Grandville Towers resident Jane Manning asks a question of the Rent Leveling Board last Thursday night (Photo by Sarah Klepner. Click to enlarge)
By SARAH KLEPNER
Red Bank’s Grandville Towers Grandville Towers is getting glass railings, but not a new pool – not at the tenants’ expense, at least.
Thursday night, the Rent Leveling Board went line by line over PRC Management’s proposal for $3 million-plus worth of work at the 10-story apartment building, which the applicant sought to have covered by rent surcharges.
Under Red Bank’s rent control ordinance, landlords are not able to raise rent more than an amount tied to the Consumer Price Index, except in cases of hardship or capital improvements.
After three days of testimony by PRC’s vice-president, architect, and civil engineer over the course of several months, the four board members eligible to participate took about 45 minutes to hash out whether each proposed expense was for a capital improvement or a repair.
The fifth board member, Alison Hayes, was in the audience, recused from these proceedings because she is a resident of Grandville Towers.
Board attorney Gene Anthony offered a long list of criteria for capital improvements recognized by the Internal Revenue Service, including improving quality, enhancing value, or adapting a property to a new use, adding that “IRS rulings are not dispositive, they are only helpful.”
Board member Nicola Bowers stood out among her colleagues in the decision-making, challenging a number of big-ticket items that are part of the proposal, including a $690,000 cabana and a $381,000 facade replacement.
Bowers said she read the rent-leveling ordinances from Verona and East Orange, the two New Jersey municipalities involved in case law that the Red Bank board uses as guidelines.
“Both ordinances state that for a landlord to seek a surcharge, it has to be an improvement which improves the value of the property,” Bowers said. “However, our ordinance does not say that. Our says that to qualify as a capital improvement, the landlord has to show a benefit to the tenant in the form of improved lifestyle, convenience, ease, and/or security.
“I do not feel that any of these structures will change [these things], because all of these items are already there,” Bowers said regarding the cabana, which is also to house fitness equipment.
Bowers moved to deny the facade replacement capital improvement status, saying, “it’s more of a repair item.”
Anthony commented, “$381,000 is a big repair,” to which Bowers replied, “It’s a big building.”
However, Bowers’ motions to deny capital improvement status to the cabana and the facade went unseconded, to the quiet dismay of the four Grandville residents in attendance.
Board member Scott Heck moved to grant the cabana the status, citing IRS descriptions of improving “quality, capacity, and strength of the property.”
Heck’s motion was seconded, by Gail Soler, who said, “I think it’s a little steep in price… I also think we need to protect ourselves and the town at this point.”
Looming over the heads of the board is the possibility that a landlord might sue the borough if proposed work is improperly denied capital improvement status.
Despite this, many pieces of the proposal were denied that status, including a new pool and entrance portico, lobby improvements, new mailboxes, new signs, and extensive landscaping work, shaving roughly $520,000 from the amount that tenants will have to pay through surcharges.
At the close of deliberations, Anthony noted that the surcharges are not to be imposed until PRC clears the final pricing of the work with the board
