With the uproar in New Jersey over the possible elimination of federal tax deductions for state and local property taxes, you would think the inequities in the property tax burdens in Teaneck would create more outrage.
While New Jersey is certain to face property tax increases after years of a 2 percent spending increase cap of the Christie administration, Teaneck’s problems are further exacerbated by its rent-control ordinance. It is hard to believe that even with the ever-increasing costs of the municipal services they consume, for three years most tenants in Teaneck have paid almost no rental increases at all. After one year of a rent freeze, the allowable rent increases have been restricted to CPI, which has averaged about 1 percent for the past two years. This has reduced the multi-family property values, which has consequently shifted the tax burden to single family homeowners.
Why haven’t you heard anything about this? Because this November, unlike any previous November during the rent-control era, Teaneck did not review its rent control ordinance. When the council froze rents in 2015 it also did away with the Sunset Provision of the ordinance, which lets it avoid public scrutiny over its policy-setting. Led by Councilman Castle, the dialogue that resulted in rents being frozen while costs to other property owners increased was not even based on costs at rent-controlled properties. Castle asserted a policy that inures tenants from the economic struggles of the rest of the town under the guise of providing affordable housing, which expressly is not the role of rent control under state law.
So if you thought the $97 million in property tax appeals brought by multi-family owners in 2015 was high, the other forces at work will continue to pile on to an unsustainable fiscal policy of discrimination against homeowners. At the very least the council should set rent control increases at the same rate as the municipal budget increases. If the town cannot contain its budget, how can it expect other property owners to do so? And it should have the courage to debate the issue annually instead of hiding behind an ordinance that we are stuck with forever despite it being passed under false pretenses.
A more realistic and equitable approach would be to model the ordinance after the one in the city of Passaic, which protects existing tenants with a modest allowable annual increase, but allows a property owner to charge market value upon a vacancy.
The price of the apartment will be dictated by the rental market, not arbitrary, politically motivated municipal restrictions. It would be a win-win for all. Owners with low rents would have an incentive to upgrade units, which would bring market rents, which in turn would lead to greater property values, which would increase property tax collections. And there are two more winners: the new tenant who gets a modern, upgraded apartment at a reasonable rent and Teaneck homeowners whose interests are equally considered relative to new tenants who are not even from Teaneck. Why do current Teaneck homeowners have to subsidize the rent of future Teaneck tenants?
By Ron Simoncini
Ron Simoncini is the executive director for the Teaneck Property Owners Association.