Cpt Courtyard at Jefferson, LLC v. City of Hoboken Rent Leveling and Stabilization Board

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3. SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2443-24 CPT COURTYARD AT JEFFERSON, LLC, Plaintiff-Appellant, v. CITY OF HOBOKEN RENT LEVELING AND STABILIZATION BOARD, Defendant-Respondent. __________________________ Argued September 15, 2026 – Decided October 2, 2026 Before Judges Gummer, Paganelli, and DeAngelis. On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1609-22. Robert Beckelman argued the cause for appellant (Wilentz, Goldman & Spitzer, attorneys; Robert Beckelman, of counsel and on the briefs; Kaylee R. James, on the briefs). Kathleen P. Ramalho argued the cause for respondent (Antonelli Kantor Rivera PC, attorneys; Daniel Antonelli, of counsel and on the brief; Lori Reynolds and Kathleen P. Ramalho, on the brief). PER CURIAM Defendant City of Hoboken Rent Leveling and Stabilization Board (the Board) issued a resolution approving a legal-rent calculation that had been performed on an apartment. The Board approved the resolution, citing its conclusions that (i) the rental lease did not contain required language about the apartment being exempt from Hoboken's rent-control ordinance, Hoboken, N.J., Code §§ 155-1 to -38; and (ii) the prior owner of the building where the apartment was located had not filed a notice of rent-control exemption for the building with Hoboken's construction official. Plaintiff CPT Courtyard at Jefferson, LLC, the building's current owner, appeals an order sustaining the Board's decision. We affirm the order based only on the Board's conclusion about the omitted lease language. I. We begin by discussing the statutory law on which the Board and the court relied in rendering their decisions. Under certain express conditions, N.J.S.A. 2A:42-84.1 to -84.6 (the Act) exempts from municipal rent-control ordinances buildings that contain four or more dwelling units. The exemption applies to A-2443-24 2 buildings constructed after the Act's 1987 enactment. N.J.S.A. 2A:42-84.2(a) provides: In any municipality which has enacted or which hereafter enacts a rent control or rent leveling ordinance, . . . those provisions of the ordinance which limit the periodic or regular increases in base rentals of dwelling units shall not apply to multiple dwellings constructed after the effective date of this act, for a period of time not to exceed the period of amortization of any initial mortgage loan obtained for the multiple dwelling, or for 30 years following completion of construction, whichever is less. In N.J.S.A. 2A:42-84.5(b), the Legislature explained why it had adopted the Act: The Legislature deems it to be necessary for the public welfare to increase the supply of newly constructed rental housing to meet the need for such housing in New Jersey. In an effort to promote this new construction, the Legislature enacted [the Act], the purpose of which was to exempt new construction of rental multiple dwelling units from municipal rent control so that the municipal rent control or rent leveling ordinances would not deter the new construction. In N.J.S.A. 2A:42-84.5(a), the Legislature described its intent regarding the Act's exemption and how the Act limited what a municipality could do regarding the exemption. It is the intent of [the Act] that the exemption from rent control or rent leveling ordinances afforded under [the Act] shall apply to any form of rent control, rent A-2443-24 3 leveling or rent stabilization, whether adopted now or in the future, and by whatever name or title adopted, which would limit in any manner the periodic or regular increases in base rentals of dwelling units of multiple dwellings constructed after the effective date of [the Act]. No municipality, county or other political subdivision of the State, or agency or instrumentality thereof, shall adopt any ordinance, resolution, or rule or regulation, or take any other action, to limit, diminish, alter or impair any exemption afforded pursuant to [the Act]. The Legislature included in the Act two conditions. Under N.J.S.A. 2A:42-84.3, an owner seeking an exemption had to provide notice to prospective tenants and had to include language in its lease agreements notifying tenants of the exemption: The owner of any multiple dwelling exempted from a rent control or rent leveling ordinance pursuant to this act, shall, prior to entering into any lease with a person for tenancy of any premises located in the multiple dwelling, furnish the prospective tenant with a written statement that the multiple dwelling in which the premises is located is exempt from rent control or rent leveling for such time as may remain in the exemption period. Each lease offered to a prospective tenant for any dwelling unit therein during the period the multiple dwelling is so exempted shall contain a provision notifying the tenant of the exemption. [N.J.S.A. 2A:42-84.3 (emphasis added).] Under N.J.S.A. 2A:42-84.4, an owner seeking an exemption had to provide notice to the municipality: A-2443-24 4 The owner of any multiple dwelling claiming an exemption from a rent control or rent leveling ordinance pursuant to this act shall file with the municipal construction official, at least 30 days prior to the issuance of a certificate of occupancy for the newly constructed multiple dwelling, a written statement of the owner's claim of exemption from an ordinance under this act, including therein a statement of the date upon which the exemption period so claimed shall commence, such information as may be necessary to effectively locate and identify the multiple dwelling for which the exemption is claimed, and a statement of the number of rental dwelling units in the multiple dwelling for which the exemption is claimed. The owner shall, at least 30 days prior to the date of the termination of the exemption period afforded pursuant to this act, file with the municipal construction official a notice of the date of termination of the exemption period for the affected multiple dwelling. [N.J.S.A. 2A:42-84.4 (emphasis added).] We consider the record in this case under that statutory framework. II. Plaintiff is the owner of a two-structure, 144-unit apartment building located in Hoboken (the property). On December 2, 2021, a tenant renting one of the apartments located at the property filed a legal-rent calculation request with the Board. The City of Hoboken had established the Board to "administer" Hoboken's rent-control ordinance. Hoboken, N.J., Code § 155-18. In the request, the tenant asserted his landlord was increasing the rent, had refused to A-2443-24 5 show proof the property was exempt from the rent-control ordinance, and had not included in their lease agreement any indication the property was exempt from the rent-control ordinance. A rent-regulation officer provided plaintiff with notice of the request, informing plaintiff it had thirty days to respond. Plaintiff submitted a copy of a June 15, 2000 letter to Hoboken's construction code official from Sanford Weiss, who purportedly had sent it on behalf of the property's previous owner, Courtyard at Jefferson, LLC (Courtyard) pursuant to N.J.S.A. 2A:42-84.4. In the signed letter, which was addressed to Hoboken's "Construction Code Official," Weiss claimed the property contained a newly-constructed, multi-unit residential building and was exempt from Hoboken's rent-control ordinance pursuant to the Act, "commencing on or about July 1, 2000." In a January 6, 2022 letter, the rent-regulation officer determined the property was "subject to the Hoboken [r]ent[-c]ontrol [o]rdinance," citing Hoboken, N.J., Code §§ 155-4 and -5, and, consequently, plaintiff could not "raise a tenant's rent more than the allowable cost of living percentage once every twelve . . . months at the renewal of the lease." The rent-regulation officer had asked Hoboken's "Construction Official" in a November 16, 2021 email whether he had "a letter of exemption from [r]ent [c]ontrol for [the property]." A-2443-24 6 He advised her the next day that his office "d[id] not have any exemption rent control on file" regarding the property. The rent-control officer did not reference their email exchange in her January 6, 2022 letter. Plaintiff appealed the determination to the Board. Citing the Act, plaintiff contended the property was exempt from Hoboken's rent-control ordinance. In support of its appeal, plaintiff submitted copies of: the June 15, 2000 letter; an October 31, 2007 deed granting the property to plaintiff; an October 26, 2007 purchase and sale agreement regarding the property; the January 6, 2022 legal-rent calculation; certificates of occupancy, and Weiss's February 20, 2022 certification. In the purchase and sale agreement, the seller represented the following: Rent Control Documentation. At least thirty . . . days prior to the issuance of certificates of occupancy for the [p]roperty, [the s]eller submitted a written notice to the City of Hoboken dated June 15, 2000 (the "Exemption Notice") claiming an exemption from the City of Hoboken [r]ent[-c]ontrol [o]rdinance, Chapter 155. Before the date hereof, [the s]eller has provided [the p]urchaser with a copy of the Exemption Notice. In the certification, Weiss stated he was Courtyard's general manager in 2001 and that he had signed the June 15, 2000 letter and had "caused [it] to be submitted to the Hoboken [c]onstruction [o]fficial . . . at least thirty . . . days prior to the issuance of a [c]ertificate of [o]ccupancy." A-2443-24 7 At its March 9, 2022 meeting, the Board considered plaintiff's appeal. During that meeting, plaintiff's counsel advised the Board of his understanding that the rent-regulation officer had concluded the property was not exempt from the rent-control ordinance because the construction official had advised her his office did not have a copy of an exemption-notification letter. According to counsel, to address that concern, his firm submitted a request to the City of Hoboken pursuant to the Open Public Records Act (OPRA), N.J.S.A. 47:1A-1 to -13, seeking copies of the property's initial certificates of occupancy and the June 15, 2000 letter. According to counsel, a city official responded, stating the City did not have any responsive documents, not even the certificates of occupancy. Neither the rent-regulation officer nor the construction official testified during the hearing. Nothing in the record indicates a copy of their November 2021 email exchange was submitted to the Board. Plaintiff's counsel also acknowledged the lease at issue did not contain a provision notifying the tenant the building was exempt from the rent-control ordinance. The tenant testified he had not received notice the building was exempt from rent control. The building's "asset manager" testified the exemption provision "was dropped from the lease form" when plaintiff hired a new property management company in 2017. A-2443-24 8 At the conclusion of the meeting, the Board voted on and passed two motions. In the first motion, the Board unanimously voted to uphold the legal- rent calculation issued by the rent-regulation officer for the tenant's apartment. In the second motion, the Board voted four to two with one abstention to find "the building is under rent control due to the lack of documentation that was required." During an April 13, 2022 meeting, the Board adopted a resolution memorializing those votes. The Board began the resolution by stating: The Board ultimately voted in favor of upholding the legal rent calculation . . . on the basis that the [l]andlord failed to indicate in the lease that the subject property is exempt from rent control, and that [the property] is . . . not exempt from [the City's rent-control ordinance] due to the lack of documentation submitted by the [l]andlord. Addressing its vote based on the omitted lease language, the Board found "[t]he lease between the [l]andlord and the [t]enant did not contain the required statutory disclosure that the subject unit is exempt from rent control." The Board stated that after voting on that issue, it "then discussed whether the failure to provide a letter at the time the property was developed mean[t] the entire property [wa]s subject to rent control." The Board referenced the "proofs" presented by plaintiff's counsel, identifying them as Weiss's certification and the A-2443-24 9 purchase and sale agreement. 1 The Board made no mention of Weiss's June 15, 2000 letter. The concluding paragraph of the resolution contained the following statement: The Board considered the evidence presented by the developer and that the prior owner has an interest in indicating the property is exempt from rent control, and the [l]andlord has failed to carry its burden, and the fact that the subject [l]ease did not contain the required statutory disclosure that the unit is exempt from rent control. On May 16, 2022, plaintiff filed a complaint in lieu of prerogative writs, challenging the resolution. Plaintiff asserted the property was "exempt from any local rent-control ordinance for a period of thirty . . . years" pursuant to the Act and that the prior owner through Weiss's June 15, 2000 letter had provided the City with notice of its exempt status in compliance with N.J.S.A. 2A:42-84.4. Plaintiff contended the Board's decision to declare the entire property subject to the rent-control ordinance was: not supported by substantial evidence; arbitrary, 1 The Board described the purchase and sale agreement as "includ[ing] a personal guaranty." The copy of the purchase and sale agreement contains a provision with the following language: "[t]o guaranty the representations and warranties being made by [s]eller herein, [s]eller shall cause Sanford Weiss and Stephen Biegle to execute and deliver to [p]urchaser at the [c]losing, the Guaranty of Seller Post-Closing Obligations in the form of Exhibit M attached hereto and made a part hereof." The record does not contain a copy of Exhibit M or of any other "personal guaranty." A-2443-24 10 capricious, and unreasonable; and a violation of N.J.S.A. 2A:42-84.5, plaintiff's due-process rights, and the rent-control ordinance. The Board answered the complaint. According to an October 24, 2024 case management order, the parties were permitted to conduct discovery. On January 17, 2025, the trial court conducted a trial by considering the parties' written submissions and hearing argument. No witnesses testified. On February 28, 2025, the court placed a decision on the record and entered an order sustaining the resolution. The court determined "the threshold question is was the decision by the Board arbitrary and capricious as to whether the building was registered with the building or construction official under [N.J.S.A. 2A:42-]84.4." Acknowledging the Board had "rejected" plaintiff's evidence, including Weiss's June 15, 2000 letter and 2022 certification, the court nevertheless found it did not need to address Weiss's credibility. Noting "a board can hear the witnesses and the submissions and make a determination," the court concluded the Board had "legitimate[ly] exercise[d] . . . [its] discretion" when it "came to the conclusion that the [June 15, 2000] letter wasn't received, is not in their file at Hoboken" and had acted within its "discretion to accept or reject the proofs that are put in front of" it. Having made that A-2443-24 11 determination, the court declined to decide the import of the lease's lack of exemption-notice language. This appeal followed. III. Courts have long recognized that "public bodies, because of their peculiar knowledge of local conditions[,] must be allowed wide latitude in the exercise of delegated discretion." Kramer v. Bd. of Adjustment, 45 N.J. 268, 296 (1965). Thus, a municipal board's action is entitled to "a presumption of validity and reasonableness." Blackridge Realty, Inc. v. City of Long Branch, 481 N.J. Super. 183 , 193 (App. Div.), certif. denied, 261 N.J. 575 (2025); see also Chau v. Cardillo, 250 N.J. Super. 378, 384 (App. Div. 1990) (finding a rent-control board's decision "was entitled to a presumption of correctness"). The party challenging the "municipal action bears the heavy burden of overcoming th[e] presumption of validity" afforded to municipal bodies. Gonzalez v. Twp. of W. Windsor, 483 N.J. Super. 600 , 633 (App. Div. 2025) (quoting Vineland Constr. Co. v. Twp. of Pennsauken, 395 N.J. Super. 230, 256 (App. Div. 2007)) (internal quotation marks omitted); see also Park Tower Apts. Inc. v. City of Bayonne, 185 N.J. Super. 211, 222 (Law. Div. 1982) (finding "the action of the rent A-2443-24 12 control board is presumptively valid and the burden is on the parties to show otherwise"). A court, however, "may set aside a municipal board decision if it is shown to be arbitrary, capricious or unreasonable, not supported in the evidence, or otherwise contrary to law." Rivkin v. Dover Twp. Rent Leveling Bd., 143 N.J. 352, 378 (1996); see also Grabowsky v. Twp. of Montclair, 221 N.J. 536, 551 (2015) (finding a municipal board's action may be overturned if "it is found to be arbitrary and capricious or unreasonable"). We review de novo a board's and a trial court's legal determinations, including their statutory interpretations. Fuster v. Twp. of Chatham, 259 N.J. 533 , 546 (2025); Jacoby v. Zoning Bd. of Adjustment of Englewood Cliffs, 442 N.J. Super. 450, 462 (App. Div. 2015). A board's factual determinations should "not be disturbed unless there is insufficient evidence to support them." Rowatti v. Gonchar, 101 N.J. 46, 52 (1985). "[W]hen reviewing the decision of a trial court that has reviewed municipal action, [appellate courts] are bound by the same standards as was the trial court." Berardo v. City of Jersey City, 476 N.J. Super. 341 , 353 (App. Div. 2023) (alterations in original) (quoting Fallone Props., L.L.C. v. Bethlehem Twp. Plan. Bd., 369 N.J. Super. 552, 562 (App. Div. 2004)). "In reviewing an A-2443-24 13 action of a rent control board the court is limited to an examination of the record below." Park Tower Apts., 185 N.J. Super. at 222 ; see also Green Acres of Verona, Inc. v. Borough of Verona, 146 N.J. Super. 468, 470 (App. Div. 1977) (same). To enable our review, "[i]t is not sufficient for the board merely to set forth its conclusions; it must articulate the basis for arriving at those ultimate conclusions and make the factual findings upon which that conclusion relies." Park Tower Apts., 185 N.J. Super. at 222 (citing In re Howard Savs. Inst. of Newark, 32 N.J. 29, 52 (1960)). And those factual findings must be supported by sufficient evidence in the record. Rowatti, 101 N.J. at 52 . Applying those standards, we affirm the February 28, 2025 order sustaining the Board's decision to uphold the legal-rent calculation of the apartment at issue. We do so, however, for reasons other than those expressed by the trial court. See Atl. Ambulance Corp., v. Cullum, 451 N.J. Super. 247, 254 (App. Div. 2017) (finding "[w]e affirm or reverse judgments and orders, not reasons" and that "[a] correct result, even if grounded on an erroneous basis in fact or in law, will not be overturned on appeal"). We affirm based on the Board's determination that the legal-rent calculation should be upheld because the lease agreement between plaintiff and the tenant did not contain "a provision notifying the tenant of the [rent-control] A-2443-24 14 exemption," as required by N.J.S.A. 2A:42-84.3. That determination and the reasons for it were fully set forth in the Board's resolution, and it was supported by sufficient, undisputed evidence in the record: witness testimony and the lease agreement itself. For that reason alone, the Board's decision to uphold the legal-rent calculation should have been sustained. Indeed, as confirmed by plaintiff's counsel during oral argument before this court, plaintiff does not challenge in this appeal that aspect of the Board's decision. In contrast, the Board's conclusory statement about "the failure to provide a[n exemption] letter at the time the property was developed" was neither fully explained in the resolution nor supported by sufficient evidence in the record. Neither the rent-regulation officer nor the construction official testified about the purported efforts to locate an exemption letter. As for evidence supporting a conclusion the prior owner had failed to submit an exemption letter, the Board had before it, at most, an unsworn statement by the construction official, assuming his November 2021 email to the rent-regulation officer had been submitted to the Board, and plaintiff's counsel's information about his office's unsuccessful attempt to obtain documents about the property through its OPRA request. In comparison, plaintiff's contention about the prior owner's submission of the exemption letter pursuant to N.J.S.A. 2A:42-84.4 was A-2443-24 15 supported by Weiss's sworn certification as well as a copy of his June 15, 2000 letter -- a critical piece of evidence the Board did not mention in the resolution. The Board apparently "rejected the evidence submitted by . . . plaintiff." It did so without hearing any testimony from any witness about the prior owner's submission of an exemption letter. The only explanation for the Board's rejection of plaintiff's evidence offered in the resolution was an unsupported statement about the prior owner's purported "interest in indicating the property is exempt from rent control" and a cursory reference to a "personal guaranty" that is not contained in the record. In its oral decision, the trial court noted the copy of the June 15, 2000 letter submitted by plaintiff did not contain a stamp indicating it had been received by the construction official. But the record is devoid of any testimony from anyone with personal knowledge about how the construction official processed exemption letters in 2000 and whether he provided stamped copies to the people who submitted them. Moreover, there was no discovery concerning whether the construction official's office had misfiled or lost the exemption letter. Based on that record, we conclude the Board's determination about "the failure to provide a[n exemption] letter" was not supported by sufficient evidence in the record and could not sustain a decision to uphold the legal-rent A-2443-24 16 calculation. Accordingly, we vacate that part of the Board's decision. In so doing, we take no position as to whether the prior owner submitted an exemption letter pursuant to N.J.S.A. 2A:42-84.4 and leave that determination for another day. In contrast, the Board's determination about the lease's omission of the notice provision required by N.J.S.A. 2A:42-84.3 was sufficiently supported. On that basis, we affirm the February 28, 2025 order sustaining the Board's decision to uphold the legal-rent calculation of the apartment at issue. Finally, we address plaintiff's request for "equitable relief." In its complaint in lieu of prerogative writs, plaintiff, in addition to the other relief sought, asked the court to "[o]rder[] such other relief as the [c]ourt may deem equitable and just." In its merits brief, plaintiff asserts it "has operated under the Rent Control Ordinance . . . and has to date suffered over three . . . years ' worth of damages that it has no remedy at law to recoup." Plaintiff asks this court to "impose an equitable remedy adding back the total amount of time that [plaintiff] will have lost the benefit of the [e]xemption or, alternatively, remand the issue of other equitable relief to the [t]rial [c]ourt to ensure complete relief to [plaintiff]." However, plaintiff's asset manager testified before the Board that the exemption provision required by N.J.S.A. 2A:42-84.3 "was dropped from A-2443-24 17 the lease form" when plaintiff hired a new property management company in 2017. On that record, we perceive no factual or legal basis for equitable relief and conclude plaintiff's request is wholly without merit. See Fulton Bank of N.J. v. Casa Eleganza, LLC, 473 N.J. Super. 387 , 400 (App. Div. 2022) (finding "[t]hose seeking equity must do equity"). Affirmed in part and vacated in part. A-2443-24 18