June 8, 2010

By: Kenneth E. Meiser, Esq.

In 2007, the New Jersey Supreme Court reviewed a case in which the trial court and Appellate Division had upheld a designation of blight. The Supreme Court reversed the lower courts’ decisions in the now well-known case captioned Gallenthin Properties v. Paulsboro. The three paragraph analysis of the property by Paulsboro’s planner had totally failed to prove that the site was blighted. The Supreme Court cautioned trial courts against automatically “rubber stamping” decisions of planning boards finding that properties were blighted. Aware of the Supreme Court’s command, the trial courts became much more aggressive in reviewing blight cases. Following the example of the Supreme Court, a number of blight determinations by planning boards were invalidated.

May 2010 Decisions More Favorable to Redevelopment

Following the issuance of the Gallenthin opinion, municipalities became more familiar with the types of necessary proofs required in order to establish that areas are blighted in the statutory sense. Planners became more adept at establishing these proofs. In turn, courts have become more supportive of redevelopment efforts, as they are now seeing stronger municipal proofs.

In a two week period in May 2010, three judicial decisions were released indicating signs of greater judicial deference to municipal redevelopment actions. These three cases may signal a trend of increased judicial approval of redevelopment efforts where municipalities have tried to apply the principles set forth in the Gallenthin case.

Plainfield’s Decision to Declare Properties in Need of Redevelopment

Arguably the most important of the three May 2010 cases is the case of Suburban Jewelers v. City of Plainfield. In this appeal, at issue was a challenge to Plainfield’s determination that a portion of its central business district was “in need of redevelopment” – the statutorily required designation if statutory redevelopment is to take place. The appellants asserted that the decision of the planning board finding the area to be in need of redevelopment was based upon a “net opinion” and that there was no substantial evidence of blight. Eight properties were declared blighted.

Despite the objector’s assertions, Plainfield’s planner had made a comprehensive analysis, which described in detail the overall area and the characteristics of each individual property. The planner consulted with property owners, occupants and managers; reviewed police records, construction and other city records; and physically inspected each property. The planner’s report concluded that the structures in the area were all marked by substantial physical deterioration, and that there was substantial criminal activity and poor traffic flow in the area. The Plainfield court stated that the city’s determination of blight was entitled to a presumption of validity, and that the challengers failed to meet their burden of proving that there was no substantial evidence for the planning board to conclude that the properties are in need of redevelopment. Thus, the court upheld Plainfield’s finding that the area was blighted in the statutory redevelopment sense.

Jersey City’s Amended Redevelopment Plan

In another May 2010 opinion, Powerhouse Arts District Neighborhood Association v. City of Jersey City, the Appellate Division rejected a challenge to Jersey City’s amendment to its redevelopment plan. The court first declared that Jersey City’s amendment was not subject to a heightened standard of judicial review as the appellants had argued. Rather, the court stated that it could invalidate the new redevelopment plan only if the objectors could prove the amendment was arbitrary and capricious, contrary to statutory law or unconstitutional. A Jersey City planner and an architect testified that the amended plan was consistent with the Jersey City master plan. The Director of City Planning demonstrated that the benefit of the plan, such as the construction of the performing arts theatre and a public plaza, outweighed any inconsistencies with the master plan. Finding no arbitrary or capricious action by Jersey City, the court affirmed the amended plan.

The Iron Mountain Case on Notice Issues

Two years ago, in Harrison Redevelopment Agency v. DeRose, the courts imposed additional notice protections for property owners threatened with displacement as a result of redevelopment. The Supreme Court then was asked, in the recent case of Iron Mountain Information Management v. City of Newark, to extend the same notice protection to a long term commercial tenant with a limited right of first refusal.

The Supreme Court unanimously concluded in Iron Mountain that the Legislature had not intended to give a long term commercial tenant the same procedural notice protections given to a property owner. Accordingly, the commercial tenant was barred from challenging the blighting of its leased property because the normal 45 day period for challenges to blighting designations had expired. Such a time limitation is sometimes not applied where a property owner does not receive adequate notice as described in the Harrison case.

Conclusion

The three May 2010 redevelopment decisions may be the start of a new judicial trend in redevelopment cases. The hope is that these cases will be followed and that municipalities that go to the trouble of addressing the proofs established in Gallenthin will prevail in court. As always, close attention to the legal issues upfront can eliminate substantial, costly problems down the road.

Kenneth E. Meiser is a partner of Hill Wallack LLP. He is a member of the Land Use Division, which encompasses the Land Use Litigation and Land Use & Environmental Applications Practice Groups. He concentrates his practice in land use litigation and approvals and in redevelopment. Known for his role in several precedent-setting legal decisions, Mr. Meiser has significant experience in both the land development application and permitting process, and in litigation of land use matters.

Hill Wallack LLP is a leading law firm in central New Jersey and eastern Pennsylvania, with offices in Princeton and Atlantic City, NJ and Yardley, PA. The firm has built a reputation for comprehensive problem-solving and aggressive advocacy. The firm has broad-based commercial capabilities and deep experience in a number of industry sectors, including community associations. With extensive government experience, Hill Wallack LLP represents businesses and public entities in many areas in which public and private interests intersect. Our attorneys are called upon to tackle some of the toughest legal and business challenges. We do more than advise on the law—we create real-world solutions.