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Monroe Properties, LLC v. The City of Hoboken

A-3101-05T5 and A-3382-05T5 (N.J. Super. App. Div. 2008) (Unpublished)

REDEVELOPMENT — A municipality violates New Jersey redevelopment statutes by not first approving a redevelopment plan before selecting and approving a redeveloper.

A municipality and a redevelopment partnership entered into a memorandum of understanding that outlined the potential redevelopment of a section of the municipality. According to the memorandum, a study was to be performed to determine whether the targeted section of the municipality was to be declared in need of redevelopment. If the targeted section of the municipality was found to be blighted, or in need of redevelopment, the partnership would then have had the exclusive right to negotiate with the municipality for a contract to redevelop the area. A property owner, whose land comprised roughly forty-two percent of the section that was to be studied, objected to the adoption of the memorandum, asserting that the municipality did not follow applicable redevelopment statutes. The municipal council then passed a resolution approving the memorandum.

The property owner sued the municipality and the redevelopment partnership to invalidate the memorandum of understanding. The lower court consolidated the matter with an action brought against the municipality and the partnership by advocates for creating new parks in the municipality. The lower court then found that the municipality failed to comply with redevelopment statutes when it gave the partnership the exclusive right to negotiate for the redevelopment of the targeted section of the municipality prior to the completion of the study on redeveloping the area. As a result, the lower court invalidated the memorandum.

On appeal, the Appellate Division first noted that municipal actions enjoy a presumption of validity unless found to be arbitrary, capricious or unreasonable. It also pointed out that according to applicable redevelopment statutes, contracts with redevelopers were to be entered into following the completion of a study as to whether an area is in need of redevelopment and a redevelopment plan is adopted. Further, the Court disagreed with the municipality and the partnership that the memorandum was not a redevelopment contract and that the partnership was not defined as a redeveloper under the redevelopment statutes. It held that the municipality violated redevelopment statutes by not first approving a redevelopment plan for the targeted area and that the municipality, in avoiding that requirement, bypassed that step by adopting the memorandum and approving of the partnership’s proposal without public notice or passage of a resolution. The Court found that the memorandum was, in fact, a contract for redevelopment which was contingent on a designation that the area was in need of redevelopment and that the partnership was a redeveloper according to applicable redevelopment statutes. It disagreed with the argument made by the municipality and the partnership that entering into the memorandum was a valid exercise of the municipality’s police powers. The Court held that the municipality had exceeded the powers delegated to the municipality by the state when it executed the memorandum of understanding. Thus, the lower court’s decision to invalidate the memorandum of understanding between the municipality and the redevelopment partnership was affirmed.


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