In gathering materials for compilation of a record for trial on those issues, the parties are reminded that the court asked, at the argument, for the transcript of the public hearing of January 31, 1981, and for legislative history materials to be obtained from the State Library, but that the State defendants have not so far supplied these.
Also, there are items in the affidavit of Mr. Connolly that do not look as though they would stand scrutiny. For example, as noted on p. 19 of the Brief of the State Officer Defendants, it is asserted that the median value of noncondominium housing units in Salem County for 1980 was $35,200., and the median contract rent $169. Multiplying the rent by 12 to obtain an annual figure, and dividing by the value, produces a gross annual rent that is only 5.6% of value. Similarly in Union County, where the 1980 value figure is $66,900 and the contract rent $240, the gross annual rent works out to 4.3% of value. Those figures would be startlingly inadequate if they represented the net yield after all expenses and are suggestive of a net loss if they reflect gross rent before expenses, which they evidently do. Something is wrong with the statistics.
The affidavit of Mr. Baar, offered as an expert opinion, is not very helpful and raises more questions than it answers. The expert qualifications are weak as foundation for the subject discussed, and the views expressed are ambiguous. If it is intended to rely on him as an expert at trial, there should be a more explicit definition of the subject-matter addressed and a better correlated indication of his related qualifications.
For example, his discussion of so-called "fair return" formulas based on a "percentage net operating income", says that mortgage payments are not an expense under the formula but he fails to say whether he is referring to mortgage interest or mortgage principal. There is no mention of depreciation, amortization or obsolescence factors. Most of all, there is no suggestion that value is taken into account. Given these rather glaring defects, the affidavit carries no significant weight.
In the papers submitted so far, neither side has discussed the significance of the evident absence of any provision in the challenged statute obliging any tenant who applies for a 40 year protected tenancy to undertake the payment of rent for its duration in contrast to such a tenant's unilateral right to vacate on one month's notice (see NJSA 46:8-10) at any time.
Also, the provisions of sec. 17 of the 1981 Act should be discussed in reference to the question whether the establishment of a 40 year protected tenancy creates a right of property in the tenant which the Legislature allows him to sell to the landlord, or perhaps to someone else, for "adequate consideration" and, if so, whether the Legislature can hereafter reduce the duration of the protected tenancy, or make eligibility more rigorous, and the like.
These examples in no way are intended to confine the parties in the scope and depth of their preparation for trial hereafter.
Submit order granting partial summary judgment to plaintiffs to the extent of a determination that those provisions of NJPL 1981, c. 226 as purport to apply, or authorize application, of its provisions to the subject property contravene the Impairment of Contracts Clause and the Taking of Property Clause of the United States Constitution. Since plaintiffs withdrew their class action request at argument, the order will apply only to the State Officer defendants and the individual tenants actually party here. In all other aspects than stated, the motions for summary judgment on both sides are denied without prejudice.
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