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Teicher American Communities at the Majestic, LLC v. The City of Asbury Park

A-5920-08T2 (N.J. Super. App. Div. 2010) (Unpublished)

ZONING; REDEVELOPMENT — When a municipality adopts a redevelopment plan, that plan becomes either all or part of the zoning for the redevelopment area and the properties included in the zone are not to be considered as “unzoned.”

In 1984, a municipality designated 230 acres of land as blighted and in need of redevelopment. A redevelopment plan was adopted and was subsequently amended. The most recent version of the plan required block-by-block redevelopment through a single master developer rather than redevelopment by individual property owners.

The municipality was permitted to acquire, through eminent domain, all of the property located within its “Prime Renewal Area” for redevelopment purposes except for eight designated properties. Four of these properties were of historical or artistic significance and were conditionally exempt from eminent domain. The other four properties were exempt for various other reasons. The property at issue was considered an inherently beneficial use that promoted the general welfare. For years, the property had been used as affordable housing for low-income senior citizens, many of whom were retired from the owner’s employment. The owner was a charitable organization. That use was permitted to continue as a pre-existing use.

A developer contracted to purchase the property. It knew of its status as a pre-existing use and of its location in the redevelopment area. Prior to closing, the developer petitioned the municipality to change the redevelopment plan to allow for construction of an additional 200 housing units, plus retail space, a fitness center, and a spa. The municipality concluded that the redevelopment plan did not provide sufficient design guidance for the property, and authorized its planning board to review potential amendments to the plan, and to recommend whether or not the property was subject to eminent domain; whether the developer should make infrastructure contributions; or whether developer should pay for certain infrastructure improvements. The planning board concluded that the redevelopment plan standards did not apply to the property and recommended that the municipality amend its redevelopment plan accordingly. However, the board made no recommendation as to whether the affordable housing property was subject to eminent domain.

The redeveloper objected to any amendments to the plan without its consent, so the municipality declined to act on the board’s recommendations. As a result, the developer sued the municipality, claiming it failed to zone the property for any viable use, and asked the court to compel the municipality to process its application. The lower court held that the property was unzoned because it was exempt from eminent domain under the plan. It ordered the municipality to adopt a zoning ordinance for the property within ninety days.

On appeal, the redeveloper argued that the lower court erred in concluding that the property was unzoned and thus not subject to the redevelopment plan’s standards and design controls. The redeveloper also contended that the lower court lacked the authority to order the municipality to adopt new zoning for the property. The Appellate Division agreed. When a municipality adopts a redevelopment plan, that plan becomes either all or part of the zoning for the redevelopment area. Thus, all of the properties located within this particular redevelopment area, including the property in question, were governed by the zoning strictures adopted by the plan. As a result, the Court concluded that the property was not unzoned.

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