On appeal from Superior Court of New Jersey, Law Division, Monmouth County.
Antell, J. H. Coleman and Simpson. The opinion of the court was delivered by Coleman, J.h., J.A.D.
[198 NJSuper Page 231] The issue raised by the appeal in this rent control case requires us to determine the proper standard of review for a municipal governing body when it reviews the decision of the
local rent control board. The Rent Control Board of the Township of Hazlet (Board) granted plaintiffs a rent increase. Two of plaintiffs' tenants appealed the rent increase to the Hazlet Township Committee (Committee) pursuant to Section 9-2.12 of the township rent control ordinance. The Committee substantially modified the rent increase. Plaintiffs-landlords then filed a verified complaint in lieu of prerogative writs seeking essentially to have the Board's decision reinstated. The Law Division judge concluded that the standard of review for the Committee is similar to that "which the Court conducts on a prerogative writ application" which means that "neither the Court nor the Township Committee is simply there to substitute its judgment for the body to whom the basic judgment has been given [the Board]." Finding that the Committee simply substituted its judgment for the Board, the judge reinstated the Board's decision after correcting a mathematical error. We hold that the judge applied the incorrect standard of review by the Committee. Hence, we reverse.
Daniel and Margaret Reid own a 90 unit mobile home park which does business as Brookside Estates in the Township of Hazlet. Both reside in the park and maintain it except when they go to Florida in the winter for about two months. On June 23, 1983 plaintiffs filed an application with the Board requesting a rent increase of $13.98 per unit per month. After conducting hearings on the application, the Board granted a rent increase of $12.51 per unit per month, effective September 1, 1983. In the Board's memorializing written resolution of August 1, 1983, it found, in pertinent part, (1) that plaintiffs' "actual expenditure" in 1983 for "[m]anagement services" was $25,044 and, therefore, the increase in the expense for these services from 1981 was $6,805, and (2) that the $1,200 "[a]uto expense" item for 1982 in plaintiffs' application "should be deleted since it is included in Management Services." On August 18, 1983 David Britton and Albert Renk, two of plaintiffs' tenants, appealed the Board's decision to the Township Committee. The Committee heard the appeal and, as previously
noted, reduced the rent increase to $3.87 per month for each mobile unit effective October 1, 1983. The Committee found (1) that plaintiffs' "proposed [m]anagement [s]ervices increase" for 1982 was "excessive on its face amounting to almost 40% over 1981"; (2) that the "allowable increase" for management services "should be $2,002.00 instead of $6,805.00," and (3) that the "item of $1,200.00 for Auto Expense" was "entirely disallowed" because it provided "[n]o benefit to [plaintiffs'] tenants."
Plaintiffs then sought review by the Law Division. They alleged that the actions of the Committee were arbitrary and capricious because the decision was without factual support in the record made before the Board and that the decision was solely for political expediency. The Law Division judge entered judgment (1) setting aside the Committee's resolution of October 4, 1983, and (2) reinstating the Board's resolution of August 1, 1983, "except that paragraph 17 of said resolution of the . . . Board shall be amended to provide that the proper increase [in 1982 expenses] for each mobile home shall be in the amount of $11.14 per month, rather than $13.37 per month improperly designated in such paragraph 17," it being "understood that the difference was merely a mathematical error."
Only the Committee has appealed. It contends that the judge below applied the incorrect standard of review of the Committee's determination made pursuant to the Township's rent control ordinance. Section 9-2.12 of the Hazlet Township Rent Control Ordinance provides, in pertinent part:
a. Appeals. Either landlord or tenant may appeal the findings or order of the rent control board to the Township Committee by filing a notice of appeal with the Township Clerk . . ., or by way of suit in lieu of prerogative writ in the Superior Court of New Jersey, Law Division. . . . The appeal, if taken to the township committee, shall be based upon the record of the rent control board below, and no additional testimony shall be taken.
We have previously held that "the determination of a local rent control board and of the governing body which reviews the board's decision should be based upon a transcribed record made before the board." Green Acres of Verona, Inc. v. Bor. of Verona, 146 N.J. Super. 468, 470 (App.Div.1977).
While the instant rent control ordinance and Green Acres establish what will comprise the appellate record, neither establishes the precise standard for review by the governing body. The process of review by the governing body under section 9-2.12 of the Hazlet Rent Leveling Ordinance is analogous to a review of the actions of a board of adjustment by the governing body. See Green Acres of Verona, Inc. v. Bor. of Verona, 146 N.J. Super. at 470. In such a case, "the governing body is to have authority to make a de novo review of the record established before the board and reach its own decision in the matter subject only to the requirement that its findings and conclusions are supported by the record." Evesham Tp. Bd. of Adj. v. Evesham Tp., 86 N.J. 295, 300 (1981). Evesham calls for a plenary scope of review much like that contemplated by R. 3:23-8(a) in appeals from ...