Williamstown Rent Board Rejects Rate Hike RequestBy Tammy Daniels, iBerkshires Staff
11:27PM / Wednesday, March 23, 2011 | |
 All the seats were taken for the Rent Control Board's decision on Wednesday. |
Spruces tenants were all smiles after the board rejected a rent increase at the mobile home park. In the center are David Rebello and Cynthia Clermont-Rebello, who head the tenants association. |
WILLIAMSTOWN, Mass. — The Mobile Home Rent Control Board on Wednesday rejected a $120 rate hike request for Spruces, vindicating the efforts of tenants who have been arguing against the proposal for nine months.
Nearly three hours of calculations by board members during an open executive session was summed up by what they determined was fair rent of $226 a lot — more than $30 less than what tenants are currently paying.
"I guess the rent increase is denied, according to our calculations," said board member Cheryl Shanks as the board sat in a bit of stunned silence.
The number was far and away from park owner Morgan Management's initial application to increase monthly rents at the 225-lot park by some $151, bumping the rents from $258 to $409. At the next meeting park officials had dropped the amount to $377.
Tenants Association President Cynthia Clermont-Rebello said she wasn't surprised by the findings as her neighbors clustered around giddy with victory. The tenants Rent Control Committee, headed by Phyllis Alcombright, and Clermont-Rebello have been doing their own research on the park's finances.
"No, I'm not surprised because that figure is exactly what we came up with," she said. "No, we knew their numbers were not valid numbers."
The clincher was the board's rejection by 3-1 of Morgan Management's request to consider a 15-year amortization of the replacement and repair of water lines to 152 lots in its rent deliberations. Tenants have argued through five contentious hearings that the $428,000 project had been ordered by the town because of failing lines and, therefore, shouldn't be included in expenses.
The board sided with the tenants based on testimony that indicated there was an order by the Board of Health and an apparent failure by the park to secure the proper permits.
Member David Levine was hesitant in outright rejecting the project, pointing to ambiguities in testimony and past meeting minutes.
"If we want them to act more responsibly, this would discourage them," said Levine "The effect on the rent is $10 or $11."
His three colleagues took a harsher view. "They are responsible for anything underground," said Chairman Jack Nogueira. "The land belongs to them; it does not belong to the tenants."
John Luczynski said it was a fact that no permits were pulled and the project was illegal: "I don't see how as a board we can possibly allow it."
While several several pieces of evidence had influenced her decision, Shanks said, "waiting for everything to collapse got them in this situation."
"The Rent Control Board bylaws state they have to justify the expenses," said Clermont-Rebello. "If they're not justified they can't get a rent increase; without the water line project, they had nothing."
It took the board nearly two hours to get to the water project vote. Members struggled with setting a value on the park as a basis for rent calculations that would also give Morgan Management a fair return. After more than an hour, they had rejected the town's assessment of $4.6 million and Morgan's pitch of $6.5 million.
The first number was "arbitrary," said Levine, and as for the second, "I don't think the bank even with a 20 percent payment would give them $6.5 million."
But the three other board members also rejected a more complicated calculation by Levine and, after grappling with cost of living ratios, rates of return and reasonable increases in property values, settled on using the 2002 purchase price of $2.28 million as a starting point. After adjustments, the board came up with a total value of $2,487,845.
They also gave the park owners an expected rate of return of the prime rate of 3.25 plus 3 percent, which worked out to 6.25 percent. That's the amount the park should be making over cost each year. (North Adams gave Morgan a stingier prime plus 1.5 percent for a total of 4.75 percent in its rent increase application last year.)
Board members Cheryl Hanks, Chairman Jack Nogueira and David Levine. John Luczynski is behind Levine. |
After a 5-minute break around the two-hour mark, the committee worked its way as swiftly as possible through other expenses that Morgan had submitted, allowing pretty much all of them.
To make a profit, the park should be bringing in about $610,860, they determined, which broken down by month and number of lots came to about $226. The rejection was made pending a written decison from the board with accompanying figures. Nogueira said the calculations would be double-checked.
Morgan's Chief Financial Officer Larry Hill said the company would wait for the written decision before deciding whether to appeal. "That's all I can tell you right now."
Nearby, association Vice President David Rebello pumped his arms in victory. "This is a sweet ending!"
"Absolutely, this is sweet," said his wife, Clermont-Rebello, who added it's not ended yet. "Our battle has really just begun, we've just begun to fight ... we're just happy with this and we realize we have some fighting to do yet."
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