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Cottage Emporium, Inc. v. Broadway Arts Center, L.L.C.

A-0048-07T2, A-4415-07T2 and A-4416-07T2 (N.J. Super. App. Div. 2010) (Unpublished)

REDEVELOPMENT; BLIGHT — A gap between the actual level of economic activity in a redevelopment area and the level that might be achieved after redevelopment does not amount to blight itself.

A municipal council declared a section known as its Central Business District (CBD) to be in need of redevelopment. The council had adopted a planning department report that observed a need to remove deteriorated buildings from the business district and to upgrade the overall physical environment because of the CBD’s unattractive and deteriorating physical condition, including a lack of stores with strong drawing power. The report also focused on unimproved vacant land that had remained so for ten years. The report concluded the vacancy was likely to remain because private capital alone would not likely develop the land. The report did not describe the reasons for the vacancy rate, like soil conditions or topography, and did not differentiate between vacant land and vacant buildings on land. The report also noted the dilapidated buildings and the obsolete location of the CBD to conclude the area’s conditions were detrimental to the health, safety, morals or welfare of the community.

The council had also relied upon a survey of the condition of land within the CBD. The survey was based solely on a visual inspection of the building exteriors. Later that year, the municipality adopted a redevelopment plan that included the CBD. Owners and tenants of commercial properties located in that section filed suit, alleging the municipality had not proven the section was in need of development. The lower court twice upheld the validity of the blight designation and of the redevelopment plan. The lower court likewise upheld the condemnation of the commercial properties and the appointment of condemnation commissioners to set values. The owners and tenants appealed.

The Appellate Division concluded the municipality’s designation of the properties as in need of redevelopment did not satisfy the heightened standard required under law, and held the record lacked the substantial evidence required to support the municipal findings under the redevelopment statute. The Court reversed the judgment appointing condemnation commissioners and vacated the declarations of taking. The Court then remanded the matter to allow the municipality to amplify the record in an effort to meet the required standard.

The reason for this reversal was the Court’s belief was that the blight findings by the municipality were based solely on aesthetic concerns, with no evidence of structural dilapidation, degraded living conditions, or a threat to the health, safety and welfare of neighboring areas as required by the New Jersey Supreme Court’s interpretation of the Local Housing and Redevelopment Law (LHRL). The Court said that instead of simply describing the physical and financial status of properties to be taken by government in furtherance of a redevelopment plan, a municipality has to perform an analysis of the statutory criteria under the LHRL, and of how each property’s condition contributes to the area’s blight.

The New Jersey Supreme Court explained that the meaning of blight did not extend to an area in which the only negative condition was suboptimal land use. Rather, to be “blight,” the area had to be characterized by physical or social deterioration that threatens to become intractable and would negatively affect surrounding areas. A municipality has to conclude the physical condition of the subject properties is contributing to social problems, not only within the redevelopment area, but also in nearby areas. A gap between the actual level of economic activity in the redevelopment area and the level that might be achieved after redevelopment does not amount to blight by itself.

In essence, the Court felt that the municipality lacked the necessary quality of evidence, under the statutory criteria, in support of its findings that the CBD was in need of redevelopment. Specifically, the Court opined that the survey, based only on exterior observation, led to findings that could be deemed more cosmetic than substantial under law. The evidence did not touch upon whether there was any deterioration or stagnation that negatively affected surrounding areas by promoting conditions in those areas that could develop into blight. Further, the exterior survey gave no indication of any interior or structural inspection that would have been helpful in showing how each property in the redevelopment area reflected or contributed to blight. The Court considered the planning report replete with net opinions that failed to explain how the condition of the buildings contributed to unwholesome living or working conditions, as required under the statutory criteria. Additionally, the report described negative aesthetic conditions affecting other commercial areas in the municipality without demonstrating how those conditions caused detriment to the safety, health, morals or welfare of the community. The Court also concluded that there was no evidence that private redevelopment in the CBD was being frustrated by diverse ownership of an individual property or other problems with its title – proof that the land is stagnant as required under law. Rather, the report simply indicated the land was not optimally used.


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