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Plaza Joint Venture and Edward Cantor v. City of Atlantic City

Decided: May 19, 1980.

PLAZA JOINT VENTURE AND EDWARD CANTOR, PLAINTIFFS-RESPONDENTS,
v.
CITY OF ATLANTIC CITY, A MUNICIPAL CORPORATION, DEFENDANT-APPELLANT, AND JAMES E. CARMACK, CATHERINE M. CARMACK, HENRY KATZ, BERTHA KATZ, DAVID APFELBAUM AND ADELINE APFELBAUM, DEFENDANTS-INTERVENORS AND APPELLANTS



On appeal from Superior Court, Law Division, Atlantic County.

Argued before Judges Bischoff and Botter. Decided by Judges Bischoff, Botter and Morgan.*fn1The opinion of the court was delivered by Bischoff, P.J.A.D.

Bischoff

[174 NJSuper Page 234] The issue presented by this appeal is whether the state has preempted the power of the City of Atlantic City to enact "an ordinance regulating the conversion of rental units to condominiums" and declaring a "moratorium on the conversion of any rental unit into a condominium for a period of one year" from passage of the ordinance.

Plaintiffs Plaza Joint Venture and Edward Cantor hold an option to purchase Plaza Apartments, a 159-unit apartment building in Atlantic City, and are obligated to pay the sum of $850,000 for the option. They intend to purchase the premises and convert the apartments into condominiums. In pursuit of their intention to convert, plaintiffs have incurred expenses of $382,500. On August 24, 1979 plaintiffs filed an application for registration and a public offering statement with the State Department of Community Affairs under the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 et seq.

On November 8, 1979 the Board of Commissioners of the City of Atlantic City adopted Ordinances 69-1979 and 70-1979 which regulate the conversion of rental units into condominiums. In enacting Ordinance 69-1979 the board found "that an emergency exists within the . . . City with respect to the unavailability of rental space" and that "the advent of casino gambling has escalated property values . . .," contributing to "the trend toward the conversion of rental units to condominiums. . . ." The conversion of existing rental units to condominiums, the board continues, would remove them from the rental housing market, "forcing the displacement of a large number of residential tenants, many of whom are senior citizens or persons of low or moderate income levels." The board concluded that the acute housing shortage in Atlantic City and nearby municipalities will make it impossible for the displaced tenants to find decent housing at a price they can afford; that these tenants were unable to have anticipated or prepared to meet the radical changes in housing demands created by casino gambling, and that a "need exists for legislation to afford tenants relief from the situation without unnecessarily infringing on the property rights of the owner."

The board determined that "the maintenance of the current numbers of rental units available will foster and improve the health, safety and welfare of its residents by insuring the

availability of a minimum number of residential rental units. . . ." In order to preserve the availability of rental housing, Ordinance 69-1979 declared a moratorium on the conversion of rental units in the following terms:

(a) There is hereby declared a moratorium on the conversion of any rental unit into a condominium for a period of one (1) year commencing upon the passage of this Ordinance.

(b) 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 consequence of conversion of a unit to a condominium.

(c) If the vacancy rate at the time when the aforesaid moratorium would have otherwise expired is less than five percent (5%), then this moratorium shall automatically be extended for six (6) additional months, but shall not be extended further.

(d) The Notice of Eviction, pursuant to N.J.S.A. 2A:18-61.2(g), shall not be given until the termination of the aforesaid moratorium.

The ordinance also provides for the appointment of a committee to study and "assess the impact of conversion on local housing needs" and "formulate a plan for maintaining and or increasing the number of rental units available." Finally, the ordinance requires registration of notices of ...


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