The city took round one Wednesday in what promises to be a protracted bout when Hudson County Superior Court Judge Arthur D'Italia issued a temporary injunction barring the proposed sale of the building, since that sale would lead to state regulation of the property and potentially higher rents for the building's residents. But he promised to take a longer look at the issue and has asked the parties to return to his courtroom Sept. 8."We are very happy," said Attorney Linda Sabat, after Judge Arthur D'Italia handed down his ruling. "But this is just temporary. We'll have to go back to court very soon."
For almost 30 years, the federal government has regulated the rents at Clock Towers because it was constructed with a low-interest loan from the Department of Housing and Urban Development. But the question of who will regulate the rents at the complex, where one, two and three bedroom apartments tend to go for the jaw-dropping rate of $500 to $1,000 a month, is now open since the developer that built it recently paid off the federal loan.
This is no surprise to city officials, who passed a City Council ordinance last month to protect the residents of Clock Towers and nine other properties in town which were built with HUD money once they come off federal regulation. The ordinance says that all "project-based" buildings would be subject to the purview of the city's rent control law once federal oversight ends.
As a practical matter, that would mean that the tenants who live there, many of whom are low and moderate income families, would only see modest two to three percent annual rent increases if the building is sold by Jefferson Adams Rehab to another group of businesspeople calling themselves Clock Towers LLC.
But state officials do not favor such a blanket approach. Instead, they cut a deal with the want-to-be owners of Clock Towers that would allow them to gradually raise rents on 34 apartments in the building. Tenants in those apartments have yearly incomes that exceed the federal income standards for low and moderate income families.
Some of the families living in the building now earn more than $75,000 a year. But no matter how much they earn, the state plan prohibits the landlord from ultimately charging tenants a rent that exceeds 30 percent of their income.
Residents of the other 138 apartments in the building would also pay no more than 30 percent of their income in rent. Their monthly rent checks would be augmented by a federal subsidy, also known as a voucher. Unlike their wealthier neighbors, who do not meet the income limits to qualify for vouchers, they are unlikely to see much of a rise in their monthly out-of-pocket expenses, state officials say, since 30 percent of their wages is more or less what they are paying now.
"From our standpoint, contributing 30 percent of your income is reasonable whether you are poor or not," said Michael Ticktin, a legislative analyst with the state's Department of Community Affairs. "This is consistent with federal policy. The new purchaser has said that they would give preference to people with vouchers for vacant apartments so we are not going to see a situation where poorer people are being turned away from apartments they can not afford."
Ticktin also pointed out that asking the wealthier residents to pay at a level that was more in line with what they could afford would benefit all the building's residents since the landlord is bound by law to reinvest a percentage of the proceeds he collects back in the building.
But city officials worry that if the state has its way, the already-extremely-tight affordable housing market will become even tighter.
In a brief filed with the court, city attorneys pointed out that the state plan calls for a reserve of only 20 percent for low income families, meaning that eventually, turnover at the building could lead to a situation where most of its residents were simply paying market value.
"The recent rent control measures that were supported by Mayor Russo and the City Council were enacted to preserve affordable housing by protecting tenants from such harmful regulatory agreements," said Michael Korman, the city's public information director. "The city does not support the proposed DCA-Clock Towers regulatory agreement since it would lead to the displacement of Hoboken tenants through large rent increases. Hoboken's rent control laws should apply here."
While almost everyone clapped during Wednesday night's City Council meeting when Mayor Anthony Russo said that the city had won a temporary injunction in the case, at least one city councilman appears to favor the approach taken by the state.
Soares: It only helps wealthy officials
"There are people in that building that are flying first class and paying economy," said Councilman Tony Soares from his sickbed in Kearny, where he is recovering from an operation performed earlier this month.
The councilman, who is a frequent Russo administration critic, ticked off a list of half-a-dozen businessmen and well-paid city officials who live in Clock Towers.
"Nobody is throwing these people out," he said. "It's nice to have a stable community. But this is about fairness. There are people in the projects who pay 30 percent of what they make to live there. But in Clock Towers, there are people who drive Jaguars and work for Fortune 500 companies not paying their fair share."