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Crescent Park Tenants Association Inc. v. Crescent Park Associates

Decided: January 28, 1986.

CRESCENT PARK TENANTS ASSOCIATION, INC., A NEW JERSEY NON-PROFIT CORPORATION, AND SAMUEL KLEIN, PLAINTIFFS-RESPONDENTS,
v.
CRESCENT PARK ASSOCIATES, DEFENDANT-APPELLANT



On appeal from the Superior Court of New Jersey, Law Division, Essex County.

Morton I. Greenberg and Havey. The opinion of the court was delivered by Havey, J.A.D.

Havey

In this rent control case defendant landlord appeals from summary judgment in favor of plaintiff tenants which compels defendant to rebate to plaintiffs tax reductions defendant had received as a result of successful tax appeals for the tax years 1978 and 1981. Relying upon Parsippany Hills Assoc. v. Rent Leveling Board, 194 N.J. Super. 34 (App.Div.1984), the trial court concluded that repeal of the tax surcharge provision of the East Orange rent control ordinance did not relieve defendant from its obligation to rebate tax reductions under the rebate provision of the ordinance. We reverse. We hold that the ordinance is intended to permit tax rebates to tenants only if a landlord's tax reduction results in a decrease in taxes from the prior year.

Defendant is a limited partnership which owns a 19-story apartment building consisting of approximately 260 residential apartments in the City of East Orange commonly known as Crescent Park. Plaintiff Crescent Park Tenants Association, Inc., consists of tenants residing in the apartment building. Plaintiff Klein is an individual tenant. The building is subject to the East Orange rent control ordinance adopted in July 1975. The ordinance created a rent control board and empowered the

board to make "judicial determinations" of applications by tenants as to "probable violations of [the] ordinance." It allows landlords 6% annual cost of living rental increases as well as the right to apply for capital expenditure and hardship increases.

Originally, the ordinance included both a tax surcharge and tax rebate provision. The tax surcharge provision permitted a landlord to pass increases in real estate taxes to tenants on a pro rata basis. The tax rebate clause provided:

In the event a tax appeal is taken by the landlord and the landlord is successful in said appeal and the taxes reduced, the tenant shall receive fifty percent (50%) of said reduction as applied to its tax portion, after deducting all expenses incurred by landlord in prosecuting said appeal only with respect to the year in which the tax appeal was taken and relief granted for taxes paid after March 7, 1973.

In 1977 the tax surcharge provision was repealed. The tax rebate provision, however, remained intact.

In 1977 defendant paid $265,791 in real estate property taxes. Defendant's taxes for 1978 increased to $312,087 because of a substantially higher assessment. Defendant's appeal to the Essex County Board of Taxation resulted in a tax reduction to $279,526. For the year 1980 defendant's taxes were $282,274. Its 1981 taxes increased to $396,000. Defendant again appealed and defendant's taxes were reduced to $302,192. In this action, plaintiffs seek to recover a share of defendant's tax reductions for 1978 and 1981 under the tax rebate provision of the ordinance.

On appeal defendant contends that plaintiffs' complaint should be dismissed because of their failure to exhaust administrative remedies before the rent leveling board and because their action is time-barred by the statute of limitation contained in the ordinance. They also argue that the rebate provision was impliedly repealed with the surcharge provision; that no tax rebates are owed if there has been no tax surcharges; that a rebate is required only when the tax actually paid by a landlord exceeds the tax paid in a prior year, and that the

ordinance may not constitutionally compel a rebate in the absence of a ...


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