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Enclave Condominium Association v. City of Atlantic City


February 21, 2008


On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket Nos. L-97-05PW and L-3280-05PW.

Per curiam.


Argued January 28, 2008

Before Judges S.L. Reisner and Baxter.

Plaintiff Enclave Condominium Association (Enclave) appeals from a January 12, 2007 order that dismissed its complaint challenging the: (1) adoption of a redevelopment ordinance by the City of Atlantic City (the City); and (2) the issuance of preliminary and final site plan approval for the project in question by the Planning Board. Enclave also appeals from an April 24, 2007 order that denied its motion for reconsideration. We affirm.


This appeal requires us to decide whether the City validly adopted a redevelopment plan pursuant to the requirements of the Local Redevelopment and Housing Law (the LRHL), N.J.S.A. 40A:12A-1 to -49. Enclave seeks to invalidate Ordinance 135, approved on November 23, 2004, which adopted a redevelopment plan for the Roosevelt-Seedorf redevelopment area. Enclave also challenges the validity of the preliminary and final site plan approval issued by the Planning Board on March 2, 2005 to intervenor Atlantic 17, L.L.C., which the City designated as the developer. Enclave filed separate complaints in lieu of prerogative writs against the City and the Planning Board, which were consolidated in the Law Division and remain consolidated on appeal.

The City's actions in adopting the redevelopment plan for the Roosevelt-Seedorf area originated with an ordinance adopted by the City in 1994. Consequently, we begin our review of the undisputed facts with the Planning Board's and City Council's (Council) actions in 1994.

On November 2, 1994, Council adopted Resolution 791, in which it requested the Planning Board to analyze whether the City of Atlantic City was "an area in need of rehabilitation" under N.J.S.A. 40A:12A-14(a).

In response to Council's request, the Planning Board adopted Resolution 24-94, which found the entire City was an "area in need of rehabilitation," and recommended that the governing body of the City conclude likewise. Planning Board Resolution 24-94 was based on a report of May 5, 1994 authored by Stuart B. Wiser, the City's Planning Director. Wiser had been asked to determine whether any or all of the City qualified as an area in need of rehabilitation. After conducting research and completing a study, Wisner concluded that the entire City qualified. Wiser's conclusion was based on his analysis of three criteria: underutilization of properties, vacant structures, and deteriorated or substandard structures.

After receiving and reviewing Planning Board Resolution 24-94, Council passed Resolution 889 designating Atlantic City, in its entirety, as an "area in need of rehabilitation." The validity of that resolution was upheld in Bryant v. City of Atlantic City, 309 N.J. Super. 596, 614-16 (App. Div. 1998). We held that Resolution 889 was supported by substantial evidence and there was an appropriate factual basis for the City to have reached the conclusions it did when it adopted the resolution in question. Ibid.

Nearly ten years later, on September 22, 2004, Council adopted Resolution 753, which stated:

A certain portion of the City of Atlantic City extending generally from the Boardwalk to Atlantic Avenue and from Roosevelt Place to John A. Seedorf Lane, exclusive of "The Enclave" condominium, is particularly in need of rehabilitation and/or redevelopment by reason of vacant land, obsolete and/or vacant building and similar conditions . . .

Resolution 753 directed the Planning Board to review the City's Master Plan and submit a report and recommendation to Council.

In response to that mandate, the Planning Board directed the City's Division of Planning (Division) to study that issue. On October 1, 2004, the Division issued a report recommending that the "Planning Board make a finding of consistency between the [Roosevelt-Seedorf] Redevelopment Plan and the Master Plan." Specifically, the Division's report listed the shared goals of both plans, such as improving the quality and character of Atlantic City housing and increasing the availability of housing. After reviewing the Division's October 1, 2004 report, the Planning Board passed Resolution 30-2004, concurring with the findings of the Division of Planning.

The Redevelopment Plan was ultimately adopted by Council pursuant to Ordinance 135, which was approved on November 23, 2004. Ordinance 135 (Redevelopment Plan) begins by noting that "the finding of an 'area in need of rehabilitation' is a prerequisite for the adoption of a Redevelopment Plan." The Redevelopment Plan describes the affected area and its condition as follows:

The project Area consists of approximately 3.2 acres. In large part with the exception of several occupied low-rise residential buildings, the Project Area contains vacant, underutilized property with structures that are obsolete and in disrepair. The vacant buildings are aged, dilapidated and are substandard with respect to current building codes. There is little if any landscape or other streetscape improvements and it includes a large unimproved parcel which has remained stripped and vacant for several years.

These detrimental conditions have existed for many years without improvement and are likely to remain, absent this redevelopment program.

Within the past 25 years, there have been little or no improvements to the two block area exclusive of the development of the Enclave and various additions/renovations to the former nursing home.

The general area over the years has seen the demise of many residential, commercial and institutional uses with an associated loss of neighborhood activity. At one time, the Project Area and Chelsea neighborhood had the Seashore Gardens Nursing Home (now vacant), Atlantic City High School (demolished), Children's Seashore House (demolished), Mayfair high-rise apartments (demolished) and other facilities.

Although the Project Area was included within the designated area "Area in Need of Rehabilitation" in 1994, this tract, consisting of prime boardwalk and beachfront property remains largely vacant, fallow and underutilized.

The clear conclusion from this history is that neither individual nor private initiatives have resulted in any development within the boundaries of the Project Area. This may have been a result of conflicting interests of property owners and their respective uses (including non-conforming commercial uses) within this residential zone, but for whatever reason this tract remains vacant, fallow and underutilized.

After the Redevelopment Plan was adopted, a developer, Atlantic 17, L.L.C., applied for preliminary and final site approval of a new 193-unit high rise luxury residential building. This building was to be named Chelsea Residence and would be built on 1.1 acres of the 3.2 acres covered by the Redevelopment Plan. On April 28, 2005, the Planning Board adopted Resolution 9-05, granting final site plan approval to Atlantic 17. The land upon which Atlantic 17 proposed to construct the Chelsea Residence was a tract it owned on Atlantic Avenue, which contained Seashore Gardens, a defunct nursing home. Because Atlantic 17 already owned the land, the Redevelopment Plan did not require the City to exercise its power of eminent domain. In fact, the Redevelopment Plan expressly precluded the City from taking land by eminent domain.

Section 6.1.1 of the Redevelopment Plan provides, "the Redevelopment Entity does not contemplate the public acquisition of privately owned parcels within the Project Area. Accordingly, no public displacement of families, individuals or business concerns shall occur in the effectuation of this Redevelopment Plan. No relocation assistance or plan is therefore required."

Enclave filed suit challenging the approval of the Redevelopment Plan and the issuance of site plan approval. Enclave argued: (1) Ordinance 135 was void because in enacting that ordinance in 2004, the City impermissibly relied on Resolution 889 of 1994, which was stale and of no force and effect; (2) the City was not entitled to utilize the redevelopment procedures set forth in N.J.S.A. 40A:12A-14; and (3) the City was instead required to satisfy the requirements of N.J.S.A. 40A:12A-5(a), but had not done so. Atlantic 17 was permitted to intervene in the litigation.

In reply, the City and Atlantic 17 contended: (1) it was appropriate for the City to use Resolution 889 of 1994 in adopting Ordinance 135 in 2004; (2) Enclave's statutory argument confuses the requirements of an "area in need of redevelopment," which triggers the provisions of N.J.S.A. 40A:12A-5, with the requirements of "an area in need of rehabilitation," which triggers the provisions of N.J.S.A. 40A:12A-14(a); (3) Enclave's reliance on Gallenthin Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007) was misplaced because the City's adoption of the Roosevelt-Seedorf Redevelopment Plan did not encompass an exercise of the City's eminent domain powers; and (4) Ordinance 135 was validly enacted.

The trial concluded on November 17, 2005. Before the judge rendered a decision, Enclave notified the judge that former City Council President Calloway had pled guilty to accepting bribes from a developer. Enclave asserted the guilty plea "constitutes a sufficient change of circumstances" to entitle Enclave to reconsideration of the April 22, 2005 order limiting discovery to the record below.

In a comprehensive and well-reasoned opinion, Judge Daryl Todd, Sr. agreed with the arguments raised by the City, the Planning Board and Atlantic 17, and rejected those of Enclave. In his opinion, Judge Todd also addressed the question of whether Enclave should be permitted to take the depositions of City Council members to determine whether the adoption of Ordinance 135 had been tainted by criminal conduct. After noting that counsel for Enclave had submitted a letter to the court on August 31, 2006, advising the court of Enclave's intention to file a motion for leave to take those depositions, Judge Todd noted that no such motion had ever been filed. The judge addressed the issue nonetheless and held:

City Council President Calloway admitted to taking approximately $36,000 in six different payments between 2003 and 2005 in exchange for using his position to assist a contractor in obtaining construction work or construction management work in Atlantic City Projects.

There is no indication either in evidence or in public media accounts of any illegal activity in connection with the Redevelopment Plan which is the subject of this litigation. Counsel for the intervenor, Atlantic 17, L.L.C., objected to his client being associated in any way with the criminal bribery issues [and] conviction [that] involved a specific development by other developers in a different area of the City. There is no indication of any taint on the Redevelopment Plan on The Chelsea Residence.

On October 31, 2007, Enclave filed a motion for rehearing and reconsideration. On April 20, 2007, in an oral decision, Judge Todd denied Enclave's motion. He concluded that Enclave had presented no new evidence nor had Enclave demonstrated that the court had overlooked any relevant facts or misapplied the law when it rendered its January 12, 2007 decision. The judge again noted that there was no evidence pointing to any wrongdoing by Council that would justify an order permitting the deposition of the three Council members. Judge Todd reasoned:

[T]his court would be quick to act if there was something that gave any hint that there was anything improper, let alone criminal, but improper dealing with the adoption of the plan here. The court has seen none in the extensive record that's been before the court.

A confirming order was entered on April 24, 2007.


The parties dispute the applicable standard of review. Enclave maintains that the Court's decision in Gallenthin, supra, was a "watershed decision" that substantially eroded the earlier "significant judicial deference to municipal redevelopment designations." Enclave argues that Gallenthin eliminated the "arbitrary and capricious" standard. Consequently, Enclave maintains that the proper standard on appeal is the standard articulated in Gallenthin, which is whether the municipal development designation is supported by "substantial evidence in the record." Gallenthin, supra, 191 N.J. at 372.

We agree with Judge Todd's conclusion that the Gallenthin requirement of "substantial evidence in the record" is limited to cases in which a municipality proceeds under N.J.S.A. 40A:12A-5 and designates an "area in need of redevelopment." The Court's decision in Gallenthin clearly demonstrates that the Court was construing only those portions of the LRHL that dealt both with areas "in need of redevelopment" and an exercise of the powers of eminent domain. Indeed, the opinion is replete with references to N.J.S.A. 40A:12A-5(a),*fn1 which is not the section of the LRHL under which the City proceeded here. The Court's reasoning in Gallenthin is clearly limited to instances where a municipality takes private property through the exercise of eminent domain, a power not being exercised here, and specifically prohibited by the terms of the Redevelopment Plan itself. Therefore, we agree with Atlantic 17's contention that the "substantial evidence" standard required by Gallenthin is not required here.

Moreover, we agree with Atlantic 17's argument that the appropriate standard of review of a redevelopment plan is that which was established in Downtown Residents for Sane Dev. v. City of Hoboken, 242 N.J. Super. 329, 332 (App. Div. 1990), where we held that a presumption of validity attaches to the adoption of a redevelopment plan. Ibid. In particular, we held that "[i]n order for Residents to prevail in setting aside the questioned plan, the legislative decisions made must be more than debatable, they must be shown to be arbitrary or capricious, contrary to law, or unconstitutional." Ibid.

We need not, however, tarry long in analyzing the standard of review because we are satisfied, as was Judge Todd, that regardless of which standard of review is applied, Ordinance 135 is valid.


We turn now to the principal issue in this case, which is whether the City followed the express requirements of the LRHL when it adopted the redevelopment plan of Ordinance 135. Enclave appears to confuse the requirements and objectives of "an area in need of redevelopment" under N.J.S.A. 40A:12A-5 with "an area in need of rehabilitation" under N.J.S.A. 40A:12A-14. Enclave argues in its brief that "[i]n the case at bar, Atlantic City designated the project area as an area in need of rehabilitation" and "[s]uch designation could implicate the use of eminent domain . . . ." (emphasis added). N.J.S.A. 40A:12A-14(a) provides:

A delineated area may be determined to be in need of rehabilitation if the governing body of the municipality determines by resolution that there exist in that area conditions such that (1) a significant portion of structures therein are in a deteriorated or substandard condition and there is a continuing pattern of vacancy, abandonment or underutilization of properties in the area, with a persistent arrearage of property tax payments thereon or (2) more than half of the housing stock in the delineated area is at least 50 years old, or a majority of the water and sewer infrastructure in the delineated area is at least 50 years old and is in need of repair or substantial maintenance; and (3) a program of rehabilitation, as defined in section 3 of P.L.1992, c.79 (C.40A:12A-3), may be expected to prevent further deterioration and promote the overall development of the community. Where warranted by consideration of the overall conditions and requirements of the community, a finding of need for rehabilitation may extend to the entire area of a municipality. Prior to adoption of the resolution, the governing body shall submit it to the municipal planning board for its review. Within 45 days of its receipt of the proposed resolution, the municipal planning board shall submit its recommendations regarding the proposed resolution, including any modifications which it may recommend, to the governing body for its consideration. Thereafter, or after the expiration of the 45 days if the municipal planning board does not submit recommendations, the governing body may adopt the resolution, with or without modification. The resolution shall not become effective without the approval of the commissioner pursuant to section 6 of P.L.1992, c.79 (C. 40A:12A-6), if otherwise required pursuant to that section. [N.J.S.A. 40A:12A-14(a).]

The difference between the two statutes is significant because where the exercise of eminent domain is involved, the municipality must, pursuant to N.J.S.A. 40A:12A-5,*fn2 satisfy the extensive and demanding procedural requirements contained in N.J.S.A. 40A:12A-6, which include: a preliminary investigation by the Planning Board, N.J.S.A. 40A:12A-6(a); and individual notice to affected property owners, general notice in a newspaper of general circulation, and a public hearing, N.J.S.A. 40A:12A-6(b)(2) and (3).

In contrast, when a municipality seeks to designate an area "in need of rehabilitation," the procedures are far more streamlined. Properly so, because when a municipality proceeds under the "in need of rehabilitation" route of N.J.S.A. 40A:12A-14(a), it is prohibited from taking private land by eminent domain.*fn3 When proceeding as the City was here under N.J.S.A. 40A:12A-14, neither a formal investigation nor a public hearing is required. Instead, the governing body need only adopt a resolution designating the area "in need of rehabilitation" after referring it to the Planning Board for its review and recommendation. There is no requirement that there be a report by the Planning Board. Indeed, the statute contemplates situations where a Planning Board might not file a report, in which case the governing body may then adopt by resolution the "area in need of rehabilitation" designation. See N.J.S.A. 40A:12A-14(providing that "after expiration of the forty-five days or if the municipal Planning Board does not submit recommendations, the governing body may adopt the resolution, with or without modification" (emphasis added)). The City followed those very procedures, and indeed Enclave does not contend otherwise. Instead, it contends that the City was required to satisfy additional requirements. We now turn to a discussion of those claims.


Enclave concedes that "[t]he validity of Resolution 889 of 1994 was upheld long ago and is not an issue here." Nonetheless, it argues that because "the stated purpose of the designation of the City as an area in need of rehabilitation was not rehabilitation at all, but was done to be able to give tax abatements and exemptions and to qualify for other State programs[,] and given the fact that 10 years has since passed, it is incumbent on the City to offer substantial evidence that the designation was still valid in 2004." We disagree.

Enclave presents no legal authority to support its contention that the City was prohibited from relying on the 1994 designation of Atlantic City as an "area in need of rehabilitation." Indeed, N.J.S.A. 40A:12A-7a is silent as to the length of time that a finding of "in need of rehabilitation" remains valid. Indeed, we rejected a similar argument in Downtown Residents, supra, 242 N.J. Super. at 340, when we held that "[m]ere passage of time does not erase validity of a blighted area designation."

Moreover, Enclave's argument that "the City has failed to offer substantial evidence that its 1994 designation of the entire City as an area in need of redevelopment is a valid basis for the adoption of the Roosevelt-Seedorf Redevelopment Plan in 2004," ignores the presumption of validity that attaches to municipal action such as this. See Downtown Residents, supra, 242 N.J. Super. at 333. Enclave bears the burden of demonstrating that the City's reliance on the 1994 ordinance was error. The City is not obliged to demonstrate the contrary.

In addition, Enclave presented no evidence before the Law Division that the 3.2 acre site in question is in any different condition today than it was in 1994 when Resolution 889 was adopted. The record shows that the area in question has, if anything, declined since 1994. As the Redevelopment Plan observes, at one time the general area had a nursing home, a high school, the Children's Seashore House, the Mayfair Hi-Rise Apartments and other facilities. All of those buildings have been demolished except for the now-defunct nursing home, which is the site upon which Atlantic 17 proposes to erect the Chelsea Residence. Thus, the record demonstrates that nothing in the intervening decade calls into question Council's reliance on Resolution 889.

Enclave's additional arguments to the contrary concerning Resolution 889 lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).


Enclave argues further that "before adopting the Roosevelt-Seedorf Redevelopment Plan, the City failed to find that the project area met the statutory criteria for an area in need of rehabilitation." In its brief, Enclave argues that "the City merely relied upon its 1994 designation of the entire municipality as an area in need of rehabilitation to justify the adoption of the Redevelopment Plan for the Roosevelt-Seedorf project area. This defies both logic and the law." (emphasis added). Enclave's argument misperceives the applicable statutory scheme set forth in the LRHL.

The City was required to complete a two-step process in order to adopt Ordinance 135. First, it was obliged to: (1) adopt an "area in need of rehabilitation" resolution pursuant to either N.J.S.A. 40A:12A-14; and (2) adopt a redevelopment plan by ordinance pursuant to N.J.S.A. 40A:12A-7. So long as the resolution is adopted prior to adoption of the Redevelopment Plan itself, the statutory requirements are plainly satisfied. As we have already discussed in Part III, additional procedures are only required in those instances where a municipality seeks to exercise its powers of eminent domain, which is not the case here.

At the heart of Enclave's argument is discontent with the City's decision not to designate the delineated area an "area in need of redevelopment" under N.J.S.A. 40A:12A-5. This would have resulted in greater procedural safeguards, such as notice, a public hearing and a report issued by Council. See N.J.S.A. 40A:12A-6. However, Enclave has presented nothing to demonstrate that the City was precluded from proceeding under the path it chose. The fact that the Redevelopment Plan contemplated actual "redevelopment" does not invalidate the municipal action at issue here. Indeed, redevelopment is permissible under a portion of the LRHL, N.J.S.A. 40A:12A-15,*fn4 where a redevelopment plan is enacted pursuant to a finding of an area "in need of rehabilitation" under N.J.S.A. 40A:12A-14. Accordingly, the LHRL provides the City with two alternative paths from which it may choose. Any quarrel Enclave may have with the City's decision to proceed by the "in need of rehabilitation" route is a function of legislative enactment and does not bear upon the validity of the municipal action here.


Next, Enclave argues that the judge erred in refusing to allow Enclave to explore through depositions whether Council members accepted bribes in connection with the Redevelopment Plan. A trial court's disposition of discovery matters is reviewed for an abuse of discretion. See Payton v. N.J. Tpk. Auth., 148 N.J. 524, 559 (1997). Rules of discovery are to be liberally construed and accorded the broadest possible latitude. Blumberg v. Dornbusch, 139 N.J. Super. 433, 437-38 (App. Div. 1976). Generally, parties may obtain discovery regarding any non-privileged matter that is relevant to the subject of a pending action or is reasonably calculated to lead to the discovery of admissible evidence. R. 4:10-2; see also Shanley & Fisher, P.C. v. Sisselman, 215 N.J. Super. 200, 215 (App. Div. 1987).

Enclave is not precluded from making a showing that Council members accepted bribes. See Helmsley v. Ft. Lee, 78 N.J. 200, 236 (1978)(holding that "[t]he motives of the borough council in passing the ordinance are irrelevant to the validity of the measure, absent a showing of fraud, personal interest, or corruption"). We therefore agree that in appropriate circumstances, a party is entitled to pursue the issue of whether a governmental official voted in favor of a project because he was influenced by a bribe. Consequently, we must determine whether Judge Todd mistakenly exercised his discretion when he decided to preclude the requested discovery.

As Judge Todd observed, and as admitted by Enclave, there is no evidence to indicate any foul play in the present transaction. The record demonstrates that the guilty plea by Calloway resulted from an extensive investigation by the United States Attorney. Despite that extensive investigation, there was no evidence of any impermissible influence in the Redevelopment Plan here. When he rejected Enclave's request for depositions of Council members, Judge Todd observed that "[i]t wouldn't be appropriate to think that a deposition of City Council would bring to light, as skilled as counsel may be in examination at a civil deposition, . . . some issue of . . . bribery [or a] criminal basis for changing a position. [That] is beyond what this court is willing to entertain."

Finally, John Costanza, an authorized officer of Atlantic 17, L.L.C., in a certification dated March 7, 2007, swore that "[n]o principal, member, officer or employee of Atlantic 17, L.L.C. has ever been contacted or questioned at any time by any law enforcement agency with respect to the Redevelopment Plan or the approvals for the Property or any other aspect of this development." Under all of these circumstances, we are unable to conclude that Judge Todd abused his discretion when he declined to permit depositions of Council members.


Finally, we agree with Judge Todd's April 24, 2007 order denying Enclave's motion for reconsideration. Motions for reconsideration are governed by Rule 4:49-2. Reconsideration is a matter to be exercised in the trial court's sound discretion. Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 257 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988). "A litigant should not seek reconsideration merely because of dissatisfaction with a decision of the [c]court." D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990). "Reconsideration should be utilized only for those cases which fall into that narrow corridor in which either 1) the [c]court has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the [c]court either did not consider, or failed to appreciate the significance of probative, competent evidence." Ibid. Reconsideration motions should be used only to point out "the matters or controlling decisions which counsel believes the court has overlooked or as to which it has erred." R. 4:49-2.

Our review of the record of the motion for reconsideration demonstrates that other than addressing the discovery issue, Enclave did nothing other than present the same arguments the court had already properly rejected in its November 17, 2005 written decision. Reconsideration was accordingly not warranted. See ibid.


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