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Brody v. City of Millville

Decided: March 3, 1971.


Horn, A.j.s.c.


[114 NJSuper Page 95] By this action in lieu of prerogative writs plaintiff challenges the authority of the City of Millville (city, or Millville) to enter into certain leases and contracts with Airwork Service Division, a division of Pacific Airmotive

Corporation (Airwork) and to borrow money for the purpose of erecting buildings and facilities to lease to Airwork.

The parties stipulated that another issue regarding the tax status of the land and buildings so utilized by Airwork is under review by the Division of Tax Appeals. Consequently, this issue is excluded from consideration.

The events leading to this action commenced during World War II. As part of the war effort the Federal Government established within the corporate limits of Millville a military airport as a staging area for military aircraft. The facility, including runways and buildings, was of a size and capacity to accommodate aircraft larger and more numerous than ordinarily would be essential for a municipality the size and population of Millville and its environs.

Following the war the entire complex was ceded to the city, which has since operated same as a public utility. N.J.S.A. 40:8-2.1 Shortly thereafter a predecessor of the presently constituted Airwork entered into a lease with Millville whereby it occupied some of the buildings, runways and aprons in connection with its business of repairing and servicing aircraft motors. However, the unoccupied portions continued to be used as a municipal airport.

As Airwork's business expanded over the ensuing years many different leases were negotiated with the city to permit Airwork to utilize more of the available space. On July 3, 1962 all existing leases were consolidated into what is known as the "master lease." This instrument recognized that title to certain buildings previously constructed by Airwork was vested in Airwork and that title to certain others was vested in the city. It provided that ownership and title to all buildings would vest in the city at the termination of the lease on December 31, 1970. The instrument also fixed the rents to be paid by Airwork to the city. It recounted the obligations of each of the parties with respect to providing fire insurance so that all buildings were protected. Rent for buildings owned by the city was fixed at 25c per square foot.

Rent for buildings "owned" by Airwork was fixed at $1 per year.

On September 17, 1968 these parties executed another agreement providing for the construction by Airwork of a hangar, taxiway and apron on the facility. By its terms the city leased to Airwork the land on which the hangar was to be constructed as well as the land for the taxiway and apron for a term of 25 years upon the same terms and conditions as the 1962 lease, "except that there shall be no rent during said term." This document further provides that title to the building is to vest in the city at the expiration of said term and that at the expiration of said term "the parties agree to negotiate a new lease at a price to be then agreed upon but not to be in excess of a figure then calculated to be equivalent to 40c per square foot at the 1968 level."

On February 3, 1970 the city and Airwork entered into still another agreement whereby the former agreed to construct for the use of Airwork a hangar and an addition to a building already occupied by Airwork under lease with the city. This instrument further provided for the making of a lease for the hangar and addition for 20 years, subject to the applicable terms of the master lease at a rental of $1.70 per square foot and a further lease for same upon its termination for an additional term of not less than ten years at a rental to be negotiated. The city then adopted ordinance 3-1970 directing the issuance of bonds to raise funds for the improvements contemplated by this agreement.

Airwork uses the leased premises for repairing aircraft motors and engines which are brought to its plant at the airport by air and surface transportation. Admittedly its business is not confined to the repair of motors, which only incidentally require servicing when at the airport. In the future Airwork will probably expand its operations at the airport to include repairs to industrial engines which power generating systems.

The city maintains that it requires the additional revenue derived and which may be derived from the leases and contracts

with Airwork in order to alleviate the large drain upon its finances required to maintain the airport. Incidental, but by no means minor, benefits are derived from the employment furnished to its citizens by Airwork.

Plaintiff first advances the view that the proposed construction and associated bond issue are invalid because the proposed building is to be used under lease to Airwork for a private purpose instead of "airport purposes," as required by N.J.S.A. 40:8-1. This statute reads as follows:

The governing body of any county and the governing body of any municipality, or either of them, may acquire by gift, grant, purchase, condemnation or in any other lawful manner real estate or any right or interest therein for airport purposes and so use lands theretofore acquired for other public purposes and being used for ...

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