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ERETC, L.L.C. v. City of Perth Amboy

381 N.J. Super. 268, 885 A.2d 512 (App. Div. 2005)

ZONING; BLIGHT—In reviewing a municipality’s designation of areas in need of development, the court limits its review to a determination of whether there existed substantial evidence to support a declaration that an area was in need of such redevelopment.

A municipal governing body “adopted a resolution directing [its] Planning Board to conduct a preliminary investigation of underutilized areas in designated sections of the [municipality] to determine whether those areas were in need of redevelopment.” It further authorized its planning board “to prepare a redevelopment plan for those designated areas.” The owner of a light manufacturing building found its property in a designated proposed redevelopment area. It used part of its building for its own business and rented the remainder to commercial tenants. The building was in good condition and was about two-thirds occupied. About 345 people were employed in the building, many of whom lived within a five to eight mile radius. The owner participated in the planning board’s hearings. The building owner, upset that property had been included within the redevelopment area, filed an action in lieu of prerogative writ challenging its property’s inclusion in the proposed zone. It pointed to the building’s occupancy, its good condition, its freedom from code violation citations, and the recent capital investments made by it and its tenants to the property. The planning board had relied on an expert’s report that “merely recited the criteria [in determining whether an area was blighted] in a conclusionary fashion without tying it to the reasons the property should be included in the redevelopment area.” The municipality’s planning expert, however, claimed that the information contained in his report was derived from his physical inspection of each site within [the designated area]. He [claimed to have] inspected the buildings from the outside, contacted the tax assessor’s office to determine whether there were any outstanding tax liens, and contacted the code enforcement office to determine whether there were any outstanding violations on any buildings in the area. He acknowledged that there were no tax liens or building violations for [this particular] property. He never inspected the interior of the buildings, however, and did not know whether any indoor improvements had been made.” The lower court “commented that ‘[m]unicipalities, at times, have dreams of grandeur and have high hopes of converting those dreams into reality’ but [the court] recognized that ‘when that dream encompasses such a large area it takes years, many years, to come to fruition, it all. When the area gets painted with too broad a brush, the impact of such decisions sometimes has the opposite effect. As in this case, an affected property owner may have difficulty in renting its facility because of the declaration of rehabilitation.’” The lower court also noted that “[w]hen the [particular property owner] bought the subject property it was 100% occupied; at the time of trial, occupancy was only 65%.” Nonetheless, the lower court held that “if the redevelopment project proceeds, ‘the property owner’s ‘damages can be considered at the time of the eminent domain proceeding. Of course[,] the problem arises when the municipality never elects to bring its dream to fruition.’”

On appeal, the Appellate Division held that the lower court “correctly applied the deferential standard in considering the municipality’s actions, limiting judicial review to a determination of ‘whether there existed substantial evidence to support a declaration that an area was in need of redevelopment.’” It also pointed out that in such matters, “redevelopment designations, like all municipal actions, are vested with a presumption of validity. ... It has long been recognized that ‘community redevelopment is a modern part of municipal government.’ ... Thus, judicial review of a redevelopment designation is limited solely to whether the designation is supported by substantial evidence.” Under the redevelopment law, an area may be designated “as in need of redevelopment if ‘any’ of the ‘conditions’ enumerated therein [were] found.” The applicable statute provides that if any of six conditions are found, the area may be designated as one in need of redevelopment. Those factors include: (a) the generality of the buildings being substandard, unsafe, unsanitary, dilapidated, or obsolescent; (b) the discontinuance of the use of buildings previously used for commercial, manufacturing, or industrial purposes, or the abandonment of the same; (c) land owned by a government agency that has remained so for ten years prior to the adoption of the resolution, and “that by reason of its location, remoteness, lack of means of access to developed sections or portions of the municipality, or topography,” etc. are not likely to be developed through private capital; (d) areas generally with dilapidated, obsolete, overcrowded or faulty buildings; (e) “[a] growing lack or total lack of proper utilization of areas”; or (f) areas over five contiguous acres with buildings and improvements that have been destroyed by fire or similar peril.

With that as the criteria before the Appellate Division, it found that there was insufficient evidence to sustain a finding that the properties included in the designated area met the criteria set forth in New Jersey’s redevelopment law. Consequently, without such substantial evidence, the municipality’s decision to designate the area “as in need of redevelopment [did] not enjoy the deference generally accorded such findings.” Therefore, the Court reversed and remanded the matter to the planning board for reconsideration in light of the criteria set forth by the Court and the evidence required to satisfy those criteria.

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