3 Large Corporate Landlords File Suit Against Hoboken And Jersey City Over Rent Control

HOBOKEN, NJ — After corporate landlords were told that raising rents in Hoboken and Jersey City 20 percent or more may violate state and local laws, three of the country's biggest landlords have filed individual lawsuits in state and federal court.

As reported exclusively in Patch last month, the equity company that owns The Jordan in Hoboken filed a lawsuit in early January against the city, saying that applying local rent control to their units is an unconstitutional "taking" of private property.

Patch has since received copies of similar lawsuits by Equity Residential and by AvalonBay filed in the last four months against the cities of Jersey City and Hoboken respectively.

In both cases, the landlords similarly argued that applying local rent control to their buildings violates the U.S. Constitution.

Over the last year, officials in Hoboken have pointed out — in response to rent increases that have risen as high as 30 percent — that these may violate a state housing law prohibiting "unconscionable and unreasonable" increases. While the amount is not specified in the law, local advocates have said court precedents suggest an amount around 25 percent, depending on the circumstances.

Besides a New Jersey law forbidding "unconscionable" rents, the towns of Hoboken and Jersey City — whose median rents recently rose to more than $4,000 per month — have individual rent control and stabilization laws limiting increases to cost of living increases, and allowing other pass-alongs. In Hoboken, landlords can also get a vacancy decontrol of up to 25 percent every few years if a tenant leaves voluntarily.

After the pandemic, throngs of young people began moving to Hoboken and Jersey City, driving increases to levels even higher than in New York City.

Tenants who had already set down roots in the buildings began asking whether unexpected increases of 25 percent or higher were legal.

That's when some discovered that their buildings might fall under local rent control laws, besides the state laws.

The three corporate landlords who recently filed suit— while never exempt from New Jersey law about "unreasonable" increases — believed themselves to be exempt from more strict local rent control ordinances, until the cities recently told them they were not. Hence the suits.

Tripped Up By Technicalities

In New Jersey, buildings constructed after 1987 were able to apply for a state exemption from local rent control for 30 years, but had to follow certain rules. They would have to obtain the state exemption according to a timeline, and by law, the landlords still need to notify each new tenant about the rent control exemption when they move in.

In some cases, corporate landlords who purchased their buildings recently were unable to find paperwork proving that the original owners received the exemption on time. In other cases, tenants said they weren't notified of the exemption. Recent hearings before the city's Rent Stabilization Board have helped determine whether the newer buildings are exempt — but some landlords have said, in their suits, that they were treated unfairly.

The owners of the Jordan, for instance, said they didn't get enough notice of the 2023 rent board hearing in which the building was determined to be under local rent control.

Three Lawsuits

The owners of The Jordan at 1200 Clinton St. filed suit in U.S. District Court on Jan. 2, 2024 against the city of Hoboken and the Hoboken Rent Leveling and Stabilization Board.

In the past two years, 12 tenants at the Jordan, who had received what they believed were unfair rent increases, had asked the city of Hoboken for a determination of their legal rents.

Then, they took the matter to the city's Rent Control and Stabilization Board for a hearing in September 2023. At the hearing, the board determined that the Jordan is subject to rent control, which currently limits increases to less than 5 percent, but allows landlords to pass along tax, water, and other surcharges.

The lawsuit filed by LPF 1200 Clinton Equity argues that the city's Rent Leveling Office initially gave tenants of the Jordan a determination that their building was not under rent control. However, when the tenants appealed to the city's Rent Leveling and Stabilization Board, arguing that the Jordan didn't follow all the rules, the rent board took their side.

The Jordan's owners argue in the lawsuit that they didn't have enough time to prepare their case.

This apartment complex, in the northwest quadrant of town, is currently managed by Willow Bridge, now owned by the Ontario Teachers' Pension Plan. (Cadillac Fairview, which manages the global real estate portfolio for Ontario Teachers’
Pension Plan, acquired Lincoln Property Company’s residential division in early 2023, which rebranded to Willow Bridge, and is no longer owned by Lincoln.)

Willow Bridge has given tenants a letter saying they will continue to operate as if exempt from rent control:

One tenant in The Jordan told Patch last month his neighbors are now "scared" about the rent increases, and confused about whether they should stay or move, as the city of Hoboken has not been able to provide clear answers about what to do next.

Avalon 'Test Case' And Lawsuit

A similar situation occurred in Hoboken over the past year with AvalonBay, which owns the luxury complex Avalon Hoboken. Avalon ultimately filed a suit against the city in state Superior Court in late January 2024.

Last spring, three Avalon tenants — who believed their rent increases to be "unconscionable" — joined the city's tenant advocate in filing a "test case" to determine what exactly counts as an unconscionable increase.

That's because the state law regarding unconscionability does not state a specific number or percent:

One plaintiff, a single mom at Avalon Hoboken, said in the 2023 suit against Avalon that her monthly rent went from $3,990 to $5,826 in two years, forcing her to face uprooting her child from local schools:

"[The tenant's child] has developed friendships with the children who live in the Avalon Hoboken and her son’s social development and stability are of paramount importance," says the suit. "She did everything possible to prevent being forced out of the Avalon Hoboken and reluctantly agreed to the 15 percent increase for the second year to maintain stability ..."

But the city dropped this "test case" in October 2023 when the rent board determined the building should be under rent control, which is a stricter standard than unconscionability.

Two months ago, believing AvalonBay was still charging residents higher increases than what local law allows, Mayor Ravi Bhalla issued a letter threatening to fine Avalon $660,000, or $3,000 per unit.

The next month, Avalon, like the two other companies, filed a lawsuit saying the city's actions have violated the Constitution:

The suit also criticizes Mayor Ravi Bhalla, who has written letters to Avalon and three other corporate landlords in town, telling them to comply with the laws.

Interestingly, AvalonBay says in the suit: "The City thereafter published this letter [threatening fines] in local media, in an apparent attempt to curry favor with a portion of the renting and voting populace of the City. It is not coincidental that only two days later, on December 13, 2023, the Mayor announced his candidacy for the congressional seat currently held by Robert Menendez Jr."

But Hoboken Patch was the only news outlet to report on the city's letter in December threatening AvalonBay with $660,000 in fines — and Patch obtained the letter from a source other than the administration.

The City Council voted earlier this month to lower the fines to around $2,000 per unit, rather than $3,000, to be in line with New Jersey law.

Avalon's double-digit rent increases have been noted by larger entities than Bhalla.

Last April, a report released by a watchdog group reported that "AvalonBay Communities Inc. — the third largest publicly-traded apartment company — saw its same store operating results jump 11% and its net income climb 13.2% to over $1.1 billion thanks to a 'double-digit rent increase.' In 2022, AvalonBay spent over $536 million acquiring over 1,300 rental units."

A Third Lawsuit: Equity Residential

A third corporate landlord, Equity Residential, owns both the Rivington in Hoboken and the older Portside Towers East and West complex in Jersey City.

Equity filed a lawsuit against Jersey City in federal court back in November, amid its ongoing battle with Portiside Towers tenants.

In Hoboken, Equity owns the Rivington complex, but appears to have been complying with rent control since the city of Hoboken told them to do so back in 2022.

Back then, residents began reaching out to Patch to complain about double-digit rent increases. The tenants pointed to suspicious language in their leases mentioning that their complex was exempt from rent control laws in Jersey City and West New York.

Ultimately, the city of Hoboken told the Rivington to comply with rent control. Rivington then rolled back rents, but the residents said they were also stripped of certain amenities as a result. READ MORE: After Rolling Back Rents, Rivington Landlords Cancel Hoboken Shuttle

The fight at Portside Towers East and West in Jersey City — two luxury towers built along the waterfront in the early 1990s — seems to be more complex and with higher stakes.

In the last three years, Jersey City has determined that Portside Towers West is rent controlled. But the tenants say the city hasn't followed through on its laws and rulings, and that both towers should be subject to local controls. The tenants' association has posted an online fundraiser to continue their lengthy legal battle.

"Even after we have fought for months, and managed to get our story out in the press to the entire country, tenants in our
buildings are still overpaying by over half a million dollars per month," wrote the Portside Tenants' Association in 2023. "Our friends and family are being effectively evicted."

They added, "Some of our once-neighbors are now homeless ... Please read our story as a warning of what is happening all over the country."

The group has raised more than $83,000, with one person chipping in $10 just three days ago.

How Much Will Rents Keep Rising In America?

Some argue that landlords should be able to raise the rents as high as they want if the market will bear it. But are the rents being raised according to market factors?

Investigative reports over the last two years have suggested that the nation's biggest corporate landlords are instead raising rents according to national software.

The danger is, according to the reports, if all the buildings in one region raise rents the same amount at the same time, tenants will wind up with nowhere to go. (SEE: RealPage, Lincoln Property face class-action in wake of ProPublica exposé)

The Justice Department is now investigating the matter, and has argued that the software "used a centralized pricing algorithm to inflate prices, costing renters millions of dollars."

Across the river from Hoboken and Jersey City, in New York City, a court ruling last Tuesday offered hope to tenants.

The U.S. Supreme Court said it would not hear two court cases brought by landlord groups challenging New York City's rent stabilization laws. However, the court can still reconsider at some point, experts said.

Local tenants and their advocates say that the double-digit increases from corporate landlords aren't just uprooting longtime tenants; they're changing the landscape of the towns.

"There is a massive displacement of young families occurring," a Hoboken tenant told Patch. "The college kids downtown pack so many kids in the apartments, the per head cost to them is doable. You can see the shift occurring."

Hoboken Mayor Ravi Bhalla told Patch in December, "We as a city will stand up to corporate greed that undermines the well-being of our community.”

Kevin Weller of the Portside Tenants Associaton said this week, "A few law firms are misleading landlords into baseless legal fights against the rent control regulations of Hoboken and Jersey City, blatantly ignoring the statute's explicit requirement for filing exemptions—a stipulation that's been a clear part of the ordinances in over 100 New Jersey municipalities since the 1980s."

What do you think? Email Patch.

Need links to the state and local eviction and renting laws, how to find a tenant lawyer, and more? See the resources at the end of this Patch story.