The opinion of the Court was delivered by PASHMAN, J.
This is the third of three related cases challenging municipal power to prevent the deterioration of rented residential housing.
On November 15, 1976, the City of Orange enacted Ordinance MCD 27-76 "to regulate, control and stabilize rents and to create a Rent Control Board within the City of Orange * *."
While no further official authorization was needed for periodic increases, each proposed increase in rentals due to hardship or capital improvements required the approval of the city's Rent Leveling Board. The board consisted of five members and two alternates appointed by the City Council for three-year terms. The ordinance granted the board authority to promulgate rules and regulations to implement the ordinance. Such regulations would "have the force of law." An aggrieved landlord or tenant could appeal decisions of the Rent Leveling Board to the City Council within 20 days of the date of determination.
The ordinance contains several provisions designed to insure a multiple dwelling's compliance with municipal standards for safety and habitability. When seeking a periodic increase in rents, a landlord must give formal notice to his tenants of the
The ordinance defined "substantial compliance" as follows:
As written, the definition appeared to mandate compliance with both the State and municipal housing codes. After the Appellate Division's decision in this case, however, the Rent Leveling Board issued regulations requiring substantial compliance with only the municipal housing code for the issuance of certificates.
Orange Taxpayers Council, Inc., a coalition of owners of rental properties in Orange, and several individual landlords
The parties filed cross motions for summary judgment on the legality of the certification scheme.
Defendants sought and were granted leave to appeal this decision to the Appellate Division.
The Appellate Division distinguished its earlier decision in Modular Concepts, supra, on three grounds. Although the South Brunswick ordinance in Modular Concepts required State, county and municipal approval of housing conditions, the court noted that Orange's ordinance required only municipal certification
We granted plaintiffs' petition for certification, but limited our review to whether a municipality could require the production of a certificate of "substantial compliance" as a prerequisite to an increase in controlled rents. 81 N.J. 399 (1979). As to that issue we now affirm.
The power of a municipality to control rents within its borders, in the absence of specific legislative authorization by the State, was recognized in the landmark case of Inganamort v. Borough of Fort Lee, 62 N.J. 521 (1973). Writing for the Court, Chief Justice Weintraub observed, "The police power is vested in local government to the very end that the right of property may be restrained when it ought to be because of sufficient local need." Id. at 538. The Court in Inganamort found that a shortage of rental housing and the consequent risk that landlords would exploit tenants presented a proper occasion for local government "to devise measures tailored to the local scene[,] * * * to meet varying conditions or to achieve the ultimate goal more effectively." Id. at 528. The "reservoir of police power" conferred by N.J.S.A. 40:48-2 was held to contain a
While Inganamort acknowledged the existence of municipal police power to regulate rents, the scope of that power remained largely unexplored until 1975. At that time, in a series of three decisions, Hutton Park Gardens v. West Orange Town Council, 68 N.J. 543 (1975); Brunetti v. Borough of New Milford, 68 N.J. 576 (1975); Troy Hills Village v. Parsippany-Troy Hills Tp., 68 N.J. 604 (1975), the Court addressed various questions concerning the manner in which a municipality may exercise its police power to control rents. The fundamental principle enunciated in these decisions was that municipal rent control ordinances "are subject to the same narrow scope of review under principles of substantive due process as are other [forms of legislative price regulations]." Hutton Park Gardens, 68 N.J. at 563-564.
Application of this principle led to a three-part analysis for assessing local rent control provisions. The first part is "whether the legislative body could rationally have concluded that the unrestrained operation of the competitive market was not in the public interest." Id. at 564. See Troy Hills Village, 68 N.J. at 616; Brunetti, 68 N.J. at 594; see also Helmsley v. Borough of Fort Lee, 78 N.J. 200, 209 (1978), app. dism., 440 U.S. 978, 99 S.Ct. 1782, 60 L.Ed.2d 237 (1979). The second inquiry is whether the regulatory scheme when examined in its entirety permits a "just and reasonable return" to the owners of rental properties. Hutton Park Gardens, 68 N.J. at 568-569; see Troy Hills Village, 68 N.J. at 619; Brunetti, 68 N.J. at 592; see also Helmsley, 78 N.J. at 210-211. Finally, the means adopted to accomplish regulation in the public interest must be rationally related to the purposes of the rent control ordinance. Hutton Park Gardens, 68 N.J. at 572-573; see Helmsley, 78 N.J. at 209.
When confiscation is the issue, and the attack is upon the terms of the enactment itself and not the consequence of its application, the plaintiff's task is equally onerous. Only if a rent leveling ordinance is "so restrictive as to facially preclude any possibility of a just and reasonable return" may a court declare it invalid without considering the actual effects of the ordinance upon landlords. Hutton Park Gardens, 68 N.J. at 571; see Brunetti, 68 N.J. at 592.
When these principles are applied to the case before us, it becomes clear that we must reject plaintiffs' claims. As their principal argument, plaintiffs challenge as arbitrary and unreasonable the requirement that an apartment be in "substantial compliance" with local housing regulations before a landlord can charge higher rents. Thus, they contend that the enforcement of minimum standards of safety and habitability is completely
We have ourselves described as "possible rationales for adopting [a rent control] ordinance * * * a housing shortage, widespread imposition of exorbitant rents, monopoly control of the rental housing market or prevalence of substandard housing." Brunetti, 68 N.J. at 594 (emphasis added). See Hutton Park Gardens, 68 N.J. at 564. Both "the problems of substandard dwellings and exorbitant rentals * * * stem from the critical condition of the housing market." Inganamort v. Borough of Fort Lee, 120 N.J.Super. 286, 310 (Law Div. 1972), aff'd, 62 N.J. 521 (1973). No one would applaud the wisdom of lawmakers who by controlling the price of rental housing but not its quality, insured that their constituents could live in affordable dwellings that are unsafe, unsanitary and harmful to health. A municipality's authority to act "for the preservation of the public health, safety and welfare" of its residents, N.J.S.A. 40:48-2, permits it to go beyond mere regulation of price. There is no doubt that a municipality can employ its delegated police power to regulate the forces of the marketplace to help its residents obtain decent housing within their means.
This was precisely the goal of the City of Orange when it imposed a requirement of "substantial compliance" in its rent control ordinance. The preamble to the ordinance under scrutiny expressed official concern about both "increases in rents and subsequent deterioration of [residential] dwelling units." The same concerns were expressed in the city's original rent control ordinance in 1972. It appears that by enacting the "substantial compliance" requirement, the city could have acted — and indeed, did act — upon a rational perception of the "health, safety and welfare" of its citizens. We therefore find that the requirement is not an arbitrary and unreasonable feature of Orange's rent control ordinance.
Plaintiffs call attention to the procedures for obtaining a certification of "substantial compliance." Relying, as did the trial court, upon the Appellate Division decision in Modular
The regulatory scheme before the Appellate Division in Modular Concepts, supra, stands in stark contrast to the rent control ordinance promulgated by the City of Orange. The court in that case described the certification scheme before it as follows:
The court doubted that "such agencies can or will certify substantial compliance; at best what can be obtained will be a listing of any violations." Id. While the court in Modular Concepts did not so state, it must have been aware that the ordinance before it required at least three separate, official inspections of residential premises each time a landlord sought an increase in rents.
The burden which the Orange ordinance imposes upon landlords is far less severe than that contemplated by the scheme in Modular Concepts. Under the procedures presently at issue, a landlord is not required to seek an inspection or official certification when he seeks a periodic increase. If he petitions the Rent
In the absence of any concrete allegations concerning instances when the certification procedure has in fact unreasonably burdened landlords, we reject plaintiffs' claim that the scheme inevitably denies landlords due process of law. Under the regulations of the Rent Leveling Board, any rent increases due to hardship or capital improvements shall be made retroactive to the date of certification of "substantial compliance." We have noted that constitutional principles of confiscation and procedural due process do not require this approach to "regulatory lag." See In re Lambertville Water Co., 79 N.J. 449, 456 (1979). In addition to the protection of the landlord's economic interest afforded by retroactivity, there is also the Rent Leveling Board's express undertaking, contained in its regulations, to employ its "best efforts" to expedite inspections and certifications at a landlord's request. Without a showing that these safeguards become meaningless in their application, we find that the procedures of the Orange ordinance are not facially unworkable or unreasonable.
We dispose of plaintiffs' confiscation claims in a similar fashion. Once again our observation in Hutton Park Gardens is appropriate:
See Dome Realty, 83 N.J. at 236.
The only feature of the ordinance which on its face gives rise to a claim of confiscation is the requirement that a dwelling be in "substantial compliance" with housing regulations before the Rent Leveling Board grants an increase in rents for economic hardship or capital improvements. As the trial court noted, "[t]he landlord seeking an increase to cure violations by a capital improvement or hardship increase cannot even file the petition because such a landlord could not get the certificate." The effect of this requirement, however, is not the preclusion of "any possibility of a just and reasonable return," Hutton Park Gardens, 68 N.J. at 571. The purpose of requiring substantial compliance before granting an increase is to insure that tenants will not finance indirectly, by way of rent increases, those repairs which housing regulations and the landlord's implied warranty of habitability, see Trentacost v. Brussel, 82 N.J. 214 (1980), already obligate him to undertake. In the past we have recognized a tenant's right to receive reductions or rebates of rent when premises violate minimum standards of safety and health. See Berzito v. Gambino, 63 N.J. 460 (1973); see also N.J.S.A. 2A:42-85 et seq. Since the notion of a "just and reasonable return" embraces a landlord's responsibilities to his tenants as well as his right to receive sufficient income, we perceive no inherent defect in an ordinance that prevents increases in rent for defective premises.
Finally, we address plaintiffs' claim that the prohibition of increases in rent for premises which are not in "substantial compliance" with housing regulations constitutes an illegal and excessive penalty. We discussed a closely related issue in Dome
Based on their assertion that the prohibition of rent increases constitutes a "penalty," plaintiffs argue that its imposition, along with criminal penalties imposed directly for such violation, violates the Double Jeopardy Clause of the federal Constitution, U.S.Const., Amend. V. Although such a challenge is undoubtedly premature in the absence of an actual second prosecution, we find the merits of this issue easily resolved. The Double Jeopardy Clause does not preclude the imposition of both a criminal and a civil, remedial sanction for the same act or omission. One Lot Emerald Cut Stones v. United States, 409 U.S. 232, 93 S.Ct. 489, 34 L.Ed.2d 438 (1972). By protecting
For the foregoing reasons, the judgment of the Appellate Division is affirmed.
For affirmance — Chief Justice WILENTZ and Justices SULLIVAN, PASHMAN, CLIFFORD, SCHREIBER, HANDLER and POLLOCK — 7.
For reversal — none.