Bhalla Administration Drops Suit To Protect Hoboken Tenants From Unconscionable Rent Hikes

HOBOKEN, NJ — New Jersey law protects all tenants in the state from "unconscionable" rent increases, but doesn't specify a percentage — so last June, Hoboken Mayor Ravi Bhalla, faced with tenant displacement amid rents that became among the highest in the country, announced that the city was filing a "test case" on behalf of three tenants in Avalon Hoboken whose rents had risen 20 percent or more.

The idea was to set a precedent, so that Hoboken tenants would have a clear idea of how high their rents could climb over a year or two.

As rents rise across the country — and the U.S. Justice Department investigates the possibility of "collusion" among landlords — cities are finding creative ways to protect tenants from the steepest increases.

Hoboken already has its own local Rent Control Ordinance, passed in 1972 and modified since then, that keeps rents on most older buildings to the Cost of Living Adjustment, usually 5 percent or less. But many buildings constructed less than 30 years ago are exempt — as long as they applied for a state exemption before construction. (Recently, several newer buildings in Hoboken have been determined to fall under rent control as well, because the city says they don't have a state exemption on file. However, several corporate landlords are now currently suing the city over those rulings, causing their tenants much consternation.)

Last year, the city's contracted tenant advocate lawyer helped three tenants of Avalon Hoboken, a luxury building on the west side of town, file a lawsuit on June 9, 2023, saying their rents were "unconscionable" by state standards.

The plaintiffs included a single mom whose rent had increased from $3,990 to $5,826 in two years. This meant she had to decide between paying $24,000 more each year, or uprooting her 10-year-old child from the schools.

"I offer my thanks to Hoboken's tenant advocate for initiating this important litigation," Bhalla wrote in August 2023, "to help set the standard through the courts to prevent unconscionable rent increases going forward in Hoboken."

However, the city dropped the suit late last year after the city's Rent Control Board determined in October that Avalon falls under rent control — a determination that may not hold, as Avalon is now suing the city. The ruling and suit have thrown Avalon tenants into a rent purgatory, not knowing which amount to pay.

What About Other Tenants?

But the city's ruling also caused the city to drop its "test case" that could have applied to tenants throughout the city facing a similar situation.

So will the city file another case to protect tenants from rent increases that are among the highest in the area?

Patch reached out to the city about this question after the case was dropped, and again recently, but received no response.

This story will be updated if a response is received.

Heading Into Eviction Court

The way the state law works now, a tenant who gets an increase that would "shock the conscience" can withhold the amount of the increase, continue to pay the old rent, and hope that a judge will agree with them when the matter heads to eviction court. If they lose, they will have to pay the back rent.

Backlog At Rent Control Office

Further complicating matters in Hoboken, tenants who aren't sure their buildings are covered by rent control have had to wait more than 7 months, in some cases, to get an answer from the city's rent control officer about their buildings, they've told Patch — making for a confusing situation. Some are not sure which rent to pay, or if they can even afford to stay in town. It also puts them into a contentious situation with their landlord.

Last week, a tenant of one complex, 1125 Jefferson St., sent a letter to two Hoboken council members saying it seemed that residents of certain buildings were getting preferential treatment in appearing before the Rent Control Board.

The tenant said that he had asked for a rent ruling back in October 2023, and due to delays, his case won't be heard until either July or September of 2024 — almost a year since he filed.

High Rents, High City Legal Bills

As if that wasn't confusing enough to tenants, the owners of three buildings in Hoboken have filed suit against the city over its recent rent control rulings. Those suing the city include the owners of the Jordan (see earlier reporting on Patch), Avalon Hoboken, and now the Bexley (as reported in Hudson County View this week).

The city provides a tenant advocate to advise and help residents for free, although that person can't represent them in court. (You can make an appointment to talk to the advocate here.)

Jersey City recently passed a "right to counsel" law to give tenants under a certain income limit a free representative for eviction hearings.

False Hope?

Avalon tenants said they are concerned that they may have to pay back the amounts in rent they withheld when the city said the building is under rent control.

Meanwhile, the city, while trying to protect tenants for steep increases they didn't budget for, may find itself paying steep lawyer bills they didn't budget for.

Jersey City Takes Action Against Alleged Collusion

Jersey City is finding other ways to deal with unexpected rent increases.

On Wednesday night, a councilman introduced a resolution in partnership with 32BJ-SEIU, a service workers' union, to call for a ban on rent-setting algorithms being used by New Jersey landlords to set rents.

Reports in investigative news outlets said that certain corporate landlords were relying on software, rather than the market, to drive up all rents in an area at once, giving tenants nowhere to go for an affordable rent.

The U.S. Justice department is now investigating the use of RealPage software by corporate landlords, including some who happen to own buildings in Hoboken or Jersey City.

Downtown Jersey City Councilman James Solomon said this week, "To know that this housing crisis was in part artificially created—that landlords and developers are essentially colluding to jack up rent prices for everyone else—is a slap in the face. If rent-setting software has the power to rig the housing market for the wealthiest property managers in the country, then we as elected officials have a duty to take that power away and level the playing field." READ MORE: Jersey City Takes Aim At Landlords 'Colluding' On Rent