Rule Change Means Likely Increase in Red Bank Rents
The borough is looking to change a rule it's held for about 40 years, the mayor says, because it has to.
For about 40 years, Red Bank has followed one system when it comes to adjusting rent levels: the consumer price index. It's worked well enough, apparently, since the borough hasn't changed it in decades. But, according to Mayor Pat Menna, there's a problem. It's not with the system, he said, but with the percentage.
The consumer price index, or CPI, calculates the percent change in the cost of goods and services, think everything from gas to orange juice. In New Jersey, rent leveling boards adjust rents based on the CPI, allowing landlords to increase their rents based on, essentially, the level of inflation. In Red Bank, however, landlords have been restricted to increasing rents by 80 percent of the CPI, not 100 percent. In 2011, for instance, the CPI increased about 3.8 percent, which means Red Bank landlords would be allowed to increase their rents by just over 3 percent.
Menna said there's no justification for the discount. And now it looks to be done.
On Wednesday, Red Bank introduced an ordinance on first reading upping rents to the full 100 percent of CPI. Menna said the decision was made at the behest of landlords who, as recently as this past fall, asked the rent leveling board to consider changing rent leveling systems. Asked why Red Bank wouldn't simply continue on allowing landlords to increase rents by 80 percent instead of 100 percent, Menna said it can't.
If challenged, he said, the borough would lose.
Menna promised it's not all bad news for Red Bank renters. In addition to the apparently mandatory CPI hike, Red Bank will review the the rent adjustment system every two years instead of the state required once-every-five-year review process - though Menna said Red Bank hasn't performed a review in decades. Should the borough find a more equitable rent leveling system it would be able to institute it after the two years are over rather than waiting the full five.
It's unclear if a better system even exists. In an interview that appeared in Patch in November, Red Bank Rent Leveling board attorney Gene Anthony said he wasn't aware of any other system being used by municipalities throughout the state. There were suggestions, however, made by landlords, to supplement the CPI with what's known as "pass-throughs." This would allow landlords to pass on additional costs with little oversight. Costs like rising fuel prices or property taxes could become the burden of renters, should a pass-through system be approved.
The rent adjustment ordinance will require a public hearing before being approved, likely at Red Bank's first April council meeting.