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Hampshire House Sponsor Corp. v. Borough of Fort Lee

Decided: December 20, 1979.

HAMPSHIRE HOUSE SPONSOR CORP., A NEW JERSEY CORPORATION; MEDITERRANEAN INVESTMENTS, INC., A NEW JERSEY CORPORATION; AND 234 CONDO SPONSOR CORP., A NEW JERSEY CORPORATION, PLAINTIFFS,
v.
BOROUGH OF FORT LEE, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY AND MAYOR AND COUNCIL OF THE BOROUGH OF FORT LEE, DEFENDANTS. CENTRAL TOWERS COMPANY, A NEW JERSEY LIMITED PARTNERSHIP, T/A NORTHBRIDGE PARK; AND NORTHBRIDGE PARK CO-OP, INC., A NEW JERSEY CORPORATION, PLAINTIFFS, V. THE BOROUGH OF FORT LEE, DEFENDANT, AND NORTHBRIDGE TENANTS ASSOCIATION, INTERVENORS. DEAUVILLE TOWERS, A NEW JERSEY LIMITED PARTNERSHIP, PLAINTIFF, V. THE BOROUGH OF FORT LEE, DEFENDANT. IMPERIAL ASSOCIATES LTD., A NEW JERSEY LIMITED PARTNERSHIP, PLAINTIFFS, V. BOROUGH OF FORT LEE, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY AND MAYOR AND COUNCIL OF THE BOROUGH OF FORT LEE, DEFENDANTS



Smith, J.s.c.

Smith

The question raised by this litigation is whether New Jersey municipalities have authority to regulate conversion of residential rental units into condominiums or cooperatives. Because exclusive jurisdiction to act in this field is vested in the State Legislature, the answer is no.

On November 1, 1979 Fort Lee's governing body adopted Ordinance 79-30 which imposed a moratorium on such conversions. These four unconsolidated cases, instituted by landlords caught in various stages of the conversion process, contest its validity. Each suit was initiated with the signing of an order to show cause and the entire matter submitted on pleadings and briefs for final judgment on the common return day. R. 4:67-5.

According to statistics compiled by the local building inspector's office, approximately 5,900 new apartments were built in Fort Lee from 1960 to 1972. They comprise the bulk of the borough's total existing 9,200 units of rental housing stock. This represents more than 40% of Bergen County's multi-family dwellings of 50 or more units concentrated in a 2.5 square mile area. Yet the critical shortage of available apartments for rent within the municipality continues unabated. Despite the demand, as attested to by a virtually nonexistent vacancy rate, there has been neither production of new buildings nor sale of existing ones in recent years. High construction costs, the

vicissitudes of the economy and imposition of stringent rent control have combined to stagnate the market.

The moratorium was enacted in response to a flood of applications for conversion filed by Fort Lee landlords. Prior to this year only Regency (161 units) and 2185 Lemoine Avenue (115 units) had converted. In 1979 the owners of eight buildings with a total of 2,377 units launched conversion proceedings: Northbridge (227), Hampshire House (202), Deauville Towers (54), Imperial Towers (55), Biaritz (49), Horizon House (1,263), 234 Columbia Avenue (20) and Mediterranean Towers West (507). Successful completion of only pending applications will reduce the borough's supply of rental housing by roughly 25%. But, undoubtedly, more landlords will soon abandon ship. All parties agree that absent government subsidy, new rental apartments will not be built in the foreseeable future. Depleted inventory will not be replaced. Suddenly, the Fort Lee tenant has become an endangered species on the brink of extinction.

The first step in the conservation program was to temporarily freeze the conversion process until its negative effect on public welfare could be studied. The preamble to Ordinance 79-30 declares that rapidly vanishing rental space constitutes a housing emergency in the borough. The definition of "dwelling" and "housing space" is identical to language found in the rent leveling ordinance. The measure provides, in pertinent part:

Section 2. There is hereby declared a moratorium of the conversion of any housing space into a condominium or cooperative unit.

Section 3. The Mayor shall appoint a committee of seven for the purpose of conducting a comprehensive study of the rental housing space emergency in the Borough. This committee shall consist of one cooperative or condominium owner, the Building Inspector, one realtor and four tenants. This committee shall gather the necessary facts so as to determine and assess the impact of conversions on the local housing needs and with respect to the rights of

individuals to adequate housing within their economic means and formulate a plan for maintaining and/or increasing the number of rental units available in the Borough. The committee shall present its report and recommendations to the Mayor and Council within six months of the effective date of this Ordinance.

Section 4. During the existence of this moratorium, no sales or contracts for sale can be entered into, no prospectus issued, and no notice of intent is to be sent to tenants and no one can request a tenant to vacate a unit as a ...


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