Monroe Properties, LLC, et al. v. The City of Hoboken, et al.

On May 30, 2008, the Appellate Division in Monroe Properties, LLC, et al. v. The City of Hoboken, et al. (and the companion case Hoboken Parks Organization, et al. v. The City of Hoboken, et al., which was consolidated with the former for purposes of the opinion) squarely rejected an attempt on the part of a municipality to select and enter into a memorandum of understanding with a private redeveloper prior to designating the study area as an area in need of redevelopment.

According to the Court, a municipality or other redevelopment entity has no inherent authority to enter into a memorandum of understanding for redevelopment but, rather, must abide the statutory procedure set forth in the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq. (“LRHL”). This procedure requires the conduct of a preliminary investigation by the local planning board into whether a given study area is in need of redevelopment, the actual designation of such area by the municipal governing body and the adoption of a redevelopment plan by ordinance. “Once an area is determined to be a redevelopment area and a redevelopment plan is adopted, then a municipality may exercise redevelopment functions[,]” which includes, 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.

Although the Monroe Properties decision has not yet been approved for publication, and therefore has no precedential value, it is well reasoned and firmly grounded in the statutory text of the LRHL. As such, municipalities or developers who have entered into (or are considering entering into) a memorandum of understanding or other pre-redevelopment agreement would be well advised to reevaluate their legal strategy.