February 4, 2019

Ordinance closing rent control loophole to take effect

Today, an ordinance signed into law by Mayor Ravi S. Bhalla to change how landlords pass along additional tax surcharges to tenants went into effect.  As a result of the amendment, owners of rental properties subject to rent control are only permitted to pass along a tax surcharge based on the date they acquired the property as opposed to 1988, the date previously specified by the rent control ordinance.

In recent years, property owners were allowed to pass on large tax surcharges on top of rent to tenants based on all property tax increases dating back to 1988. Property owners who acquired rental properties after 1988 were still permitted to apply the tax surcharge on property tax increases dating to 1988, even when they did not own the property or absorb those tax increases prior to their ownership. Now, thanks to the new law, the tax surcharge can only be applied back to the date of when the property owner acquired the property, resulting in a smaller calculated amount, or tax surcharge, that can be applied to tenants.  

We are committed to ensuring tenants are not burdened by large tax surcharges, and this new law will help ensure fairness and transparency for renters,” said Mayor Ravi Bhalla.  “I appreciate the assistance of Councilman Doyle and Councilwoman Falco in leading this process through the Council.”

Additionally, the amendment states that landlords must inform and explain the tax surcharge in writing to tenants including the actual tax surcharge, the base rent, the tax surcharge, total and apportioned, and the effective date. Additionally, the tax surcharge must be imposed at the beginning of a lease term or renewal, and is not permitted to be assessed mid lease. Landlords who already have filed for a tax surcharge are grandfathered and can transfer their property with the tax surcharge intact so long as they annually refile with the City.

"I was pleased to see the broad Council support for this change in how municipal tax increases are passed along to residential tenants in our City,” said Councilman Jim Doyle. “This is fair change that will help tenants, and we need to continue with reforms like this to help keep our community economically diverse for the benefit of all."

“I am happy to have been part of the working group for the rent control ordinance,” said Councilwoman Vanessa Falco. “This is one area that Mayor Bhalla was committed to amend that will really assist residents. We will continue to find solutions in this area as this amendment is a work in progress.”

The amendment was passed by the City Council by a 8-0-1 margin.  Councilmembers Jim Doyle, Vanessa Falco, Michael Russo, Ruben Ramos, Emily Jabbour, Jen Giattino, Tiffanie Fisher, and Peter Cunningham voted in support, with Councilman Mike DeFusco absent from the vote.