Newark Property Owners Fighting Recently Passed Ordinance in Court

In May, property owners in Newark suffered a major blow when the Newark City Council passed an ordinance aimed at making it more difficult for owners of rent-controlled apartments to raise rents. Now, owners are fighting back in court against the legislation, stating that the ordinance is too difficult to understand and follow.

The new ordinance caps annual rent increases for all properties “to the Consumer Price Index (CPI) for the previous twelve months for the New Jersey area, as established by the Federal Bureau of Labor Statistics.”. Owners say that no such index exists and that the Federal Bureau of Labor Statistics publishes monthly CPI’s on a delayed basis. Following the passing of this law, a newly formed owner’s group called the Newark Apartment Owners association filed a complaint in Essex County Superior Court and asked the judge to order an immediate stay to the law and declare the ordinance unconstitutional. The judge allowed the law to take effect on June 20th, but stated that the ordinance could be struck down at any time in the future. Before the new ordinance was passed, owners were permitted to raise rents annually by 5% if their building has 49 units or less and by 4% if the building has more than 49 units. Owners could also ask the City of Newark to raise rents up to 25% in vacant apartments if they were able to show proof that they spent $100 or more in making an individual apartment improvement. Now, owners are fighting the new legislation in court and contends that the wording of the law is too vague and unfairly places a burden on property owners to interpret the law.

Just days after the Newark law went into effect, New York City property owners celebrated a victory over the City Rent Guidelines Board when an impending rent freeze was narrowly avoided with the lowest rent guidelines in City history approved. Although the approved rent increases do not come close to covering the rising costs for New York City owners, thwarting what seemed to be an inevitable rent freeze was a major victory. The timetable is unknown for this new legal battle for Newark owners, however, perhaps they can soon feel the same sense of relief that New York City owners were able to achieve earlier this year.

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