The Housing Authority of the City of Paterson contests the validity of certain acts taken by the governing body of the city in an avowed attempt to divest the Authority of powers it is presently exercising. The action of the city, if sustained, will result in a transfer of these powers to the city which will thereafter continue to exercise them itself as a local public agency. The question presented appears to be one of novel impression in this State.
For at least the last 30 years government in this country has been actively concerned with the problems of slum clearance, the creation and maintenance of sufficient and adequate low-income housing, urban renewal and the rehabilitation and redevelopment of blighted areas. In 1937 the United States Housing Act, 42 U.S.C. § 1401 et seq. gave initial impetus to this effort. This statute, as amended and supplemented from time to time, has made available to local communities very large sums of money by way of federal subsidy. The program outlined in the statute requires implementation at the state level in the form of legislation permitting the creation in local communities of instrumentalities designed to carry out the legislative purposes. In New Jersey legislation looking to this end in the form of the Local Housing Authorities Law was promptly adopted (L. 1938, c. 19; N.J.S.A. 55:14A-1 et seq.) This statute permits but does not require municipalities [96 NJSuper Page 398] (or two or more municipalities acting together) to establish municipal or regional housing authorities. An authority consists of six members, five of whom are appointed by the governing body of the municipality and the sixth by the executive officer of the Public Housing and Development Authority in the State Department of Conservation and Economic Development. The authority is a public body, corporate and politic, exercising public and essential governmental functions. Among other powers it is authorized to sue and be sued, to have perpetual succession, to make and execute contracts and other instruments necessary or convenient to the exercise of its powers, and to make and from time to time amend and repeal by-laws, rules and regulations. It is further authorized to acquire, lease and operate housing projects and to provide for their construction, reconstruction, improvement, alteration or repair. It may arrange or contract for the furnishing by any person or agency, public or private, of services, privileges, works or facilities for or in connection with a housing project or the occupants thereof. It may establish or revise rents or charges in respect of any housing project, may own and improve real or personal property and purchase, lease, transfer, assign or pledge the same. It may exercise the power of eminent domain. Authorization is given to investigate into living, dwelling and housing conditions and into the means and methods of their improvement, to determine where slum areas exist or where there is a shortage of decent, safe and sanitary dwelling accommodations for persons of low income and to make studies of recommendations relating to the problem of clearing, replanning and reconstructing slum areas. It may cooperate with any public body, including the municipality by which it has been created, in any action taken in connection with any such problem. It is given power to issue bonds and in connection therewith to pledge its future income, mortgage its real or personal property, including after-acquired assets, and bind itself by a variety of covenants designed to protect the interests of the bondholders.
Naturally enough its powers include the right to borrow money or accept grants or other financial assistance from the federal government, all upon such conditions and subject to such restrictions as may be required. Housing projects owned by a housing authority are tax-exempt, but payments in lieu of taxes may be made. Later amendments and supplements to the Local Housing Authorities Law, notably L. 1949, c. 300 and L. 1956, c. 211, granted housing authorities the right to initiate and carry out redevelopment projects, as well as conservation and rehabilitation work in blighted areas. This included the power to acquire, demolish or rehabilitate buildings as well as to install or construct streets, utilities, parks and playgrounds. These powers are broad and comprehensive. It is clearly the legislative design that an entity clothed with powers of such amplitude should be an important and influential arm of government in the area in which it is intended to act.
At the same time a considerable degree of control over a housing authority rests with the governing body of the municipality. It must first authorize, by ordinance, the initiation and carrying out of any redevelopment project; it determines the existence of a "blighted area"; it may order the authority, or its officers or employees, to comply with the provisions of any approved redevelopment plan, to maintain uniform systems of accounts and to file, at times and in manner presecribed by the governing body, reports and answers to specific questions. Annual estimates must receive municipal approval and expenditures or disbursements lacking such approval are forbidden.
It is clear that the drafters of this legislation contemplated, or at least hoped, that there would be effective co-operation between a local housing authority and the municipality that had brought it to life. In addition to including a provision looking to this end in the Local Housing Authorities Law itself (N.J.S.A. 55:14A-40), the same legislature adopted, at exactly the same time, the Housing Cooperation Law (L. 1938, c. 20; N.J.S.A. 55:14B-1
et seq.). This statute expressly authorizes municipalities to cooperate with their local housing authorities in a variety of ways. Municipal property may be dedicated, sold, conveyed or leased to an authority. Parks, playgrounds, recreational, community, educational, water, sewer or drainage facilities may be provided. Streets and sidewalks may be installed; planning, zoning and building regulations may be altered and in general anything may be done necessary or convenient "to aid and co-operate in the planning, undertaking, construction or operation of * * * housing or redevelopment projects." N.J.S.A. 55:14B-4(f). It is especially worthy of note that the governing body is authorized to "Enter into agreements (which may extend over any period, notwithstanding any provision or rule of law to the contrary), with a housing authority * * * respecting action to be taken by such public body (municipality) pursuant to any of the powers granted by this act. If at any time title to, or possession of, any project is held by any public body (including, by definition, a housing authority) * * * authorized by law to engage in the development or administration of low-rent housing or slum clearance projects * * *, the provisions of such agreements shall inure to the benefit of and may be enforced by such public body (housing authority) * * *." N.J.S.A. 55:14B-4(e) (italicized portions supplied).
On March 23, 1967 the Housing Authority of the City of Paterson filed suit in the Chancery Division of this court against the City of Paterson. On the same day the City instituted suit against the Authority by way of prerogative writ in the Law Division. The former action has been consolidated within the latter. In brief, by steps taken in March of this year, the City sought to remove from the control of the Authority certain rehabilitation projects with which the latter was actively engaged. The Authority resisted and has asked the court to determine its rights. In order to consider the issues involved in proper context it will first be necessary to set forth briefly the history of the
Housing Authority and particularly its relationship to the City with respect to the projects concerned.
The Housing Authority of the City of Paterson was created by ordinance enacted by the governing body of the City January 23, 1941, pursuant to the Local Housing Authorities Law. Parenthetically it should be pointed out that the municipal government of the City of Paterson is rather unusual. For present purposes it will be convenient and sufficiently accurate to say that "the governing body" may be considered the Board of Finance and the Board of Public Works acting concurrently. On November 3, 1949, pursuant to a then recent amendment to the Local Housing Authorities Law (L. 1949, c. 300) the governing body adopted an ordinance authorizing the Authority to carry out redevelopment projects and in so doing to possess all the rights, powers, privileges and immunities conferred by this statute. We then move ahead to 1961. In that year the Authority entered into a contract with the United States of America acting through the Federal Housing and Home Finance Agency by the terms of which the Authority received a loan in the amount of $63,870 for the purpose of completing a comprehensive study of the slum clearance and urban renewal problem in the city. The Authority agreed to repay the amount of this advance. By the end of 1961 this study, known as the General Neighborhood Renewal Plan, had been completed and had received the formal approval of the Authority, the local Planning Board and governing body. Apparently nothing was done immediately to put the plan into execution but in the summer of 1963 the plan was formally embodied in the municipal master plan by act of the Planning Board and in September of the same year a new resolution of approval was adopted by the governing body. The General Neighborhood Renewal Plan covered some 545 acres and it was never contemplated that the entire project would be undertaken at once. In September, 1964, the governing body adopted an elaborate resolution approving, as a particular phase of [96 NJSuper Page 402] the whole undertaking, Urban Renewal Project N.J.R.-103. The area included within Project 103 is referred to as the Central Business Area and consists of a substantial portion of downtown Paterson. The resolution contains very clear pledges of cooperation on the part of the City. Implementing this pledge the City, on January 1, 1965, entered into a so-called Cooperation Agreement with the Authority. Such an agreement is required if federal financial assistance is to be forthcoming. 42 U.S.C. § 1415(7)(b). By the terms of this agreement the City undertook to reimburse the Authority for what is described as the estimated ineligible portion of site improvement and clearance cost in the amount of approximately $640,000; it agreed to allow the Authority certain tax credits in an estimated amount of $400,000 and undertook, without expense to the Authority, to vacate various streets and dedicate the vacated areas to the Authority. It further agreed to undertake its obligations at such times as should coincide with the construction and progress of the entire project and to complete all work within a reasonable time after commencement. The agreement specifically states that the City acknowledges an obligation to make cash or noncash grants in aid in a total amount equal to not less than ...