nj future redevelopment forum 2014 eminent domain gruel maraziti

Communities across the country have engaged in redevelopment initiatives to address their economic issues. However, the redevelopment standards and procedures that are utilized in declaration of areas in need of redevelopment have been in transition since the United States Supreme Court case of Kelo v. City of New London, 545 U.S. 469 (2005), which upheld the use of condemnation powers for the public purpose of encouraging economic development. However, since Kelo, there has been a negative stigma which has encumbered the redevelopment designation process because of the fear of the utilization of condemnation powers.

On September 9, 2013, Governor Christie signed a Bill to amend the Local Redevelopment and Housing Law (“LRHL”), to address some of these issues.

REDEVELOPMENT W/O EMINENT DOMAINNJ Future Redevelopment Conference

Hyatt Hotel, New BrunswickMarch 14, 2014

Joseph J. Maraziti Jr., Esq., PartnerMARAZITI FALCON & HEALEY, LLPAttorneys at Law

George Vallone, PresidentThe Hoboken Brownstone Co.Real Estate & Development

J. Randy Bishop, CommitteemanTownship of Neptune

Susan S. Gruel, PP, PrincipalHEYER, GRUEL & ASSOCIATESCommunity Planning Consultants

REDEVELOPMENT W/O EMINENT DOMAIN

Redevelopment: How NOT to start the conversation

Focusing the Attention: Residential and Business Owners Bill of Rights

So what happened?

Amendments to the Redevelopment and Housing Law

Signed into law by the Governor on September 9, 2013 (known as Assembly Bill 3615)

Law took effect 90 days from September 9th or December 8, 2013

Does not apply to existing redevelopment designations or those designations before December 8, 2013

Addresses use of condemnation/eminent domain

Codifies two judicial decisions

o Gallenthin Realty Development Inc v. Borough of Paulsboro 191 NJ 344 (2007)

o Harrison Redevelopment Agency v. De Rose 398 NJ Super. 361 (Appellate Division 2008)


Key Provision

Law permits a municipality to use two different types of redevelopment area designations

o Non Condemnation Redevelopment Area – All redevelopment powers (including 30 year tax abatement) except use of eminent domain

o Condemnation Redevelopment Area – All redevelopment powers including eminent domain

Governing body resolution requesting Planning Board to investigate whether an area qualifies as an area in need of redevelopment must state whether the redevelopment area designation will authorize the municipality to use condemnation


Key Procedural Changes

Non Condemnation Redevelopment Area Option

Notice of Planning Board hearing shall specifically state that a Redevelopment Area determination shall not authorize the municipality to exercise the power of eminent domain to acquire property in the delineated area.

Condemnation Redevelopment Area Option

Notice of Planning Board hearing shall specifically state that a redevelopment area determination shall authorize the municipality to exercise the power of eminent domain to acquire property in delineated area


Notice of DeterminationCondemnation Redevelopment Area

Notice of determination (that delineated area is a redevelopment area) shall be served within 10 days after determination to all owners of record located within the delineated area listed on the tax assessor’s records and upon each person who filed a written objection.

Notice shall state the following:

o Determination operates as a finding of public purpose and authorizes municipality to exercise the power of eminent domain to acquire property in area

Legal action to challenge the determination must be commenced within 45 days of receipt of notice of determination and failure to do so shall preclude an owner from later raising such challenge unless that municipality and property owner agree otherwise.


Change from Non Condemnation Redevelopment Area to Condemnation Redevelopment Area

If the municipal Governing Body wants to change the designation of a property or area from a Non Condemnation Redevelopment Area to a Condemnation Redevelopment Area it must follow the process set forth for a Condemnation Redevelopment Area designation The determination must be based upon the existing conditions of the property or area and shall not be based upon the condition at the time of the prior Non Condemnation Redevelopment Area designation.


Revisions to Criteria “e”

New “e” language:

“A growing lack or total lack of property utilization of areas caused by condition of the title, diverse ownership of the real properties therein or other similar conditions which impede land assemblage or discourage the undertaking of improvements resulting in a stagnant and unproductive condition of land potentially useful and valuable for contributing to and serving the public health, safety and welfare which condition is presumed to be having a negative social or economic impact or otherwise being detrimental to the safety, health, morals or welfare of the surrounding area or the community in general.”

Revisions based upon Gallenthin Realty Development Inc v. Borough of Paulsboro

Revisions clarified:

o “similar conditions” language


Revisions to Rehabilitation Criteria (NJSA 40A:12A-14)

Addition of environmental criterion

(5) “environmental contamination is discouraging improvements and investment in properties in the area”

New Criteria

(14 a) “ A delineated area may be determined to be in need of rehabilitation if the governing body of the municipality determines by resolution that a program of rehabilitation, as defined in section 3 of P.L.1992, c.79 (C.40A:12A-3), may be expected to prevent further deterioration and promote the overall development of the community; and that there exist in that area any of the following conditions such that (1) a significant portion of structures therein are in a deteriorated or substandard condition; (2) more than half of the housing stock in the delineated area is at least 50 years old; (3) there is a pattern of vacancy, abandonment, or underutilization of properties in the area; (4) there is a persistent arrearage of property tax payments on properties in the area; (5) environmental contamination is discouraging improvements and investment in properties in the area; or (6) a majority of the water and sewer infrastructure in the delineated area is at least 50 years old and is in need of repair or substantial maintenance.”


Rezone Rehabilitation Redevelopment Non-Condemnation Redevelopment

Active Municipal Role X X X

Passive Municipal Role X

Must Satisfy Designation Criteria (Area Study)

X X X

Redevelopment Plan X X X

Municipality Selects Redeveloper X X

Build as of Right X

Maximum Municipal Control X X X

Condemnation Option X

Improvements Limited to “Rational Nexus” X

Negotiate Community Amenities X X X

Long Term Tax Exemption Option X X

Short Term Tax Exemption Option X X X

Public Property Transfers without Bid X X X


Observations

At least one statutory criterion for designating a redevelopment area must still be met.

The “substantial evidence” standard remains.

The “finality” of the 45 day timeframe for appeals can be extended by the Court in the “interest of justice.”

The “redevelopment light” option addresses the stigma of condemnation and in certain situations may be an effective tool; however, it may not solve the site assemblage issue without utilizing the condemnation option.

Environmental contamination is a new rehabilitation criterion. It may be difficult to establish a nexus between environmental contamination and “discouraging improvements and investment in property.”


Comments & Questions

03/14/2014

MARAZITI FALCON & HEALEY, LLPAttorneys at Law150 JFK ParkwayShort Hills, NJ 07078Phone: 973.912.9008Fax: 973.912.9007www.mfhenvlaw.com

HEYER, GRUEL & ASSOCIATESCommunity Planning Consultants236 Broad StreetRed Bank, NJ 07701Phone: 732.741.2900Fax: 732.741.2929www.hgapa.com

THE HOBOKEN BORWNSTONE CO.Real Estate & Development305 Coles StreetJersey City, NJ 07310Phone: 201.792.3814www.hbrownstone.com

nj future redevelopment forum 2014 eminent domain gruel maraziti

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