Rent control nears final approval in Montclair
The battle to stabilize rents in Montclair, lasting more than four decades, is almost over.
On April 5, the Township Council introduced what is slated to become Montclair’s rent control ordinance; a hearing and final vote is set for April 19.
It limits annual increases to 4%, or 2.5% for seniors, after a one-time allowance of up to 6%, and applies to multifamily properties with two or three units in which the owner does not reside, as well as properties with four units or more. The increase limit also pertains to parking rented to tenants by their landlords.
The ordinance was recently negotiated between tenant advocates and landlords as a last-ditch effort to avoid a May 10 referendum on an ordinance passed in 2020 but never enacted. That version would have set limits of 4.25%, or 2.5% for seniors, and only applied to properties with four or more units.
Past rent stabilization referendums in 1979 and 1986 failed in Montclair. If the 2020 law had gone to referendum and failed, it would be another three years before the township could create another rent control ordinance.
“We may never have gotten rent control if it went to referendum,” Bob Russo, the longest-standing council member, said Tuesday night.
Montclair Housing Commission Chairman William Scott said that with the ordinance applying to two- and three-family properties, 60% of Montclair’s 5,501 renter-occupied units would be covered.
But some owners of two- and three-unit properties who called into the meeting in protest said they do not want rent control applied to their buildings, were wary of a newly required registration process and were concerned that their property values will go down. They said they felt left out of the process.
“This law is sweeping and long-lasting. To exclude small property owners in crafting its terms is egregious and prejudicial to hundreds of property owners in Montclair,” three-family property owner Carmel Loughman, who had run for the council in 2020, said.
Ellen Nagle, who owns a two-family property, said she was concerned about recouping a rise in heating costs for her units — which are on a one-meter system and included in her tenants’ rent — now that her units would be subject to limited rent increases.
Tenants Organization of Montclair representative Toni Martin criticized the complaints from smaller landlords.
“The outcry from several small landlords that they were left out of the discussions and negotiations concerning rent control reminds me very much of something that happened two years ago,” Martin said.
“That would be the outcry from a hastily formed group of landlords calling itself the Montclair Property Owners Association, who said they had been left out of discussion of rent control in Montclair. In both those cases, the outraged objections to having been quote-unquote left in the dark came after very considerable public airing of the issues.”
Two years in the making
In April 2020, just as the pandemic set in, the council approved the earlier ordinance, but a group of landlords — members of the Montclair Property Owners Association — successfully sued to have it stayed while they collected signatures for a petition that would force the law to a special election. They then conducted the state’s first-ever electronic-signature petition campaign for a referendum, allowed because of restrictions in place during the pandemic.
The township clerk rejected the petition twice — saying some of the electronic signatures didn’t match handwritten ones on voter rolls — but Essex County Superior Court Judge Jeffrey Beacham eventually ruled that the clerk had acted “arbitrarily and capriciously” in tossing out the signatures, and an appeals court upheld his decision.
Since December, landlords and tenant advocates, who both thought they could pen a better ordinance, have been in negotiations. That process appeared to break down in February, but the parties returned to negotiations in March as a deadline for the clerk to schedule the special election approached. Ultimately, they struck a deal just two days before the clerk would have had to schedule the election, and the landlords withdrew their petition.
Other provisions of the ordinance
The one-time 6% increase would be allowed on top of the rent a landlord was collecting from a tenant as of May 1, 2020, when Montclair first initiated a separate, temporary rent freeze — a measure the council has renewed every three months, citing authority under New Jersey’s ongoing state of emergency for the coronavirus pandemic. The freeze is set to continue through May 31.
Some landlords had issued tenants notices of increases during the freeze, even though they couldn’t put them into effect. The rates from those notices couldn’t be used as a basis for the 6% increase, however.
The 2020 ordnance would have also limited rent increases after vacancies to 10%. That was a large sticking point for landlords. The new version allows increases after vacancies with no percentage limits, but no more often than once every five years.
The new ordinance puts in place registration requirements based on unit information, not personal tenant information, something the landlords were against.
Landlords will have 60 days from the enactment of the ordinance to register all properties, listing apartment numbers, the number of rooms for each apartment and the number of bedrooms, the current rent for each apartment, the date and amount of the last increase for each apartment, the dates leases began and ended, and what services (such as parking, heating and pet allowances) are provided.
The new ordinance won’t cover newer construction. Since 2008, the state has prohibited rent control on new buildings for 30 years after the date construction is completed or until after an initial mortgage is amortized, whichever comes first. In Montclair that includes 820 units at Montclair Residences, Valley & Bloom, Montclairian II, Vestry, Westly, 2 South Willow and The Siena, according to Scott.
Rent control limits would also not apply to the approximately 750 affordable units in Montclair, which fall under state guidelines, Scott said.
The ordinance creates a board of seven members, appointed by the council, consisting of three tenants, one homeowner who is neither a landlord nor a tenant, and three landlords.
The board will issue rules and regulations based on the ordinance, and provide landlords and tenants information to help them comply with the law. It will hold hearings on applications from landlords seeking increases after major capital improvements or major additional service surcharges, or seeking hardship rent increases.
It will similarly hold hearings on applications from tenants seeking rent reductions based on declines in services. And it will approve settlements or other agreements on disputes between landlords and tenants. The board’s decisions could be appealed to the Essex County Superior Court.
The ordinance also creates the position of rent control officer, to maintain multifamily property records, ensure compliance by landlords and tenants, assist landlords and tenants with conflict resolution and investigate complaints filed by tenants and landlords over increases and/or vacancy decontrol allowances.
Council members voted unanimously to introduce the ordinance. Councilwoman Robin Schlager said, however, that she felt “sad” for the two- and three-family property owners who “felt excluded, surprised and shocked.”
“What was supposed to be a big positive really isn’t,” Schlager said.
Councilman Peter Yacobellis, who pushed for the expansion to include two- and three-family properties, said that the law is now more comprehensive. He said the small landlords can use vacancy decontrol to recoup money spent on investments in their properties, and noted that the law allows for landlords to apply for exceptions for hardships incurred by property owners — when their expenses for a building exceed 65% of the gross income, when they conduct major capital improvements or when they add major additional services.
In neighboring towns with rent stabilization — Belleville, West Orange, Bloomfield, Clifton, Little Falls and Verona — the laws do not apply to two- and three-family properties.