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Levin-Sagner-Orange and Levin-Sagner-Homes Urban Renewal Section v. Rent Leveling Board

Decided: June 4, 1976.

LEVIN-SAGNER-ORANGE AND LEVIN-SAGNER-HOMES URBAN RENEWAL SECTION II, PLAINTIFFS,
v.
RENT LEVELING BOARD OF THE CITY OF ORANGE, DEFENDANT



Bedford, J.c.c., Temporarily Assigned.

Bedford

[142 NJSuper Page 431] Plaintiff Levin-Sagner-Orange is the owner of Section I of a garden apartment complex consisting of 52 units in the City of Orange. Plaintiff Levin-Sagner-Homes Urban Renewal Section II is the owner of Section II of that garden apartment complex consisting of 248 units in the City of Orange. It is known as Washington-Dodd Apartments, a subsidized insured project

of the Department of Housing and Urban Development under § 221(d)(3) of the National Housing Act, 12 U.S.C.A. § 1715 l (d) (3). Defendant Rent Leveling Board of the City of Orange is a public agency of the City created on November 10, 1972 by the rent leveling ordinance.

On October 22, 1975 HUD issued a regulation prescribing the conditions under which it will preempt rent regulation by local rent control boards acting pursuant to state or local law. 24 C.F.R. § 403. It provides in § 403.9 that

In January 1976 plaintiffs notified their tenants at the Washington-Dodd Apartments of their intention to file an application with HUD for rent increases. In February HUD notified the Orange board that it was processing plaintiffs' application for rent increases "and that HUD has preempted the fields of local rent regulations as it affects the [plaintiffs'] project."

On March 19, 1976 HUD approved an increase in the monthly rental charges of the Washington-Dodd Apartments. Three days later defendant's chairman notified plaintiffs and their tenants that the proposed increase "is null and void and tenants shall continue to pay current rents under the direction of the Orange Rent Leveling Board in compliance with The [Orange Rent Leveling] Ordinance."

On April 1, 1976 plaintiffs filed a complaint in lieu of prerogative writs seeking a declaration that defendant was acting unlawfully and interfering with plaintiffs' charging rents approved by HUD, and a temporary restraining order enjoining defendant from interfering with the collection of those rents. Plaintiffs also obtained an order to show cause why relief should not be granted on the return date thereof by way of summary judgment and a permanent injunction.

On April 21, 1976 defendant filed an answer and counterclaim seeking a declaration that plaintiffs were unlawfully interfering with the administration of the Orange rent leveling ordinance with respect to the charging of rents at the Washington-Dodd Apartments and a permanent injunction against such conduct. Defendant has also filed a cross-motion for summary judgment.

The court is faced with the novel question of whether this HUD regulation, if valid, preempts the application of the Orange rent leveling ordinance to these plaintiffs.

First, defendant contends that the HUD regulation, 24 C.F.R. § 403, is invalid because it is an exercise by HUD of an undelegated authority and is therefore ultra vires.

12 U.S.C.A. § 1715b provides:

The Secretary is authorized and directed to make such rules and regulations as may be necessary to carry out the provisions of ...


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