On appeal from Superior Court, Chancery Division, Atlantic County.
Conford, Pressler and King. The opinion of the court was delivered by Conford, P.J.A.D. (retired and temporarily assigned).
[168 NJSuper Page 578] The basic question presented on this appeal is the interpretation of the "tax surcharge" provisions of the Atlantic City rent control ordinance adopted in 1973. The city and the tenants' association contend a landlord may surcharge the tenants only the tax increase of the current tax year over the next prior year. Plaintiff and the intervenor claim the surcharge extends to the aggregate tax increase of the current year over the base year specified by the ordinance -- here the year prior to the adoption of the ordinance, 1972. We are satisfied the latter represents the true intent of the ordinance; this court has previously so held as to a
substantially similar tax surcharge provision in Apartment Managem. Co. v. Union Tp. Comm. , 140 N.J. Super. 220 (App. Div. 1976).
The material provisions of the instant ordinance read as follows:
SECTION 4. During the existence of a housing state of emergency a landlord may seek a tax surcharge from the tenant because of an increase in municipal property taxes over the tax for 1972. The tax surcharge shall not exceed that amount authorized by the following provisions. The landlord shall divide the increase in the present property tax over the property tax of 1972 by the total square feet in the dwelling to obtain the tax increase per square foot. The tenant shall not be liable for a tax surcharge exceeding the tax increase per square foot multiplied by the number of square feet occupied by the tenant plus a proportionate share of the square footage of the common areas, including hallways and grounds.
Any landlord seeking a tax surcharge shall notify the tenant by certified mail or personal service of the calculations involved in computing the tax surcharge including the present property tax of the dwelling, the property tax for the dwelling for the previous year, the number of square feet in the dwelling, the tax increase per square foot, the number of square feet occupied by the tenant, the proportionate share of common area charged to the tenant, and the maximum allowable surcharge. Failure of the landlord to provide the tenant with this information shall make any tax surcharge void and the tenant shall recover for any tax surcharge paid unless a Court finds that the omission was excusable taking into consideration the owner's good faith, education, and extent of ownership of property. The tax surcharge each tenant is liable for shall be paid in twelve monthly payments. * * *
As two points in the first paragraph of § 4 there are references to the increase in current taxes over the tax for 1972. It is perfectly obvious that the intent of the ordinance is that the landlord may pass on to the tenants, over and above any other upward rent adjustments allowed by the ordinance, the full amount of the difference in taxes between those of any subsequent lease year and those of the base year 1972. To allow the landlord in 1978, for example, only a tax surcharge for the excess, if any, of 1978 taxes over 1977 taxes would compel the landlord to absorb the
entire increased tax expense through 1977; and as the years went by, taxes generally increasing, the landlord would be bearing a progressively increasing percentage of the total tax increase since 1972. We are satisfied that this is patently contrary to the legislative intent. See Apartment Managem. Co. v. Union Tp., Comm., supra , 140 N.J. Super. at 225.
The tenants' association argues that its position is justified by the fact that the ordinance allows a rent increase equal to increases in the consumer price index and that the latter criterion includes a substantial factor for taxes and rents -- therefore, the landlord has already been compensated for the tax increase through the consumer price index. Apart from the statistical unsoundness of the contention, the argument proves too much, for it logically would nullify the tax surcharge even for the increase over the next prior year.
In further support of its position the tenants' association points to the requirement in the second paragraph of § 4 of the ordinance quoted above, that a landlord seeking a tax surcharge must notify the tenant, among other things, of "the property tax for the dwelling for the previous year." Even if this means the next preceding year, rather than the previous base year, as held in the Apartment Manage. case cited above, 140 N.J. Super. at 225, the draftsman apparently assumed the tenant would know from tax surcharge notices in prior years what the cumulative tax increase amounted to for prior years and would need to be informed of only the tax increase from the next preceding year. In any event, the second paragraph cannot gainsay the clear and unequivocal direction in the first paragraph that the tax surcharge includes all increases in taxes over the 1972 base year.
The tenants' association argues that the failure of the landlord, in any of the years between 1973 and 1978, to request the tax surcharge from the tenants constitutes a waiver as to 1978 and future years of the tax surcharge allowed by the ordinance, in respect of the increases in those earlier years. We find the contention ...