LANDLORD FILMS OUTLINE RENT CONTROL PERILS

HOBOKEN, NJ – (March 5, 2010) As a city council committee continues to debate prospective changes to Hoboken’s rent control ordinance, Mile Square Taxpayers Association is showing two filmed interviews on its
website of property owners who suffered significant negative financial
consequences as a result of administrative failures related to the rent control
ordinance that one judge deemed unconstitutional.

The landlords in the film describe having registered rents with the rent leveling office every year, but were never notified that they were not in conformance
with the ordinance. However, the
rent leveling office, as a matter of course, supplies information to tenants so
that they can pursue suits against landlords.

In one case, a property owner describes requesting legal rent calculations for a property she was considering purchasing.
She was denied the records, which were then turned over to tenants who
sued her and won judgments of more than $200,000 in back rents collected not by
her but by previous landlords.

In another case, a property owner paid settlements to several clients of the former rent leveling board attorney, Ravi Bhalla, who is a current
councilman. Attorneys for Mile
Square have filed a formal complaint asking that Mr. Bhalla be prevented from
working on rent control matters and be reviewed by the State Ethics Board
(letter attached).

Each of these issues is steeped in a change in the procedures of the rent leveling board where one regime refused to accept a required form and the subsequent
regime found owners to be out of compliance when the form was not present in
the files. A judge for a similar
case found the law unconstitutional as applied last summer, but the Council
still has not amended the ordinance and the Administration has not made
regulatory changes that would correct the matter.

Charles Gormally, a lawyer who recently filed a class action seeking damages from the city for its inaction, says “Hoboken’s management of this issue is costing the
city millions in lost property value, lost ratables and legal fees.”

Dear Mr. Kates:

I am writing to on behalf of our client, The Mile Square Taxpayers Association (“MSTA”). MSTA is a not-for-profit association of multi-family property owners
within the City of Hoboken who are affected by local property matters, and
particularly affected by the municipality’s administration of the Rent Control
Ordinance. I am writing to you in
connection with matters that have been addressed at the last public hearing of
the City Council in which Councilman Ravi Bhalla participated. Attached to this correspondence you
will find a number of letters that indicate that Councilman Bhalla is
representing and has represented tenants in the City of Hoboken despite his
claims to the contrary at last Wednesday night’s council meeting. It is our considered judgment that not
only are Councilman Bhalla’s actions a violation of his obligations as an
attorney pursuant to R.P.C. 1.8(k) but, and perhaps more pointedly for your
consideration, they amount to a clear violation of the Local Government Ethics
Law.

Councilman Bhalla is quite obviously an elected official and compensated for objectively representing the interests of the constituency of the residents of the City of Hoboken.
In addition to his general obligations as a Councilman, Mr. Bhalla is
also participating in a sub-committee as appointed by the City Council whose
objective it is to reform the City’s Rent Leveling Ordinance and Rent Control
Administrative Procedures.

Councilman Bhalla pursuant to the Local Government Ethics Law is to be considered a “local government officer” since he has been elected to serve in the capacity as Councilman.
At the same time as serving as a local government officer, Councilman
Bhalla maintains an office for the private practice of law in the City of
Hoboken. As long as his practice
of law does not substantially conflict with the proper discharge of his duties in
the public interest, there would be no violation of the Local Government Ethics
Law. However, should Attorney
Bhalla’s professional interest in representing the interests of his clients conflict
with his proper discharge of his duties as a Councilman, then the Local
Government Ethics Law is implicated.

Of particular concern is N.J.S.A. 40A:9-22.5(g) which provides that:

“No local government officer…shall use, or allow to be used, his public office…, or any information, not generally available to the members of the public, which he receives or acquires in the course of and by
reason of his office…for the purpose of securing financial gain for himself, any
member of his immediate family, or any business organization with which he is
associated.”

While Councilman Bhalla has been actively involved in the evaluation of the Local Rent Control Ordinance as a member of the Council sub-committee, he continues to be engaged in the private practice of law
involving tenants with matters distinctly affected by the Local Rent Control
Ordinance. There can be little
doubt that Councilman Bhalla’s knowledge and information with respect to his
involvement as a municipal officer provide him with information generally not
available to members of the public which assist him in securing a financial
gain for himself, as well as his clients.[1]

This information would include an intimate knowledge of the past practices of the Rent Control Board with respect to the rent calculation process, the systematic failure of the Board and the Administrator to require
the filing of registration forms and vacancy decontrol forms, and the near
certainty that every landlords’ property file in the Rent Control Office will
not be able to withstand a legal rent calculation based on the retrospective
application of the documentation requirements. In addition, I am assuming that Councilman Bhalla has either
been privy to or has been actively involved with closed session discussions in
which the City’s legal position regarding rent control lawsuits, including the
Bloomfield 206 matter has been the subject of discussion. This participation gives him access to
precisely the type of specialized and confidential information that proscribes
his private personal gain.

I have been directed by our client to bring this matter to your attention for a prompt evaluation and advice to the Council with respect to Councilman Bhalla’s continued participation in all rent control
matters. The purpose of this
advance notification is to provide a reasonable opportunity for you and the
Council to attempt to resolve the issue consistent with the Local Government
Ethics Law and the procedure set forth in the Administrative Code.

Should we fail to receive confirmation from you that you are advising the Council and Councilman Bhalla to recuse himself from any matters involving the Local Rent Control Ordinance, I have been authorized to file a
complaint with the New Jersey Department of Community Affairs, Local Finance
Board, pursuant to N.J.A.C. 5:35-1.1, et seq.

I would appreciate it if you would contract me to discuss your intended course of action in this matter so that I may counsel my client appropriately.