The opinion of the court was delivered by: STERN
Plaintiff is an unincorporated association of developers which own property in the City of Hoboken.
In this suit the association seeks a declaratory judgment that an ordinance passed by the City Council and signed by the Mayor of Hoboken violates federal constitutional and statutory rights of the association and, furthermore, that the city ordinance is preempted by legislation enacted by the State of New Jersey.
The ordinance exempts several categories of apartments from its provisions. These include units in owner-occupied buildings of four units or fewer; units in buildings participating in "an affordable housing project approved by the Community Development Agency of Hoboken;" and units in a building whose owner has transmitted his first sixty-day notice of intent to convert the building into a condominium or cooperative "and his full plan of conversion to the City Clerk pursuant to N.J.S.A. 2A:18-61.8."
That provision of the New Jersey statutes requires rental unit owners simultaneously to give tenants and the municipal clerk notice of intent to convert to condominium or cooperative ownership. The notice must include notification of the tenants' rights under the statute, including the right "to purchase ownership in the premises at a specified price in accordance with this section." The notice itself appears to trigger this purchase right. Thus any Hoboken landlord who wishes to convert rental property to condominium or cooperative ownership may take his property out of the ordinance by complying with the state's notice requirements.
According to the preamble of the ordinance, "the elimination of a substantial portion of the existing affordable rental housing stock, and insufficient new construction of affordable rental housing . . . have caused a substantial and increasing shortage of rental housing affordable by families of low and moderate income." The resulting "housing emergency" is said to be "exacerbated by reason of the withholding by owners of available affordable housing units from the rental market in order to increase the value of their property at the expense of persons desiring to rent such housing units." This warehousing of vacant units is said to cause "severe economic and physical hardships to tenants," thus necessitating the ordinance "to protect the rights of tenants during the present affordable rental housing crisis in the City of Hoboken."
The Hoboken City Council enacted the ordinance on June 18, 1986, to take effect immediately. On August 1, 1986, plaintiff filed this action, and moved for a temporary restraining order preventing the city from enforcing the ordinance.
On August 4, after a hearing, Judge Lechner of this court entered an order temporarily restraining the city and its agents from enforcing the ordinance. Judge Lechner granted the request for temporary restraints and set a return date of August 11 for a hearing on plaintiff's preliminary injunction motion. His order states that it was granted in part due to the representation of counsel for the city that the ordinance was "pending before the Mayor and City Council of the City of Hoboken for additional consideration."
No hearing was held on August 11. Instead, counsel for plaintiff submitted a proposed order continuing restraints until September 8, 1986, when a hearing would be had. The city did not oppose the order, which represented that "action upon Ordinance V-51 still pends before the Mayor and Council of the City of Hoboken." This Court signed the order on August 18.
Before that date arrived, a group of applicants to intervene as defendants made a motion to intervene as of right pursuant to Rule 24(a) of the Federal Rules of Civil Procedure. After a hearing, I granted the motion to intervene of three of the applicants: the Campaign for Housing Justice, an unincorporated association; Ms. Sonia Burgos; and Ms. Margarita Sanabria. In my letter-opinion of October 24, 1986, I noted that both the applicants for intervention and the plaintiff itself had provided the Court with reason to believe that the City Attorney of Hoboken sided with the plaintiff, and against its client, with regard to the key constitutional issues in this matter. I also noted that the City Attorney had made no response to these accusations or to the documents supporting them. "Under these circumstances," I held, "the position of the applicants that their interests are not adequately represented by counsel for the city is well taken."
The delay occasioned by the motion to intervene, and the need to rule on a discovery motion, resulted in the rescheduling of the original motion for a preliminary injunction from November 24. The parties agreed orally to continue the restraints to that date. Also scheduled for hearing at that time was a motion brought by the intervenors to dismiss this action for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The motion to dismiss will be granted, thus obviating the need to rule on the plaintiff's motion for a preliminary injunction.
The complaint alleges that the ordinance violates six different provisions of federal law, and that the ordinance is preempted by various statutes of the State of New Jersey. As the federal claims have no merit, the Court will decline to exercise its pendant jurisdiction to hear the state law claims.
The Fifth and Fourteenth Amendment Claims
Plaintiff alleges that the ordinance violates the fifth and fourteenth amendments to the Federal Constitution in that it constitutes a taking of property without compensation.
The ordinance does not contemplate the city's physical occupation of property. Instead, it requires landlords to rent ...