Co-authored by Brian J. Shemesh and Kyle J. Campanile

The Supreme Court of New Jersey recently denied a petition for certification in the matter of Applied Monroe Lender v. City of Hoboken Planning Bd. and City of Hoboken, 234 N.J. 10, 187 A.3d 858 (Table). The petitioner, developer Applied Monroe Lender, LLC (“Applied”), owned property that had been designated as an area in need of redevelopment pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq. (“LRHL”) and was subject to a redevelopment plan adopted by the City of Hoboken.

Even though it had never been designated as a redeveloper, Applied sought to develop its property in accordance with the redevelopment plan, claiming that a redeveloper designation was not necessary based on the language of the redevelopment plan. The redevelopment plan did not specifically require such a designation, but made repeated references “redeveloper” and “redeveloper designation.” The City maintained that the plan required a redeveloper designation and refused to deem Applied’s submission for site plan approval “complete” until it had been designated.

Applied brought suit in the Superior Court, Hudson County, in April 2015. Ultimately the parties made competing motions for summary judgment, at which point the trial judge found that “the policy as interpreted and in practice requires that a plaintiff who wishes to develop in a redevelopment area must first be qualified and approved as a redeveloper.” Applied Monroe Lender v. City of Hoboken Planning Bd., et al., 2018 WL 1219453 at *2 (App. Div. 2018). On that basis, the judge granted the City’s motion and dismissed the case. Applied appealed.

The Appellate Division heard the case in November 2017 and issued its decision in March 2018. See Id. The Appellate panel affirmed the trial judge’s ruling in holding that designation as a redeveloper was required under the plan, emphasizing the plan’s repeated references to “redeveloper” and “redeveloper designation.” Since Applied never obtained such a designation, it lacked standing to pursue site plan approval.

This ruling confirmed what practitioners have understood to be the law for some time – that once a property has been designated as an area in need of redevelopment and the municipality has adopted a redevelopment plan inclusive of that property, the municipality has the ability to restrict redevelopment of such properties in accordance with the redevelopment plan to qualified redevelopers.  See, e.g., Jersey Urban Renewal, LLC v. City of Asbury Park, 337 N.J. Super. 232 (App. Div. 2005).  In addition to reaffirming this principle, the Appellate decision expanded the scope of Jersey Urban Renewal by applying its rule regardless of whether the redevelopment plan contains language explicitly requiring a redeveloper designation.

In denying Applied’s petition for certification and refusing to hear its appeal, the Supreme Court of New Jersey leaves the Appellate ruling undisturbed, and as a result, it will remain as valuable guidance to developers and land use practitioners unless and until the state’s high court speaks more fully and clearly on this issue.

It is important to note a possible future limiting factor of the Applied Monroe Lender v. City of Hoboken holding and that is in the context of redevelopment areas designated as “non-condemnation” areas under the LRHL.  In the Applied case, the applicable redevelopment plan was adopted in 1998 and was therefore subject to the pre-2013 amendment to the LRHL.  At that time, the LRHL did not permit municipalities to designate properties as “areas in need of redevelopment” without condemnation power.  The 2013 amendment to the LRHL provides municipalities with the ability to designate properties as areas in need of redevelopment with or without condemnation authority.

Designation of a property as an area in need of redevelopment, especially when coupled with the specter of condemnation, is a powerful tool for municipal entities.  It confers control over property owners and developers and facilitates their participation in redevelopment agreements, which further afford municipal entities control in the redevelopment process – enabling them to charge fees, defer various redevelopment costs to developers, to control the project timeline, and to impose accountability and timelines upon owners and developers in the form of contractual obligations, enforcement and remedies.

Accordingly, in future cases an important distinction that may impact the Court’s analysis is whether a subject property has been designated as a condemnation or non-condemnation redevelopment area under the LRHL.  As of now, whether that distinction is enough to sway the court’s view of redevelopment by a property owner without an official redevelopment designation remains unclear.