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.
Alex Buono
9:32 am on Thursday, March 29, 2012
My understanding of the CPI is that it EXCLUDES essentials like food and fuel (items listed in the 2nd paragraph) from it's formula. If my thoughts are correct then perhaps that was the reason for the 80% formula. Should my assertion be wrong please correct me. Most renters pay their own energy and food bills just as a home owner does. Pass-throuhghs seem fair though in Red Bank water consumption becomes an issue as that burden seems to grow more rapidly than property taxes. Lets say I live at a property with a pool yet I do not use it. should I have to shoulder the cost associated with it's water usage as a "pass-through? Similarly most rental communities have varied floor plans and sized units how would it be equitably determined what "pass through" should be assesed for that consumption? Will water meters be installed in all rental units to determine water usage so a single dweller does not have to pay for a neighbor who has multiple inhabitants in a rental unit within the same community? I am interested in just what type of dwellings are covered by the rent leveling board. Are they multi family homes, single family homes, high density properties such as apartment/condo communities or all rentals in town. I am also interested in learning more about why after 40 years this suddenly has become an agenda item, particularly in light of the depressed housing market and notable apartment to condo conversion failures (over the past 5 years) here in town. Thank You.
Edward Van Embden
10:35 am on Thursday, March 29, 2012
From what I've heard, a pass-through system seems like it's very unfair for renters, likely why Red Bank didn't pursue it. A few months ago landlords in Eatontown went to their rent leveling board to ask for that system, but I'm pretty sure they were rebuffed, too.
Jessica Lotito
9:33 am on Thursday, March 29, 2012
Bummer for renters.
Sal
6:31 am on Saturday, March 31, 2012
Most people who rent really do not want to hear the facts or try to understand the facts. All renters feel they are paying too much for their rent___that is normal Human Nature since no of us like paying for anything. I live in my own fully paid for small single family home. Yet it costs me $1,100 per month to keep living in my already paid for house. Between $7,000 per year real estate taxes, $900 per year homeowners insurance, $30 per month trash hauling fees, $35 per month water and $40 per month sewerage bills, $3,500 per year for oil heat and $70 per month electricity it cost me $1,100 per month to live in my Fully Paid for small home with no mortgage on it and that is not counting even one cent for repair costs. The costs are much higher in NJ than most renters are willing to believe or accept mentally.
aspin
10:07 pm on Saturday, March 31, 2012
Sal, I say you are doing pretty good at $1,100/month if you are living in red bank with or without a mortgage. I was paying more than double that a month when I owned a small condo in crappy Toms River. (and that's not including repair costs or utilities) Now Im back to renting and Im paying over $2000/month in rent to live in a duplex with not a single utility included with the exception of yard maintenance. The rental comps in the area are pretty similar so I know Im not alone. I love Red Bank but if my landlord raises my rent, i don't think I can justify staying which makes me incredibly sad.
JosephGhabourLaw
9:29 am on Thursday, June 14, 2012
A common, market rate, housing tool is allowing ADU's: accessory dwelling units. That means a mother-in-law apartment, a garage converted to a studio apartment, etc. If a rental starts to get expensive, and you want to buy -- but can't afford -- look at such options. In turn, allowing such ADU's helps keep housing affordable, both for landlords and tenants.