percent a year, depending on federally decided cost of living increases. There are exceptions to allow landlords to make a profit if they upgrade the building, but any major changes to the law have been fought by tenant advocates in the last 40 years.

Because of the law – which applies to units constructed before 1987 and not the new luxury housing in town – some rents are still much lower than market rate. Tenant advocates argue that the law allows Hoboken’s elderly, working-class, and artist population to afford to remain in a town where rents for new apartments sometimes exceed $4,000 per month.

They also argue that even if exemptions to rent control only apply when a current tenant leaves, that gives an incentive for landlords to harass a tenant into leaving so the landlord can raise the rent.

Last fall, Hoboken voters approved a set of minor amendments to rent control after a council committee debated them for more than two years. These amendments made it easier for landlords to apply for certain increases, and put limits on tenants’ abilities to sue for back rents. They were meant as a compromise for both tenants and the MSTA, and came about due to an MSTA lawsuit.

20 days to decide

Ron Simoncini, executive director of the MSTA, said during Wednesday’s council meeting that the new amendment will be put on November’s ballot if the council does not hold a public hearing and vote within 20 days. Since the council is not scheduled to meet within the next 20 days, a special meeting would have to be called.

Some council members, such as Michael Russo, have said that they think a public debate needs to take place.

Tenant advocates have said they prefer a hearing and a City Council vote on the ordinance, because it will force the council members to take a public stand on the issue.

They also fear that referendum language can be manipulated to trick voters into voting against their intentions.

For or against?

Cheryl Fallick, who sits on city’s Rent Leveling Board and is a member of the tenant advocacy group Hoboken Fair Housing Association, opposes the MSTA initiative. She is concerned that landlords will be able to forcibly evict tenants in order to utilize vacancy decontrol and forgo rent control restrictions.

“You can be evicted within 60 days if the owner feels like evicting you,” said Fallick. Evictions do have to conform to certain state guidelines, for instance, non payment of rent. But Fallick noted, “The tenant would have no other recourse other than to take the landlord to court. This is all while they are in the process of being evicted.”

Fallick also said that rent levels in Hoboken, compared to other areas, are “off the charts.”

“The rent control laws were put in place to protect tenants from the unfair imbalance of power that landlords have over tenants,” said Fallick, adding that the imbalance comes from both high rent costs and the requirement that tenants pay a security deposit, broker fee, and rent immediately upon signing a lease. “It’s not the time to start exempting properties [from rent control].”

Simoncini maintains that newer tenants in Hoboken are paying cheap rents despite earning high incomes.

“The joke of it is, the new tenants in Hoboken…they’re all working in New York,” said Simoncini. “They are making 70, 80, to over $100,000 [a year], and the rent is so low. That’s not normal. That’s not what happens in real estate markets across the country.”

Simoncini said that the current vacancy decontrol regulation, which requires that landlords apply for municipal permission to increase rents beyond the allotted amount, is not working.

“Obviously, nobody is playing fair,” said Simoncini. “Hoboken is the worst-regulated rent control regime in the country. It’s embarrassing.”

“The tenants will come and say, ‘Oh, this will be the end of rent control in Hoboken,’ ” said Simoncini. “No, that’s a bunch of hooey. They’ll be protected as they are protected currently.”

“People want fairness,” he said. “They want people in Hoboken to pay the full rent.”

Fallick said the idea that the city’s rent boards are not addressing landlords is untrue.

“I’m on the Rent Leveling Board,” said Fallick. “I can tell you that is a lie. There’s absolutely no landlord that has come before the Rent Leveling Board that hasn’t gotten exactly what they asked for, if not close to it.”

Hoboken tenant David Cogswell said that allowing landlords to negotiate with new tenants puts too much responsibility into the hands of the market.

“You can’t have people’s housing controlled strictly by the market, especially when the market is jumping up and down,” said Cogswell.

Charles X. Gormally, an attorney for MSTA, said that the market would automatically adjust itself fairly according to supply and demand.

“The market seeks its own level,” said Gormally. “When you begin to tinker with the market – which is what Hoboken has done with rent control – you affect the market forces.”

Gormally also said that rent control keeps prices “artificially low” and inhibits owners from reinvesting in their property, because there is not enough of a payoff.

“The reality is, if you looked at communities that have eliminated rent control,” said Gormally, “what you saw is a doubling of investment by property owners in their properties. You saw tremendous improvement being made in apartment buildings, because owners knew if they made those improvements, they’d be able to attract and negotiate to market rate level.”

Gormally also said that landlords cannot remove tenants from their apartments unless there are grounds for eviction.

“Having represented a lot of landlords over the years, it’s not an easy process,” said Gormally, “even when you have grounds under the statute.”

Lawsuit coming to a close?

Cogswell complained that city officials are unwilling to speak with him about the current state of rent control in the city due to a current lawsuit. That lawsuit is evidently coming to an end, according to Gormally, who represents landlords in a class action suit against the city.

The suit, “Gina DeNardo and 611-613, LLC vs. The City of Hoboken,” seeks to “change the way Hoboken dealt with the rent calculation process,” according to Gormally. However, the prior rent control regulation was amended after the filing of the suit.

Gormally said that the lawsuit is wrapping up because of the council’s recent adoption of the amendments.

“We believe the last ordinance adopted by Hoboken moots our lawsuit,” said Gormally, who added his clients are seeking to be declared the prevailing party in the lawsuit.

“[According to New Jersey statute], if you have brought a claim and the municipality changes the law in order to address [that] claim, you can apply to the court for attorney fees.”

A hearing will take place Aug. 13 to determine if the plaintiffs are entitled to attorney fees, Gormally said.

Visit for more on the MSTA’s proposed vacancy decontrol amendment.

Stephen LaMarca may be reached at [email protected]

Source: Hudson Reporter

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