New Jersey Zoning Watch

In one of the battlegrounds over redevelopment and the use of eminent domain in the state, the Appellate Division has ruled that the City of Long Branch failed to establish sufficient evidence that certain residential properties in the Beachfront North redevelopment zone met the criteria for an area in need of redevelopment. The court also dismissed other contentions of the homeowners, including claims of conflict of interest of the City Attorney and upheld the City’s delegation of authority to commence condemnation proceedings to the designated redeveloper. Long Branch v. Anzalone, A-0067-06T2 et als. (N.J. App. Div. August 7, 2008).

According to the Asbury Park Press:

The Appellate Division of Superior Court, relying on the 2007 decision in the Gallenthin Realty Development Inc. v. the Borough of Paulsboro case, found that Long Branch’s 1996 report did not meet the heightened standard for blight and so it reversed Lawson’s decision appointing condemnation commissioners for the affected parcels.

“We agree with appellants that material facts are in dispute regarding not only whether substantial evidence supports a finding of a need for redevelopment,” but also regarding other issues such as whether taking that neighborhood is integral to the overall redevelopment plan and whether its inclusion is necessary in the redevelopment plan.

Also, Lawson will determine whether taking the properties represented a change to the redevelopment plan that would have required it to be readopted, and thus require a new series of public notices and hearings.

MTOTSA maintains it was always told that its neighborhood was safe and would be redeveloped as “infill,” which it took to mean as development on existing or available properties. Absent a definition, however, Lawson will have to define that term as well, the appellate panel said.

“We agree with appellants that . . . the city did not find actual blight‚ under any part of the law, ‚that the record lacked substantial evidence that could have supported the New Jersey Constitution’s standard for finding blight and that the absence of substantial evidence of blight compels reversal,” the appellate panel found.

For the full Asbury Park Press article, click here.

For the Star Ledger article, click here.

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On Wednesday, July 16, 2008, Philip J. Morin III, Special Counsel in the Firm’s Real Estate Department, will be on the faculty for this one-day Lorman Educational Services Seminar that will discuss land use law, environmental issues and the development approval process in New Jersey. Panelists will also address the status of the third-round affordable housing regulations, potential amendments to the redevelopment laws, and review recent court decisions impacting development issues.

Mr. Morin will present several lectures throughout the day, including “Overview of Development and Land Use Law,” “Land Use Procedures and the Public Hearing,” “Ethical Considerations” and “Recent Trends and Municipal Government Perspectives.” Also on the faculty are Mary Elizabeth Warner, Esq., Real Estate Counsel for Quick Chek Corporation; Brian McMorrow, P.E. of Bohler Engineering, PC and Paul Grygiel, AICP, P.P., of Phillips Preiss Shapiro Associates, Inc.

The seminar will take place in the Holiday Inn Cherry Hill-Philadelphia in Cherry Hill, New Jersey from 8:30 a.m. to 4:30 p.m. NY and PA CLE credit is available.

For for information and to register for this event, please click here.

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According to a timely e-mail update from Conor Fennessey of the New Jersey Apartment Association, S-757 was not voted out of committee on Monday.  The vote of the Senate Community and Urban Affairs Committee was 1-3-1, with Senator Rice casting the only affirmative vote.  Senator Rice advised during the public session that the bill will be back in some form on the Committee’s May 15 agenda.

For a copy of the draft committee statement on the bill, including comments on the proposed amendments to the bill, click here: S-757 Draft Committee Statement.

For more of the background regarding the bill, Gregory Volpe has an excellent story in today’s Courier Post.   A different version of the article with more commentary about the behind-the-scenes battle over competing versions of redevelopment reform appears in the Asbury Park Press.

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As promised, here are the proposed amendments to Sen. Ronald Rice’s bill on redevelopment and eminent domain. See Amendments to S-757.  This bill is scheduled to be discussed by the Senate Community and Urban Affairs Committee on Monday, May 5.

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The Senate Community and Urban Affairs Committee will take up Senator Ronald Rice’s bill on redevelopment and eminent domain reform on Monday, May 5.  According to sources in Trenton, the bill will include amendments to the version that died in the last legislative session.   It is expected that the amended version of the bill will be available prior to the Monday hearing. 

Senator Rice, who chairs the Committee, is the only member of the Committee who is returning from the 2006-2007 legislative session.  The other four members are freshman senators.

For the pre-filed version of S-757, click here.

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Editor’s Note/Update:  The March 16, 2008 Sunday Daily News reports that Governor Paterson will continue support of the Atlantic Yards/basketball arena in Brooklyn…. 

An interesting sideline to the change in the governorship in New York State is the strong anti-eminent domain policy that Lt. Governor David Paterson adopted as a member of the state legislature.  As a result, several economic development projects across the Hudson, including the Atlantic Yards project in Brooklyn, which is slated to be the home of the New Jersey Nets in 2011, “could be derailed or delayed,” according to the New York Sun. 

While Paterson was a state senator, he called for a statewide moratorium on the use of eminent domain. 

As reported in the Sun on March 14:

Mr. Paterson said a decision handed down by the Supreme Court in the Kelo v. City of New London case could lead to a “gold rush” of eminent domain use across the state, The New York Sun reported at the time. He said he would gather legislators and introduce legislation to impose a moratorium on its use.

“He stood with me and proposed some legislation and I am very hopeful that the lieutenant governor and soon-to-be governor will honor his commitment and will either issue a moratorium or review the abuse of eminent domain across New York City,” [City Council Member Letitia] James said yesterday in an interview.

Ms. James’s district is in Brooklyn, and she opposes developer Bruce Ratner’s $4 billion Atlantic Yards project near downtown Brooklyn, which would require use of eminent domain. 

Thus, there is the possibility that if Governor Paterson remains consistent with his prior position, that the Atlantic Yards project, already delayed by lawsuits, environmental reviews and other impediments, could be blocked.  In turn, the question must be asked, particularly in light of recent public debate over whether the Prudential Center in Newark and Izod Center in East Rutherford can co-exist, whether this will have any impact on future development at the Meadowlands Complex or raise the potential of the Nets moving to Newark if the Atlantic Yards project falls through.

Mr. Ratner is planning to build a basketball arena and 16 mostly residential towers on 22 acres in Prospect Heights. The plans would remake the low-rise neighborhood with 8 million square feet of development, including more than 6,000 apartments, “affordable” housing, and office and retail space in a complex designed by architect Frank Gehry.

Perhaps the new New York Governor can reconcile his prior views with the broader economic development goals of New York City Mayor Bloomberg and others in the city and the state, perhaps not.  One thing is certain; the impact of how New York approaches eminent domain will be felt in New Jersey, regardless.

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In Harrison Redevelopment Agency v. Anthony J. DeRose,  decided February 25, 2008, the New Jersey Appellate Division ruled that due process concerns mandate that the notice provisions of the Local Redevelopment and Housing Law (”LRHL”), N.J.S.A. 40A:12A-6, will not pass constitutional muster unless a municipality provides a property owner with contemporaneous written notice that fairly alerts the owner that:

(1) his or her property has been designated for redevelopment,

(2) the designation operates as a finding of public purpose and authorizes the municipality to acquire the property against the owner’s will, and

(3) informs the owner of the time limits within which the owner may take legal action to challenge that designation.

Thus, an owner constitutionally preserves the right to contest the designation, by way of affirmative defense to an ensuing condemnation action.  Absent such constitutionally-adequate notice, the owner’s right to raise such defenses is preserved, even beyond the traditional forty-five day limitation period after the designation is adopted.

If the municipality’s notice does contain these constitutionally-essential components, an owner who wishes to challenge the designation must bring an action within the forty-five day period after a municipality has adopted the designation.  The owner who is provided with such adequate notice typically may not raise objections to the designation as a defense in a future condemnation action.  However, a court may apply the “interests of justice” standard to expand the forty-five day limitation period when circumstances require.

Additionally, in remanding the case to the trial court to consider the appellant’s challenges to the underlying redevelopment designation, the appellate court found that, while the issue of retroactivity in Gallenthin v. Borough of Paulsboro is ultimately an issue for the state Supreme Court, the court presumed that the holding has “pipeline retroactivity” to cases such as this, where the matter was pending in the court on June 13, 2007 when the Court decided Gallenthin.  As a result, the appellate court directed the trial court to allow all parties to supplement the record as to whether substantial evidence was present to designate the property in question as an area in need of redevelopment in accordance with the Gallenthin court’s interpretation of section N.J.S.A. 40A:12A-5(e) which limited redevelopment designations under this section to properties with diverse title and ownership issues, and not amorphous claims of “underutilization.” Gallenthin held that the expert testimony supporting a redevelopment designation must provide a substantive analysis of the facts surrounding the criteria for finding an area to be in need of redevelopment.

 The impact of the Harrison decision on existing redevelopment areas is clear, namely, if a municipality did not provide individual notice of the designation of a property as a redevelopment area and the potential for future condemnation as outlined in the Harrison opinion (which detail pertaining to notice is not required by the plain language of the LRHL or reported decisions prior to this opinion), a property owner would have standing to challenge the procedural or substantive facts underlying a redevelopment designation years down the road.  Thus, this opinion is a blaring warning to developers, municipal officials and property owners that the underlying strength of any redevelopment designation should be evaluated by a prospective developer, investor or landowner early on in the redevelopment process as, if condemnation is ultimately used, the original redevelopment designation could be voided, even if the designation was resolved years prior.

For a copy of our bulletin on this decision, click here.

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On February 4, the Appellate Decision issued an unpublished decision finding that the Borough of Belmar did not properly support the designation of “an area in need of redevelopment” based upon the Gallenthin v. Paulsboro decision.  BMIA, LLC v. Planning Board of the Borough of Belmar, Docket No.  A-5974-05T5 (App. Div. Feb. 4, 2008).  Additionally, a separate panel of the Appellate Division heard oral argument yesterday, led by Public Advocate Ronald Chen, involving a redevelopment area in Harrison in which he argued that the 45-day statute of limitations for challenging a redevelopment designation violates constitutional requirements of due process.

In BMIA, LLC, the court found that the proper standard “involved a narrow legal construction of the LRHL,” which required that the designation be set aside.  The court noted that while the consultant’s report on which the defendant Borough had relied might have established that the area could be “better utilized” and that ”redevelopment would be beneficial,” there was no evidence that the existing conditions were “detrimental to the health, safety, morals or welfare of the community” as required by N.J.S.A. 40A:12A-5d, or were due to “issue of title” or “diversity of ownership” as required by N.J.S.A. 40A:12A-5e.  Having decided that the redevelopment designation did not follow the strict requirements of the Local Redevelopment and Housing Law, the court declined to address the issue of whether the LRHL permits a municipality or redevelopment agency to enter into a redevelopment agreement with a redeveloper before a redevelopment plan has been prepared.

In the Harrison case, the Star Ledger reported that the Public Advocate is challenging the time period in which a legal challenge may be brought against a redevelopment designation.  In challenges to a redevelopment designation, the statute of limitations is 45 days from the establishment of the redevelopment area by the governing body, subject to limited exceptions.   Here, none of the the affected property owners objected to the underlying designation, but six years later, several were faced with condemnation proceedings.  According to the Star Ledger article:

State Public Advocate Ronald Chen and lawyers for three present and past property owners argued that the state’s redevelopment law does not give property owners enough time to challenge a town’s plans to take their property. They said the owners may not know their property is actually targeted for condemnation until years after the deadline for legal action has expired.

In 1997, the Harrison Planning Board determined a portion of the town south of Route 280 was blighted and designated it as an “area in need of redevelopment” by Hoboken-based Harrison Commons Inc. Chen and supporting lawyers said when the planning board conducted a required public hearing, officials provided property owners only positive information about the benefits of redevelopment and told them it would not affect their property rights.

A year later, the Harrison council adopted the planning board’s redevelopment recommendation. Property owners had only 45 days under the law to initiate legal action opposing the blight designation, but the town did not identify any specific properties it intended to take through eminent domain.

Another six years passed before property owners were notified the town planned to condemn their properties. By then, Chen said, the 45-day period to take legal action had long passed.

“Under our current law, New Jersey residents can lose their property without adequate notice that their property will be taken and without a hearing,” Chen said. “This case demonstrates why the current law fails to satisfy the due process requirements of the federal and state constitutions.”

Chen argued that any government notice of condemnation procedures must include notice of a property owner’s right to challenge in court.

Gregory Castano, counsel for the planning board, said the 45-day rule is intended to prevent last- minute challenges that can be expensive and time-consuming to a government.

We will be keeping a close eye on this case as if the court strikes down the limitations period, it will potentially open up the door to challenges to redevelopment areas created years ago, well before the Gallenthin Court’s strict reading of N.J.S.A. 40A:12A-5e.  Thus, both the BMIA case and the Harrison case are reminders of the necessity of thorough due diligence as to the underpinnings of a redevelopment designation by a prospective purchaser or redeveloper of property within a redevelopment zone.

P.S.  The Star Ledger also reported on the positives associated with new residential and commercial development in Harrison, as well as the ongoing construction of a new soccer stadium, in the area of the Harrison Path station.  For the full article entitled “On the Path to a Boom,” click here.

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In a panel discussion at Monmouth University this week, former Justice James Zazzali provided some commentary on the Gallenthin opinion he authored as well as the future of redevelopment:

“There can be little question that the exercise of eminent domain has received a bad name lately,” said Zazzali, author of the state Supreme Court decision.  The jurist described himself as “somewhere in between” builders who support the use of eminent domain, and critics of the power.  As for the question of redevelopment and its link to eminent domain, he said: “Maybe some might call it a mess. I do not.” 

Despite a growing public perception that individual property rights were being “trampled” in some redevelopment cases, “we did not voice an opinion about whether redevelopment was good or bad,” said the chief justice.

“There are restraints in the exercise of the authority. “In my view, the court acted appropriately” in deciding Gallenthin in a way that provides a measure of protection to property owners,” Zazzali said. “The court did not decide what sort of redevelopment was appropriate,” and is neither driven by pro- or anti-redevelopment forces, he said. 

“At the end of the day, redevelopment and eminent domain can still play a valuable role in the revitalization of the urban landscape,” Zazzali said.  Requiring more than a cursory report to prove an area is blighted “will in all likelihood reduce the number of redevelopment projects,” Zazzali conceded. “The answer is not to abandon redevelopment in these areas. . . . If we do it right, it can be a win-win-win situation for developers, municipalities and their citizens. I plead for cooperation and conciliation.”

For the full article from the Asbury Park Press, click here.

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In a long-awaited ruling, a Superior Court Judge in Somerset County has held that Readington Township may proceed with condemnation of hundreds of acres of land at the Solberg Airport which the Township intends to preserve as open space.

According to an article in the October 17, 2008 Express Times, Solberg Aviation Co., a family-owned airport, fought the township, arguing the condemnation masked Readington’s desire to prevent the facility from expanding.

Readington moved to condemn 624 acres of the 726-acre airport property for use as open space and obtain the development rights to the remaining 102-acre airport.  The Court, relying upon the Appellate Division’s decision in Mt. Laurel Twp. v. Mipro Homes LLC, 379 N.J. Super. 358 (App. Div. 2005), aff’d, 188 N.J. 531 (2006), found that a municipality has clear statutory authority to condemn land for open space purposes and that the condemnation of land for open space is a “public use,” even though no “active use” is contemplated.   Id. at 373.

From the Express Times article: 

In court, Solberg Airport argued the land was being condemned not for reasons of open space but to prevent the airport from expanding and possibly allowing larger airplanes to fly in and out. The local airport is used by an average of 50 to 60 pilots a day, and it is host to an annual hot air balloon festival.

Arguments were heard in court in late 2006, but [the Hon. Yolanda] Ciccone gave Solberg until March to provide additional evidence.  She wrote Solberg had presented “little to nothing new since the Nov. 3, 2006, hearing” and the evidence did not “meet the strong and convincing burden” needed to stop the condemnation.  “Solberg bears a heavy burden to demonstrate that the township’s motives rise to the level of fraud or bad faith,” the ruling said.

For the purchase, the township raised $21.7 million through a bond ordinance approved by voters.

If you are interested in receiving a copy of Judge Ciccone’s January 16, 2008 letter opinion, e-mail us at pmorin@saul.com

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