In a move that could serve as a model for other cities grappling with rising rents, Passaic just adopted one of the strongest rent control measures in the state, approving a new law that limits rent increases to 3% a year.

And it eliminates a loophole that often leads to steep rent hikes when tenants move out.

Supporters say it's a major win for working class families trying to stay in their homes.

But critics warn it'll stifle investment in housing.

Senior correspondent Joanna Girgis has more on what the change means for renters and landlords.

Wow.

With this new ordinance that has been passed, I can now breathe easily and I do feel a big sense of relief.

Berta Jimenez is a Passaic resident who's been fighting for a rent control ordinance that the city council just passed earlier this month.

It caps the amount that a landlord can raise rent on tenants at 3% per year.

This is passed unanimously, mostly passed in.

The council, enacted a similar ordinance in February, capping rent increases at 6%.

But community advocacy group make the road.

New Jersey fought for the city to lower that cap even further, citing a housing crisis that they say is pushing some 10,000 families close to homelessness.

I've heard people deciding on, you know, are they going to pay their medical bills this month or are they going to pay the rent?

Are they going to put groceries on the table?

They might not have enough.

And, you know, that kind of has led to many evictions throughout the years.

So we've seen a huge jump from like 20, 22 to 2024 where it's almost tripled.

The eviction cases in court.

Gimenez has seen rent increases year over year and says she's been scared that she could be next on that eviction list.

CARLA And every year the landlord has been increasing my rent of about $100, including during the COVID 19 pandemic.

It's been incredibly difficult for me and my family because I am a mother of four younger daughters and I have to choose between paying for our food, our meals and or paying for my rent.

And if I don't pay the rent completely, I am charged with late fees that additionally add to my stress and burden.

Not mine.

But while Gimenez can breathe a sigh of relief that her rent won't go up by more than 3%, Nicky Case with the New Jersey Apartment Association, which represents landlords, believes ordinances like this only end up hurting renters in the long run.

And the association opposes rent control of any kind.

Rent control doesn't doesn't reflect the the economics of housing.

It discourages investment in housing.

And by doing so, it creates a shortage of supply and disinvestment in the housing supply that we already have.

And he says these caps don't reflect the cost that landlords have to bear.

The cost of labor has gone up significantly.

Insurance costs and just since the pandemic alone have doubled rising utility costs.

You know, those are going up tremendously.

Appliance costs, costs, materials.

So we're seeing all of these cost drivers on the expense side.

And it's important that that owners be able to recapture those costs through rents, because otherwise, you know, we'll either see a decline in quality of housing or we're going to see owners struggle to, you know, provide services and stay in business.

The Passaic ordinance does allow owners to apply for higher increases if they've made capital improvements or other major repairs to a housing unit.

But the law now forbids what's known as vacancy decontrol, where a landlord can increase the rent to any amount once a unit becomes vacant.

There had been abuses in the past as well, like, you know, landlord trying to raise rent twice a year.

A landlord could say like, you know, it's time for you to move out.

And then they could raise around $500 for the new tenant.

And the new tenant wouldn't know what the past you know, rent was.

A bill was passed by the assembly earlier this year that would establish a state standard for unconscionable rent increases.

In light of the growing eviction and homelessness rates in New Jersey over the last few years, that Bill hasn't moved in the Senate, though Kiki says there are better ways to address affordability.

Rent control is often kind of viewed as a stopgap for high housing costs, but really the solution is to address the underlying cost drivers and not just impose a cap on rents.

So what New Jersey really should do is focus on increasing the supply of both market rate housing as well as affordable housing, because we need to have both market rate and affordable housing built together in order to make this work.

While state lawmakers argue over how to increase the affordable housing supply, make the road is working on establishing rent control ordinances in other cities like Perth Amboy and Elizabeth.

In Passaic, I'm Joanna Geiger, NJ.

Spotlight News.