I represent both sides in Hoboken Rent Control disputes.
Many condominium purchasers do not realize that their unit may be subject to rent control. If you are buying a condo in Hoboken that was not built prior to 1986 it may be controlled by the Hoboken Rent Control Laws.
Plaintiff Constance De Sena appeals the order of the Law Division dismissing her action in lieu of prerogative writs against the Rent Leveling and Stabilization Board of the City of Hoboken (the Board) and E. Thomas Lundgren and Pichu Yeh Lundgren (landlord), the owners of the residential property in which she rented an apartment. This case arises from the landlord’s application to raise plaintiff’s rent commensurate with increases in municipal property taxes over a specified period of years. This method of calculating rent increases is permitted under the Hoboken Rent Leveling Ordinance as a tax surcharge.
Suzanne Hetman, the Hoboken Rent Regulation Officer (RRO), approved the landlord’s tax surcharge application on August 14, 2012, resulting in a net increase of $161 in plaintiff’s monthly rent. Plaintiff appealed the RRO’s determination to the Board. Of the five Board members present, two voted to overturn the RRO’s determination approving the tax surcharge increase, two members voted to uphold the RRO’s determination, and one member abstained. Based on the advice of counsel, the Board concluded that a tie vote was legally insufficient to overturn the presumptively valid determination of the RRO. Stated differently, as the party seeking to overturn the RRO’s determination, plaintiff failed to persuade a majority of the members of the Board that the decision by the RRO to grant a tax surcharge in this case was erroneous or arbitrary, capricious and unreasonable.
As provided in Rule 4:69–1, plaintiff filed an action in lieu of prerogative writs in the Superior Court seeking to overturn the Board’s ruling. After considering the record developed before the Board and the arguments of counsel, Judge Barry P. Sarkisian upheld the Board’s decision that a tied vote was legally insufficient to overturn the RRO’s presumptively valid determination. Judge Sarkisian explained his decision in a memorandum of opinion dated June 18, 2013.
On appeal to this court, plaintiff argues (1) the Board did not authorize the method of calculation used by the RRO in determining the tax surcharge; (2) the RRO’s interpretation and application of the tax surcharge provision of the ordinance was contrary to the intent and purpose of the ordinance; and (3) the Board’s tied vote should be deemed as a disapproval of the RRO’s determination. In response, the Board argues the RRO properly applied the tax surcharge provision in the rent control ordinance to grant the landlord’s application to increase plaintiff’s rent. The Board also urges us to uphold the trial court’s legal determination that in reviewing the determinations of the RRO, a tied vote of the Board leaves the RRO’s determination undisturbed because those seeking to overturn or modify the RRO’s decision have the burden to demonstrate the decision was erroneous or arbitrary, capricious and unreasonable.
After reviewing the record before us, we discern no legal merit in plaintiff’s arguments and affirm substantially for the reasons expressed by Judge Sarkisian in his memorandum of opinion. In the interest of clarity, we will briefly describe the salient facts that informed Judge Sarkisian’s legal analysis and ultimate conclusion.
Plaintiff leased the apartment at issue here on September 12, 2010. The property is a three-family building that the landlord has owned since 1992. On July 26, 2012, less than two years after the commencement of the lease, the landlord filed an application with the Hoboken Rent Leveling and Stabilization Office seeking approval for a tax surcharge. Section 155–6 of Hoboken’s rent control ordinance provides:
A landlord may seek a tax surcharge from a tenant because of an increase in municipal property taxes if said taxes are in excess of those assessed for the 1988 tax year. The rental increase permitted for taxes is determined by the Rent Regulation Officer pursuant to a formula approved by the Rent Control Board. The rent increase for taxes that each tenant is liable to pay shall be paid in 12 equal monthly payments, 1/12 each month. The surcharge shall not be considered rent for purposes of computing cost-of-living rental increases. Determinations under this section shall be made by the Rent Regulation Officer.
[Hoboken N.J. Municipal Code § 155–6.]
Based on the information provided by the landlord, the RRO applied the standard described in Section 155–6 and approved the application on August 14, 2012, according to the following calculation:
Total Number of Units: 3 Difference: $5,8031
Base Tax: $3,199 Monthly Differential: $484
Current Tax: $9,002 Unit Surcharge: $161
Plaintiff appealed the RRO’s determination to the Board. The matter was heard by the Board on November 14, 2012. As the minutes of the hearing before the Board reflect, plaintiff’s counsel, who is also her father, argued plaintiff should not be held liable for twenty-four years of tax increases because she had only been a tenant at this property since 2010.
Plaintiff also noted that the landlord had received a hardship rent increase in 1992 and vacancy decontrols in 1993, 1996, and 2002. According to plaintiff, these increases should have been considered in determining whether the landlord was entitled to yet another increase in the form of a tax surcharge. In response, the RRO indicated that increases in rent based on the hardship provisions of the ordinance permanently increase the base rent of the apartment. By contrast, a tax surcharge does not become part of the base rent, and is not considered in calculating ordinary annual cost of living increases. Finally, in response to a Board member’s question as to the method used to grant this application, the RRO emphasized: “This is how the office has been doing tax surcharge calculations going back to when it was 1988.”
As framed by plaintiff’s argument, the discussion among the Board members centered around the fairness of passing along twenty-four years of tax increases to a tenant who had only occupied her apartment for the last two years. Two members argued approving this kind of tax surcharge was both unfair and contrary to the ordinance’s core purpose of protecting tenants from unreasonable increases in rent. Other members disagreed, arguing that denying the tax surcharge would harm landlords. These members noted that denying the increase would be akin to amending the plain language of the tax surcharge provisions, a power exclusively reserved to the City Council.
At the conclusion of this debate, a Board member moved to table the discussion to permit the Board to obtain additional information on a host of issues related to the hardship increase provision and resolutions concerning tax surcharge applications. The motion failed to gain a majority of the votes cast, with two members voting “no,” two members voting “yes,” and one member “abstaining.” One of the members who had voted “no” on the motion to table thereafter moved to approve the decision of the RRO granting the tax surcharge. Again the motion failed to carry a majority of the votes cast, with two members voting “no,” two members voting “yes,” and one member “abstaining.”2
Plaintiff filed an action in lieu of prerogative writs, which Judge Sarkisian decided in favor of the Board. Specifically, Judge Sarkisian found plaintiff did not demonstrate to a majority of the members of the Board that the RRO’s approval of the tax surcharge was erroneous or arbitrary and capricious. We agree.
As the party seeking to overturn the decision of the municipal officer, plaintiff has the “burden” to “demonstrate that the Officer’s determination was in error or arbitrary, capricious and unreasonable.” Hoboken N.J. Municipal Code § 155–23. When the trial court reviews a discretionary decision of a municipal agency, it must start by recognizing that the Legislature has vested the municipality with discretion to make the decision involved. Booth v. Bd. of Adj. of Rockaway, 50 N.J. 302, 306 (1967).
A rebuttable presumption arises that the municipality has properly exercised its discretion. Harvard Enter’s, Inc. v. Bd. of Adj. of Twp. of Madison, 56 N.J. 362, 368 (1970). The trial court may not substitute its judgment for that of the municipal body. The party appealing the decision must prove that the board’s action was arbitrary, unreasonable or capricious. Ibid. We use the same standard of review regarding decisions made by the trial court.
We owe no deference, however, in cases where the municipal body has merely interpreted an ordinance. Cherney v. Zoning Bd. of Adj. of Matawan Borough, 221 N.J.Super. 141, 144–45 (App.Div.1987). Our review of a municipal body’s interpretation of an ordinance is plenary. Osaria v. W. New York Rent Control Bd., 410 N.J.Super. 437, 443 (App.Div.2009). Our legal analysis may take us in any direction we deem appropriate under law, and our ultimate conclusion is limited only by how we apply the law to the facts before us. Ibid.
Here, the trial court correctly reviewed the Board’s decision according to an arbitrary, capricious or unreasonable standard. Relying on our holding and analysis in Columbro v. Lebanon Twp. Zoning Bd. of Adjustment, 424 N.J.Super. 501, 508–09 (App.Div.2012), Judge Sarkisian correctly noted “that the interpretation of an ordinance is primarily a question of law that is subject to de novo review.” Under the internal appellate review established by the Hoboken City Council, a party seeking to overturn a decision made by the RRO has the burden to “demonstrate that the Officer’s determination was in error or arbitrary, capricious and unreasonable.” Hoboken N.J. Municipal Code § 155–23.
The record shows plaintiff failed to satisfy this burden. Albeit, the motion before the Board was worded “to approve” the decision of the RRO. That motion failed to pass. However, the record clearly shows that the Board thereafter considered the matter closed. Thus, despite the anomalous manner by which the issue was presented, plaintiff did not demonstrate to a majority of the members present that the RRO’s approval of the landlord’s tax surcharge application “was in error or arbitrary, capricious and unreasonable.” Ibid.
We are in complete agreement with Judge Sarkisian on this issue. The plain text of the Hoboken Municipal Code supports the RRO’s approval of the tax surcharge and the legal conclusion that plaintiff did not carry her burden of proof. We incorporate by reference the remaining parts of Judge Sarkisian’s analysis as reflected in his memorandum of opinion. The balance of plaintiff’s arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11–3(e)(1)(E).
As provided in Section 155–6, the RRO used the base-year 1988 and the application year 2011 to determine the increase in municipal property taxes that occurred during this twenty-four year period. Plaintiff has not challenged the manner or mathematical calculations performed by the RRO to reach the tax surcharge figure of $161 per month.
The record reflects one member as “absent.
The Marciano Law Firm, attorneys for respondents E. Thomas Lundgren and Pichu Yeh Lundgren, join in the brief of respondent The Rent Leveling and Stabilization Board of the City of Hoboken.