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Brownstone Associates v. Mayor and Council of the Township of Little Falls

A-4005-09T4 (N.J. Super. App. Div. 2011) (Unpublished)

RENT CONTROL — Municipalities can adopt any ordinances that do not conflict with state or federal law and in evaluating the validity of a municipality’s rent control ordinance, New Jersey courts conduct a three-part analysis.

A municipal rent control ordinance applied to residential buildings with four or more units and provided that a landlord could appear before the municipality to appeal for a hardship rent increase. A real estate holding company filed a complaint in lieu of prerogative writs seeking to void an extension of the ordinance’s effectiveness. The company claimed that the extension was arbitrary and capricious because the municipality had not conducted studies or amassed evidence to establish a scarcity of apartments for rent. The company had previously applied for, and received, a hardship rent increase.

The company claimed that the conditions that gave rise to the rent control ordinance in the first place, years earlier, no longer existed. It testified at the municipal meeting that landlords were experiencing vacancies, indicating a lack of housing scarcity. Also, the company testified that the rent control ordinance had resulted in disparities in the amount different tenants paid for comparable apartments. Two residents spoke in support of the ordinance. The municipality noted that over one-hundred of the municipalities in New Jersey had rent control ordinances, many more aggressive than its own. Also, the municipal governing body noted that its ordinance had been in place for many years and that it had conducted a study to review rental conditions only four years earlier.

The lower court found that municipalities can adopt any ordinances that do not conflict with state or federal law. On appeal, the Appellate Division noted that New Jersey courts conduct a three-part analysis for assessing local rent control provisions. Specifically, courts consider whether the legislative body could rationally have concluded that the unrestrained operation of the rental competitive market was not in the public interest; whether a rent control ordinance provided landlords with the opportunity to receive a just and reasonable return on their investments; and whether the means adopted by the ordinance were rationally related to the purposes of the ordinance. In addition, municipal ordinances carry a presumption of validity, and objectors calling an ordinance arbitrary and unreasonable face a heavy burden.

The company simply asserted that there were numerous rental vacancies amounting to a five-percent vacancy rate, whereas in the past there was generally a waiting list for apartments. The Court found that while the company had alleged facts, it did not provide support for its conclusion. Thus, the company failed to meet its burden of proving that there was no rational basis for the municipality to adopt the extension of the ordinance. To the Court, the municipality’s explanation that the ordinance was extended to ensure immediate continuation of rent control for tenants pending further study was rational.


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