## Facts

- The City of Hoboken had a rent-control ordinance limiting rent increases for covered residential units.
- BDLJ Associates, LLC owned an apartment complex in Hoboken that qualified for a 30-year exemption from the ordinance under New Jersey’s Rent Control Exemption Act (RCEA), with the exemption set to expire in 2030.
- In February 2004, tenants Raul and Elizabeth Perez leased an apartment in the complex from BDLJ; the tenancy began while the property was treated as exempt under the RCEA.
- In August 2004, BDLJ sold the property to Toll Brothers, Inc.
- In October 2004, Toll Brothers sold the property to Block 268 LLC.
- After acquiring the property, Block 268 began converting some units to condominiums while continuing to rent other units, including the Perezes’ unit.
- The Perezes’ lease expired in August 2005. During renewal negotiations, Block 268 sought a rent increase above the level Hoboken’s ordinance would permit if the unit were rent-controlled.
- The Perezes filed a complaint with the City of Hoboken Rent Leveling and Stabilization Board, arguing that the property lost its RCEA exemption when BDLJ sold the property (and that the conversion activity supported treating the units as subject to rent control).
- After a hearing, the Board ruled for the Perezes and applied Hoboken’s rent-control ordinance to the property.
- Block 268 filed suit in the Law Division challenging the Board’s action and moved for partial summary judgment, seeking a declaration that the RCEA exemption remained in effect through 2030 and that the Board’s contrary determination was unlawful.

## Issues

1. Whether an RCEA rent-control exemption that is in effect for a statutory 30-year term ends when the property is sold to a new owner.
2. Whether the exemption ends when the owner converts some units to condominiums while continuing to operate other units as rentals.
3. Whether the Board acted beyond its authority, or acted arbitrarily, capriciously, or unreasonably, by applying rent control despite the RCEA exemption.

## Decision

- The Law Division granted Block 268’s motion for partial summary judgment.
- The court held the RCEA exemption continued through the full statutory term and was not terminated by a transfer of ownership.
- The court held the exemption was not terminated by partial condominium conversion while rental units remained within the exempt project.
- The court set aside the Board’s determination, concluding the Board’s action was arbitrary, capricious, unreasonable, and beyond the Board’s authority under the RCEA.

## Legal Principles

- The RCEA provides a time-limited, statutory exemption from municipal rent control for qualifying projects; absent statutory language ending the exemption earlier, the exemption lasts for the full term set by the Act.
- An RCEA exemption attaches to the qualifying property or project for the statutory period and is not extinguished merely because the property is later sold.
- A municipal rent board may not add non-statutory conditions that terminate an RCEA exemption (such as termination upon sale or partial condominium conversion) when the Legislature did not include those limits in the Act.
- Courts reviewing local administrative determinations will invalidate actions that conflict with governing statutes or exceed delegated authority, including actions that are arbitrary, capricious, or unreasonable.

## Conclusion

The Law Division held that Hoboken’s rent-control ordinance did not apply because the apartment complex remained exempt under the RCEA until 2030, and that neither a sale of the property nor partial conversion to condominiums terminated the statutory exemption; accordingly, the court vacated the Rent Leveling and Stabilization Board’s contrary ruling as unauthorized.


Block 268 v. City of Hoboken Rent Leveling and Stabilization Board, 951 A.2d 1098 (2006)