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CD Development, LLC v. City of Newark

A-5349-07T3 (N.J. Super. App. Div. 2010) (Unpublished)

CONDEMNATION; REDEVELOPMENT — New Jersey’s condemnation law does not authorize the classification of property as being in need of redevelopment simply because the property is not utilized in an optimal manner.

An owner of five acres of land used its property as an active trucking facility. The site consisted of two lots. One lot contained the facility, while the other lot was vacant. The municipal council of the governing municipality authorized the planning board to investigate whether this land, among other parcels, qualified as an area “in need of redevelopment” under the Local Redevelopment and Housing Law (LRHL). A licensed professional planner presented an investigatory report to the planning board. The report concluded the area was in need of redevelopment because the land was in a stagnant, or not fully productive, condition. The report’s specific findings calculated an underutilization of the property based upon an improvement to land ratio of less than 2:1.

At a hearing that followed, the owner’s representative testified that the property was actively used as a trucking facility. A neighboring landowner within the contemplated redevelopment zone submitted another planner’s report. It disputed the analysis of the initial planner. It opined that the use of tax assessment ratios to be a deceptive and unreliable basis for judging satisfaction of the statutory criteria for an area in need of redevelopment. Based on all evidence, the planning board concluded that each of the properties in the study area qualified as areas in need of redevelopment. The municipal council voted to accept this recommendation, but made no independent findings of fact. Its resolution incorporated the investigating planner’s report. The owner filed suit, challenging this decision.

During the pendency of the action, the New Jersey Supreme Court held that the LRHL applied only to property that had become stagnant because of issues of title, diversity of ownership or other similar conditions. The lower court concluded the designation of the owner’s property as an area in need of redevelopment was arbitrary, capricious, and invalid, as the decision was not predicated on any evidence of diversity of title or ownership as now required. The municipality appealed, but the Appellate Division affirmed, finding the investigator’s report failed to identify any issues of title, diversity of ownership or other similar conditions that would justify the inclusion of the owner’s property in the redevelopment area. Rather, that report simply stated the owner’s property was stagnant and not fully productive. The Court said the law does not authorize the classification of property as being in need of redevelopment simply because the property is not utilized in an optimal manner.


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