New Jersey Appellate Division Clarifies Scope of Blight Finding Under Local Housing and Redevelopment Law

May 2013Articles In the Zone

A recent decision by the Appellate Division makes clear the requirement that a finding of blight is a necessary prerequisite to the exercise of the area in need of redevelopment finding under the Local Housing and Redevelopment Law (LHRL).

In 62-64 Main Street LLC, et al. the Mayor and Council of the City of Hackensack, et al, A3257-11T4, the Appellate Division amplified the prior Supreme Court ruling of Gallenthin Realty v. Borough of Paulsboro, 191 N.J. 344 (2007) as applied by the Appellate Division in Hoagland v. City of Long Branch, 428 N.J. Super. 321 (App. Div. 2012). These cases collectively mandate that in order to designate an area in need of redevelopment, a planning board and governing body must not only make a determination that the affected area satisfies the findings established under N.J.S.A. 40A:12A-5, but also make a finding of blight applicable to the proposed redevelopment area. These cases reflect the constitutional requirement of a blight finding as a necessary prerequisite to the use of eminent domain under the LHRL.

There has been some dispute as to whether the scope of the Gallenthin holding requiring the finding of blight in instances involving findings related to other purposes of the LHRL, other than just purpose (e). See Gallenthin Realty v. Borough of Paulsboro, 191 N.J. 344 (2007), N.J.S.A. 40A:12A-5(e). In 62-64 Main Street, the Appellate Division makes clear that under the LHRL, in order to designate an area in need of redevelopment, a municipality must make “a finding of actual blight before private property may be taken for purposes of redevelopment.” 62-64 Main StreetSlip Opinion at 9. The 62-64 Main Street holding amplifies the Appellate Division’s prior decision in Hoagland, where the Appellate Division held that “the Constitution requires a finding of actual blight before private property may be taken for purposes of redevelopment.” Hoagland v. City of Long Branch, 428 N.J. Super. at 324.

The facts of 62-64 Main Street are all too familiar for those active in redevelopment projects. The plaintiffs own property that was found by the Planning Board to be in need of redevelopment and confirmed by the Mayor and Council as blighted, based on perfunctory findings associated with dilapidation and “faulty layout”. Slip Opinion at 5,6. In the Planning Board’s resolution, the Board found that plaintiff’s property contained buildings that showed signs of structural deterioration, were boarded up and had been subject of a code enforcement notice to demolish the buildings to correct unsafe conditions. Slip Opinion at 6. Based on these facts, the Planning Board found that the property satisfied criteria (a), (b) and (d) under the LHRL. N.J.S.A. 40A:12A-5.

While on its face, these findings would be indicia of blight, the Planning Board ignored the fact that the property owner intended to develop the property by seeking a variance from the existing zoning. Slip Opinion at 7. The Board simply ignored the property owner’s attempts to secure approval to improve the properties on its own, which proposals were denied by the City. Id. The Appellate Division found that both the Planning Board and Mayor and Council’s resolutions contained insufficient findings of blight, because both bodies did not give any consideration as to whether the conditions were simply temporary, or represented a blight condition that heightened the need for redevelopment power in order to remedy the blight condition. Id. at 8.

62-64 Main Street represents the continued expansion of the findings required to designate an area in need of redevelopment, where the finding of blight is either not made, or is based upon insufficient credible evidence to support the blight finding. The finding of blight is a constitutional prerequisite to the exercise of the redevelopment authority where the use of eminent domain is authorized. Only recently have courts more carefully examined redevelopment designations to assure that this necessary prerequisite finding of blight is in fact applicable to particular properties.

One aspect of a blight finding that is more problematic as a result of 62-64 Main Street involves those situations where the property owner seeks to redevelop a property either in accordance with local zoning, or through variance relief, but without recourse to the Redevelopment Authority. 62-64 Main Street gives property owners another necessary defense against intrusive municipal use of eminent domain under the LHRL.

In response to these recent case law developments, the legislature is considering a bill that will modify the LHRL to permit municipalities to adopt redevelopment ordinances that expressly exclude the use of eminent domain. On May 20, 2013, A-3615 passed the Assembly and appears to be headed for adoption. It may be that this modification to the LHRL will sidestep the requirement for a finding of blight, as eminent domain will not be authorized under this form of redevelopment. However, the interplay between the LHRL and more traditional zoning pursuant to the MLUL under this legislation has yet to be delineated. There may be constitutional issues associated with this new form of redevelopment. Given the recent case law developments, however, it is likely the Legislature will adopt this new form of redevelopment authority under the LHRL.

View the entire May 2013 issue of In the Zone