NEW JERSEY, NEXT VICTIM?
Landlords, Politicians Take Aim at Local Rent Controls
By Steven Wishnia

Rent controls are under assault in New Jersey.

In July, the Passaic City Council eliminated rent control for buildings of six or fewer apartments, and enacted vacancy decontrol for all others in the city. In August, Jersey City decontrolled vacant buildings, and allowed landlords to raise rents by 1.3 percent of the cost of renovating the apartment. And Assemblymember Michael P. Carroll (R-Morristown) has introduced what tenant advocates call “the killer bill.” It would impose vacancy decontrol statewide, and possibly abolish rent controls in five years.

New Jersey’s rent controls are a patchwork of local ordinances. Most of them date from the 1970s; the state Supreme Court in 1955 ruled that Newark’s Korean War-era controls were unconstitutional, but reversed itself in 1973, citing a “housing emergency.” Within five years, 120 localities had rent regulations. Today 110 do, including the state’s biggest cities—Newark, Jersey City, Paterson, Trenton, Elizabeth, and Camden—and virtually all of Hudson County and southern and central Bergen County. They cover about two-thirds of the state’s 2.5 million renters, according to Mitch Kahn, an organizer for the New Jersey Tenants Organization.

So landlord groups, most prominently the New Jersey Apartment Association, are attacking rent controls on both the state and local levels, “going by stealth, town by town,” says NJTO administrative director Bonnie Shapiro. “It’s a two-pronged attack,” says Kahn. “We’re dealing with scores of little brushfires.”

The legislative scenario is depressingly familiar. As in New York last year, the main legislative opponent of rent controls is a Republican from an affluent rural area, immune to electoral revenge from urban renters. Michael Carroll represents the upscale fringe-suburbs of Morris County. Carroll says his animosity toward rent controls stems from a brief stint as an aide to New York State Sen. Roy Goodman in 1980. He offers the standard party line against them. He claims rent controls primarily subsidize rich people, and “not a lot of poor people benefit”; he also argues that they depress rental-property values, increasing taxes for homeowners and businesses. He doesn’t believe decontrol would spur massive rent increases, and says property owners shouldn’t have to “subsidize” poorer tenants anyway.

Wouldn’t deregulation enrich a handful of wealthy landowners, as it did in New York? “I’m not into class envy,” he replies. “I want to be one of them.” Tenant advocates have so far been able to keep the bill blocked in committee. Carroll has diluted his original proposal, which would have immediately decontrolled all apartments renting for $750 a month or more and abolished all rent controls by the end of 2000.

That may change if Governor Christie Whitman supports the bill. A spokesperson for the governor’s office says she does not take positions on pending legislation.

However, Whitman has appointed a task force to study rent control and tenant protections. Bankers, builders, landlords and politicians far outnumber the one tenant representative on the eight-member panel. Tenant advocates suspect it was conceived to undercut tenants’ rights, to recommend such measures as removing foreclosed buildings from rent control and allowing their tenants to be evicted without cause. They demanded that Whitman add four more consumer and tenant representatives to the panel. She refused, but, “as a result of all the opposition, no meetings have been called,” says the NJTO’s Kahn.

To preserve protections, Kahn says, the New Jersey tenant movement has to revive itself, to regain the energy it lost after winning local rent controls in the 1970s. “The Passaic thing was a real big defeat,” he says. “This never should have happened in a city that’s 75 percent tenants.” Passaic has no city-wide tenant group, only a handful of building organizations, and many tenants there are immigrants, not registered to vote. The struggle over rent control there, he adds, has taken on an ethnic cast: Most tenants are Latinos, but the City Council is controlled by a small, well-organized bloc of pro-landlord Orthodox Jews.

Kahn dismisses the argument that rent controls increase homeowners’ property-tax burden. In a study he did of Bergen County from 1972 to 1988, he found that the proportion of property taxes paid by homeowners went up primarily from an increase in the number of homeowners; from the ’80s real-estate boom, in which the assessed value of some houses rose 600 to 800 percent; and industrial decline. The former Ford plant in Mahwah paid a third of the town’s property taxes before it closed. “The significant factor was not rent control,” he concludes.

As in New York, New Jersey landlords can appeal for rent increases if they prove they’re not making an adequate return on their investment. However few landlords outside of Atlantic City have done so. In Newark, only 14 hardship appeals were filed between 1993 and 1997, according to Kahn. If landlords are so stressed by rent control, why aren’t more of them filing such claims? Kahn’s answer is easily predicted by anyone familiar with New York housing issues: “They don’t want to open their books.”

“There are no reason for these bills (except landlord dollars,” a NJTO flyer concludes. “Boston (totally) and New York (partially) lost their rent- control battles. They lost their rights. We do not want to lose!”