assisted living operators are increasing their charges / rents

Nursing home business owners and operators who lease their buildings would have their annual rent increases capped at 4% under a bill before the New Jersey General Assembly.

The bill, according to a statement from the Assembly Health Committee, prohibits someone who leases or rents land or a building to an owner or operator of a nursing home from raising annual rent by more than 4%. The bill now heads to the state Assembly Aging and Senior Services Committee for consideration.

“A more equitable way to assess increases would be if facilities filed cost reports, something that had been mandated until 2015, before then Gov. Chris Christie [R] ended the requirement,” John Indyk, vice president of the Health Care Association of New Jersey, told the McKnight’s Business Daily

“We’re all for paying reasonable rates — I get it about related transaction parties and concerns about that — but if we had cost reports, we could determine what’s a reasonable rate,” he added.

The legislation allows for exemptions to the rent cap. Owners can file a petition in the Superior Court, in the Office of the Special Part Clerk where the property is located. Some reasons that the court might allow an exception include increases in maintenance and utilities costs, real estate taxes and property insurance. In addition, “reasonable” improvements to the land or building or the addition of reasonable services or amenities not previously provided could factor into an exemption.

If passed, an owner who violates the provisions of the bill with annual rent increases greater than 4% would be subject to a penalty equal to two-and-a-half times the monthly lease or rent payments for each violation. Collected fines would be deposited into a fund to be used to offset the cost to the courts of administering the provisions of the bill.

Laurie Facciarossa Brewer, New Jersey’s long-term care ombudsman, is in favor of the legislation. 

“This would protect nursing home owners from drastic rental/lease increases and would also protect against some of the abuses happening with related party transactions, where a landlord or lessor related to the nursing home charges rates far above fair market value. … related party real estate transactions are one of the primary ways that nursing homes across the country can funnel public moneys away from resident care and pass it up as profits through shared ownership structures, and this bill would help ensure that more money is available for patient care,” Brewer said in testimony before the committee.

The bill first was introduced to the Assembly in June. It is sponsored by Assemblyman Herb Conaway Jr. (D), Assemblywoman Angela V. McKnight (D) and Assemblywoman Shanique Speight (D). A companion bill is being considered by the New Jersey Senate Health, Human Services and Senior Citizens Committee. There, the bill is being sponsored by Democratic state Sens. Joseph Vitale and Sandra Cunningham.