New Jersey Supreme Court Refuses to Apply a Heightened Standard for “Blight” Under Redevelopment Law

New Jersey Supreme Court Refuses to Apply a Heightened Standard for “Blight” Under Redevelopment Law
Riker Danzig Environmental Update December 2015

This past Spring, the New Jersey Supreme Court made a significant ruling regarding the ability of municipalities to designate land for redevelopment under the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A et seq., (the “Redevelopment Law”). In 62-64 Main Street, LLC, et al. v. Mayor and Council of the City of Hackensack, 221 N.J. 129 (2015), the Court determined that a property does not need to negatively affect the surrounding properties in order to be considered “blighted” and thus eligible for redevelopment.  In doing so, the Court refused to expand the standard for “blight” and distinguished its earlier ruling in Gallenthin Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007), wherein it determined that a municipality could not designate a property for redevelopment under a particular subsection of the Redevelopment Law -- N.J.S.A. 40A:12A-5(e) -- unless the conditions on that property negatively affected the surrounding areas.

In 62-64 Main Street, LLC, plaintiffs owned five lots in the City of Hackensack on which stood two dilapidated buildings abutted by two poorly maintained and decrepit parking lots.  Hackensack designated eleven out of twenty lots in a two-block area as “in need of redevelopment,” including plaintiffs’ five lots.  In doing so, the Planning Board made specific findings that those lots met the statutory definitions of blight under sections 5(a), (b) and (d) of the Redevelopment Law, but did not specifically find a negative effect on the surrounding properties.

Plaintiffs filed an action in Superior Court, challenging Hackensack’s classification of their lots as “blighted.”  Plaintiffs argued that a finding of blight under sections 5(a), (b), and (d) of the Redevelopment Law does not meet the constitutional definition of “blight” enunciated in Gallenthin.  The trial court rejected plaintiffs’ argument, concluding that Gallenthin merely corrected a constitutional defect of subsection (e) of N.J.S.A. 40A:12A-5 and did not render other subsections of the Redevelopment Law constitutionally infirm. The trial court, moreover, determined that the substantial evidence presented by Hackensack supported the city’s determination that the plaintiffs’ properties were “in need of redevelopment.”  The Appellate Division reversed, holding that Gallenthin did indeed establish a heightened constitutional standard for blight, which “superimposes over the statutory definition of blight the need for an additional finding that property has suffered a ‘deterioration or stagnation that negatively affects surrounding areas.’”

In a 3-2 decision, the majority of the Supreme Court sided with the trial court and reversed the Appellate Division decision against Hackensack.  In its opinion, the Court explained that it “did not suggest in Gallenthin that the definitions of blight in subsections (a), (b), and (d) of N.J.S.A. 40A:12A-5, which have been part of legislative schemes for more than sixty years, were constitutionally inadequate.”  It further added, “[w]e would not have concentrated in Gallenthin on the infirmity in subsection (e) – a single defective timber – if the whole statutory scheme was rotten.”  As such, Hackensack was not required to meet the heightened standard for “blight” set forth in subsection (e), which requires a finding that a property has negatively affected its surrounding properties in order to designate it ripe for redevelopment.

Critics of this opinion, including the dissenting justices, contend that this ruling will empower municipalities to more freely take properties through eminent domain or condemn properties for private redevelopment.  Although there is likely some legitimacy to this concern, the majority opinion focused heavily on the substantial evidence proffered by Hackensack to support each of the criteria it relied upon to determine plaintiffs’ properties were indeed “blighted.” Therefore, municipalities should take care to establish specific facts in support of their redevelopment decisions.