Politics & Government

Rent Leveling Board Wants to Reevaluate CPI

The near-universal formula used to adjust rents to be reconsidered by board.

The consumer price index, better known by its equally un-understandable acronym, CPI, has been used to adjust rent levels in Red Bank and nearly every other town in the state for decades now. So, when borough council asked its to look at CPI and its impact on the renters of Red Bank, as well as find other systems, it took on the task, but isn't promising any kind of quick turn around.

Any findings will have to wait, though, as after an introductory meeting in which the board discussed CPI – more like identified the definition of the cost-of-living increase formula – it delayed further discussion until its members and solicitor could conduct more research. Research on what remains to be seen. Like the renters of Red Bank, CPI adjustments are all the board has ever known. There just aren’t many things to compare it to.

In its simplest definition, CPI calculates the percentage change – it’s almost always an increase – in the cost of goods and services on a regular basis. Since it’s hard to determine how rent should be impacted year to year, after all, we’re talking about people’s homes here, not the market cost of a bunch of asparagus after a wet spring, municipalities apply CPI changes to their rental units each year.

Find out what's happening in Red Bank-Shrewsburywith free, real-time updates from Patch.

In Red Bank, landlords are allowed to increase rent 80 percent of the CPI each year if they pay for rent. If the tenant pays for rent, the landlord can increase rent 60 percent of the CPI. In the last 12 months, leveling board Chair Vincent Light said the CPI has increased 3.8 percent. According to my calculator, that means landlords who cover the cost of a unit’s heat can increase their tenants’ rent a smidge over 3 percent.

The system has been in place for decades, but the council wants to know if it’s actually fair. With concerns that CPI fails to accurately represent inflation, or at least inflation when it comes to the cost of renting, the leveling board has been tasked with finding if a better solution exists. They’ll let us know if they find one.

Find out what's happening in Red Bank-Shrewsburywith free, real-time updates from Patch.

When asked if he knew of any other rent calculating formulas used by other municipalities, board attorney Gene Anthony said he didn’t. He would know, he does this kind of thing for a living. The problem, he said, is that CPI, in addition to being near universal in its use, is also supported by state case law justifying its use by towns nearly 40 years ago.

Though the leveling board was short on answers initially, Anthony said more thorough discussion on CPI will come but is pending research. In a town where it’s possible that there are more renters than homeowners, Anthony said, it’s imperative that the leveling board considers all parties when it comes to determining if CPI, or rent adjustment based on CPI, is the best fit.

Anthony cautioned that though renters might be dissatisfied with rising living costs being tied to a cost-of-living formula, there exist worst alternatives that could wind up costing renters more.

First things first, Anthony said renters are done a favor by only having to cover 80 percent – or 60 percent – of the CPI. In Eatontown, where Anthony also sits on a leveling board, landlords have called for an increase to 100 percent. There has also been clamoring from landlords for instituting what Anthony calls “pass-throughs.” An ordinance approving pass-throughs would allow landlords to pass along additional costs to tenants without much oversight.

“That would have a major impact on tenants if, in addition to CPI, if (landlords) could pass along the rising cost of utilities and taxes,” he said, noting that he recommended in Eatontown that pass-throughs not be implemented. “There would be no way to control it.”

As far as whether there’s a more equitable solution for both landlords and tenants, research will have to bear that out. Anthony set a likely time for further discussion of both CPI and the collected research in January of February of 2012. If any changes are recommended, the matter would go before the council where any new ordinance would face a public hearing.


Get more local news delivered straight to your inbox. Sign up for free Patch newsletters and alerts.

We’ve removed the ability to reply as we work to make improvements. Learn more here