[HISTORY: Adopted by the Mayor and Council of the Borough of Somerdale 9-12-1990 by Ord. No. 90:09. Amendments noted where applicable.]
This chapter shall be known as the "Rent Stabilization Ordinance of the Borough of Somerdale."
As used in this chapter, the following terms shall have the meanings indicated:
- AVAILABLE FOR RENT TO TENANTS
- Fit for habitation, as defined by state or local housing inspection codes or the law as promulgated by the Legislature and courts of the State of New Jersey, and offered for rent.
- Includes all dwelling units advertised as available for rent to tenants under the same management and trading under the same name.
- DWELLING SPACE
- Includes that portion of a dwelling or land rented or offered for rent for living and dwelling purposes to one individual or family unit, together with all privileges, services, furnishings and the use or occupancy of such portion of the complex as is granted the household from the landlord to the tenant. The term "dwelling" shall also include rental space for manufactured housing, a mobile home or a trailer.
- JUST AND REASONABLE RATE OF RETURN
- One which is not confiscatory. It should be one generally commensurate with returns on similar investments; however, an evaluation must be made of the interests of not only the investor but also of the tenants and the general public.
- An owner, sublessor, assignee or other person, firm, partnership or corporation receiving or entitled to receive rents or any agent of the same receiving or entitled to receive rent from a tenant of a multiple dwelling.
- MULTIPLE DWELLING
- Any building or structure or group or complex of buildings or structures or lands in or on which four or more units or dwelling spaces are occupied or are intended to be occupied by four or more persons who live independently of each other. The term "dwelling," whenever used within the body of this chapter, shall be construed to mean "multiple dwelling."
- OPERATIONAL YEAR
- The year to which the proposed rent increase is to be applied, as established by the Rent Stabilization Board.
- REASONABLE EXPENSES
- Includes but is not limited to taxes and depreciation not previously compensated for through tax savings or other such means, utilities, insurance, maintenance, reasonable repairs, vacancy allowances and uncollectibles.
- REASONABLE RENTAL
- Includes a showing of the age, character, locality, appurtenant amenities and state of repair of the multiple dwellings, as well as comparable rentals for similar properties located within the Borough.
There is hereby established within the Borough of Somerdale a Rent Stabilization Board, hereinafter referred to as the "Board," which shall consist of seven members, all of whom shall be appointed by the Mayor and Council and shall serve without compensation.
The membership of the Board shall consist of two landlords owning property affected by this chapter, two tenants residing in property affected by this chapter and three homeowners and residents of the Borough of Somerdale.
The terms of office of the members first appointed shall be as follows: one landlord, one tenant and one homeowner shall be appointed for one year; and one landlord, one tenant and two homeowners shall be appointed for terms of two years. Thereafter, as the term of each member of the Board first appointed shall expire, such member shall be appointed for a term of two years.
Vacancies occurring in membership on the Board shall be filled by the Mayor and Council for the unexpired term only, in accordance with the provisions of this chapter.
The Chairman of the Board shall be elected by the members of the Board, and a quorum shall consist of a simple majority of full membership to the Board. However, notwithstanding anything to the contrary, no vote of the Board shall be taken on any application unless an equal representation of landlord and tenant members is present and eligible to vote upon the same.
The Board shall hold a regular meeting at least once a month on a day, time and place to be established by the Board.
Duties and jurisdiction of Board.
The Rent Stabilization Board hereby created shall exercise, in addition to the powers herein granted, all powers necessary and incidental to carry out and execute the purpose of this chapter, including:
To hold hearings and adjudicate applications from landlords for rent increase allowed by this chapter.
To hold hearings and adjudicate landlord applications for hardship increases. These may be granted to the landlord when he has clearly shown the Board that he cannot meet his mortgage payments and maintenance costs.
To determine and hold hearings in regard to the amount of proposed capital improvement surcharge to be allowed, if any, after consideration of the nature of the application and the benefit to the tenant of a capital improvement surcharge, if any.
To hold hearings and determine whether the landlord applicant is an economically efficient operator and whether the return on the applicant's investment is a just and reasonable rate of return. This decision shall only be made on applications for increases filed pursuant to § 206-7B.
To issue and promulgate such rules and regulations as it deems necessary to implement the purpose of this chapter. Said rules and regulations may be amended from time to time by the Board in the exercise of its discretion. Such rules and regulations shall be filed by the Borough Clerk.
To supply information and assistance to landlords and tenants to help them comply with the provisions of this chapter.
To issue subpoenas to compel the attendance of witnesses and the production of books and records in connection with hearings held pursuant to the provisions of this chapter.
To enforce the provisions of this chapter and to initiate proceedings in the Municipal Court for willful violations thereof and to seek the restitution or reimbursement of any rental amount charged in excess of the rental amount allowed pursuant to this chapter, either through a civil action or through the Municipal Court proceedings. Nothing in this provision is to be construed as the exclusive remedy by which an individual tenant may seek a rent rebate for any invalid rent increase.
The Chairman or presiding officer of the Board may administer oaths and take testimony and shall afford the landlord and tenant reasonable opportunity to be heard before the Board and shall render any determination.
There shall be six alternate members: two for the class representing landlords owning property affected by this chapter, two for the class representing tenants residing in property affected by this chapter and two for the class representing homeowners and residents of the Borough of Somerdale.
Alternate members shall be appointed for terms of one year, beginning on July 1 of each year.
Alternate members shall be appointed by the Mayor and Council, and any vacancies occurring in the membership of alternate members shall be filled by the Mayor and Council for the unexpired term only, in accordance with the provisions of this chapter.
Alternate members of each class shall serve in the absence or disqualification of a regular member of that class.
The Board may authorize or appoint a committee to determine the completeness of any or all applications.
The administrative officer for the Rent Stabilization Board of the Borough of Somerdale shall serve as administrative agent to perform the duties and responsibilities prescribed under the Senior Citizen and Disabled Protected Tenancy Act, N.J.S.A. 2A:18-61.22 et seq.
The fee for administrative services performed pursuant to the Senior Citizen and Disabled Protected Tenancy Act shall be as set forth in the current Fee Ordinance.
The owner of the building or structure seeking to convert any premises involving administration services under said act shall pay the appropriate fee heretofore established unto the Borough of Somerdale prior to the filing of an application for registration of conversion and concurrently with the notification of intention and submission of a tenants list to the administrative officer.
Whether or not the landlord is seeking a rent increase, he must at all times maintain the same standards of service, maintenance, furniture, furnishings, recreational facilities and landscaping as he is required to do by law or by the terms of the lease at the date the lease was entered into. The intent of this subsection is to have the landlords maintain their facilities at all times and to upgrade their facilities for the betterment of the community. Any fraudulent inducement by the landlord which results in the signing of the lease by the tenant shall be considered by the Board in its determination.
Any individual tenant or class of tenants who are not receiving the same standards of service, maintenance, furniture, furnishings, recreational facilities or landscaping which existed at the signing of the lease may petition the Board for a rent reduction in, view of the deficiency. The tenant or class of tenants shall pay the reduced rent as determined by the Board as the full payment of rent until the landlord proves that the deficiency has been corrected. The Board shall determine the reduced rent by using the following suggestive, but not exclusive, guidelines:
Violation of the applicable housing, building, maintenance or sanitary code.
The nature of the deficiency or defect as it affects habitability.
The potential and actual effect of the deficiency or defect upon the safety, security and sanitation of the dwelling and surrounding area.
The length of time of the existence of the deficiency or defect.
The age of the structure.
The amount of rent.
Any responsibility of the tenant for the creation of the defect or deficiency or denial of access to correct the deficiency or defective condition.
Pursuant to the landlord's duty to maintain the standards at the complex as provided by law and this chapter, the Board, at its discretion, is authorized to inspect the exterior and common areas of any apartment complex subject to this chapter, as well as the interior of individual dwelling spaces upon the invitation and with the permission of the tenant or tenants residing therein. The landlord, upon and by his application to the Board for a rent increase pursuant to this chapter, shall be deemed to consent to such inspection by the Board. The Board shall make such rules and regulations as it deems necessary for the conduct of such inspections.
No application for any rental increase, either under § 206-7A or B or 206-8, shall be accepted by the Board as complete nor heard by the Board unless proof of payment of all real estate taxes and municipal utility authority service charges are submitted by the applicant to the Board as part of the application. Such proof of payment shall be for all such taxes or charges due as of the date of the filing the application. For rent increase applications pursuant to § 206-8 (hardship applications), the applicant may substitute written approval from the Borough and/or the Borough's utility authority, through the appropriate official (financial director/administrator, executive director, etc.), indicating that arrangements have been made for payments and that this requirement is waived.
Establishment of a rent increase between a landlord and a tenant to whom this chapter is applicable shall be determined by this section of this chapter. The percent increases in Subsection A are not mandatory increases, and the Board must consider the criteria set forth in § 206-4. Failure of an applicant to meet the criteria set forth in § 206-4 may result in the Board's granting an increase less than that applied for.
Rent increase procedure.
An annual increase of up to 4 1/2% for Class A dwelling spaces; 4% of the existing rental rate for Class B dwelling spaces; 3% of the existing rental rate for Class C (1) dwelling spaces; and two and 2 1/2% of the existing rental rate for Class C (2) dwelling spaces may be granted by the Board if the landlord provides the Board with a copy of a proper termination notice and proof that service thereof was made on each affected tenant at least 30 days prior to the effective date of the notice. However, a year-to-year tenant must receive at least 90 days' notice of any rent increase.
The notice must state that the landlord has applied for a rent increase, that the tenancy established at the outset of the leasehold is hereby terminated and that a new tenancy may be created by the parties at an increased rental, if approved by the Board. If the Board is not provided with these required evidences by the required time, the application shall be incomplete. The termination notice must include a statement that the tenant has a right at any time during the term of tenancy to petition the Rent Board for a reduction of rent for defects or deficiencies that have not been corrected.
The landlord must also submit to the Board a sworn statement that the maintenance and security standards for the complex as set forth in § 207-4 have been complied with. The Board may require the submission of any other information, including more detailed information relating to maintenance and security standards and expenditures, which it deems necessary or proper for its deliberation.
The Board may grant less than the increase requested after considering various factors, including but not limited to the reasonable rental value of the dwelling spaces, the effect upon rent stabilization and the landlords' maintenance of standards in the complex as set forth in § 207-4.
An annual rental increase in excess of that set forth in Subsection A may be granted to the landlord by the Board, provided that the Board is supplied with the following:
A statement setting forth the estimated reasonable expenses and all other reasonable costs for the operational year, by providing the following:
A statement of financial condition (balance sheet) for the period ended in the application (no more than 60 days prior to the filing of the application).
A statement of operating expenses for the year ended [no more than 60 days prior to filing the application]. The operating expenses should be detailed enough to make an analysis of the expenses meaningful. The operating expenses will not include depreciation or interest expenses.
A comparative statement of operations. This statement will show side by side the revenue and operating expenses for the current and two preceding years on an actual basis and for the year under review on an actual basis and for the year under review on an estimated basis. The projection should assume no rental increase.
A statement of changes in financial position.
An analysis of operating expenses. The applicant should furnish a detailed analysis of cost in the following areas for the then most recent and the projected operational years:
Calculation of fringe benefits and payroll taxes.
Utilities: break out type of utility. Where a tenant pays his own utilities, a statement should be provided by the utility as to the average cost to the tenant.
A schedule showing the original cost of the investment and capitalized expenditures since the date of purchase.
A statement of value. This can consist of a statement by the landlord or an appraiser's report. However, the establishment of value must be fully explained and disclosed.
A statement of return. The landlord must calculate the present rate of return that the increase requested will yield. The rate of return must be substantiated as being reasonable for the type of investment and risk involved. Comparison to similar types of investment and their yields should be discussed.
A certification by the landlord as to the accuracy of all financial statements. The landlord's certification should be accompanied by a review opinion of a certified public accountant as prescribed by the American Institute of Certified Public Accountants.
The burden of proof in regard to value computation, the reasonableness of expenses, reasonable rental, inadequacy of rate of return and all items pertaining thereto is on the applicant. Where a majority of the Board decides that it is unable to make proper determination from the facts as presented, the Board may appoint an auditor or an accountant to make an independent examination of all relevant documents or a real estate appraiser to make an independent appraisal of the value of the complex, and they shall then present their findings to the Board prior to its deciding on the application.
A property owner cannot submit an application or expenses whereby more than one complex is mentioned therein for a rental increase pursuant to Subsection B or for a hardship increase or capital improvement surcharge. A property owner will not be permitted to subsidize a complex which yields inadequate return out of its profits derived from other complexes concealed by averaging it together with another complex.
In determining the value of real property, the Board may consider evidence using various means of computation, such as depreciated replacement costs, market value based on sales on comparable properties or any soundly conceived method which the parties may suggest, such as assessed valuation or original cost depreciated.
The landlord must provide the Board with the aforementioned information at least 30 days prior to a hearing on the application. Failure of the landlord to provide the Board with this information shall make his application incomplete.
A completed rental increase or rental decrease application must be filed with the Board either at least 30 days prior to a regularly scheduled meeting or at least at the regularly scheduled meeting immediately preceding the meeting requested to be heard at if there are fewer than 30 calendar days between regular meetings in order to be heard at said meeting. Having filed a completed application, 30 days having elapsed prior to said meeting and the Board having heard the facts as presented by the interested parties, the Board shall render its decision upon such application within 90 days of such filing, and, upon failure to do so, such application, at the expiration of such time, unless otherwise extended with the consent of the applicant, shall be deemed to be denied in the same manner as though said Board has rendered a decision to that effect. No increase or decrease shall become effective until the lapse of 31 days after the date of the Board's final decision.
No landlord shall, after the effective date of this chapter, increase any rents of tenants of multiple dwellings without first having made application therefor to the Rent Stabilization Board, complying with the provisions of this chapter and receiving approval of such increase by the Board.
A rental increase can be granted by the Board only once within a twelve-month period. However, a hardship increase may be applied for pursuant to § 206-3G(2) at any time during the course of the operational year. In the case of such application, the landlord must prove that all affected tenants received at least 30 days' notice of the hearing on the same. However, no hardship increase shall be effective until after determination of the existing lease terms of the tenants to be affected.
Hardship application. A hardship application requires the same financial data presented for a rate-of-return increase pursuant to § 206-76 except that items in § 206-7B(7) and Subsection B of this section may be deleted. Additionally, the applicant would be asked to submit the following:
Tax returns for the three most recent years.
A statement from the landlord outlining the tax benefits accrued to the owners.
A cash-flow statement, including debt service, for the most recent three-year period and the project year.
Any rental increases by the landlord that take effect at a time other than at the expiration of a lease or termination of a periodic term of the tenant shall be void. Any rental increase in excess of that authorized under the provisions of this chapter shall also be void.
The landlord of a dwelling being rented for the first time shall not be restricted in the rent charged for such dwelling. Any subsequent rent increases, however, shall be subject to the provisions of this chapter. In conformance with the intent of this chapter, none of the following dwellings shall be deemed to be a dwelling being rented for the first time:
A dwelling involved in a conversion to condominium, cooperative or other similar form of common ownership.
A dwelling that has been remodeled or renovated due to fire or other type of casualty.
A dwelling that has previously been used as the superintendent's apartment or for any nontenant use.
A dwelling that was previously subject to the provisions of this chapter but was not available for rent to tenants, for whatever reason, for a period of time and is once again available for rent to tenants.
An application pursuant to § 206-7A or 206-BA shall be accompanied by an application fee as set forth in the current Fee Ordinance.
An application filed pursuant to § 206-7B shall be accompanied by an escrow deposit as set forth in the current Fee Ordinance.
Within 30 days after the completion of proceedings before the Board on an application for a rent increase filed pursuant to § 206-7B, the Borough shall apply to the Borough's general fund from the escrow, if available, the fee which would have been payable by the applicant had he filed his application pursuant to § 206-7A and shall refund to the applicant any balance of the application fee thereafter remaining in the escrow account.
Any interested tenant may appeal to the governing body any final decision of the Rent Stabilization Board approving any application for rental increases exceeding the limit set forth in § 206-7A. Such appeal shall be made within 30 days of the date of such final decision. The appeal to the governing body shall be made by serving the Municipal Clerk, in person or by certified mail, with a notice of appeal, specifying the grounds thereof and the name and address of the appellant and the name and address of his attorney, if represented. Such appeal shall be decided by the governing body only upon the record established before the Rent Stabilization Board.
Notice of the meeting to review the record shall be given by the governing body, by personal service or certified mail, to the appellant, to the landlord and to the Rent Stabilization Board at least 10 days prior to the date of the meeting.
The governing body shall conclude a review of the record below not later than 45 days from the date of receipt of the transcript of the hearing, unless the appellant consents, in writing, to an extension of such period. Upon the filing of an appeal, the Municipal Clerk shall order preparation of a transcript, the cost of which is to be paid by the Borough. Failure of the governing body to hold a hearing and conclude a review of the record and to render a decision within such specified period without written consent of the appellant shall constitute a decision confirming the action of the Board.
The governing body may reverse, remand or affirm, wholly or in part, or may modify the final decision of the Rent Stabilization Board.
The affirmative vote of a majority of the entire governing body shall be necessary to reverse, remand or modify any final action of the Board.
An appeal to the governing body shall stay all proceedings in furtherance of the action in respect to which the decision appealed from was made, including the implementation of any rent increase.
An appeal body shall mail a copy of the decision to the appellant or, if represented, then to his attorney without separate charge and for a reasonable charge to any interested party who has requested it, not later than 10 days after the date of the decision.
Nothing in this chapter shall be construed to restrict the right of any party to obtain a review by any court of competent jurisdiction according to law.
Each day that a violation occurs shall be considered a separate offense.
Violations affecting more than one leasehold shall be considered separate offenses.
Any provision of a lease or other agreement whereby any provision of this chapter is waived shall be deemed against public policy and shall be voided.
This chapter, being necessary for the protection of the health, safety and welfare of the Borough of Somerdale, its inhabitants and citizens shall be liberally construed to effectuate the purposes thereof.