The proposed rent increase: part 2
the landlord's offer

[The deadline for the offer had expired.
This web page is preserved to show the events as they happened]

The landlord extended this offer in lieu of the application for a major capital improvement surcharge for the upgrading of the piping, insulation and fan coil units that provide heat and air conditioning. As of November 2015: 214 of 728 fancoils have been completed (29%).
It will take 10-12 years to complete the work.

apartment # of fancoils monthly surcharge
when all work is completed
A C D H J K P 3 $21.45
B F G I M N 4 $28.60
E L 5 $35.75
See the spreadsheet for the status of each apartment
(number of fancoils completed and the corresponding cost).


Admittedly, there are merits to the proposal.
  1. The surcharge is only for units installed.
    For some tenants, that may be 10 years in the future.
  2. The monthly surcharge is lower by extending the payment over 30 years instead of 20 years.

BUT THERE ARE COMPELLING REASONS TO REJECT THIS PROPOSAL

  1. The offer includes 5% interest despite the work being self-financed.
    This violates a ruling by Judge Walter R. Barisonak denying interest when there is no loan.
    (click here for more information about the Barisonak decision)

  2. Elizabeth municipal ordinance 5.70.010 clearly states
    The conversion of one heating system for another …
    shall not be deemed a capital improvement.
    In addition, Elizabeth municipal ordinance 5.70.120 states
    Capital improvements shall not include any repair or replacement of an already existing facility,
    or those items or services required by law, or previously required by law.

  3. The work must be completed prior to applying for a Capital Improvement.
    To date, approximately 30% of the work has been completed
    and work is not expected to be completed until approximately 2025-2027.

  4. There is no allowance for the substantial savings from reduced energy and maintenance costs.
    Even the Trane web site claims "up to 66% energy savings"
    particularly when used with the new computerized building management system.

  5. The math:
    Citing the Capital Improvement filing,
$1,262,935.21 was spent for 214 of 728 fancoils

The estimated TOTAL COST is $4,300,000, possibly higher if prices/costs increase.
The landlord has never disclosed that estimate.
The revised Capital Improvement Application of December 15, 2015
reveals he intends to file for the remaining 70% once completed!
"there will be additional surcharges as future upgrades have been completed"

The original filing:
$10.84 per room per month
× 769 tenant rooms in the building (NOT including those for the landlord's use)
× 12 month/year
× 20 years
= $2,000,630.40
— $1,262,935.21 spent = $737,695.19 interest

The new proposal:
$7.15 per fan coil per month
× 728 fancoils in tenant apartments (NOT including those for the landlord's use)
× 12 month/year
× 30 years
= $1,873,872.00
— $1,262,935.21 spent = $610,936.79 interest
    That's barely a better deal considering that interest is not allowed!


Remember, this is IN ADDITION TO the current Capitol Improvement surcharges,
which will expire according to their original agreement.

The landlord did not accept the CTTA's alternate proposal to extend the current capital improvements for another 30 years.
That would have given the landlord the required funding without raising anybody's rent.

Current capital improvement surcharges

apartment rooms 2003 capital
improvement		 2007 capital
improvement
D K 3 $9.75 $5.28
A C H J 3 ½ $11.38 $6.16
B F I M P 4 $13.00 $7.04
G N 4 ½ $14.62 $7.92
E L 5 ½ $17.87 $9.68


Thank you for your very kind attention.