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Citizens in Action v. Township of Mt. Holly

July 5, 2007


On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-3027-03.

Per curiam.


Argued: October 18, 2006

Before Judges Cuff, Fuentes and Baxter.

In 2002, the Mt. Holly Township Council determined that a section of Mt. Holly known as Mt. Holly Gardens (the Gardens) was an area in need of redevelopment under New Jersey's Local Housing and Redevelopment Law, N.J.S.A. 40A:12A-1 to -73 (LHRL). It based its decision on the recommendation of the Mt. Holly Planning Board, which had reviewed a redevelopment plan known as the Gardens Area Redevelopment Plan (GARP). Later, the Township Council amended the GARP to include an adjacent parcel of land that was subsequently purchased by Mt. Holly. The amended redevelopment plan was renamed the West Rancocas Redevelopment Plan (WRRP).

Plaintiffs, a group of homeowners who live in the Gardens and other concerned citizens, claim that the determination that the Gardens is an area in need of redevelopment was not supported by the evidence and was arbitrary and capricious.

They also claim that defendants' actions are unconstitutional because they constitute intentional discrimination and the redevelopment designation will have a disparate impact on minorities who live in Mt. Holly. Finally, they claim several procedural errors. We affirm the order that determined the Gardens an area in need of redevelopment. We also affirm the order dismissing the remaining statutory and constitutional claims without prejudice.

The Gardens development "is a residential area comprised of 327 attached housing units built in the early 1950s." The residential units in the Gardens are low-rise, garden apartment-style housing, grouped into blocks of attached units with eight or ten units per block, and are owned in fee. The dwelling units are served by a system of roadways and alleys.

There is no homeowners' association. Presently, most of the units are owned by absentee landlords and the occupants rent individual units. About 18% of the units are vacant and either completely or partially boarded up. According to the 2000 Census, 1,605 persons live in the Gardens, of whom 44% are African-American, 22% are Hispanic and 28% are non-Hispanic White.

The residences contain approximately 600 square feet for a one-bedroom unit and 1,300 square feet for a three-bedroom unit.

They are constructed on lots of approximately 2,500 square feet. Many rear yards have been paved over to provide additional parking spaces for residents.

The Township of Mt. Holly (the Township) acquired twenty-three lots in the Gardens through foreclosure sales. Two of those units have been demolished for health reasons. The Township also owns a 14,100 square foot parcel that once contained a playground, and it has adapted a dwelling unit to function as a community center.

In 1999, the Gardens accounted for 28% of the Township's Uniform Crime Reporting Part 1 crimes,*fn1 even though it accounts for only 1.5% of the Township's total land area. It accounted for over half of the burglaries in the entire Township and nearly one-third of the motor vehicle thefts.

The Gardens is zoned R-3 Residential, which permits single family dwellings. The majority of the Gardens is located within the Township's urban enterprise zone. Most of the residences are attached on both sides, and some have only one side yard. A majority of the units do not meet the R-3 district's fifty-foot minimum frontage requirement.

The average household size in the Gardens is 3.2 people. The average unit size is 2.1 bedrooms. Forty-seven percent of the households earn less than $20,000 per year. Forty-three percent earn between $20,000 and $40,000. Nine percent earn more than $40,000 and .7% earn more than $60,000. The median rental in the Gardens is $705 per month. The median cost of homeownership is $969 per month. Township and county homeownership costs are 58% and 44% more expensive, respectively. The Gardens has high African-American and Hispanic homeownership rates, which is unusual in Burlington County.

In 2000, the Township Council commissioned THP, Inc. (THP), a private planning firm, to investigate whether the Gardens met the criteria of an "area in need of redevelopment." The Township Council did not authorize this action by resolution. It also had not passed a resolution instructing the Planning Board to determine if the Gardens qualified as an area in need of redevelopment. In November 2000, THP issued a report called "Redevelopment Area Determination Report.".

On July 30, 2002, the Township Council passed Resolution No. 2002-166. This resolution authorized the Planning Board to undertake a preliminary investigation to determine if the Gardens was an area in need of redevelopment according to the criteria set forth in N.J.S.A. 40A:12A-1 to -73. The Planning Board held a public hearing on August 19, 2002. In addition, a special meeting was held at the Rancocas Valley High School on September 16, 2002. Most portions of the transcript from that meeting are inaudible. The testimony of the Planning Board's planner, Janice Talley, was summarized in the minutes of the meeting as follows:

Ms. Talley went over the map and reviewed the area that is identified in the resolution. Ms. Talley reviewed that the criteria for redevelopment includes that the buildings are substandard, unsafe, unsanitary dilapidated or obsolescent, in any municipality which has been declared an urban enterprise zone, the land is owned by the municipality, the county, the local housing authority, redevelopment agency or redevelopment entity. Also the criteria includes a growing lack or total lack of proper utilization of areas caused by the condition of title, diverse ownership of real property therein or other conditions, resulting in a stagnant and unproductive condition of land potentially useful and valuable for contributing to and serving the public health, safety and welfare. Ms. Talley reviewed that the area is 31.03-acres, the residential area is characterized by blocks of attached brick housing units of one or two stories, with alleys behind all housing blocks. The majority of homes are not owner occupied and are overcrowded. There is no common area or design and abandoned units. Ms. Talley discussed that the Master Plan discuss the goals to improve the quality of life in the area and to use redevelopment as one of the tools.

No person or group presented expert testimony or cross-examined Talley at this meeting.

Talley prepared a Redevelopment Area Determination Report for the Planning Board dated September 3, 2002. The report contained a block-by-block analysis of the Gardens. It also contained an appendix with a detailed parcel-by-parcel analysis that includes information on "ownership, occupancy, land use, assessed value, lot dimensions, zoning, a brief description and the number of code enforcement actions taken (since October 1996)." The block-by-block analysis and the parcel-by-parcel analysis was confined to an exterior investigation and public records search.

In her report, Talley explained that she undertook a "careful analysis" of the Gardens' land use, physical characteristics and accessibility using tax records, public information and visual inspection. The Gardens was comprised of blocks of housing that contain between three and fourteen, but generally between eight and ten, single family units per block. There were thirty-nine housing blocks with 327 housing units and a density of 11.8 units per acre. Because the lots were each owned in fee simple, there was no common space for the residents to use for recreation. Additionally, "there is no established organization to deal with the neighborhood's physical and social problems."

She noted reported overcrowding within the individual units. Furthermore, she opined that the narrow lots contributed to the "substantial" density of the area and the density created a corollary parking problem. These conditions led residents to pave their rear yards, which created a "haphazard pattern of paved, gravel and compacted dirt spaces," which in turn contributed to a drainage problem. In general, the area had excessive land coverage.

Talley also reported an 18% vacancy rate in the Gardens. The prevalence of absentee landlords had created a decline in housing unit repair and maintenance and yard upkeep. This had led to "significant signs of blight including boarded up residences, exterior building code violations, and poor home and yard maintenance." Talley also noted that the Mt. Holly Master Plan recommended that the Gardens be redeveloped.

Talley concluded that:

Overall, the area meets the redevelopment criteria "a", "d", "e", and "g" as established by Section 5 of the [LHRL] as a Redevelopment Area. The obsolete design and layout of this development creates an environment such that light, air, and open space are lacking. This design and the property ownership structure, in today's world, also contribute to excess lot coverage, criminal activity, and a general lack of proper utilization of land. Finally, Mt. Holly is an Urban Enterprise Zone community which by statute is considered sufficient for the determination that the area is in need of redevelopment pursuant to sections 5 and 6 of P.L. 1992, c. 79 (C.40A:12A-5 and 40A:12A-6).

Based on Talley's report, the Planning Board adopted Resolution No. 2002-10 finding the Gardens an area in need of redevelopment. The Township Council accepted this recommendation in Resolution No. 2002-217.

The GARP originally proposed that one-third of the new dwellings be two-family dwellings, one-third be townhouses, and one-third be senior citizen flat/townhouse combinations. No multi-family apartments were proposed. The Township Council adopted the GARP by ordinance on September 8, 2003.

In due course, the Township Council requested an amendment to the GARP due to the acquisition of a large parcel adjacent to the Gardens. On February 21, 2005, the Planning Board held a hearing to adopt amendments to the GARP. Talley presented testimony regarding the additional piece of land. She explained that the GARP was now known as the WRRP. The total number of affected housing units in the Gardens was 307 rather than 379, and the new redevelopment plan contemplated a rehabilitation element of existing units component. Finally, residents of units designated for rehabilitation would be relocated in phases to accommodate those who wished to remain in their units.

Talley confirmed that the revised redevelopment plan increased the number of units to be constructed from 180 to 228. In addition, some multi-family housing limited to senior citizens had been included.

Opponents to the plan presented testimony before the Planning Board from a planner, Alan Mallach. He testified that he had reviewed the WRRP and thought the actions proposed by the plan were unnecessary in order to achieve its projected goals, were inconsistent with the requirements of the LHRL, and would impose significant harm on "large numbers" of people. Furthermore, the same goals could be achieved without harm by different devices. According to Mallach, under the amended plan, only townhouses could be rehabilitated, so only one-third of the units under the plan could be rehabilitated. Moreover, rehabilitation was only an option and substantial incentives would be required for developers to choose redevelopment, but no such incentives were included in the plan.

Mallach also testified that, aside from the twenty-three houses that would be deed-restricted affordable units, ninety percent of the existing residents of the Gardens would not be able to afford the newly constructed units. He projected the current sale value of homes in the Gardens as $50,000, while the cost of a newly constructed home under the WRRP would be between $200,000 and $250,000. He opined that "It is inconceivable that the 205 truly market rate units that would be constructed under this plan would be affordable to these families."

Mallach stated that the LHRL requires that a redevelopment plan contain an estimate of affordable units that are available in the existing market for displaced residents. The WRRP failed to contain such an estimate. He also expressed serious reservations whether the current residents would be able to find equivalent housing in Mt. Holly. Mallach emphasized that the WRRP provides between nineteen and thirty-eight rental units, all of which were designated for senior citizens. He explained that between a half and two-thirds of the residents in the Gardens were tenants and that the WRRP would therefore displace between 130 and 180 families.

Mallach also questioned why the WRRP provided only the Council on Affordable Housing (COAH) standards for low income housing. He remembered that in some developments, up to fifty percent of the new housing was affordable. The COAH standards fail to account for a situation where between 200 and 300 affordable housing units were eliminated and only ten percent of the new units were affordable. He testified that "[t]he overwhelming majority of the present residents of the Gardens would not be able to live in the new development that would be planned to be constructed in its place."

The Planning Board adopted Ordinance No. 2005-10 with certain amendments, specifically, that the townhouses could comprise seventy-five percent of the units, which would increase the number of potential rehabilitated units. The Planning Board also mandated that any new commercial development be required to contribute to the Township Affordable Housing Program in order to mitigate displacement of residents. On March 14, 2005, the Township Council held a public meeting regarding the WRRP. After receiving comments from residents of the Gardens and interested citizens, the Council adopted the WRRP pursuant to Ordinance No. 2005-07 on second and final reading.

On October 23, 2003, plaintiffs Citizens in Action, and several individuals filed a nine-count compliant in lieu of prerogative writs and for declaratory and injunctive relief. They amended their complaint on October 31, 2003, to add a tenth count, and a second time on November 19, 2003, to add an eleventh count. Additional individual plaintiffs were named when the complaint was amended.

The first count of the second amended complaint alleged that defendants had violated the statutory procedures mandated by the LHRL. Plaintiffs claimed that defendants had failed to pass a resolution authorizing the Planning Board to undertake a preliminary investigation to determine whether the Gardens was an area in need of redevelopment pursuant to N.J.S.A. 40A:12A-6a. The Township Council had impermissibly commissioned a redevelopment report in November 2000 instead of assigning the preliminary investigation to the Planning Board. Subsequently, the Planning Board adopted a redevelopment report in 2002, i.e., the GARP, but that "was the same study, with only minor changes, as the 2000 Redevelopment Report," prepared two years earlier. Therefore, the Township Council's Resolution No. 2002-217, which designated the Gardens as an area in need of development, was "fundamentally flawed" and "ultra vires."

The second count alleged that the designation of the Gardens as an area in need of redevelopment was arbitrary and capricious. The complaint alleged that the neighborhood does not meet any of the statutory criteria for an area in need of redevelopment as set forth in N.J.S.A. 40A:12A-5. Accordingly, the designation was not supported by substantial credible evidence.

The third count alleged that adopting the GARP violated the provisions of the LHRL. The GARP failed to: (1) include an outline for "the planning, development, redevelopment, or rehabilitation of the project area sufficient to determine its relationship to definite local objectives;" (2) provide for the relocation of residents; and (3) include the redevelopment plan's relationship to the master plans of contiguous municipalities and the county, and the State Development and Redevelopment Plan.

Plaintiffs claimed in their fourth count that defendants impermissibly enacted Ordinance No. 2003-37, which gave defendants the right to authorize the purchase of properties by resolution instead of by ordinance in violation of N.J.S.A. 40A:12-5. They claimed that defendants acted ...

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