Two complaints have been filed challenging the constitutionality of the defendant municipalities' recently adopted ordinances which seek to establish rent leveling systems designed to curtail the popularly labeled practice of "rent gouging" (the exacting of exorbitant rents through excessive rent increases).
Essentially, River Edge and Fort Lee, in response to public despair over the dwindling housing supply and the attendant sky-rocketing of rents, endeavored to fix rentals as of specified dates and provide for adjusted increases thereafter. Such changes would reflect cost-of-living increases, maintenance costs, capital improvement costs, property tax increases and general "hardship" factors. Administrative boards, designed to review and oversee the operation of the leveling provisions are also established. Further, the ordinances prescribe sanctions in the form of fines and imprisonment for the willful violation of their provisions. See N.J.S.A. 40:49-5.
The plaintiffs are multiple-dwelling owners and a homeowners association opposed to rent control. This court imposed temporary restraints against the enforcement of the Fort Lee and River Edge ordinances pending formal argument. The New Jersey Tenants Organization was granted leave to file an amicus curiae brief. The issues to be adjudicated are legal in nature. Accordingly, the matter may be disposed of in a summary manner. R. 4:67.
The plaintiffs challenge the validity of the ordinances on the grounds that:
(1) There were two procedural defects concerning the adoption of the Fort Lee ordinance: (a) a five-minute time limitation during which opponents and supporters thereof were permitted to voice their viewpoints at the public meeting, and (b) the failure to publicly advertise and hold a public meeting on an amendment to the ordinance;
(2) The Fort Lee ordinance is arbitrary and oppressive and violates due process in that it may result in the imposition of severe and unwarranted tax increases on residential property owners;
(3) Due process and other statutory and constitutional objections to the various sections of the ordinances relating to summary dispossess measures render the ordinances unconstitutional;
(4) Due process and other statutory and constitutional objections to the various sections of the ordinances relating to tax surcharges render the ordinances unconstitutional;
(5) Due process and other statutory and constitutional objections to the various sections of the ordinances relating to delegation of powers to the administrative boards render the ordinances unconstitutional;
(6) The enactments are preempted by state legislation designed to occupy entirely the field of rent regulation; in this regard, they cite state statutes dealing with substandard housing and summary dispossess proceedings;
(7) The enactments are preempted by federal legislation designed to occupy entirely the field of rent regulation; in
this regard, they cite federal statutes dealing with the current federal economic program popularly referred to as Phase II;
(8) Municipalities generally lack the power and authority to regulate rents and landlord-tenant relationships; reliance is placed primarily on the case of Wagner v. Mayor and Municipal Council of Newark , 24 N.J. 467 (1957).
PROCEDURAL DEFECTS CONCERNING ADOPTION OF FORT LEE ORDINANCE
Two violations of the procedural provisions of N.J.S.A. 40:49-2 are alleged in relation to the adoption of the Fort Lee ordinance. The first is grounded on a five-minute limitation imposed on each speaker at the public meeting. N.J.S.A. 40:49-2, which governs the procedure to be employed in the enactment of municipal law, is silent with respect to the time to be allowed supporters or opponents of the ordinances. It merely mandates that the ordinance be subject to public expression at a public meeting. N.J.S.A. 40:49-2(b).
The public hearing in this case took place on January 19, 1972. There was considerable controversy surrounding the ordinance and the meeting was heated and well-attended. It lasted well into the night. Each speaker was afforded five minutes initially and an additional five minutes after all speakers were heard. The statute imposes no bar to such a procedure. There seems to be nothing patently unreasonable with such limitations. No speaker is alleging discrimination or unwarranted exceptions to the five-minute rule.
For the foregoing reasons, and in light of the presumption of reasonableness normally accorded municipal actions, it must be concluded that the ordinance is not voidable because of the time limitation imposed on speakers at the
The second procedural infirmity posed by plaintiffs relates to an amendment to the Fort Lee ordinance subsequent to its adoption but prior to its final passage. The ordinance as originally adopted was to be effective for a period of three years. Two weeks after its initial adoption by the governing body and the public hearing thereon, by an amendment, the effective period was reduced to one year. The said amendment further provided for extensions of the effective date from year to year by resolution of the governing body. At that same meeting, the ordinance was finally adopted.
Plaintiffs contend that the ordinance as finally passed is invalid since the notice and hearing requirements of N.J.S.A. 40:49-2(c) were not followed. That statute provides:
If any amendment be adopted, substantially altering the substance of the ordinance, the ordinance as so amended shall not be finally adopted until at least 1 week thereafter, and the ordinance as amended shall be read at a meeting of the governing body, which reading may be by title, and shall be published, together with a notice of the introduction, and the time and place when and where the amended ordinance will be further considered for final passage, at least 2 days prior to the time so fixed. [emphasis added]
The aforementioned procedure is mandated only where the adopted amendment "substantially" alters the substance of the ordinance. Wollen v. Fort Lee , 27 N.J. 408, 420 (1958).
Insofar as opponents to the ordinance are concerned, the term of the law was reduced and any prejudice that might result from the amendment would arise only after the third year of its effectiveness but certainly not until after the first year. At times, an extension could be achieved by resolution (without requirement of advertising and formal public hearing) rather than by compliance with the provisions of N.J.S.A. 40:49-2(c). Thus, it is only after the third year that the plaintiffs would be prejudiced, if at all. Prior to that time,
and even after, the ordinance will continue under the scrutiny of the public by virtue of the Right to Know Law. N.J.S.A. 10:4-1 et seq.
The problem requiring the exercise of the police power is the threat to the public welfare caused by a shortage of housing at reasonable rentals. The circumstances are emergent, as cited in the preamble to the ordinance. This difficulty is hopefully temporary. Even if the governing body had appended no time limitation to the ordinance, the effectiveness of this type of legislation is only for the emergency.
In weighing the equities in terms of the harm to the plaintiffs, the purposes for which N.J.S.A. 40:49-2(c) was enacted and the effect of the amendment on the substantive application of the ordinance, it is my conclusion that the amendment in question does not constitute such a substantial alteration to the ordinance as to warrant its invalidation. If anything, plaintiffs are benefited by the change. Under these circumstances, the decreased time period cannot be deemed to be a substantive aspect of the ordinance. Accordingly, no substantial alteration of the substance of the ordinance has occurred. Wollen v. Fort Lee, supra at 420; cf., Reisdorf v. Mountainside , 114 N.J. Super. 562, 574, 575 (Law Div. 1971).
CONSTITUTIONAL OBJECTS -- TAX INCREASES ON RESIDENTIAL PROPERTY OWNERS
The Fort Lee homeowners group seeks to bottom a due process attack on the possibility that residential homeowners will incur substantial and unwarranted tax increases as a result of rent leveling. The argument is that property taxes on apartment houses will remain stable since the income derived therefrom will not increase. While the assessed value of the property remains constant, it is asserted that the cost of municipal services will increase. The difference, it is argued,
will fall exclusively on the shoulders of the residential property owners.
The plaintiffs' logic breaks down under an examination of the ordinance itself. Section 5 specifically provides for a tax surcharge to be passed on to the tenant "because of an increase in municipal taxes." In addition, the ordinance requires that tenants pay:
(1) differences in rentals (at lease renewal periods) as reflected by percentage increases between consumer price indices at commencement and termination of leases (section 2);
(2) hardship rental increases connected to mortgage payments (section 10);
(3) additional rental for capital improvements (section 10);
(4) additional rental for increased or more costly services (section 10).
Moreover, new housing units are exempted from the requirements of the ordinances; the landlord fixes the initial rent.
It is apparent, therefore, that under the ordinances, apartment dwellers are not to be preferred with respect to taxes or increased costs of municipal services. Nor will the apartment owners be deprived of recovering increased costs of improvements and daily services available and required in the dwelling. The veiled warning of disaster about to befall homeowners by reason of rent leveling is groundless.
If the foregoing were not enough to dispel the challenge raised by the association, it should suffice to repeat the proposition that legislative enactments are not necessarily defective because they may result in an incidental burden upon certain members of the community. Where the general welfare is served, the ordinance is presumptively valid. Garden State Racing Ass'n v. Cherry Hill Tp. , 42 N.J. 454, 464 (1964); Zampieri v. River Vale Tp. , 29 N.J. 599, 606 (1959); Kozesnik v. Montgomery Tp. , 24 N.J. 154, 167 (1957); Johnson v. Montville Tp., supra. And the wisdom of the exercise of the legislative function in the
selection of the means to promote the general welfare is not open to arbitrary interference or review by the judiciary. New Jersey Mortgage Finance Agency v. McCrane , 56 N.J. 414, 422 (1970); Roe v. Kervick , 42 N.J. 191, 230 (1964); Guill v. Mayor, etc., Hoboken , 21 N.J. 574, 581-582 (1956); Fred v. Mayor, etc., Old Tappan , 10 N.J. 515 (1952).
For the foregoing reasons, if it is found that the ordinance under review is validly within the scope of municipal police power, the homeowners association charge cannot prevail.
CONSTITUTIONAL OBJECTIONS -- SUMMARY DISPOSSESS MEASURES
Section 1(e) of the Fort Lee ordinance is the subject of attack by plaintiffs. It consists of definitions of terms presumably employed in the ordinance. It defines "just cause" as:
[A]ction on the part of the landlord in refusing to let, relet, or rerent to a tenant or basis for dispossess for any one or more of the following:
1. Failure on the part of the tenant to pay rent due and owing under the lease when the same be oral or written.
2. Disorderly or disturbing noises or conduct on the part of the tenant that destroys the peace and tranquility of the landlord, other tenants, or other persons living in or about the neighborhood.
3. Intentional or persistent neglect, damage, or injury by the tenant to the property of landlord.
4. Constant violation by the tenant of the rules and regulations of landlord if signed by tenant or incorporated in the lease with a a copy being given to tenant.
5. Substantial breach of the terms and conditions of the lease agreement by the tenant.
6. Owners seek to occupy premises himself [sic].
7. Owner seeks to close premises down without permitting any further occupancy.
The plaintiffs urge that this section purports to establish what constitutes "just cause" for a landlord to refuse
to let or relet to a tenant. Oddly enough, while the term "just cause" is defined, nowhere does it appear in the substantive provisions of the ordinance. Therefore, the term is of no legal effect. The River Edge ordinance, nearly identical in all other respects, is devoid of such a provision. Some verbiage and part of the format of the ordinance leave much to be desired. But this is not a basis for invalidation.
The claim is that the ordinance is clearly incompatible with N.J.S.A. 2A:18-53 et seq. That statute grants to a landlord a summary remedy for recovery of his premises under certain conditions.
A municipality may not legislate in a field already subject to state statutory law or regulation. Mogolefsky, v. Schoem , 50 N.J. 588, 598 (1967). And it is elementary that in exercising its police power, a municipality may not legislate in conflict with state statutes. Ringlieb v. Parsippany-Troy Hills Tp. , 59 N.J. 348 (1971); Kennedy v. Newark , 29 N.J. 178, 186 (1959).
Assuming that section 1(e) of the ordinance sets forth the grounds for a landlord to refuse to rent his premises, the statutory law (N.J.S.A. 2A:18-53) does not contradict the right to possession by that landlord. It deals only with the remedy if the right otherwise exists. It follows that legislation conditioning the right to evict does not encroach upon the statutory remedies. These ordinances will not impinge upon that remedy existent in the field of landlord and tenant relationships. As Chief Justice Weintraub observed in Summer v. Teaneck Tp. , 53 N.J. 548 (1969):
Each of the governmental agencies concerned is charged with guarding a separate public interest. In Re Mattera , 34 N.J. 259, 266-267 (1961). There is good reason thus to distribute the total power of the State. [at 557]
Further, even if one assumes that the term "just cause" in section 1(e) is a substantive part of the ordinance and limits the landlord's privilege to relet, rent leveling cannot be said to be so intertwined with control of evictions that
the municipal governing body intended both or none. Some control of maximum rents is itself conducive to the purpose of assuring continued occupancy. To be sure, direct control of evictions is an additional and a more direct technique; yet control of maximum rents is itself an intelligent partial solution. It would be unreasonable to assume that the municipality, if aware of its lack of power to control evictions directly, would do nothing at all to meet the emergency it found to exist. See Wagner v. Mayor, etc., Newark , 42 N.J. Super. 193, 210 (Law Div. 1956), wherein Chief Justice (then Judge) Weintraub decided this legal point, which observations as such were not reversed or negated in the Supreme Court opinion of the former Chief Justice Vanderbilt, 24 N.J. 467 (1957). Therefore, control of evictions, if it exists at all, does not render the entire ordinance invalid. Section 19 of Fort Lee and section 18 of River Edge provide for severability. Section 1(e) may be invalid; the remainder of the ordinance stands. Kennedy v. Newark , 29 N.J. 178, 187 (1959); Van Itallie v. Franklin Lakes , 28 N.J. 258, 276 (1958); Economy Ent., Inc. v. Tp. Com. of Manalapan Tp. , 104 N.J. Super. 373, 377 (App. Div. 1969).
CONSTITUTIONAL OBJECTIONS -- TAX SURCHARGES
The tax provisions of sections 7 and 9 of the Fort Lee ordinance are brought into play in a further challenge by plaintiffs. It is urged that section 7 which requires the tenant to pay his pro rata share of tax increases "in 6 monthly payments, commencing July 1st of each year" is arbitrary to the extent that the landlord is obligated to pay his taxes for the first two quarters on February 1 and May 1. The contention is that a landlord is thereby required to "carry" his tenant for six months. (The River Edge ordinance provides for a 12-month payment schedule.)
This provision is not so arbitrary or oppressive as to constitute a violation of due process. Ebler v. Newark , 54 N.J. 487 (1969). Landlords typically "carry" tenants where leases provide for fixed rentals. Compensation for tax increases must frequently await the termination of the lease or outcome of certain appeals or contingencies which may occur after the actual increase. The tax increase each year is not determined until receipt of the bill on or about July 1 for that year reflecting the increase and charging it in the third and fourth quarters (August 1 and November 1) of that year. The tenant will substantially be paying during the same period as the landlord. If anything, this provision allows for compensation at an earlier date than usual since it comes regardless of whether the lease has or has not been terminated.
The second aspect of the attack bottomed on the taxation provisions relates to sections 9 of both ordinances. These sections require a landlord who successfully prosecutes a tax appeal to pass on to his tenants 50% of any reduction in taxes realized. The plaintiffs contend that this provision may be read as to require a sharing of reductions that are related to increases for years prior to the effective date of the ordinances.
The general guidelines for construing legislative enactments bear repetition at this point. There is a presumption in favor of the validity of an act. McDonald v. Board of Election Com'rs of Chicago , 394 U.S. 802, 809, 89 S. Ct. 1404, 22 L. Ed. 2d 739 (1969); United States v. National Dairy Products Corp. , 372 U.S. 29, 32, 83 S. Ct. 594, 9 L. Ed. 2d 561 (1963); Stothers v. Martini , 6 N.J. 560, 567 (1951). Unless its repugnancy to the Constitution is so manifest that it leaves no room for reasonable doubt, the act should be held constitutional. Behnke v. New Jersey Highway Authority , 13 N.J. 14, 25 (1953). Further, an act of the Legislature ...