by Jong Sook Nee on December 10, 2015
A consortium of 270 New Jersey municipalities (the “Municipal Group”) and thirty-five individual municipalities were successful in a recent appeal filed with the Appellate Division of a November 19, 2015 Order issued by Middlesex County Mount Laurel Judge Douglas Wolfson which required the disclosure of a preliminary draft report in the Monroe Declaratory Judgment action, which was prepared for the Municipal Group by Dr. Robert Burchell.
The Municipal Group had entered into a shared services defense agreement (MSSD) in order to address fulfillment of their planning obligations pursuant to the Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to -329, and in the defense of builder’s remedies actions relating to compliance with their FHA obligations. The Municipal Group includes the Township of Monroe.
Judge Wolfson ordered disclosure of Dr. Burchell’s preliminary draft report in the Monroe litigation, even though the Report will never be finished or used due to Dr. Burchell’s illness. Nonetheless, Judge Wolfson found, without any actual testimony, certifications, or affidavits, that it was reasonable to assume that there had been widespread disclosure throughout the State of the Report and that as a result, the draft Report was no longer privileged information. Judge Wolfson also said he was not looking to allow the Report in as an opinion or conclusion, but rather to provide the basis of and source of information, protocols, cohorts, data sources, etc.
The Appellate Division however, in a December 7, 2015 Order, found that on this limited record, they could not determine what Judge Wolfson drew from to reach that premise and whether it was correct. Consequently, the Appellate Division directed that Judge Wolfson reconsider applicability of and make findings not only regarding Rule 4:10-2(c), but also whether the Report is included within the attorney-client privilege and/or the work product privilege.
In addition to making additional findings with regard to the question of whether any privileges apply, the Appellate Division also suggested that Judge Wolfson make an in camera inspection of the draft Report prior to ruling whether it is protected by any privilege. The Appellate Division stayed dissemination of the Report until the completion of the remand and entry of additional findings, and retained jurisdiction.
In response to the Appellate Division Order, Judge Wolfson has requested a list of all the individuals that the draft Burchell Report was distributed to and a certification from each person who received a copy of the Burchell Report, including a list of all to whom that person sent it.
For more information on this topic, please contact Leslie G. London at (973) 622-5335.
by Jong Sook Nee on December 10, 2015
On November 25, 2015 the Appellate Division affirmed an Order dated August 26, 2015, issued by Middlesex County Mount Laurel Judge Wolfson, which denied the New Jersey State Department of Community Affairs’ (“DCA”) Motion to Intervene and to file a counterclaim in a pending Declaratory Judgment Action filed by the Township of Monroe.
In the Monroe action, the DCA sought to Intervene and file a counterclaim, to require a full accounting of Monroe’s affordable housing trust funds and an order requiring Monroe to turn over the funds to the DCA based on the Township’s failure to spend or commit to spend these funds within the 4 year period prescribed by NJSA 52:27D-329.2(d) and 329.3(b), as required.
Judge Wolfson denied the DCA’s Motion to Intervene and to file the counterclaim on the basis that the DCA was procedurally, legally and equitably precluded from intervening. Judge Wolfson said the Supreme Court’s clear directive was that the Declaratory Judgment Actions are to be limited to the issue of constitutional compliance. Further, he said intervention by DCA to pursue its counterclaim would be futile as a matter of law.
Judge Wolfson also discussed in his opinion, the fact that COAH had failed to function and there was an inability of municipalities to obtain COAH approval of its spending plan (which is required before utilizing the funds) and that equitable and legal principles demand that the statutory 4 year period during which collected trust funds were required to be spent or committed be tolled, and the running of the period within which to commit the funds, not be triggered until a municipality’s housing plan is either adjudicated to be constitutionally compliant or its plan is judicially rejected and the court concludes that the municipality is determined to be non-complaint.
Based on the Appellate Division’s affirmation of Judge Wolfson’s “well-reasoned and comprehensive written opinion”, this opinion continues to be an important decision with respect to a municipality’s ability to maintain control of its Affordable Housing Trust Funds.
For more information on this topic, please contact Leslie G. London at (973) 622-5335.
by Jong Sook Nee on March 25, 2015
On February 3, 2015, the Honorable Mary Jacobson, sitting in the Law Division in Mercer County, ruled that the West Windsor Zoning Board of Adjustment may grant variances, pursuant to the Municipal Land Use Law (MLUL), from the Princeton Junction Redevelopment Plan (PJRP) in Pereira Investment Corp. v. West Windsor Township Zoning Board of Adjustment, et al (Not yet approved for publication. The PJRP, which governs the area surrounding the Princeton Junction Train Station in West Windsor Township, supersedes the underlying zoning for that area. Many in the redevelopment community have long believed that a zoning board’s role in redevelopment was limited to areas governed by redevelopment plans that constitute overlay zoning. Many believed, however, that a zoning board could not grant such variances from redevelopment plans that supersede underlying zoning. The latter reading is consistent with the provision in the Local Redevelopment and Housing Law (LRHL) that “[a]ll applications for . . . redevelopment . . . shall be submitted to the municipal planning board for its review and approval in accordance with the [MLUL].” N.J.S.A. 40A:12A-13 (emphasis added). It is further supported by the decision in Weeden v. City Council of the City of Trenton, 391 N.J. Super. 214 (App. Div. 2007), wherein the court held that a zoning board could grant variances from a redevelopment plan. In so holding, however, the court specifically noted, several times, that the redevelopment plan at issue was an overlay plan.
As noted above, the PJRP supersedes the underlying zoning in the area covered by the plan. Moreover, the PJRP provides that, in the event a development proposal requires deviations from the plan, it is expected that “findings derived from that process” will be presented to the Township’s governing body in the form of recommendations for possible revisions to the PJRP. Nevertheless, the court found that such language could not have meant that the Zoning Board had no role in the redevelopment process, as that result would be contrary to the role envisioned for zoning boards in the MLUL. The court also found that the Township did not intend to preclude the zoning board from considering variances from the PJRP. Otherwise it would have specifically set forth that restriction. The court found that the above-referenced language regarding deviations was contained in a preamble to the PJRP, rather than the body of the plan. The court also compared such language in the PJRP to similar language set forth in a redevelopment plan in the neighboring Township of Plainsboro. The court found, in contrast to the language in the Plainsboro Redevelopment Plan, that the PJRP did not specifically restrict the Zoning Board’s ability to consider variance applications. Thus, the court took the position that the location of the restrictive provision and its relative lack of specificity were significant.
Finally, from a substantive standpoint, the court also found that the applicant’s property was only a small part of the Princeton Junction Redevelopment Area, and that the relief requested by the applicant was relatively minor and had no real impact on the surrounding parts of the redevelopment area. According to the court, the variances, therefore, had a very limited impact on the PRJP.
Further clarification of the court’s decision is warranted. The court’s ruling both implies that the MLUL contemplates a role for a zoning board in the redevelopment process and that a municipality could nevertheless limit or even exclude a zoning board from such process with more specific prohibitive language. Perhaps the courts or the Legislature will reconcile those two apparently conflicting holdings. On March 18, 2015, the Plaintiff filed a Notice of Appeal, so perhaps the Appellate Division will reconcile these two apparently conflicting holdings
by Jennifer L. Credidio on September 20, 2013
P.L. 2013, Chapter 159, signed into law on September 6, 2013, significantly changed the way that municipalities designate areas in need of redevelopment pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq. Chapter 159 moves a municipality’s decision to reserve the power of eminent domain to the very beginning of the redevelopment process; now, when asking the local planning board to investigate whether an area should be designated as in need of redevelopment, the municipality must indicate whether it is seeking to designate a “Non-Condemnation Redevelopment Area” or a “Condemnation Redevelopment Area”. The criteria for each type of area are the same; the only difference is the power to use eminent domain.
Chapter 159 also revised the “e” criterion for designating an area in need of redevelopment, and expanded the criteria for designating an area in need of rehabilitation.
For more information on Chapter 159, click here, or contact Jennifer Credidio or any member of our redevelopment and land use practice group, http://www.msbnj.com/practice-areas/redevelopment-and-land-use/attorneys/.
by Jong Sook Nee on January 11, 2012
As we bid farewell to 2011 and the roller coaster of international economic policy, the State of New Jersey wants to help you with a new resolution for 2012. Stay in New Jersey and grow. On January 6th, Governor Christie signed S-3033 establishing the new Grow New Jersey Assistance Program. Grow NJ is a tax credit incentive program for companies looking to move into or stay in New Jersey and make a sizable capital investment. Grow NJ expands on the much-heralded, but under-utilized Urban Transit Hub Tax Credit (UTHTC) incentive program. Similar to the UTHTC, companies that make a certain capital investment in New Jersey and who either retain or create 100 full time jobs can earn up to $5,000 – $8,000 per job for each of 10 years. Unlike the UTHTC, eligibility under Grow NJ is not limited to a few municipalities. Grow NJ expands its reach throughout the State based on planning areas and areas zoned for growth under the State Development and Redevelopment Plan and in various regional planning areas, such as the Hackensack Meadowlands or even BRAC areas.
As noted above, the UTHTC program generated a great deal of interest, but its logistical and technical requirements created hurdles that made it unavailable to many businesses. Will the new Grow NJ program with its generous locational requirements, softer capital improvement thresholds and focus on job retention light the State’s economic engine? We have yet to see. However, if you are looking for a new resolution to cure the economic hangover from 2011, consider Grow NJ. But hurry, you only have until July 1, 2014 to apply.
by Edward J. McManimon, III on January 19, 2011
You would think that the last thing the various branches of the State government, already severely challenged by high taxes and shrinking revenues, would want to do to local governments, particularly urban areas, is diminish their powers that provide the best means long term to revitalize their communities on their own while they are adjusting to their curtailed State aid. Yet that is exactly what is happening across the board to the Local Redevelopment and Housing Law.
The Governor imposed a large dose of financial reality on local governments telling them directly to become self-reliant by drastically cutting State aid in spite of their dependence on such State aid in many instances for over 25 years. The financial fallout was immediate and extreme. For communities thinking creatively and long term, this accelerated the hunt for tax ratables and development to shore up their local tax base. The use of the broad powers in the redevelopment laws to forge public/private business partnerships to provide incentives to the developers to locate in their communities was at least some hope. Then the State Comptroller out of nowhere released a superficial report on payments in lieu of taxation with little practical or rational substance concluding that such arrangements are giveaways to projects that in his view would have located in such communities anyway in spite of decades of such property in many cases laying follow and financially unproductive. He apparently presumes that the incredible revitalization of New Brunswick over the past 20 years and similar revitalizations elsewhere throughout the State have happened naturally.
Then to add insult to injury, the Local Finance Board in doling out the diminished local governments “transition aid”, which replaced steady and reliable much larger amounts of State aid, required that any local governments receiving such transition aid must sign a memorandum of understanding that any PILOT revenue derived from such redevelopment projects must be shared with their school districts. Instead of providing much needed municipal revenues, it shares revenues with a school district even if the redevelopment project has no impact on adding school children and in spite of the fact that school districts receive 100% of their budget request anyway regardless of whether any development occurs or not.
On top of that, the New Jersey Legislature decided to weigh in by resurrecting the Rice/Burzichelli Redevelopment Eminent Domain legislation significantly changing much of the flexibility to local governments in the Redevelopment Law in spite of the many judicial decisions which already changed the landscape of municipal options in dealing with their longstanding and unproductive properties.
The Courts, of course, continue to address these issues in a vacuum, one even recently allowing a property owner in one municipality who bought property in a redevelopment area after the redevelopment designation and with full knowledge of the designation and who participated for two years in trying to get the municipality to adopt a redevelopment plan to provide higher densities for his proposed housing than the proposed redevelopment to challenge the redevelopment designation years later, based on the De Rose Case, even though the adopted redevelopment plan actually provided that there will be no eminent domain.
So where does it all go for local governments? No more money from the State, demands to help yourself, continued restrictions on those who try to do just that and lawsuits going on for years with a freewheeling court while the public demands progress. Good Luck.
by Joseph P. Baumann, Jr. on January 7, 2011
In an economic environment where equity is scarce, loans are hard to obtain and grants are virtually nonexistent, the Redevelopment Area Bond Financing Law, N.J.S.A. 40A:12A-65 et seq. (RAB Law) stands alone as the most effective tool available in the much depleted redevelopment “tool box”. Born from the Large Site Landfill Reclamation and Improvement Law, N.J.S.A. 40A:12A-51 et seq., the RAB Law remains the preferred statute when municipalities and redevelopers are faced with significant gaps in their financial models. As a result, redevelopment area bonds (RABs) have become a proven source of “gap financing” in many successful projects.
This form of financing was first utilized in connection with the construction of the Jersey Gardens Mall in Elizabeth, New Jersey, where extraordinary infrastructure costs made an important project financially infeasible without RABs. Since then, RABs have been used to address extraordinary costs associated with commercial, retail and housing projects throughout the State.
While there are many benefits to RABs, two stand out. First, because RABs are secured by payments in lieu of real estate taxes (PILOTs), they remain a very secure investment enjoying a lien on the land and improvements that primes all mortgages and equity. Second, and perhaps more importantly, because they are repaid from the PILOTs, RABs generate a source of funds for a redevelopment project without the need for either the redeveloper or the municipality to “come out of pocket”. In the redevelopers’ pro forma, RAB proceeds are like a grant. From the municipality’s point of view, the dedication of the PILOTs to repay the RABs is a dedication of money the town would not otherwise have without the project. In effect, the municipality foregoes money it doesn’t have.
So, unless or until a better tool comes along, every redevelopment project facing a significant gap in its pro forma should take a hard look at RABs. It is very often the right tool for the job.
by William W. Northgrave on January 1, 2011
The recent resurgence of activity in industrial and commercial markets, with some limited retail and the occasional residential project, makes this the perfect time to make sure that your community is ready for redevelopment. As with the federal 2009 American Reinvestment and Recovery Act (“ARRA”) program, if your community is not “shovel-ready” for redevelopment, developers will make their investments elsewhere.
The initial and most basic step each community should take is to make certain that the designation of any redevelopment area can withstand a legal challenge. There have been a number of recent decisions that may question whether a redevelopment area was properly designated. In Gallenthin v. Paulsboro, 479 N.J. 344 (2007), the New Jersey Supreme Court reviewed the designation of a redevelopment area and found that although the municipality’s designation met the statutory criteria set forth in the Local Redevelopment and Housing Law (N.J.S.A. 40A:12A-1 et seq.)(the “Redevelopment Law”), simply meeting those criterion was insufficient to establish the constitutional “blight” required to designate any area. While not every redevelopment criteria under the Redevelopment Law was challenged in Gallenthin, many of the investigations conducted prior to Gallenthin could suffer from the same infirmity found by the Supreme Court in Gallenthin. If your community has designated redevelopment areas within your borders prior to 2007, the investigation of the study area should be reviewed by your counsel (in conjunction with your planner) to determine the adequacy of the investigation and the findings supporting the redevelopment area desigation.
While Gallenthin questioned the substance of a redevelopment designation, the Appellate Division in Harrison Redevelopment Agency v. De Rose, 398 N.J. Super. 361, 942 A.2d 59 (App. Div. 2008) questioned the process employed to designate a redevelopment area. When undertaking to study and designate a redevelopment area, the Redevelopment Law simply requires public notice as to the date and time an area is to be studied. The court in DeRose found that more notice was required because a property owner would have only 45 days from the date that a resolution designating a redevelopment area was adopted to challenge that designation. That 45-day period could pass well before the property owner realized, many times not until years later, that the designation could lead to the taking of the property by eminent domain. The DeRose court ordered that, unless the property owner (a) was actually on notice as to the impact of a designation (i.e., that the property could be subject to condemnation) and (b) had the opportunity to contest the findings leading to a designation of a redevelopment area, that property owner could challenge the designation at any time. In other words, the property owner would not be time-barred from raising a challenge to the original redevelopment area designation even if the challenge came years later. The problem with that open-ended ability to challenge is that it creates tremendous uncertainty as to whether the vision in the redevelopment plan can be achieved. Further, if the challenged property is the lynchpin of a project (which is common in most, if not all, cases requiring condemnation) the municipality’s ability to implement a comprehensive redevelopment project can be stalled, if not stopped completely.
Understanding the impacts of these recent decisions on the implementation of redevelopment, we recommend a review of both the substantive and procedural issues surrounding the designation of a redevelopment area in order to ensure your community is ready for redevelopment.
by Jong Sook Nee on December 30, 2010
For years many municipalities have utilized long term tax exemptions to assist in the development of a variety of projects, from affordable housing developments to urban redevelopment. These tax exemptions were provided as a means to make a project financially feasible for the developer by exempting the project from municipal taxes and allowing the developer to make a payment in lieu of taxes (a “PILOT”) to pay for municipal services. There are agreements that have been in existence for as long as 30 or 40 years. Some agreements created under the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 et seq., allowed a certain amount of flexibility in the calculation of the payments in lieu of taxes. For some agreements, the percentage of the total costs might adjust at different rates. In others, the definition of what is included or excluded from the calculation of total project costs or gross annual rents might be different from agreement to agreement. It is generally a good practice to review your PILOT agreements to ensure that the municipality is appropriately calculating and receiving its agreed-upon payments. In many such agreements, the developer or the owner of the project may be calculating these payments. It is far more incumbent in those situations for the municipality to routinely review the annual financial statements of the developer or the owner to ensure proper calculation and collection of the PILOTs.
by Jong Sook Nee on December 7, 2010
Green building codes and standards are receiving a lot of attention lately. Many public officials, developers and members of the public are passionate about “going green” and for good reason. Alternative and renewable energy sources make headlines for their reported ability to lower individual energy costs while reducing our dependency on fossil fuels. Green building standards such as the U.S. Green Building Council’s Leadership in Energy and Environmental Design or “LEED” claim to provide third-party verification of energy savings, water efficiency, CO2 emissions reduction and improved indoor environmental quality. Instilling a mindset to reduce energy consumption, reduce construction waste, incentivize alternative energy usage and encourage recycling are excellent goals from a municipal perspective, as well as a more global perspective. We are often asked whether municipalities can and should impose green building standards in redevelopment areas.
Redevelopment areas provide an opportunity for particular development standards, since the redevelopment designation allows the municipality the chance to redefine the zoning standards for a discrete area. To this end, redevelopment areas could be the perfect breeding ground to test a new green building policy for private development. Municipalities, however, should consider the full implications of imposing green building standards in a redevelopment context.
This is not to say that no municipality should ever consider adopting a green building standard. On the contrary, some municipalities have adopted such standards as part of a municipal green building policy. As a policy that is part of the redevelopment plan, the municipalities state their goals for green building and provide developers with options on how to meet those goals. In this way, developers are made aware that the municipality favors redevelopers who are sophisticated in green building techniques, while not tying the hands of the municipality in the event some projects cannot feasibly or economically meet the green building standards. The municipality can incentivize its policy by expressing a preference for proposals by redevelopers who have experience with and will utilize green building practices, offering waivers of certain municipal fees (water/sewer connection, planning board application, etc.) for green developments or offering financial assistance. By including green building standards as a municipal policy and incentivizing compliance to the standards under a redevelopment plan, a municipality can continue to promote its green building agenda without limiting its redevelopment potential.