The Supreme Court Revisits the Constitutionality of the Redevelopment Law

62-64 Main Street, LLC v. Hackensack Mayor & Council, 221 N.J. 129 (2015).  The Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 to -73, defines when an area is blighted and in need of redevelopment.  The Redevelopment Law implements Article VIII, section 3, paragraph 1 of the New Jersey Constitution, known as the Blighted Areas Clause, which states that “redevelopment of blighted areas” is a “public purpose” for which private property may be taken by the government, provided that just compensation is paid to the property owner under Article I, paragraph 20.

In Gallenthin v. Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007), the Supreme Court held that a portion of the Redevelopment Law, N.J.S.A. 40A:12-5(e), was unconstitutional.  An interpretation of that statute that “would equate ‘blighted areas’ to areas that are not operated in an optimal manner, cannot be reconciled with the New Jersey Constitution,” the Court said.  Yesterday, the Court was asked to decide whether the holding of Gallenthin as to subsection (e) also applied to subsections (a), (b), and (d), under which municipal authorities in Hackensack had determined that plaintiffs’ properties were in need of redevelopment.  The Law Division had found that Gallenthin was limited to subsection (e), and that substantial evidence supported Hackensack’s decision that plaintiffs’ properties were areas in need of redevelopment.  The Appellate Division reversed, ruling that “Gallenthin superimposes over the statutory definition of blight the need for an additional finding that the property has suffered a deterioration or stagnation that negatively affects surrounding areas.”

In a 3-2 decision, the Court concluded that Gallenthin was limited to subsection (e).  Justice Albin wrote the majority opinion, in which Justices LaVecchia and Fernandez-Vina joined.  Chief Justice Rabner issued a lengthy dissent on behalf of himself and Justice Solomon.  Justice Patterson and Judge Cuff did not participate.

Justice Albin observed that the Court had found subsections (a), (b), and (d) constitutional in Wilson v. City of Long Branch, 27 N.J. 360 (1958), and Levin v. Bridgewater Tp. Comm., 57 N.J. 506 (1971), decisions that Galllenthin cited with approval.  Nothing in Gallenthin, the majority said, suggested that the definitions of blight in subsections (a), (b), and (d), “which have been part of legislative schemes for more than sixty years, were constitutionally inadequate.”  Justice Albin traced, at great length, the history of the Blighted Areas Clause, the Redevelopment Law and its predecessors (which extended back as far as 1944, predating the 1947 Constitution), and caselaw under the constitutional and statutory provisions, and concluded that the holding of Gallenthin did not extend beyond subsection (e).

That subsection, the only one directly at issue in Gallenthin, was found constitutionally flawed in that case because subsection (e) had provided that property could be deemed in need of redevelopment if it were “stagnant or not fully productive”(emphasis by Justice Albin), which meant that “any property that is operated in a less than optimal manner is arguably ‘blighted.”  A predecessor statute, the Blighted Areas Act, had allowed a finding of blight only if property were “stagnant and not fully productive” (emphasis by Justice Albin), and the Court had found that provision constitutional in Levin.  Subsections (a), (b), and (d) did not contain the disjunctive “or” that had troubled the Court in Gallenthin as regards subsection (e).  Accordingly, plaintiffs did not carry their heavy burden of showing that “the statute’s repugnancy to the Constitution is clear beyond a reasonable doubt.”

Then, applying a deferential standard of review in evaluating the municipality’s finding of blight as to plaintiffs’ properties, the majority upheld that finding.  Municipal decisions are “invested with a presumption of validity,” though municipal discretion in this area “is not unfettered.”  Justice Albin cautioned that municipalities must “rigorously comply with the statutory criteria for determining whether an area is in need of redevelopment,” and must also “clearly articulate the factual findings” that support a conclusion that there is a need for redevelopment.

Justice Albin concluded by noting that the Redevelopment Law afforded plaintiffs the ability to “pursue an agreement with Hackensack that would permit them to rehabilitate their property in a way consistent with the redevelopment plan.”  Alternatively, if the city exercised its power to take the property using eminent domain, plaintiffs would be entitled to just compensation.

The dissenters found the majority’s view to be “a step backward from Gallenthin.”  The “immense authority” that municipalities have to declare areas in need of redevelopment, though “a valuable tool to reverse the effects of economic deterioration,” is also subject to abuse.  Chief Justice Rabner quoted Gallenthin as stating that that appeal “requires us to ascertain the meaning of the term ‘blighted’ as used in the New Jersey Constitution” (emphasis by Chief Justice Rabner), “not a subpart of a statute.”

The dissenters also concluded that, contrary to the majority, Wilson and Levin did not “squarely address” the constitutional issue as to subsections (a), (b), and (d).  None of those subsections “expressly requires a finding that a property suffers from deterioration or stagnation in a way that has a negative effect on surrounding properties.  In other words, none of the subsections expressly satisfies the constitutional standard.”  And the use of the disjunctive “or” in those sections meant that “any combination of findings could justify the conclusion that a property is in need of redevelopment.”

The majority and dissenting opinions are each quite lengthy (over 40 pages each) and scholarly, and well worth reading in full.  The dissenters feared that the redevelopment process may be abused to strip property owners of their rights, while the majority stated that “[r]edevelopment may not occur at the expense of individual rights,” and that, were the dissent’s view to be adopted, “countless redevelopment projects up and down this state might be halted and mired in litigation.”  Just one vote out of five (one can only speculate whether the full Court would have come out the same way) determined the result here.



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