Vincent J. Mangini - New Jersey Law Blog

High Demand on Water Supply May Require Plan for Reclamation and Reuse

Vincent J. Mangini — Wed, 24 Feb 2010 14:57:36 -0500

The following is a portion of an article entitled Hot and Green Legal Topics written by Vincent J. Mangini and Gary S. Forshner taken from the December 2009 edition of The Cutting Edge:

The construction of energy efficient buildings, the practice of conserving natural resources and recycling and the development and use of alternative fuels have all become prevalent concerns in our culture. Not surprisingly, these concepts have thoroughly permeated the contemporary legal landscape providing both benefits and burdens to individuals and businesses alike. The purpose of this article is to provide a summary of a few of the laws and incentives that impact the building and real estate industry.

Water Reuse Program
In light of the increasing demand placed on water supplies and the desire to reduce the impact of drought conditions, interest has grown in water reclamation and reuse, which entails the conversion of wastewater into reclaimed water through the application of specialized treatment for beneficial uses, such as landscape and agricultural irrigation, fire protection, dust control and street cleaning.

The term “reclaimed water for beneficial reuse" (RWBR) is defined in the New Jersey Administrative Code to mean “[w]ater that meets restricted access or public access reuse requirements specified in a NJPDES permit that authorizes that water to be directly reused for non-potable applications in place of potable water, diverted surface water, or diverted groundwater.” N.J.A.C. 7:14A-1.2.
Under current State policy, as manifested through the New Jersey Department of Environmental Protection’s technical manual entitled “Reclaimed Water for Beneficial Reuse," dated January 2005 (“Guidelines”), the preparation of a water reuse feasibility study may be required for New Jersey Pollutant Discharge Elimination System (NJPDES) permits involving all wastewater treatment and disposal facilities with a design flow of at least 100,000 gallons per day and for water supply allocation permits involving the use of water for non-potable and consumptive uses. See also N.J.A.C. 7:19-2.2(g) (requiring applicant for water supply allocation permit to consider lower quality water for non-potable purposes). Indeed, in issuing water allocation permits the DEP may require users to consent to the use of reclaimed water should such lower quality water become available, potentially creating a host of additional issues and challenges for builders.
Any person, who actually produces or is seeking to produce RWBR is required under current State regulations to utilize the Guidelines and to obtain a NJPDES permit. N.J.A.C. 7:14A-2.15.
A building project that makes use of recycled wastewater for landscape irrigation or sewage conveyance (i.e. toilet flushing) may earn water efficiency credits that can be applied towards certification under the Leadership in Energy and Environmental Design Green Building Rating System for New Construction (LEED-NC) formulated by the United States Green Building Council.

A Renewable Energy Facility May Require an Easement from your Neighbor

Vincent J. Mangini — Tue, 16 Feb 2010 08:05:14 -0500

Due to high energy costs and concern about the environment (and the availability of tax credits and grants), homeowners and businesses are giving greater consideration to renewable energy. Before undertaking the installation of a renewable energy facility, such as solar panels, it is important to conduct due diligence, which may include, among other things, the procurement of easements from neighbors to allow for unobstructed access to sunlight. Fortunately, New Jersey specifically recognizes easements for solar energy facilities and has set forth the minimum content for such easements in the Solar Easements Act. However, while providing useful guidelines, this statute does not require the owner of property adjoining a solar energy facility to grant a solar easement. Rather, the prospective solar energy customer must negotiate with surrounding property owners and pay whatever consideration the market may bear. In light of the complexities involved in negotiating the terms and conditions for such an easement agreement and in preparing the easement document, potential solar energy customers would be well advised to seek the assistance of an attorney in performing this task.

Governor Corzine signs bill creating Solar and Wind Energy Commission

Vincent J. Mangini — Mon, 08 Feb 2010 08:56:55 -0500

Among the several pieces of “green” legislation, that Governor Jon Corzine signed just prior to leaving office was a bill (A3218) that creates a new, temporary 11-member public body to be known as the Solar and Wind Energy Commission. This new law - approved as P.L. 2009, c. 239 - authorizes the Commission “to conduct a thorough and comprehensive study to examine State owned property and determine where solar and wind energy installations would be feasible[,]” which shall include a discussion of the financial implications of such installations, projected energy and financial savings, potential use of net metering and a host of other topics. Although there is no limit to the number of documents that the Commission may produce under the statute relating to this study, it must submit to the Governor and the Legislature and make available to the public a final report containing its findings, conclusions and recommendations within one year after its organization. Thirty days thereafter, the Commission shall expire. It will be interesting to see what this year-long effort will generate.

Governor Corzine Signs Solar Farm Bill

Vincent J. Mangini — Thu, 04 Feb 2010 08:37:42 -0500

On January 16, 2010, just prior to leaving office as Governor, Jon Corzine signed into law what I am going to refer to as the "solar farm bill" (P.L. 2009, c. 213), which authorizes a person who owns preserved farmland to install and operate biomass, solar or wind energy generation facilities, structures and equipment on the farm for the purpose of generating power or heat. Among other things, this bill also adds to the list of permitted activities that may be conducted on commercial farms "the generation of power or heat from biomass, solar, or wind energy" and, as such, it will serve as a nice companion to a recent amendment to the Municipal Land Use Law (P.L. 2009, c. 35), which allows a “renewable energy facility” to be located on a parcel or parcels of land owned by the same person comprising at least 20 contiguous acres within every municipal industrial zoning district, signed into law by the former Governor in March of last year.

New Jersey Clean Energy Program: Pay for Performance

Vincent J. Mangini — Wed, 06 Jan 2010 08:08:22 -0500

The New Jersey Clean Energy Program administered by the New Jersey Board of Public Utilities through its Office of Clean Energy offers a host of financial incentives. Among these is the Pay for Performance Program, which is funded by the societal benefits charge authorized by the New Jersey Electric Discount and Energy Competition Act. Under this program, a qualifying utility customer may receive up to 50% of the total cost of energy-efficient measures recommended by an energy efficiency expert, also known as a program “partner,” who the customer selects from a pre-approved list, provided that the implementation of such measures will achieve an energy savings of at least 15%. A customer participating in the Pay for Performance Program may also receive funds to offset the cost of the program partner’s services at a rate of $0.10 per square foot up to a maximum of $50,000 or 50% of the annual energy cost of the building or facility that is the subject of the application for benefits, whichever is less. There are also advanced measure incentives for combined heat and power under the program.

In order to be eligible for the Pay for Performance Program, (1) an applicant must be a customer of a regulated electric utility and/or gas utility in New Jersey, including Atlantic City Electric, Jersey Central Power & Light, Rockland Electric Company, New Jersey Natural Gas, Elizabethtown Gas, PSE&G and South Jersey Gas, and (2) the project for which an application is made must consist of one or more commercial, industrial, institutional or multi-family residential structures having over 200 kW average annual peak demand electrical usage (if the buildings are preexisting) or having at least 50,000 square feet or more of planned conditioned space (if the project calls for new construction). Individual buildings, as well as multiple buildings in complexes owned by a single person or entity, may qualify for benefits under the program provided that they meet the above criteria. Condominium associations may also be eligible to receive incentives for energy-efficient measures relating to common elements under this program.

New York State Energy and Development Authority to provide loans for Energy Audits and Qualified Energy Efficiency Services under Green Jobs-Green New York Program

Vincent J. Mangini — Mon, 21 Dec 2009 09:44:21 -0500

On October 9, 2009, the New York State Legislature enacted the Green Jobs-Green New York Act of 2009 (“Green Jobs Act”) as P.L. 2009, ch. 487, amending the Public Authorities Law, to create the Green Jobs-Green New York Energy Conservation and Community Sustainability Program (“Green Jobs-Green New York Program”). Under this new program, the New York State Energy and Development Authority (“Authority”) is empowered to award financial assistance from the Green Jobs-Green New York Revolving Loan Fund to applicants for the conduct of energy audits and the performance of qualified energy efficiency services on non-residential, residential and multi-family structures. The Green Jobs Act defines “applicant” broadly to include any “person who owns, leases or manages a structure and who has the authority to contract for the provision of qualified energy efficiency services to such structure.” NY PUB AUTH § 1891. However, loans for “qualified energy efficiency services,” which are also defined under the Green Jobs Act and include such building improvements as thermostat upgrades and the installation of thermal solar heat or hot water systems, are limited. For example, loans for approved qualified energy efficiency services may not exceed $26,000.00 per applicant for non-residential structures. Applicants applying for financial assistance relating to residential structures may only receive up to half that amount. The cost of the energy audit may be added to the amount of the loan. Interest rates shall lie within the Authority’s discretion, but may “be no higher than necessary to make the provision of the qualified energy efficiency services feasible.” NY PUB AUTH § 1896.

In addition to the provision of loans for energy audits and qualified energy efficiency services, the Green Jobs-Green New York Program requires the Authority to award grants for certain purposes and to promote employment and training services. In the way of funding, the New York State Legislature has appropriated $112,000,000 to finance the aforesaid loan program and the Authority’s other activities. The Authority is not expected to begin implementing the Green Jobs-Green New York Program until the spring of 2010.

Legislature Defines Inherently Beneficial Use to Include Wind, Solar and Photovoltaic Energy Facilities and Structures

Vincent J. Mangini — Tue, 08 Dec 2009 08:43:15 -0500

On November 20, 2009, Governor Jon S. Corzine signed into law Senate Bill S1303 as P.L. 2009, ch. 146, which codifies the term “inherently beneficial use,” a concept originally fashioned by the Supreme Court in Andrews v. Ocean Township Bd. of Adjustment, 30 N.J. 245 (1959) and, thereafter, expanded and refined by the judiciary over many years. The new law, which amends Section 3.1 of the Municipal Land Use Law (L.1975, c.291, C.40:55D-4), defines inherently beneficial use to include, among other things, “a wind, solar or photovoltaic energy facility or structure.” This will undoubtedly make it easier to obtain approvals for and install these alternative energy facilities where they are not permitted under local zoning regulations and require a use variance. However, the text of the amendment presents a number of issues of which property owners, developers and others should be aware.

First, strangely missing from the new statutory definition of inherently beneficial use is any mention of religious institutions, affordable housing or certain other uses that have been long recognized as being inherently beneficial. Although the list of uses contained in the definition is expressly stated not to be exhaustive, the omission of uses traditionally viewed as being inherently beneficial is troubling and could open the door to a reexamination of their value and purpose by municipal agencies and the courts. Additionally, it is unclear whether the term “wind, solar or photovoltaic energy facility or structure” refers only to stand-alone facilities or to facilities that are accessory to (and situated on the same site as) other uses or structures, as well. It also remains to be seen whether a wind, solar or photovoltaic energy facility that is connected to the grid and supplies excess energy to off-site users qualifies as inherently beneficial.

Friends of Peapack-Gladstone v. Borough of Peapack-Gladstone Land Use Board, et al. Tolling of Development Approvals under N.J.S.A. 40:55D-21

Vincent J. Mangini — Mon, 22 Jun 2009 08:03:35 -0500

Under N.J.S.A. 40:55D-21, if a developer is “barred or prevented, directly or indirectly,” from moving forward with an approval obtained pursuant to the Municipal Land Use Law (MLUL) “during the period of approval” on account of the institution of “a legal action” or the issuance of “a directive or order” by, among other government actors, a “political subdivision” for the purpose of “protect[ing] the public health or welfare” at a time when “the developer is otherwise ready, able and willing to proceed[,]” then - in such instance - the period of approval shall be suspended for so long as “said legal action is pending or such directive or order is in effect.”

Recently, in the matter of Friends of Peapack-Gladstone v. Borough of Peapack-Gladstone Land Use Board, et al., the Appellate Division of the New Jersey Superior Court interpreted this provision of the MLUL and decided, among other things, that the running of the period of approval for 18 golf cottages was tolled when a zoning officer declined to issue a building permit for the construction of the second such cottage, “because of his perception that the project was being advertised in a manner contrary to the Board’s prior approvals.” In the Court’s view, the zoning officer was “plainly” acting as an agent of the Borough, a political subdivision, in rendering this decision which, according to the Court, “was manifestly an effort on his part . . . to ‘protect the public health and welfare’ in the Borough [and] . . . had the direct and indirect effect of halting the developer’s work on the project, at a time at which the developer was evidently ‘ready, willing and able to proceed’ with the building of the next dwelling.”

The Appellate Division’s decision in Friends of Peapack-Gladstone v. Borough of Peapack-Gladstone Land Use Board, et al. may be viewed on WestLaw at 2009 WL 1643315 (N.J.Super. A.D.) and has been approved for publication.

Schmidhausler v. Planning Board of Borough of Lake Como: Remedy for Vote by Ineligible Board Member

Vincent J. Mangini — Tue, 16 Jun 2009 08:08:29 -0500

Recently, in the matter of Schmidhausler v. Planning Board of Borough of Lake Como, the Appellate Division of the New Jersey Superior Court addressed, among other issues, what the remedy for an aggrieved party should be when a municipal board renders a decision on an application for development under the Municipal Land Use Law that is tainted by the failure of one of its members to read or listen to the testimony presented on the matter during a prior meeting in violation of N.J.S.A. 40:55D-10.2. In this case, the planning board voted to approve an application for a subdivision with variance relief by a narrow one-vote margin. The plaintiffs argued that the remedy in such instance should be the striking of the disobedient board member’s vote. The Appellate Division, however, was not persuaded by plaintiffs’ suggestion, especially here, where such action “would result in a tie vote and . . . an automatic denial of the application.” Instead, the Court opted to remand the matter to the planning board for another round of deliberation and a new vote after “those who had not attended one or all of the hearings in this matter review the transcript of any meeting or meetings that they may have missed[ and] certify they have done so[.]” According to the Court, this course of action was preferable to “denying the application outright or putting all of the parties to the cost and expense of an entire new hearing[.]”

By this case, the Appellate Division has provided a clear message to all parties involved in the prosecution and disposition of applications for development under the MLUL that a failure on the part of municipal board members to abide by N.J.S.A. 40:55D-10.2 - while not triggering a new hearing - will likely cause the board’s decision to be deliberated and voted on anew. The Appellate Division’s decision in Schmidhausler v. Planning Board of Borough of Lake Como may be viewed on WestLaw at 2009 WL 1491306 (N.J.Super. A.D.) and has been approved for publication.

Redevelopment Procedures - Adequate Record

Vincent J. Mangini — Wed, 29 Apr 2009 08:05:53 -0500

Although municipal boards are not bound by the strict rules of evidence during the conduct of proceedings, their findings and determinations must be based upon substantial credible evidence created in the record. This applies when a municipal board acts in a quasi-judicial capacity during the review of applications for development under the Municipal Land Use Law, N.J.S.A. 40:55D-1, et seq. (“MLUL”), and when a municipal board (specifically, a planning board) acts in a quasi-legislative capacity during a preliminary investigation into whether certain properties are in need of redevelopment pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq. (“LRHL”).

In order to meet the substantial evidence standard an adequate record must exist. This requires a verbatim recording of the proceedings. The MLUL expressly requires that “[t]he municipal agency shall provide for the verbatim recording of the proceedings by either stenographer, mechanical or electronic means.” N.J.S.A. 40:55D-10f. Although there is no comparable provision in the LRHL, the Appellate Division in Concerned Citizens v. Mayor implied that the minimum procedures required for hearings on applications set forth in the MLUL applies equally to the conduct of proceedings by municipal agencies under the LRHL. 370 N.J.Super. 429, 463 certif. denied 182 N.J . 139 (2004). The application of the MLUL in this regard is reasonable in light of the importance a written record plays in memorializing issues, concerns and policy considerations that were relevant when the municipal board made its determination. A written record of proceedings also provides the judiciary with a basis for evaluating the validity of a determination when it is challenged on appeal.

Governor Corzine Signs Residential Development Solar Energy Systems Act Into Law

Vincent J. Mangini — Fri, 17 Apr 2009 08:05:17 -0500

On March 31, 2009, Governor Jon Corzine signed into law new legislation known as the Residential Development Solar Energy Systems Act. (P.L. 2009, c.33) codified at N.J.S.A. 52:27D-141.1, et seq.. The Act requires developers of residential developments containing 25 or more single-family dwelling units to disclose in advertising and offer to install solar energy systems. The act requires the Department of Community Affairs (DCA) in consultation with the Board of Public Utilities to adopt regulations respecting the technical sufficiency of solar energy systems to be installed pursuant the act and prescribes certain minimum standards. For example, a solar energy system installed under the act shall have components that are new and shall have a manufacturer’s warranty of not less than 10 years.

Although the Residential Development Solar Energy Systems Act became effective immediately, in actuality, it shall apply only to dwelling units that have received a construction permit on or after the 90th day following the DCA’s promulgation of the aforesaid technical sufficiency regulations for solar energy systems.

Redeveloper Agreements - Designating the Redeveloper

Vincent J. Mangini — Tue, 31 Mar 2009 08:01:58 -0500

Under the Local Redevelopment and Housing Law (LRHL), a redevelopment entity is allowed to enter into a contract with a private redeveloper. The redevelopment entity is allowed broad discretion in selecting a private redeveloper and currently no specific statutory guidelines for the designation of a redeveloper exist. However, a redevelopment entity must still act rationally in choosing a redeveloper for a given redevelopment project. For example, a redevelopment entity must be sure that the redeveloper it selects is competent having both the technical expertise and the financial wherewithal to carry out the redevelopment project with which it is being entrusted. The Appellate Division of the New Jersey Superior Court made clear in Vineland Const. Co. Inc. v. Township of Pennsauken, 395 N.J. Super. 230, 255 (App. Div 2007) that mere “political connections” are insufficient to justify the designation of a particular person or company as a redeveloper. The public good is not served by such an appointment. Ibid. at 257-258.

A redevelopment entity must also take care not to enter into a redeveloper agreement in anticipation of the project area that is the subject of such agreement being made the subject of a redevelopment plan. On the contrary, in Monroe Properties, LLC, et al. v. The City of Hoboken, et al., an unreported decision decided after the Vineland Const. case, the Appellate Division squarely rejected an attempt on the part of a municipality to select a private redeveloper prior to designating the study area as an area in need of redevelopment. The Court made clear that a municipality or other redevelopment entity has no inherent authority to enter into a memorandum of understanding for redevelopment but, rather, must abide by the statutory procedure set forth in the LRHL. Once a municipality has determined that a particular geographic area within its jurisdiction is in need of redevelopment or in need of rehabilitation and has adopted a redevelopment plan for such area, then it or a separate redevelopment entity designated by the municipal governing body may exercise redevelopment functions, which include, among other things, entering into contracts with redevelopers “for the planning, replanning, construction, or undertaking of any project or redevelopment work.” N.J.S.A. 40A:12A-8f.

Redevelopment Procedures - Unsworn Testimony

Vincent J. Mangini — Mon, 09 Mar 2009 08:05:14 -0500

In order for the evidence adduced during municipal board hearings to be relied upon in making factual findings it must in every instance be given under oath. Indeed, even in settings where the rules of evidence are relaxed the Appellate Division of the New Jersey Superior Court has recognized “the importance of administering the oath before a witness may testify.” Penbara v. Straczynski, 347 N.J.Super. 155, 158 n.1 (App. Div. 2002). Sworn testimony is expressly required under the Municipal Land Use Law. N.J.S.A . 40:55D-10d. Although there is no comparable provision in the Local Redevelopment and Housing Law, at least one trial court in an unreported decision has held that the purpose for requiring competent evidence in municipal board hearings under the MLUL applies equally to proceedings conducted by planning boards under the LRHL. See Cramer Hill Residents ASO v. COO Primas and the Camden Redevelopment Agency (Docket No. CAM-L-008135-05), decided January 23, 2006. In addition to purely statutory considerations, a municipal agency’s reliance upon unsworn testimony in making a redevelopment determination, which implicates the rights of property owners within the study area and the public at large, may violate due process.

Redevelopment - Waiver of Right to Appeal

Vincent J. Mangini — Tue, 24 Feb 2009 08:08:30 -0500

A person whose property has been condemned and who is involved in litigation with the condemning authority over the validity of the taking will lose the right to continue the appeal if they withdraw all or any portion of the funds on deposit with the court pursuant to the Eminent Domain Act of 1971, N.J.S.A. 20:3-1, et. seq.; N.J.S.A. 20:3-23. Indeed, last year in Township of Piscataway v. South Washington Avenue, LLC, the Appellate Division of the New Jersey Superior Court specifically ruled that “a condemnee could not accept or withdraw deposited funds and thereafter appeal the condemnation on any ground other than the amount of compensation due." 400 N.J.Super. 358, 369.

According to the Court in South Washington Avenue, this holding “fully accords” with existing case precedent relating to appeals from judgments by litigants, who have voluntarily accepted the benefits of such judgments. In those instances, under the common law, a litigant would be prohibited from attacking such a judgment on appeal. Ibid. at 369. The Appellate Division also viewed its ruling as being consistent with the Eminent Domain Act’s provision relating to the withdrawal of funds. Although the Eminent Domain Act provides that the withdrawal of money from court shall not “affect or prejudice the rights of . . . the condemnee in the determination of compensation[,]” N.J.S.A. 20:3-27, the statute does not afford similar protection to the rights of the condemnee in the determination of a taking’s validity and such omission “implicitly bars a condemnee who makes a withdrawal of the deposit from asserting any rights other than those relating to the amount of compensation.” 400 N.J. Super. at 368.

Redevelopment Plan - Amendments

Vincent J. Mangini — Tue, 27 Jan 2009 08:02:39 -0500

Unlike a redevelopment area designation, which must be based upon substantial credible evidence in the record, there is nothing in the Local Redevelopment and Housing Law (LRHL) that requires the contents of a redevelopment plan to be based upon substantial evidence. On the contrary, as recognized by the Appellate Division of the New Jersey Superior Court in Bryant v. City of Atlantic City, the LRHL “[r]equires only that the plan include an ‘outline’ for the development of the project area indicating [among other things] (1) its relationship to certain local objectives [and] (2) the proposed land uses and building requirements in the project area[.]” 309 N.J.Super. 596, 617-618 (1998). This general rule, however, as it applies to redevelopment plan amendments was questioned recently in an unreported case entitled St. Paul’s Missionary Baptist Church v. City of Vineland, et al., decided by the Appellate Division on July 15, 2008.

In St. Paul’s Missionary Baptist Church, a municipal governing body, after receiving a proposal from the designated redeveloper, amended a redevelopment plan to provide for the operation of a homeless shelter as a permitted use within the zone. Although the city followed the procedures outlined in N.J.S.A. 40A:12A-7 required for amending a redevelopment plan which, as already stated, do not require specific findings based upon substantial evidence, the Court was nevertheless convinced that the substantial evidence test must be applied to a redevelopment plan amendment where, as here, “it calls for such a significant change in the permitted use in the area.” Indeed, the Appellate Division could not find “any reason, of public policy or otherwise, for a distinction between the level of proof required to create a redevelopment zone, and that which should be required for a significant change in use within that zone . . .” and in light of the city’s failure to furnish such evidence to support it inclusion of homeless shelters in the redevelopment plan the Court found the ordinance amending the redevelopment plan to be “arbitrary, capricious and unreasonable.”

Also underlying the decision in St. Paul’s Missionary Baptist Church was the Court’s discomfort with city’s decision to modify the permitted uses within the redevelopment zone in response to the designated redeveloper’s proposal. Although homeless shelters were identified in the city’s master plan as being needed facilities, the master plan “did not designate a [specific] geographic area . . . where such shelters should be located[]” and, as such, “without further justification,” the Court was of the opinion that the city’s action in amending the redevelopment plan was “analogous to ‘spot zoning,’ the impermissible re-zoning of a lot or parcel of land for the benefit of an owner for a use incompatible with surrounding uses, and which does not further the comprehensive zoning plan.”

Although St. Paul’s Missionary Baptist Church is not precedential, it raises doubts about how New Jersey courts will evaluate the validity of substantial amendments to redevelopment plans that change major land use requirements applicable to a zone, such as the permitted uses, especially when such modifications are made in response to a redeveloper’s proposal.

Redevelopment Agreement - Forfeiture Remedy

Vincent J. Mangini — Mon, 29 Dec 2008 08:06:41 -0500

When negotiating the terms of a redevelopment agreement with a redevelopment entity it is crucial to pay close attention to the wording of the redevelopment entity’s remedies upon default, especially if the redevelopment project is going to involve mortgage financing. Indeed, in such instance, a redeveloper should try to avoid including a provision in the redevelopment agreement that subjects its interest in whatever property it might acquire within the redevelopment project area to forfeiture upon default. However, if the redevelopment entity insists upon having such a remedy, then it should be made subject to the redeveloper’s right of redemption under any mortgage. Otherwise, a redeveloper runs the risk of losing title to property previously conveyed to it by the redevelopment entity upon default under the redevelopment agreement (whether or not the redeveloper is in default under the mortgage at the time the redevelopment entity seeks reversion of title). This situation was recently addressed by the Appellate Division of the New Jersey Superior Court in Mercer County Improvement Authority v. Trenton Studios, Inc. in an unpublished case decided on August 21, 2008.

In Trenton Studios , a redevelopment entity initiated foreclosure proceedings and sought reversion of title, among other relief, after the redeveloper had defaulted under a mortgage held by the redevelopment entity and the redevelopment agreement. The redeveloper claimed, among other things, that enforcement of the redevelopment agreement’s forfeiture remedy impermissibly interfered with the redeveloper’s equitable right of redemption. In evaluating this issue, the Appellate Division agreed with the redeveloper’s position “that a remedy which flows from the [m]ortgage due to a default under the [m]ortgage cannot clog the equity of redemption.” However, the Court rejected the redeveloper’s assertion that the redevelopment entity was limited the those remedies, such as foreclosure, that flow from the mortgage. In this regard, the Court observed that since the redevelopment agreement “does not incorporate the default events” contained in the mortgage and has “separate and independent conditions, obligations and events of default[,]” it is a “distinct instrument[]” that is neither subject to nor intertwined with the mortgage. “Therefore, while reconveyance of title and possession is not a viable remedy under the [m]ortgage because it would clog the equity of redemption, it does not prevent plaintiff from seeking that remedy under the terms of the [r]edevelopment [a]greement.”

Designating Property For Redevelopment Using the "A" Criteria

Vincent J. Mangini — Mon, 15 Dec 2008 08:04:33 -0500

Under the Local Redevelopment and Housing Law a municipality may declare private property to be blighted if “[t]he generality of buildings are substandard . . . dilapidated, or obsolescent . . . or are so lacking in light, air, or space,” and such conditions are “[c]onducive to unwholesome living or working conditions.” This is the first of eight enumerated criteria set forth in the statute, which is sometimes referred to as the “a” criteria (because it is codified at N.J.S.A. 40A:12A-5a).

In order to prove that property within a redevelopment study area meets the “a” criteria it is essential for municipal officials to do their homework and actually document findings of fact that support both prongs of the “a” criteria test. In 2005, the Appellate Division of the New Jersey Superior Court in case entitled ERTEC v. City of Perth Amboy, which is reported at 381 N.J.Super. 268, identified the types of data that need to be collected and analyzed in evaluating whether property satisfies the first prong of the “a” criteria - that is whether “[t]he generality of buildings are substandard . . . dilapidated, or obsolescent . . . or are so lacking in light, air, or space[.]” Among these data items are (i) land use and topographic information, (ii) environmental conditions (iii) building and fire code violations, (iv) exterior and interior building conditions and (v) building permit data. As for the second prong of the “a” criteria, that being the linkage between substandard, dilapidated, obsolescent or overcrowded conditions and “unwholesome living or working conditions,” the Court suggested in ERTEC that municipal officials undertaking a redevelopment study look at such things as “occupancy rates” within the study area. Indeed, if a “dilapidated” area, which may be “lacking in light, air, or space” is, nevertheless, a functional commercial, residential or mixed use neighborhood, it may not be declared in need of redevelopment under the “a” criteria.

More recently, on August 7, 2008, in an unreported decision entitled City of Long Branch v. Anzalone, the Appellate Division, among other things, examined the methodology of obtaining and evaluating evidence to support a redevelopment designation using the “a” criteria and the quality of such evidence. In that case, municipal officials conducted a “windshield” survey of exterior conditions of properties being considered for redevelopment using six assessment criteria derived from city and state building codes that included “broken windows; ‘deteriorating’ paint; exterior columns that were falling or rotten; masonry veneer that was cracked or chipped; structural parts like walls, roofs, stairs, porches, balconies, and siding that showed ‘evidence of deterioration’; and ‘evidence of apparent defects’ in gutters, leaders, drains, window frames and doors.” According to the city’s data evaluation methodology, a building that satisfied one or two of these criteria would be categorized as “fair” and a building that satisfied three or more of these criteria would be considered in poor condition. The Court in Anzalone found the city’s system to be wholly deficient criticizing the city’s procurement of data through a windshield survey and its examination of property characteristics that “might well be deemed more cosmetic than substantial.” The Court was also concerned about the lack any “expert opinion setting forth standards by which blighted structures should be gauged.”

In light of the foregoing, there is little doubt that the task of delineating a redevelopment zone using the “a” criterial is a formidable one that requires a clear methodology for obtaining and evaluating relevant data that establishes the required linkage between certain deleterious property characteristics and unwholesome living and working conditions.

Redevelopment Takings - Statutory Authority and Limitations

Vincent J. Mangini — Mon, 01 Dec 2008 08:08:30 -0500

A redevelopment entity may not condemn private property for redevelopment, unless it has first complied with all of the statutory procedures set forth in the Local Redevelopment and Housing Law (“LRHL”) and the Eminent Domain Act of 1971. Under the LRHL, basic pre-condemnation prerequisites include the municipal governing body’s designation of the subject property as blighted and adoption of a redevelopment plan by ordinance for the designated area. The redevelopment plan must identify the property being condemned as one that is to be acquired and explain why it is “necessary for the redevelopment project.” N.J.S.A. 40A:12A-8c. In order to withstand a challenge, the necessity of the taking must be backed up by substantial, credible evidence, unless its necessity is made plainly obvious by the circumstances of the matter at hand.

Redevelopment Takings - Constitutional Authority and Limitations

Vincent J. Mangini — Mon, 17 Nov 2008 08:07:10 -0500

The redevelopment of blighted areas is specifically and separately described in Article VIII, Section 3, paragraph 1 of the New Jersey Constitution as “a public purpose and public use, for which private property may be taken or acquired.” Any such taking, however, must satisfy all constitutional mandates and limitations on government power. For example, Article I, paragraph 20 of the New Jersey Constitution requires that a condemning authority pay just compensation when it acquires private property. A government entity desirous of taking private property must also comply with all due process requirements before it may do so.

Standing to Participate in Redevelopment Challenges and Valuation Proceedings

Vincent J. Mangini — Mon, 03 Nov 2008 08:02:03 -0500

Although the law governing a redeveloper’s right to intervene in redevelopment matters is not well developed, the courts that have addressed this issue have generally ruled that a redeveloper has no standing to participate in a challenge to a redevelopment area designation or valuation proceedings. Although the trial court in Mulberry Street Area Property Owner’s Group v. City of Newark (an unreported decision issued October 20, 2006) recognized the significant investment often made by private redevelopers in redevelopment projects it opined that this alone is not sufficient to confer standing upon a redeveloper to litigate the validity of a local redevelopment determination. An appellate court came to a similar conclusion in City of Asbury Park v. Asbury Park Towers - a valuation case - saying, among other things, that a contractual obligation to pay an award of just compensation under a redeveloper agreement does not create an interest in the property being acquired and, as such, this circumstance does not afford a redeveloper the right to intervene in a condemnation action. The Asbury Park Towers case has been approved for publication and is officially reported at 388 N.J.Super. 1 (App. Div. 2006).

The rationale behind these decisions is predicated upon the notion that redevelopment is a matter of public concern, which should not be prejudiced by the private interests of a redeveloper. Therefore, unless it is demonstrated that the redeveloper’s interests in a given project are being jeopardized by the actions or inaction of the redevelopment entity and intervention is necessary to protect those interests it is unlikely that a court will permit a redeveloper to participate in redevelopment matters.