Fair Rent Splits The Difference

New Fair Rent ED Wildaliz Bermúdez running her first meeting.

The Fair Rent Commission slashed a $495 rent hike to $200 after finding the landlord’s initial proposed increase was too much for a tenant to swallow all at once — even if the original hike would have been in line with market rents.

That was the outcome of the latest regular monthly meeting of the Fair Rent Commission. 

The virtual meeting took place online via Zoom, under the new leadership of recently tapped city Fair Rent Commission Executive Director Wildaliz Bermúdez.

As Commission Chair Lizz McCrea said at the top of meeting, one of the main responsibilities of the state-empowered local body is to control and eliminate excessive rental charges” in residential housing in New Haven. 

Or, as the city’s website puts it, the commission is charged with determining whether or not the rent for the housing accommodation is so excessive as to be harsh and unconscionable” — and then to intervene, in the form of approving, rejecting, or assigning new rents, which in turn become binding for a year.

One of the three cases before the board on Tuesday featured a fair-rent complaint filed by a pair of Exchange Street tenants against their landlord, an affiliate of the local megalandlord Ocean Management. 

The landlord, which bought the three-unit rental property last year for $250,000, sought to increase the two-bedroom apartment’s rent from $800 to $1,295. The tenant, who hasn’t seen a rent increase in eight years, proposed a new rent of $950. The commissioners ultimately settled on a new fair” monthly rent of $1,000.

The case and ensuing debate raised a series of questions at the center of New Haven’s hot and investor-laden rental market. 

Those include: What is an appropriate market” rent, especially at a time when housing costs and values are going through the roof? Should the new owner of a property immediately increase apartment rents to whatever the market can bear, regardless of where those rents stood before the purchase? And what, if anything, should the government do to protect tenants from sudden steep rent hikes — while not stepping on the toes of private actors in a free market?

Tenant: Large Rental Increase After No Renovations

Tuesday's Fair Rent meeting.

In this case, the tenants, Gary and Caren, first filed a fair-rent complaint back in July 2021.

They did so after their landlord tried to raise the rent for their two-bedroom apartment near the Quinnipiac River from $800 to $1,295.

Gary told the commissioners that he received a letter in May of last year, informing him that Ocean had purchased the house and that, after some renovations were done, we would get a rent increase of up to $1,200 a month.”

Gary said that he didn’t hear from Ocean for a few weeks. He said the new landlord didn’t make any repairs or upgrades to his second-floor apartment. He ultimately received a lease renewal document in the mail, letting him know that his rent would be going up to $1,295.

He said he tried to negotiate with the landlord. He said an Ocean property manager told him that they could not go any lower than $1,250.”

That was the same day I called the Fair Rent Commission and filed a complaint,” on July 15, 2021, Gary said.

That’s about it, he concluded.

They’re asking for a large rental increase after they did not do any renovations that they said they would. And they asked for more than they said they wanted. That’s my complaint.”

Landlord's Lawyer: Taxes Going Up & Up

Thomas Breen photo

The Exchange St. rental property in question.

The landlord’s representative at Tuesday’s Fair Rent Commission meeting was attorney Ian Gottlieb.

During his turn to give the landlord’s side of the case, Gottlieb did not directly make the case for the Ocean affiliate’s proposed increase. Rather, he asked Gary a series of questions, soliciting testimony aimed at bolstering his client’s cause.

How long have you been living at the Exchange Street apartment and paying $800 per month in rent? Gottlieb asked.

Eight years, Gary replied. He said he moved in in 2013.

And your rent has not increased in that period of time?” Gottlieb asked.

Right,” Gary said. 

He said the two-family house where he lives used to be owned by a friend of a friend. The building was then bought by two guys” last year, who, on the same day that they purchased it, flipped the property to an Ocean affiliate at a $40,000 markup.

Are you familiar with taxes in the City of New Haven at all?” Gottlieb asked.

Just the car taxes that I pay,” Gary said.

Are you aware that, in the eight years you’ve been there, taxes have gone up significantly in the City of New Haven?” Gottlieb asked.

I guess so,” replied Gary.

But you have not been asked to pay anything more than $800 per month that entire time? Gottlieb continued.

Correct,” Gary said.

Do you pay for water and sewer on top of your monthly rent? the attorney asked.

No, Gary said, just electric and gas. 

According to the city’s online tax database, the property tax burden for this Exchange Street rental property was $4,313.32 back in 2013. It has since risen by nearly $2,300, to a current total of $6,603.94. If the mayor’s proposed reval-phase in and 42.75 mill rate is adopted, then this property’s local tax liability will go up by $634 next fiscal year, to a total of $7,238.26

Deliberations: What Is "Fair"?

To help the commissioners with their deliberations, Bermúdez presented several photos that she and fellow Fair Rent staffer Tanice Doman took on a recent visit to the property. (They did so over the vocal objections of Gottlieb, who criticized the commission staff for not sharing this evidence” with his client prior to Tuesday’s meeting. Bermúdez responded that the landlord has access to the apartment, and that these photos simply document what the apartment looks like today.)

The apartment is dated and has not had any renovations in several decades,” she said.

She said it’s roughly 750 square feet in size, and that the tenant has been paying $800 per month in rent for the past eight years. She also said that a two-bedroom converted cottage apartment at the back of this same Exchange Street property is roughly 1,000 square feet, has been recently renovated, and is currently rented out at $1,550 per month.

In evaluating the proposed $800-to-$1,295 rent hike, Fair Rent Commissioner Doug Losty said that the $400-plus proposed increase struck him as a bit excessive.”

However, he continued, the tenant has been getting quite a bargain for eight years” at his $800 monthly rent.

I would suggest that maybe we split the difference and give the landlord a $200 dollar raise from the $800” current rental amount, Losty said. It’s a little better for the tenant to swallow that pill than a massive $400 increase all at once.”

Fair Rent Commissioner Wendy Gamba noted that, in the tenant’s fair rent complaint, the tenant had suggested a rent of $950 per month. He was trying to work with the landlord,” she said. She said it’s probably in the best interest of this public body” to let tenants and landlords know that it’s better to work out rents amongst themselves than to have the Fair Rent Commission decide their rental fate for them.

Therefore, Gamba suggested, a $1,000 monthly rent seemed fair.

Based on my judgement, it’s up to the landlord what he allows his tenant to pay,” Fair Rent Commissioner Javier Cabrera weighed in. The previous landlord charged $800 per month. Now, we have a new landlord, which is looking at the fair value” for a market rent for a two-bedroom apartment in this area.

Me as a tenant, I decide where I want to live based on what I can afford,” Cabrera continued, and the landlord is the one that provides the services” — that is, the place to rent and live.

While the $400-plus rent increase seems a little bit steep,” he said, a two-bedroom apartment in New Haven at a monthly rent of $1,295 is indeed fair.”

Ultimately, Cabrera was OK with setting the rent at $1,000, in between what the tenant and landlord wanted.

$1,000 is more than fair, and even $1,200 is fair for a two-bedroom,” he repeated. 

McCrea said that a newly renovated 1,000 square-foot apartment renting at $1,500, as is the case for the cottage apartment on this same property, seems fair to her. However, in this case, the landlord wants to raise the rent by over $400 with no renovations at all. I personally don’t think it’s fair.”

Ultimately, Losty moved that the commissioners set the tenant’s new monthly rent at “$1,000 even.” All five commissioners voted unanimously in support.

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