Monday night, August 5th, at 7PM there will be a special City Council meeting via ZOOM for a public hearing, 2nd reading and vote on proposed changes to our Rent Control ordinance.
This impacts everyone – whether you are an owner, a renter, or both.
The ordinance was introduced with a 9-0 vote on July 24th at a special meeting, with several members of the public speaking, mostly in opposition to the ordinance. I am seeking your input before Monday on what is the hardest choice I have been faced with as a City Council person, a sentiment shared by many of my colleagues. A choice that potentially accelerates the reduction of affordably priced apartments in Hoboken, thus increasing the threat of displacement of neighbors who have called Hoboken home for a long time.
- Should voters decide at the polls, and vote on a REFERENDUM question whether to keep our current Rent Control protections or significantly gut them. Or...
- Should the City Council approve the ALTERNATIVE ORDINANCE that significantly reduces Rent Control protections, just not as badly as if the referendum question were to pass.
To be clear, Mile Square Tax Payers Association (“MSTA”) who represent a group of landlords in Hoboken, got enough petitions signed to place a referendum question on the November ballot. Under state statute, if we do not approve an alternative ordinance acceptable to MSTA by August 9th, then the referendum moves forward as a question for voters in November. Referendum is a powerful tool for voters who seek changes to our laws. In this case, however, it also potentially has meaningful impacts on affordability in Hoboken.
What has been the most frustrating is that we didn’t have to be in this situation. It could have been avoided completely were it not for the ‘politics before people’ approach that has been a hallmark of this administration. The same approach brought us delayed responses on important quality of life and public safety concerns like rats and food delivery e-bikes. But in this instance, it literally has the potential to uproot someone’s life.
BRIEF OVERVIEW - RENT CONTROL IN HOBOKEN
Rent Control at its core is about housing security and insecurity. All rental units in Hoboken and rents of all amounts from very low to very high either already are or will be someday subject to rent control restrictions. It’s a tough issue made more challenging in a competitive real estate market like Hoboken that is becoming increasingly costly to live in and increasingly profitable to invest in. Rent Control is one tool that has allowed many people to stay in Hoboken that might otherwise not be able to if faced with outsized rent increases.
Hoboken has had Rent Control laws in place for decades, and every current property owner, myself included, has purchased their property with these laws in effect.
- These laws specifically protect existing tenants from extreme rent increases while allowing landlords to increase rent at the inflation rate, now capped at 5%.
- Landlords are also permitted to pass through increases in taxes and water charges to the tenant and to recover costs for capital improvements made to the unit or building.
- Our current Rent Control laws allow landlords to increase rent by 25% once every three years after a unit becomes vacant, which equates to an ~8% annual increase over those three years (on top of prior inflation increases).
- Rent control applies to most buildings in Hoboken, with some being exempt under state law for the first 30 years after initial construction if certain conditions are met. Many of these buildings, including some at Shipyard, Hudson Tea, and Maxwell, will lose their 30-year exemptions in the next few years.
IMPORTANT: Rent control doesn't mean landlords can only charge low rent; it simply means they can't increase the current tenants' rent higher than the rate of inflation. For buildings falling under rent control for the first time, the initial rent is set at the market price at that time. Going forward, landlords can still increase the rent annually at the inflation rate and pass through water, tax and capital expenditure surcharges.
SUMMARY OF THE TWO CHOICES
REFERENDUM QUESTION
This is MSTA’s question being proposed for the November ballot:
“Should Chapter 155-31 of the Ordinances of the City of Hoboken, Rent Control Ordinance ("RCO") be amended to provide an option to landlords to pay a fee of $2,500 to the Hoboken Affordable Housing Trust Fund in order to lease voluntarily vacated apartments at a freely negotiated rent, which thereafter remain subject to the provisions of the (“RCO”) including limitations on annual rent increases.”
If it passes on Election Day, it would give all landlords a financial windfall by allowing them a one-time opportunity to increase rent to market pricing on a unit after the existing tenant leaves. After the increase, the unit would still be subject to rent restrictions going forward, but the damage will have been done - Hoboken would see an expedited increase in rents across the board, limiting many people’s ability to find housing in Hoboken at rates comparable to what they are currently paying. Landlords would have even more incentives to find ways to displace tenants sooner
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For example, a young couple in a one bedroom paying $2,500 / month looking for a two family to accommodate growing their family would find it difficult to move because a vacated two bedroom would command a much higher rent. And as soon as they left their current apartment, the rent for their 1 bedroom would go up significantly as well.
The windfall: landlords would have a perpetual step up in rent, and a significant, permanent increase in the value of their property. The price for this windfall? A $2,500 fee which is the equivalent of one to two months increase in rent.
If it fails on Election Day, Hoboken’s current rent control ordinance would apply which gives landlords the ability to charge a 25% increase upon vacancy.
ALTERNATIVE ORDINANCE
IMPORTANT: It is critical to understand that this ordinance is NOT an ordinance that the City Council would ever approve on its own. It is ONLY being considered in the face of the possible worse outcome for tenants if the referendum were to pass on Election Day. Needing a veto-proof six votes to pass, CP Giattino, CW Jabbour, CM Doyle and myself worked together to negotiate this alternative ordinance with MSTA. Giattino and Doyle know more about the specifics of our Rent Control ordinance, and have defended tenants’ interests, than any other elected officials. I am probably a far 3rd on that list.
The crux of the issue that we attempted to bridge was vacancy decontrol – the ability to raise rents when a tenant leaves. MSTA required it as seen in the Referendum. With many years between us speaking with tenant advocates, we knew they would never support it. MSTA, confident in their potential success, held the threat of the Referendum over our head the entire time. The proverbial "gun to our head". So here is the summary of the Alternative Ordinance agreed under duress, that still allow vacancy decontrol, but at a pace that is slower than what would occur if the referendum were to pass:
- One time rent increases not tied to market, rather tied to existing rents and the duration of the prior lease: 25% increase for 2-5yr leases, 50% increase for 5-10yr leases, and 100% or $1,750 for 10+ yr leases.
- The ability to give these rent increases is only if you are registered with our Rent Control office within the next 12 months, otherwise the option expires.
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Fees charged:
- To participate: $100 per unit for those currently registered, $3,500 per unit for those not currently registered
- Upon application of the one time rent increase: $500 for 25%, $1000 for 50%, and $2000 for 100%/$1,750.
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Changes in notices to give tenants better information
- Landlords are required to give tenants notice of participating in the rent increase program.
- Tenants and landlords will now provide mutual notice of any rent calculations requested by the rent control office.
- Landlords are required to give the new tenant the rent amount paid by the prior tenant.
The incentive for MSTA’s members to support the Alternate for supporting this is so they do not have to spend hundreds of thousands of dollars to run a campaign and risk losing in November. This is a sweet deal for them.
POLITICS BEFORE PEOPLE – HOW WE GOT HERE
In February 2023, my City Council colleagues Jabbour and Doyle sponsored an amendment to our Rent Control ordinance with underinformed changes that destabilized rent control immediately. This amendment was passed that night with a 5-4 vote, despite significant pushback from both tenants and landlords, including MSTA.
Their proposed changes aimed to “help clarify uncertainties and to get the rent board back on track” . In effect, this was to quiet a new Rent Control Board member appointed by Mayor Bhalla and to end an interpretation of our Rent Control ordinance that she questioned. This interpretation, accepted for decades under multiple administrations, allowed landlords to reserve approved but unused rent increases for future tenants. For example, if a landlord had approval to charge $2,500 but only charged $2,000, they could reserve the $500 increase for a future tenant. Under the Jabbour/Doyle amendment, landlords would lose this $500, taking money out of their pockets and giving it to future tenants.
This unnecessary law change poked the bear that was MSTA, bringing them out with a threat to put Rent Control on the ballot and gut it in a way that landlords could recoup these losses. The votes that night: Jabbour, Doyle, Russo, Quintero, Cohen voted yes. Giattino, DeFusco, Ramos, Fisher voted against.
In the months leading up to this, I had strongly recommended to Jabbour and Doyle to withdraw their ordinance because of the real consequence that MSTA was well equipped and funded to make good on their threat of gutting our Rent Control protections. In response, they told me I was just supporting landlords and not tenants. I raised this concern at every City Council meeting from when Jabbour and Doyle first put the ordinance on the agenda in June 2022 and sent newsletters to you about this on 6/1/22, 7/10/22, 8/1/22, 9/18/22, and 4/2/23.
My City Council colleagues Giattino & Ramos were able to get MSTA and Hoboken’s longest serving tenant advocate in a room and I joined them to hash out a compromise ordinance to re-stabilize Rent Control. This was introduced in April 2023 and the ordinance passed 5-4 on first and second reading, with CM Russo, after being Team Bhalla's 5th vote on the destabilizing ordinance, saw the light and switched sides to join us.
But politics came before people, and Mayor Bhalla, who could never support legislation sponsored by his perceived opponents, vetoed this compromise ordinance on April 28th, 2023. This move supported his Team Bhalla colleagues instead and once again destabilized and created uncertainty with our Rent Control protections. Hoboken mayor vetoes rent control amendment that represented a compromise - nj.com.
As I am now, I was incredibly frustrated, this was my comment:
“For three decades the practice by Hoboken’s Rent Control office, including twelve years under Mayor Bhalla’s watch, has allowed landlords to charge future tenants accrued or ‘banked’ annual CPI rent increases that had not previously been charged to existing tenants. When this provision was eliminated by five City Council votes in February, a move that was almost universally opposed by tenants and landlords alike, the future of Hoboken’s rent control laws were threatened. By taking money out of property owners’ pockets, many who are long-term Hoboken residents on fixed incomes, to benefit future tenants and not existing ones, it only created even more incentives for property owners to get out from under rent control either via condo conversion or a promised ballot measure that risks eliminating rent control altogether.”
More importantly, this was the telling comment from MSTA’s director –
“As a result, the previous housing policy, which was barely livable, has been undermined to the point of provocation. Our only option to continue to be able to serve our customers and save the value of our investments is to take our issue directly to the public. We will launch a Referendum for Vacancy Decontrol next week. Stay tuned for details and the language for the public question.
And here we are. A terrible choice before us, and one that was within our control to avoid.
MY PERSONAL VIEW
I support keeping Rent Control and I struggle with supporting any measure that has the effect quickening the pace of displacing members of our community and increasing the overall costs to live here. Both the Referendum (if it passes) and the Alternative Ordinance will do this. But I also see locking in and voting for an Alternative Ordinance, albeit an awful one, as a potential way to make sure an even worse outcome doesn’t happen.
Rent Control is just one of the affordability tools we have. I have read every article that you want to send me about why Rent Control doesn’t work (and when it does), and why building affordable housing is the only path to maintain affordability. But those articles do not factor specific Hoboken market conditions: where demand to live here significantly exceeds supply of housing (so prices do not go down when new housing is built), where there is no land to build affordable housing, or where the elimination of affordable housing options will create a labor / housing imbalance and make a community less diverse. And where many local government officials rely on developer campaign contributions and will not demand from developers that they build more affordable housing than has been required.
I get why some may want to eliminate Rent Control. And I do not fault you for it. But as an elected official, part of my focus is to think about what works for our broader community. And I do not see how accelerating the reduction of affordably priced rental units does. The full elimination of Rent Control is a when, not an if. But that to me does not mean that it needs to be done quicker, or that I need to support it with my vote.
Thank you in advance for sharing your thoughts with me on this so I can factor these into my decision Monday night. #MoreVoicesAreAlwaysBetter. Especially on this.
As always, please share this with everyone you know who may be interested and reach out any time on any issue important to you: 201-208-1764 or [email protected].
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