particularly in the urban counties, with different systems and different formulas from one municipality to the next, some being only a few square miles in size. In addition to this there is the difficulty posed by the direction given in Troy Hills, supra, that a methodology akin to that of public utility rate cases is to be employed.
All of these factors were expressed, in the colloquy, as generating an increased risk of subtle forms of official corruption in the contest either to obtain an increase or to block one, through the creation of a large number of agencies to deal with granting or denying authority for the payment of money. The risk is that of creating economic constituencies whose votes in the electoral process might be bought with the grant or denial of someone else's money, public or private. The injection of public utility rate concepts seems likely to magnify the risk because of the complexity and expense of that process, especially when the economic unit to which the process must be applied under Troy Hills is the "individually administered apartment complex," such as Hill Manor Apartments here.
The risk can take several forms. One is where the increase at issue is a small one, and the owner's cost of securing it (including judicial proceedings) involves a substantial sum. Since the expense of securing the increase is a cost of doing business, it will compel the authorization of a still greater increase if, as New Jersey has ruled, the end result is to be a just and reasonable rate of return. Second, the structure of the Board under the Newark ordinance seems to invite the risk of making determinations to favor one or another economic constituency.
Section 10 establishes a Board of 5 members to be appointed by the Mayor and approved by the Council. Of the 5, 2 are to be tenants, 2 are to be landlords, and the fifth is to be a law school graduate. Section 10(e) sets a quorum at 3, and requires a vote of 3 for Board action. If the tenant and landlord members vote in ways that favor the constituencies they represent, Board action could, in practical effect, be controlled solely by the law school graduate. And if that key member should have hopes or aspirations to hold public office, he may be led to favor one side or the other, depending on which he conceives to be his stronger constituency.
This is not to suggest that the Board members will not discharge their duties other than honestly, faithfully and impartially. But the risk of conflict, and the appearance of impropriety are invited by the structure. Parties in interest should be heard fully, but the process risks degradation when they take part in the decision. Plaintiffs and defendants do not sit on their own juries.
Obviously, the present ordinance as amended in 1974 could not have foreseen the details spelled out by the Supreme Court in the 1975 trilogy. A new ordinance drafted in the light of those decisions may well meet these problems effectively. It is too early to tell, and this case may or may not prove to be the proper vehicle for considering that question.
Also, it should be noted that as long ago as 1967, New Jersey recognized the vital importance of protecting the integrity of mortgage loans made for redevelopment, renewal and rehabilitation projects (which include low income and middle income housing projects) by the enactment of L. 1967, c. 304, N.J.S.A. 55:17-1 to 11.
It assures that the terms of any lease or financial arrangement made as one of the elements counted on in launching such a project are to continue in full force and effect despite default in or foreclosure of any mortgage loan made to finance the project, and provides other additional and supplemental remedies for such mortgage loans.
Contracts for mortgage loans (i.e., mortgage loan commitments) as well as the notes or bonds and the mortgages themselves, when made on or after the effective date of the Act on February 15, 1968, come within the protection of N.J.Const. Art. 4, § 7, par. 3. That provision goes beyond its parallel in the U.S. Constitution in that it not only forbids laws impairing the obligation of contracts but also those "depriving a party of any remedy for enforcing a contract which existed when the contract was made."
The introducer's statement to the bill took note that without such protection, revenue bonds to be issued by various State or local agencies to finance the construction of such projects, including housing projects, might well be unmarketable and this would naturally frustrate the underlying objective to provide public support for private financing of such projects.
The arrangements with the United States in regard to Hill Manor Apartments may well come within this statute, by reason of the definition in NJSA 55:17-9(b). It is also observed that as published, NJSA 55:17-9(d) omits a phrase or phrases as the sentence of the definition is incomplete.
The point has not been briefed, but it may well be that this statute, especially when considered with the rule expressed in Summer v. Teaneck, 53 N.J. 548, at 554-555, 251 A.2d 761 (1969), and the constitutional provision mentioned, expresses a policy of local law which itself carves out and excludes from municipal rent control ordinances those projects coming within its terms. If this were so, then the federal questions of pre-emption and the like may not need to be decided.
In any event, the present posture of the case is no different than it was at the February 24, 1976 hearing, and the decision then made will stand.
The nature of the case is such as to lend itself for final determination on the basis of facts not in dispute. After the City's brief and the answers to the supplemental complaint are in, a pretrial conference will make that evaluation possible. The defendants are urged to serve and file their answers as soon as feasible so that the matter may be expedited.
© 1992-2004 VersusLaw Inc.