The Redeveloper

New Jersey Supreme Court Rules in Avalon

Marc Policastro — Wed, 07 Jul 2010 19:58:32 +0000

What is the impetus behind many Supreme Court decisions? Common sense, equity and a practical approach. On June 22, 2010, the New Jersey Supreme Court rendered a unanimous decision in the Klumpp v. Borough of Avalon case. In Klumpp,the plaintiffs’ home was destroyed as a result of a devastating nor’easter occurring in 1962. Following the storm, the Borough took control of the property to construct protective sand dunes to secure the area. Significantly, the Borough’s taking was without any concomitant compensation to the landowner. Over time, the Borough continued to list the property as privately held on the public land records, and plaintiffs paid real estate taxes on the parcel over a number of years. In turn, the Borough constructed the dunes and then proceeded to adopt laws which (1) restricted access to the property and (2) prohibited residential structures on the seized property. The Court recognized that where a town physically takes property without first bringing a formal condemnation proceeding, property owners are permitted to initiate an inverse condemnation legal action, and to petition the court for just compensation for the taking. Although acknowledging the applicable six-year statute of limitations which applies to inverse condemnation proceedings, the Court determined that the Borough of Avalon had a legal obligation to notify the property owner of the physical taking. Consequently, the Court ruled that in light of the lack of notice to the land owner, the Borough must pay plaintiffs compensation as of 1965, the date the dunes were completed. The Court emphasized that, although the property owners should have had constructive notice of the taking, e.g., from the physical limitations and fencing placed on the property, the owners were required to receive actual notice of the taking. Writing for the Court, Justice LaVecchia pointed to the unjust result in permitting the Borough to both restrict the use of the land and also refuse to pay compensation for the taking. This was an easy one.

Affordable Housing Revisited: Fact or Fiction?

Marc Policastro — Tue, 01 Jun 2010 18:39:52 +0000

New Jersey’s Fair Housing Act is outdated, unpredictable and ineffective. Not a great combination. In the eyes of most, it has simply failed to achieve its stated purpose. On May 13, 2010, Governor Christie announced a basic road map to revamping the entire affordable housing system in New Jersey. The Governor’s plan would abolish the Council on Affordable Housing (COAH) and attempt to shift more planning control to the local level, and away from the State. Under the new proposal, developments having more than 10 units would be required to set-aside 10 percent of the units as “affordable units”. Developers pursuing projects having between 2 and 10 units would be subject to a required payment into an affordable housing trust. The new framework would repeal the current 2.5% commercial development fee and would also give “special needs” housing priority. Redevelopment of existing housing supplies is to be encouraged and local assessments, as opposed to State-driven housing analyses, should prevail. The real question is simple: Will the new plan contain enough incentives for developers and municipalities to collaborate in a meaningful way and avoid the delay, uncertainty, litigation and inefficiencies which are synonymous with the old COAH system? Governor Christie has painted a broad brushed picture. As always, the proof is in the fine print.

Supreme Court Draws Line On Right To Notice

Michael Bruno — Tue, 01 Jun 2010 16:19:03 +0000

On May 19, 2010, the New Jersey Supreme Court in Iron Mountain Information Management, Inc. v. The City of Newark refused to expand to tenants, even those tenants with heightened property rights such as a right of first refusal, the right to notice that the Local Redevelopment and Housing Law affords to certain property owners. The Supreme Court held that a long term tenancy, with a limited right of first refusal, does not have a protected interest in the property that is equivalent to the building owner’s interest in the property that is subject to a potential blight designation. The Court confirmed that in the blight designation context, the Local Redevelopment and Housing Law limits the right to notice to “owners of record and those whose names are listed on the tax assessor’s records.” As noted in my earlier blogs this month, May has been a boom month for redevelopment as we are finally starting to see a more balanced approach by the Court’s in limiting the power of objectors to redevelopment designations. Municipalities must remain diligent and thorough in designating an area in need of redevelopment. However, the Suburban, Powerhouse and Iron Mountain cases, all decided in May of 2010, are all good news for the redevelopment community.

Powerhouse case for Redevelopment

Michael Bruno — Fri, 28 May 2010 14:51:13 +0000

In what continues to be a very good month for redevelopment, on May 17, 2010 the Appellate Division decided Powerhouse Arts District Neighborhood Association Redevelopment, et al v. City Council of the City of Jersey City and rejected the arguments of the plaintiff neighborhood association group challenging the City’s amendments to the redevelopment plan for a downtown portion of Jersey City. The Court also rejected the association’s argument that the area was not blighted and was improperly included within the redevelopment area years earlier. The Court found that under the redevelopment plan provisions of the Local Redevelopment and Housing Law the “municipality’s adoption of a zoning ordinance or, as here, a redevelopment plan, is a discretionary decision of broader application” than that of a redevelopment designation. The Court found that because the municipalities action was discretionary such decisions should be reviewed under the “arbitrary or capricious” standard rather than the more strict “substantial evidence” standard. The Supreme Court under the Gallenthin case previously held that proper standard of review for redevelopment designations under the Local Redevelopment and Housing Law is the more strict standard of whether the municipal action is based upon “substantial evidence” in the record. Although redevelopment plan amendment and redevelopment designation powers are found in different sections of the The Local Redevelopment and Housing Law, given the series of decisions since the Gallenthin case was decided, there was significant concern that the Court would find that the more restrictive “substantial evidence” standard of review applied to redevelopment plan amendments. The Powerhouse case is a critical victory for redevelopers and serves to confirm that municipalities have broad discretion to amend redevelopment plans.

Finally, Post Gallenthin Appellate Division Upholds Redevelopment Designation

Michael Bruno — Tue, 25 May 2010 21:35:05 +0000

On May 6, 2010 the Appellate Division in Suburban Jewelers, Inc et al v. City of South Plainfield upheld the City Of Plainfield’s redevelopment designation of a portion of its central business district. Of the over thirty cases that have reviewed, discussed or cited the Gallenthin case since Gallenthin was decided in the summer of 2007, this is the first Appellate Division case that upholds a municipalities redevelopment designation against a challenge and provides a much anticipated blueprint going forward. The Court outlines the City’s determination study and provides good commentary on the study required in connection with whether an area qualifies in need of redevelopment under the law. The Court pays particular note to the specific conditions cited in the City Planner’s needs report for each property within the area and that those conditions were the result of adequate investigation. Post Gallenthin, this case is a must read for any municipality considering a redevelopment designation or for any redeveloper undertaking due diligence in connection with an existing redevelopment project.

Christie Administration Goes Solar

Marc Policastro — Fri, 07 May 2010 16:25:13 +0000

On April 22, 2010 Governor Christie signed into law S-921, which is intended to smooth the way for zoning approvals involving solar panels. The new law specifically exempts solar panels in the calculation of “impervious coverage” as defined under the Municipal Land Use Law. Similarly, solar panels are not to be considered in determining agricultural impervious cover and shall not be determined to be an impervious “surface” in a Highlands district. The law distinguishes between the “base or foundation” of the panel and the elevated portion of the panel itself. The latter is exempt from impervious calculations. Impervious cover regulations are intended to regulate the use of surface materials which, theoretically, affect water absorption rates, aesthetics and ground water runoff flow. Solar panels are devices that capture and convert solar radiation to produce power. New Jersey is positioning itself to be a national leader in solar installation and solar productivity. To review a complete copy of S-921 click here http://www.njleg.state.nj.us/2010/Bills/AL10/4_.PDF

Notice of Public Hearings, Get it Right or Pay the Price

Michael Bruno — Thu, 06 May 2010 16:25:10 +0000

Always a critical jurisdictional requirement in municipal land use applications, getting the public notice right in the redevelopment context has even greater importance. Starting with the Gallenthin decision in the summer of 2007, New Jersey court’s have reviewed redevelopments designations with a keen eye toward protecting private property rights impacted by the designation. In addition, in 2008 the court in Harrison Redvelopment Agency v. DeRose decided that in the redevelopment context, in addition to the notice requirements set forth in the governing Local Redevelopment and Housing Law, a heightened notice was required. Most recently, Judge Feinberg in IC/L-A Washington Road, LLC v. Township of West Windsor, et al, further expanded the rights of property owners that do not get a “Harrison notice”. Clearly, the notice provided in the redevelopment context must be precise and follow both the Local Redevelopment and Housing Law and the guidance found in Harrison to withstand a timely challenge as well as cut off future challenges outside the 45 day appeal period.

Governor Christie Signs “Time of Application” Bill

Michael Bruno — Wed, 05 May 2010 20:50:37 +0000

Long awaited by land use practitioners, Governor Christie signed Senate Bill No. 82 on May 5, 2010. The new law, which becomes effective a year from today, amends the Municipal Land Use Law and provides that municipal regulations in effect on the date of submission of a development application shall govern for purposes of review and decision on that application. Except for issues relating to health and safety, any subsequent changes to municipal development regulations shall not apply to a submitted application. This rule has been long awaited since the stinging 1995 decision by New Jersey’s Supreme Court in Manalapan Realty v. Township Committee. In the Manalapan case, the Township amended its zoning ordinance during the pendency of a site plan application for a new Home Depot store as a result of public opposition to the site plan. Under the new legislation, municiplities will no longer be able to amend its zoning ordinance to prohibit a use or amend its bulk requirements to prohibit or limit a use as to pending applications.

Redevelopment, The Pendulem Continues to Swing Towards Private Property Rights

Michael Bruno — Wed, 05 May 2010 20:08:18 +0000

In the summer of 2007 we predicted that the New Jersey Supreme Court decision, Gallenthin Realty Development Inc. v. Borough of Paulsboro, marked the swinging of the pendulum against the use of eminent domain in the redevelopment context in New Jersey. Unfortunately for those believing in the merits on which the redevelopment law was founded, our analysis was “spot on” and New Jersey court’s have continued to chip away at the redevelopment laws. The court’s most recent decision Cottage Emporium, Inc, et.al. v. City of Long Branch, et.al., decided April 16, 2010, continues to highlight the heightened standard imposed by Gallenthin and the critical importance of the redevelopment study conducted by a municipality in connection with its redevelopment designation. Unfortunately, until we see a case with facts that provide a solid planner’s report based upon substantial evidence to support the municipalities designation and choice of criteria under the Local Redevelopment and Housing Law, we will likely continue to see the court’s reject redevelopment designations. For analysis of the Gallenthin case, please click here.

Zoning Standards: The Tough Get Tougher

Marc Policastro — Wed, 05 May 2010 18:29:26 +0000

New Jersey’s zoning laws should promote revitalized use of properties which have been neglected, or fallen into nonuse status. Right? Not so fast. A recently decided New Jersey Appellate Division case further erodes the notion that redevelopment, or “brownfield” cases should enjoy any type of relaxation in the application of legal standards to be applied in zoning decisions. In Saadala v. East Brunswick Zoning Board of Adjustment, A-4999-08, a New Jersey appellate court determined that under the facts of that case, a “substantial change” was proposed for the redevelopment of a 7-Eleven and mini mart. Consequently, the court refused to apply a relaxed legal standard and instead required application of the traditional Medici which is implemented in traditional use variance cases. In the Saadala case, a Shell gas station and 7-Eleven had been in operation as a “preexisting use” for many years. Over time, the gas station use component had ceased. The redevelopment project called for a larger gas station, with other basic improvements to qualify it as a “mini mart”. The court emphasized that a substantial change in a use required strict application of the Medici standard, even where the redevelopment plan contemplates uses that had harmoniously coexisted for years. Returning brownfield sites — abandoned, underutilized properties — to viable, productive projects, just became more difficult.