Eminent Domain Reform Advances In The Garden State

by:  Peter J. Gallagher

New Jersey is one step closer to updating its eminent domain laws for the first time since the U.S. Supreme Court handed downs its landmark Kelo v. City of New London decision in 2005. On March 4, 2013, the Senate Community and Urban Affairs Committee voted unanimously to approve a bill (S-2447) that would, according to a press release from Senate Democrats, “create a two-track system for redevelopment, establishing separate requirements for redevelopment projects that would involve condemnation and for those that would not.” The two tracks would protect homeowners whose properties might otherwise be subject to condemnation, while also creating a more streamlined process for municipalities undertaking redevelopment projects that do not involve condemnation.

According to the press release:

The legislation would require municipalities to advise property owners within a proposed redevelopment area of the municipality’s intent to use or not use eminent domain to facilitate a redevelopment plan at the outset of the redevelopment study as well as to provide specific notice of such designation. Unless a municipality notifies owners of property located in a proposed redevelopment area that the designation will allow the municipality to take property located in the area by eminent domain – or that the proposed area is a Condemnation Redevelopment Area – the “Local Redevelopment Housing Law” would not authorize the use of eminent domain.

The bill would also authorize municipalities that intend to implement redevelopment initiatives without using eminent domain to do so but to still take advantage of the other tools available under the LRHL that encourage and facilitate economic development activities, create job opportunities, increase commerce, and enhance ratable values within their communities during these difficult economic times. This process would require designating the proposed area as a Non-Condemnation Redevelopment Area.

Having made it out of the Senate Community and Urban Affairs Committee, the bill now heads to the Senate Budget and Appropriations Committee. Stay tuned for more updates.

Victory For Commercial Affordable Housing

by:  Katharine A. Muscalino

Private commercial developers have struggled to install affordable housing in New Jersey’s municipalities for decades, facing opposition from communities, local governments, and the municipal zoning boards.  The Appellate Division has just eased the burden of private developers by holding, for the first time explicitly, that affordable housing built by a commercial developer (as opposed to a non-profit or public entity) qualifies as an “inherently beneficial use” in Conifer Realty LLC v. Township of Middle Zoning Board of Adjustment (September 9, 2011).  By being categorized as an inherently beneficial use, commercial affordable housing is subject to a less stringent standard for obtaining use variance relief.  In support of this holding, the Appellate division noted that the courts have previously recognized that affordable housing is an inherently beneficial use in a “variety of circumstances” and that housing needs are “clearly related to the general welfare under the zoning laws.”

The Appellate Division found that the zoning board construed previous opinions holding that affordable housing is an inherently beneficial use too narrowly.  The board had maintained that because all existing caselaw had addressed affordable housing constructed by public of non-profit entities, a commercial developer’s affordable housing could not qualify as an inherently beneficial use.  The Court directed that in analyzing whether a proposed use is inherently beneficial, “the focus of the inquiry is whether the proposal furthers the general welfare, not whether the undertaking is one that is not-for-profit or a commercial enterprise.”

In addition to remanding the application to the Board for consideration under the less stringent inherently beneficial use standard (the Sica test), the Appellate Division found the Board’s concerns regarding the negative criteria to be arbitrary, capricious, and unreasonable.  The Appellate Division noted that the Board’s rejection of the application, base on density and environmental concerns, was contradicted by the Township’s Fair Share plan, which included the project, minimized the environmental impact, and promised to amend the zoning and density for the project.

Who Says Babies Don’t Play Bocce? Law Division Rules On Age Restricted Housing Conversion

by: Gregory S. Ricciardi

With the continuing strain on residential development projects, some developers may seek relief in the form of a recent New Jersey law, which allows for the conversion of age-restricted projects to non age-restricted projects.  A recent opinion from the Law Division may serve as a helpful tool to developers seeking to take advantage of the law.

Heritage at Towne Lake, LLC v. Planning Board of Sayreville interprets and applies N.J.S.A. 45:45:22A-46.3 (the “Conversion Statute”), which regulates the conversion of age restricted units to non-age restricted units in development projects.  In this case, the Sayreville Planning Board (the “Board”) denied a developer’s application to convert a one hundred eighty-four (184) unit, age restricted community to a non-age restricted community, containing the same number of units, but configured differently. 

Pursuant to the Conversion Statute, the approving board has broad discretion to require the applicant to prove that the conversion can be granted  without substantial determinant  to the public good and will not substantially impair the intent and purpose of the zone plan and zoning ordinance.  The Conversion Statute establishes a set of criteria that applicants must prove, which include: (1) that the site meets RSIS standards; (2) recreation improvements and other amenities are revised, as needed, to meet the needs of the converted development; (3) water and sewer systems are adequately designed;  and (4) sufficient parking is available to accommodate the converted development. 

In addition to arguing that the applicant failed to meet the burden of proof as to the conditions of the Conversion Statute, the Board claimed that approving the conversion application would create a density violation.  Since the applicant received a density bonus for age-restricted development, if the conversion were approved, the Board argued that the project would require a (d) variance for density pursuant to N.J.S.A. 40:55D-70d(5).  The court dismissed this argument, citing the plain meaning of the Conversion Statute, which states:

“No application for an amended approval seeking the authority to construct a converted development shall be considered a “use variance” or other “d variance” application pursuant to subsection d.  of section 57 of P.L.  1975, c 291 (C:4055D-70).”

The court ultimately concluded that the applicant had met its burden of proof and that the denial of the conversion application by the board was unreasonable.  The court remanded the matter back to the Board an ordered that the conversion be approved subject to the conversion of the originally proposed bocce courts to a “tot lot” for children.  

The Conversion Statute remains an attractive option for distressed, age-restricted development projects, provided the projects and the application for conversion can meet the statutory requirements, including a 20% set aside for affordable housing.    The publication of this decision helps shed light on the conversion process and eliminate confusion as to its application.