MANCHESTER – The new cap for rent increases for manufactured home communities will be 3.5%, a result of a settlement between the township and landlords.
The rent leveling ordinance was passed in March, and it received support from residents of manufactured home communities. However, some landlords took issue with the 2% cap that was included in the ordinance and challenged it in court.
Mayor Robert Arace explained a compromise during the latest Township Council meeting, that changed the figure to 3.5%.
“I’ve had the opportunity to speak to the residents and I truly do believe that the rent levelling ordinance is a net benefit to the town. It gives us safeguards and certain parameters that allow for us to police it effectively,” he said.
He noted that in the last week, “Pine Ridge South (community) sent out notices of a 3.5% increase before the council had the opportunity to codify or solidify that. I find that rather presumptuous and I find it personally disrespectful.”
“My understanding is what they are trying to do today, a metropolitan area CPI (Consumer Price Index) where our ordinance specifically calls for the region in which Ocean County is located,” the mayor added.
Mayor Arace added, “the region is the northeast region CPI is pretty face value to me and how you work it backwards to a metropolitan area because Ocean County is included in it, is a bit of a stretch in my opinion.”
“The CPI will be the lesser which is the northeast region – not metropolitan. So, we will look to enforce that. It is something that the rent levelling ordinance – and the (Rent Levelling) Board for that matter – will enable us to do which we did not have before.” Mayor Arace added.
The mayor noted that a member of the Rent Levelling Board had brought to his attention, “Pine Ridge South is applying for percent increases to an entire monthly payment. That includes rent and taxes and whatever services with the intent is that percent increase would only be included on the monthly rent payment. Again, now that there is an ordinance and a Board, something like that can be enforced…The intent of that language is that the tax would be backed out of the monthly rental payment and that is what the percentage would be calculated on.”
Nine residents came out to speak during the public comment period for the ordinance as well as an attorney who represented the mobile home community that was part of the lawsuit.
Mark Russo of Winding Brook Way remarked, “with this letter that they (Pine Ridge South) sent out is that what this is going to be?”
“They can pass through the property increase to the rental. The number in which they are using is the wrong CPI,” Mayor Arace replied. “The number that they were using is a New York and Newark CPI.”
Township Attorney Lauren Staiger interjected, “we can’t speak to the specifics of the numbers of your base rent. The way it is supposed to be is that the ordinance is supposed to identify what your base rent is. There is a percentage – whether it is 3.5 CPI, whichever is the lower of the two – is added to the base rent and then your real estate taxes and those other items are itemized separately.”
“They spent $2,000 sending out certified letters that were completely bogus and then they cried that they weren’t making money,” Russo said concerning the management of his development. “They’ve been doing this sleezy stuff for years.”
Mayor Arace noted that “those kinds of increases would have to be brought to the Rent Levelling Board…they would have to justify them. A lawyer and CPA sit on that board and that is an additional safeguard that did not exist before.”
“The township was sued and the cost of litigation is ultimately on everyone so the prudent decision in my mind was to come up with a number that was lower than some of the surrounding areas,” Mayor Arace said.
Andrew Kerstein of Pine Ridge Boulevard wanted to make sure what the Council would later pass at the meeting “that everyone understands how to do the calculation and that the landlord has to provide you that information to the Rent Levelling Board in advance of sending out any letters of an increase and that the Rent Levelling Board gets to look at that and that the calculation is being done in the proper way.”
He added, “I think you have done a good job and have come up with a good compromise.”
Mayor Arace responded to Frank Everly of Pine Ridge at Crestwood concerning the percentage of the CPI that “historically, they did float between 1.5 to 2. What the ordinance is designed to do is that whenever there is an economic down turn or when interest rates skyrocket again is the parameter that protects the residents from the five to six, seven and eight and protects us from that. When things return to normal that CPI acts as a floating parameter.”
Attorney Lori Greenberg who is representing Pine Ridge at Crestwood also thanked the mayor and Council for their actions in developing and passing the ordinance. “I want to thank everyone for what was a hard and difficult process. My client fully intends to follow the ordinance.”
“We can’t comment on the ordinance interpretation because that is up to the Rent Board. We wanted to say the ordinance speaks for itself. I thank you for everything you have done today,” she added.
The mayor said, “what I was told that the 3.5 % was the likely best-case scenario so I think we are still walking away with a net positive.”
Staiger said a judge would now have to sign off on the settlement.
