PHILLIPSBURG MAYOR STEVE ELLIS’ STATEMENT ON RENT CONTROL VETO

Ellis Says Rent Control Would Deter Investment, Reduce Rental Housing Stock

PHILLIPSBURG, NJ (Oct. 15, 2019)—Phillipsburg Mayor Steve Ellis released the following statement on his veto of the Phillipsburg Town Council’s proposed rent control ordinance:

Rent control policies were designed to protect tenants in rapidly gentrifying communities from losing their place to live. These controls limit the amount by which landlords can raise rents so that a tenant is not faced with an overnight, exponential rent hike that they could not possibly afford. Without rent control, in communities where market forces are rapidly driving up housing costs, an individual or family could find themselves forced from homes and communities where they may have lived for decades.

While we certainly do hope that through waterfront development, downtown redevelopment and other investment, we will soon experience an increase in our property values and in the demand to live here, that is not currently the conditions in Phillipsburg. Phillipsburg has the lowest rents in Warren County. It has a high rate of vacancy in multiple family and two-family homes. There is no shortage of rental housing; supply is exceeding demand. The people who seek to rent homes in Phillipsburg are seeking low cost housing. In Phillipsburg, these market forces—driven by what the people who choose to live here can afford—act as rent control.

Phillipsburg has an owner-occupied rate much lower than the national average of homeownership. Nearly half of our residents do not own the home in which they live. A rent control ordinance in Phillipsburg would not protect our large rental community from rent hikes or displacement. What it would do is deter and de-incentivize the real estate investors and landlords who provide rental housing from investing here. It would devalue rental properties, which could prevent potential real estate investors from obtaining mortgages and result in tax appeals that could shift the property tax burden onto single family homeowners. It would also result in an increase in vacant and abandoned properties as Phillipsburg is unable to attract the investors who rehabilitate these properties into rental units, which would further shrink our tax base.  Any action taken by the town that would deter investment in our fragile real estate market would be disastrous for our community and our residents.

A rent control ordinance would also require the establishment of a rent leveling board, a new layer of government that would not be workable within our current government and would be expensive for taxpayers without providing the desired benefit.

The justification for this rent control ordinance is to address legitimate concerns about the neglected conditions of some rental properties. These are admirable goals, but they are not accomplished through rent control. In fact, rent control could discourage landlords from improving their properties. We need to improve our inspection and code enforcement services, and I would recommend convening a special committee with the objective of providing much improved inspection, code enforcement and oversight of rental property conditions.

For these reasons, I have vetoed the rent control ordinance.