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Silver Oaks Properties, Inc. v. Borough of Matawan

A-3253-06T1 (N.J. Super. App. Div. 2008) (Unpublished)

REDEVELOPMENT; MUNICIPALITIES; PUBLIC BIDDING — Redevelopment statutes do not have any criteria regarding the selection of a private redeveloper by a municipality and selection actions of municipal governing bodies, made honestly and upon due consideration, are presumed to be valid.

Two municipalities sought to redevelop a train station located on a shared border. Both municipalities retained consultants for the redevelopment and later entered into an interlocal services agreement. They created a joint management committee for the purpose of exploring a unified redevelopment plan. The agreement designated one of the municipalities as the lead agency, but also contemplated the possibility that the two municipalities would not ultimately agree on a plan. Thus, the agreement allowed the municipality not designated as the lead agency to withdraw and pursue its own plan for the portion of the station within its boundaries. The two municipalities disagreed as to whether a resolution passed by the committee approving a bidder had to be jointly decided or could be unilaterally approved by the municipality designated as the lead agency. According to the municipality not designated as the lead agency, the resolution was never sent to its governing body and that as a result, the interlocal services agreement was terminated. The non-lead municipality then entered into an exclusive four-month agreement with the bidder for the right to redevelop its own portion of the station. A competitor brought an action against the non-lead municipality, the bidder, and the transit company alleging that the non-lead municipality’s selection of the bidder was arbitrary and capricious. The competitor’s suit sought monetary damages and counsel fees. The lower court, on summary judgment, found in favor of the municipality and the bidder.

On appeal, the competitor argued that the municipality ignored the recommendations of its consultants in retaining the successful bidder and that the municipality violated redevelopment statutes by not providing it with notice and an opportunity to dispute the bidder’s plan submission. The Appellate Division pointed out that the actions of municipal governing bodies are presumed to be valid. Further, if decisions were made honestly and upon due consideration, they were not considered arbitrary or capricious even if such decisions were found to be erroneous. It also pointed out that redevelopment statutes did not have any criteria regarding the selection of a private redeveloper. The Court further pointed out that a final redevelopment plan was likely to, and was allowed to, differ from the original plan that was adopted and did not have to include similar provisions. The competitor’s argument, that the municipality’s choice of the bidder was wrongly based on political considerations based on a meeting facilitated by a state senator that received contributions from the bidder, was rejected. It noted that even if the developer’s political connections helped facilitate a prompt meeting with the municipality and with the New Jersey Department of Environmental Protection, there was no showing of improper political pressure and that the choice of the bidder could have been based on legitimate factors. Based on its findings, the Court affirmed the lower court’s finding that the municipality did not wrongly select the bidder.

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