A.
Calculation of allowable automatic increase. At the
expiration of a lease or at the termination of the lease of a periodic
tenant, the landlord may request and receive from the tenant a percentage
rental increase no greater than 90%, if the heat is supplied and paid
for by the landlord, and 80%, if heat is paid for by the tenant, of
the percentage difference between the consumer price index for the
fourth preceding month prior to the month in which the new lease arrangement
shall be implemented and the consumer price index (CPI) for the fourth
preceding month prior to the month the current leasing arrangement
was entered into with said tenant. By way of example: assume a tenant's
current leasing arrangement was entered into during the month of February
1980 and the proposed new lease will be entered into during the month
of December 1980. The landlord would use the difference in the CPI
between October 1979 (fourth month preceding February 1980) and August
1980 (fourth month preceding December 1980). The intent of this provision
is to allow the landlord to increase rentals based upon the change
in the CPI over a time period equal in length to the period of time
which elapsed between the date he last implemented a rental increase
and the date the automatic increase will be effective. The percentage
allowable increase calculated hereunder shall be applied to the tenant's
existing rental charge, but exclusive of and without regard to any
surcharge pursuant to this chapter or prior action of the Rent Control
Board being paid or payable by the tenant.
C.
Notice to tenants of automatic increase. Any landlord seeking an automatic increase in rent under § 261-8 shall, at least 30 days prior to the date of the anticipated implementation of the automatic increase, serve the affected tenant(s) with a notification which shall clearly set forth the following information:
(1)
The consumer price index 60 days prior to the date
of entry into the current leasing agreement.
(2)
The consumer price index no less than 60 days prior
to the anticipated date of entry into the new leasing arrangement.
(4)
Calculation of the amount of the allowable rental
increases rounded to the nearest dollar.
(5)
Calculation of the tenant's rent for the new leasing
term.
(6)
Date of the anticipated implementation of the automatic
increase.
(7)
A true copy of a certificate of substantial compliance.
Such certification shall have been issued not more than six months
from the date of the notice to the tenant of the automatic increase.
D.
Hearing on tenant challenge of automatic increase.
(1)
Notice and hearing.
(a)
In the event that the facts and/or calculations required pursuant to § 261-8 are disputed, the aggrieved tenant shall have the right to appeal to the Board by mailing to the landlord and the Board, not less than 15 days prior to the anticipated date of implementation of the automatic increase, a notice that the facts and/or calculations are disputed and the exact particulars of the manner in which they are disputed. The aggrieved tenant shall attach thereto a copy of the notice served upon him by the landlord pursuant to § 261-8C. The aforementioned fifteen-day period shall be calculated from the date of postmark and shall be a jurisdictional requirement for the Board. In the event of a perfected appeal, the automatic increase will be stayed until the Board has held a hearing and rendered a decision on the dispute. If the Board renders a finding in favor of the landlord, the automatic increase shall, subject to any applicable statutory law, be effective as of the original scheduled date of implementation even though same may require a retroactive rent increase payment by the tenant. If the Board renders a finding in favor of the tenant, the anticipated automatic increase shall be void; the landlord must reimburse the tenant for the application fee as provided by § 261-8D(2); no further automatic increase may be sought or implemented until the erroneous facts and/or calculation has been corrected; a new notice of increase pursuant to § 261-8C is served upon the tenant and the tenant is reimbursed for the application fee as set forth herein.
(b)
In the event that a single tenant, or a number of tenants, shall appeal hereunder, and shall raise issues common to other tenants within the same multiple dwelling complex who have received notification of an automatic increase pursuant to § 261-8, the Board may declare that its decision, as to the common issues, shall apply to all tenants within the multiple dwelling complex similarly situated, which action by the Board shall negate any necessity of those tenants similarly situated filing an appeal.
(2)
Fee. At the time an aggrieved tenant files an appeal with the Board, pursuant to § 261-8D(1), such tenant shall include therein an application fee by check or money order made payable to the "Township of Freehold" in the amount set forth in Chapter 150, Fees, which shall be subject to reimbursement by the landlord to the tenant in the event that the tenant shall prevail after the hearing by the Board on the dispute.
Each landlord shall be entitled to a fair rate
of return on his investment. If the landlord does not believe he is
receiving a fair rate of return on his investment, he may make application
to the Board for a hardship increase pursuant to this section.
A.
Procedure. The following procedure shall be followed:
(1)
Application. A landlord seeking a hardship rental
increase under this section for any multiple dwelling unit shall make
written application therefor to the Board on such written forms as
it may from time to time prescribe and including such additional information
as the Board may require. Included with the application shall be a
certificate of substantial compliance. Such certification shall not
be more than six months as of the date of application submission to
the Board. After having received a complete application, including
the certificate of substantial compliance, the Board shall set a date
upon which the hearing shall commence. Simultaneously with filing
the application for a rental increase with the Board, the landlord
shall make a copy of the complete application available at a convenient
location on his premises where same may be inspected by his tenants
during regular business hours, Monday through Friday. Further, if
a tenants' association or its equivalent exists within the landlords
multiple dwelling complex, the landlord shall serve a copy of the
application and all related documents filed with the Board upon the
President of said association or in his absence on the Vice President.
(2)
Notice to tenants. Upon receipt from the Board of
the date upon which the hearing shall commence, the landlord shall
serve, at least 30 days prior to the hearing, notice of same upon
each tenant to be affected by the requested increase. Such notice
shall set forth the following:
(a)
Notice that the landlord has filed an application
for a rental increase with the Board.
(b)
The location on the landlord's premises where
the complete application can be inspected by the tenant, and the hours
and days when such inspection may take place, which shall be at least
during the regular business hours, Monday through Friday.
(c)
The date, time and location for the commencement
of the public hearing before the Board on the application for rental
increase.
(3)
Recording of proceedings. If any party to the public
hearing desires to have a verbatim transcript made of the proceedings
before the Board, he shall request that the Board designate a stenographic
reporter to report verbatim the proceedings, all in accordance with
N.J.S.A. 2A:84-1. Any such request must be made at least 14 days before
the date set for the commencement of the hearing and shall be made
to the Board and the attorney for the Board. In the event that the
party is not notified at least seven days before the hearing of the
name of the stenographer designated by the Board, or if said stenographer
is unavailable, the party requesting the stenographer shall arrange
for a stenographer of his choice to record the proceedings. In either
event, the requesting party shall be responsible for paying any charge
made by the reporter. In the event that arrangements are made for
the transcribing of the hearing a copy of the verbatim transcript
shall be forwarded to the Board, free of charge by the requesting
party. In the event that any members of the Board have been absent
for one or more nights of the hearing, they may read the verbatim
transcript of that portion of the hearing for which they were absent,
and shall thereafter be qualified to vote on the determination of
the application for rental increase.
(4)
Time for decision. The Board shall render a decision on an application for a hardship increase pursuant to § 261-9, within 45 days of the close of the hearing, unless such time for decision is extended by consent of the applicant. Failure of the Board to so act shall not be deemed an approval of the amount of increase sought by the applicant, but shall result in a requirement that any increase granted by the Board be made retroactive to the date upon which the decision should have been made in accordance with this provision.
B.
Burden of proof. The burden of proof in any hardship increase hearing shall be upon the landlord to establish by a preponderance of the evidence that he is entitled to all or a portion of the relief which he seeks. Should the landlord fail to produce evidence as to any of the relevant considerations listed in § 261-9C below, the Board may still grant an increase to the landlord if warranted by the proof submitted.
C.
Considerations in general. At a hearing for a hardship
increase, the landlord shall produce evidence relevant to the following:
(1)
Landlord's rate base. The landlord's rate base shall
be the landlord's gross cost of the complex as excerpted from his
audited financial statements for the most current fiscal year. Nothing
herein shall be construed to prevent the Board from accepting evidence
supplementing capital expenditures made by the landlord since the
close of the most current fiscal year. The gross cost shall include
all "arms length" costs of acquisition plus all capitalized improvements
since the date of acquisition. The resulting figure shall not be reduced
by depreciation. In the event that the Board finds that all or a substantial
part of the gross cost is invalid for some specifically articulated
reason(s), the Board may consider the following:
(a)
Fair market value of the landlord's property
utilized in his rental operation.
(b)
Assessed valuation of the landlord's property
utilized in the rental operation as determined by the Township Tax
Assessor. The Board may, where it deems it appropriate, adjust same
by the directors ratio of equalized assessments determined pursuant
to N.J.S.A. 54:1-35.1.
(c)
Such other evidence which may be produced by
the parties and found relevant by the Board.
(2)
Landlord's rate of return. The Board shall make a
finding as to the rate of return to which the landlord is properly
entitled. In determining the rate of return, the Board shall consider
the following, in addition to other evidence which may be produced
by the parties and considered relevant by the Board:
(a)
Risk of the investment to the landlord.
(b)
Commercial mortgage rates available on properties
similar to the landlord's.
(c)
Rates of return available to the landlord in
other ventures with similar risks, or the Board shall adjust the rate
to compensate for the difference in risk.
(d)
Point in time when the landlord's investment
was made.
(3)
Landlord's net operating income. The Board shall determine the net operating income to which the landlord is entitled. In making such a determination, the Board shall multiply the landlord's rate base determined pursuant to § 261-9C(1), by the rate of return to which he is entitled pursuant to § 261-9C(2).
(4)
Operating expenses of the landlord. The Board shall
review the landlord's operating expenses for reasonableness. In performing
this function, the Board may rely upon the individual expertise of
its individual members as well as any evidence bearing on same as
may be presented by the parties or the Board. If the Board finds any
expenses to be unreasonable, it shall set forth specifically its reasons
for so finding and shall substitute therefor an amount it deems reasonable
and shall likewise specify the method it used to ascertain the reasonable
expense.
(5)
Gross rental income entitlement of landlord.
(a)
The Board shall determine the gross rental income to which the landlord is entitled. In making this determination, the Board shall add to the landlord's net income entitlement determined pursuant to § 261-9C(3) the amount of the reasonable expenses determined pursuant to § 261-9C(4). The resulting sum shall be the landlord's gross income entitlement which in most cases shall represent the gross rental income entitlement to the landlord, i.e., landlord's annualized rent roll without consideration for vacancies. In appropriate circumstances, the Board may deduct from the landlord's gross income entitlement the following in order to arrive at his gross rental income entitlement:
[1]
All or a portion of the income from related
operations conducted by the landlord including but not limited to
appliance sales, insurance sales, swim club fees, parking fees, etc.,
provided that the Board finds a sufficient nexus between the related
operation and the rental operation. The specific reasons for finding
the nexus shall be set forth by the Board as well as its reasoning
for making the deduction.
[2]
If the Board has used exclusively or predominantly
the fair market value approach to arrive at the landlord's rate base,
all or a portion of the period appreciation in value of the landlord's
property may be added to the net operating income.
(b)
The weighing and apportioning of the above factors
will be made as a function of the Board's discretion after having
considered all of the relevant and credible evidence submitted at
the hearing. If the Board has used exclusively or predominantly the
original cost plus capitalization of improvements approach to valuing
the landlord's rate base, no property value appreciation shall be
considered by the Board as income or benefit to the landlord.
(6)
Landlord's expense ratio. The Board shall make a finding as to the landlord's expense ratio which shall be computed by dividing the landlord's reasonable expenses determined pursuant to § 261-9C(4) by the gross income entitlement. If the resulting quotient is more than 60%, it shall be an indication of confiscation warranting a rental increase sufficient to decrease the expense ratio as computed above to no more than 60%. If, however, the Board is of the opinion that the landlord is making a fair rate of return on his investment by implementation of a lesser rental increase than might be indicated under this subsection, the Board may refuse to allow a sufficient increase to produce an expense ratio of 60%, but in so doing; must set forth specific and detailed reasons for so doing.
D.
Fees.
(1)
Deposit. At the time the landlord makes application for a hardship increase, he shall submit a fee in the amount provided for in Chapter 150, Fees, to the Township of Freehold which shall serve as a deposit on account for any final application fee which may be determined due from the landlord.
(2)
Final fee.
(b)
The amount of the final application fee shall
be determined by the Board and set forth in its written resolution
adjudicating the landlord's application. Failure of the Board to set
forth the fee in the resolution shall not excuse the landlord from
paying same. Any amount determined to be due from the landlord which
is in excess of the amount deposited shall be paid in full to the
Township prior to the implementation of any rental increase granted
by the Board and/or prior to any future implementation by the landlord
of any rental increase pursuant to this chapter. In the event that
the final application fee is less than the deposit, the difference
shall be refunded by the Township to the landlord upon vouchers signed
by the landlord, approved by the Chairman or Vice Chairman and finally
approved by the Township Committee.
[Added 12-17-2013 by Ord. No. O-13-41[1]]
Upon the voluntary, uncoerced vacating or court-ordered eviction
of any rental unit for which rent increases are controlled by the
terms of this chapter and upon compliance with Subsections A to E
below, at the time of the rerental of a rental unit the rental increase
restrictions of this chapter shall not apply, and a landlord shall
be entitled to apply the market adjustment provisions for that unit
upon approval required by Subsection E below. However, the market
adjustment provisions shall not apply a) where a landlord-tenant relationship
exists between the landlord and the proposed new tenant and that tenant
is transferring to a new rental unit owned by the same landlord on
the same property, and b) for any subsequent rental increase for the
market-adjusted rental unit unless there is another, separate vacancy
event as described in the first sentence of this section. Further
clarifying this Item b), if a multiyear lease is proposed for a market-adjusted
rental unit, only the initial rent set forth in such lease is subject
to market adjustment. All subsequent rentals charged, even those set
forth within the multiyear lease, must comply with the rental restrictions
of this chapter. When seeking to implement a market adjustment, the
landlord shall comply with each of the following:
A.
The landlord shall file with the Township Administrator or his/her
designee a certification, in such form as prescribed by the Township
Administrator and signed by the landlord, that the surrender of possession
by the vacating tenant was voluntary and uncoerced or pursuant to
a lawful court-ordered eviction.
B.
The landlord shall file with the Township Administrator or his/her
designee the name and address of the vacating tenant, the then current
rental amount of the vacated rental unit, an identification of the
vacated rental unit and the rent to be charged to the new tenant.
C.
The landlord shall submit proof that it is in possession of a current
certificate of substantial compliance.
D.
Any required certificates or permits as to the manufactured home
located on the rental unit shall have been issued.
E.
The Township Administrator or his/her designee shall review the information
submitted by the landlord under this section and notify the landlord
of approval or disapproval of the applicability of the market adjustment
provisions to the particular vacated rental unit. Such notification
shall be rendered within 30 days after all information required under
this section has been submitted. If the Township Administrator or
his/her designee finds the market adjustment provisions of this section
inapplicable to the particular vacated rental unit, the Township Administrator
or his/her designee shall notify the landlord of the basis for disapproval
and of the landlord's right to request a hearing from the Township
Administrator or his/her designee within 15 days of the landlord's
receipt of the Township Administrator's disapproval. If no hearing
is requested or if the Township Administrator or his/her designee,
after hearing, affirms the decision, the landlord shall be required
to reduce the rent to the amount as determined by the Township Administrator
or his/her designee and rebate to the tenant all monies and security
deposits, based upon such rental, paid in excess thereof.
