NJ Appellate Division Announces Evidentiary Standards for Condemnations “Necessary” for a Redevelopment Project

At what point is a piece of property “necessary” for a redevelopment project? On January 7, 2019, the New Jersey Appellate Division published a decision in Borough of Glassboro v. Jack Grossman, Matthew Roche, and Dan Desilvio, — N.J. Super. — (App. Div. 2019) (slip op. at 2) that – for the first time – clarifies the phrase “necessary for the redevelopment project” as stated in the Local Redevelopment and Housing Law (LRHL) at N.J.S.A. 40A:12A-8(c). The three-judge panel addressed the question of whether a showing of necessity is required by a condemning authority beyond the designation of the area as one in need of redevelopment, and, what showing it must make in order to condemn a parcel of land located with a redevelopment area. Existing case law required the taking to be “reasonably necessary,” but had never clarified what standards should be used to evaluate how necessary a given property might be to a given redevelopment project. This decision now requires that when a landowner within a redevelopment area contests the necessity of a condemnation, the condemning authority must articulate a definitive need to acquire the parcel for an identified redevelopment project.

In Grossman, the defendants owned or were purchasing a parcel located within a redevelopment area in the Borough of Glassboro. The area had been designated in 2000, and was presumptively one in which condemnation was permitted. Following pre-suit negotiations and valuation of the property, the Borough filed a condemnation complaint to acquire the property, asserting it needed the property for “the public purpose of redevelopment” and “for the specific purpose of increasing the availability of public parking in the Borough of Glassboro.” Grossman, slip op. at 9. The defendants objected, and contested the necessity of the taking. At an order to show cause hearing before the trial court, the Borough’s attorney stated that public parking was only a possible use and the property could be used for some other, unidentified purpose related to redevelopment. The trial court rejected the Borough’s assertion that it could take any property within the redevelopment area without providing a reason, but ruled the Borough showed an adequate public purpose for the taking by way of the asserted need for public parking.

The defendants appealed this decision to the Appellate Division.

The decision of the Appellate Division recognizes that more is necessary than simply satisfying the “public purpose” test under the Blighted Areas Clause of the New Jersey constitution. Instead, in order to actually take a property, the Appellate Division focused on whether the proposed taking would comply with the narrower standards of the LRHL, namely whether the taking was “necessary for the redevelopment project.” From the outset, the panel recognized that “necessary” is not defined as used in the LRHL, and instead turned to a review of the applicable case law. While the court acknowledged the broad powers afforded to redevelopment entities under the LRHL to “[d]o all things necessary or convenient to carry out its power,” it emphasized that this provision should not make the limitations governing property acquisition by condemnation “superfluous or meaningless.” The Appellate Division noted that case law interpreting the LRHL establishes that a determination of necessity is a “legislative” function, and that judicial deference must be afforded to the determination if it is reasonable.

The court reasoned that the more important issue here is evidential, stating that the “precise issue before us concerns what, if any, evidential showing a municipality or redevelopment agency must present in order to establish reasonable necessity for an acquisition of property under N.J.S.A. 40A:12A-8(c).” Grossman, slip op. at 18.

The Appellate Division focused on two components: “(1) the condemnor’s articulation of ‘necessary’ for the purpose tied to a redevelopment project; and (2) the showing that a condemnor must present to substantiate that purpose.” Id. As to the first component, the condemning authority must identify the specific “redevelopment project,” which the court viewed as the most narrowly defined term to describe redevelopment within the LRHL. There must be a specific connection between the redevelopment project and the proposed acquisition. As to the second component, if a claim of necessity is challenged, the condemning authority must present supporting proof rather than a conclusory proclamation of need. The panel laid out a number of potential options for such proof, including the presentation of discrete facts or data, an expert report, architectural plans, a market study, or some combination of said proofs. The court reiterated that this evidence is only necessary when there is a challenge to the necessity determination, the burden rests with the challenger to show the decision was unreasonable, and protracted court proceedings to determine necessity are discouraged.

Based on this framework, the court unanimously overruled the trial court’s approval of the proposed acquisition. Grossman, slip op. at 26. The Borough’s authorizing ordinance did not reference any specific project associated with the acquisition, and notably did not reference any necessity for public parking. The Borough also failed to establish the required connection between the proposed redevelopment project and the defendants’ property. The court noted the lack of supporting proofs presented to the trial court, and stated that this acquisition resembled the sort of land “stockpiling” that does not satisfy the statutory requirement of necessity. It reversed the trial court’s decision without prejudice, allowing the Borough to attempt to acquire the property at a later date.

This decision provides guidance for redevelopment entities to follow when deciding to acquire property through condemnation as part of a redevelopment project. Conclusory proclamations of a “need” for the property are not adequate, and the redevelopment entity must be able to show a reasonable connection between the redevelopment project and the condemned property. The justification of assembling property for a potential future redevelopment is insufficient in the eyes of the Appellate Division, and redevelopers and municipal entities alike should be clear that their condemnation satisfies the evidentiary requirement set forth in Grossman.

Brendan J. Kelly and Cameron W. MacLeod, Associates in the Gibbons Real Property Department, authored this post.
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