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Harrison Redevelopment Agency v. Derose

February 25, 2008

HARRISON REDEVELOPMENT AGENCY, PLAINTIFF-RESPONDENT,
v.
ANTHONY J. DEROSE, DEFENDANT/COUNTERCLAIMANT/THIRD-PARTY-PLAINTIFF-APPELLANT,
v.
TOWN OF HARRISON AND PLANNING BOARD OF THE TOWN OF HARRISON, THIRD-PARTY DEFENDANTS-RESPONDENTS.
HARRISON REDEVELOPMENT AGENCY, PLAINTIFF-RESPONDENT,
v.
ANTHONY J. DEROSE, DEFENDANT-APPELLANT, AND OFFICE OF THE PUBLIC DEFENDER, SEARS ROEBUCK AND CO., CHARLES A. STANZIALE, JR., BANKRUPTCY TRUSTEE, STATE OF NEW JERSEY DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT DIVISION OF WORKERS' COMPENSATION UNINSURED EMPLOYERS FUND, STATE OF NEW JERSEY DEPARTMENT OF THE TREASURY DIVISION OF TAXATION, AND TOWN OF HARRISON, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket Nos. L-2001-06 and L-2744-07.

The opinion of the court was delivered by: Sabatino, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued*fn1 February 4, 2008

Before Judges Parrillo, Sabatino and Alvarez.

These consolidated appeals, along with two companion cases we also decide today,*fn2 converge at the intersection of our state's laws regulating the government's taking of private property for purposes of redevelopment. The central and recurring question before us is whether a property owner who fails to challenge a redevelopment designation containing his or her property within forty-five days of its adoption by a municipal governing body, pursuant to the Local Redevelopment and Housing Law ("LRHL"), N.J.S.A. 40A:12A-1 to -49, may still challenge, in full or in part, the public purpose of the taking of his or her property, by way of a defense in an ensuing condemnation action. To date both this court and the trial courts have rendered conflicting answers to that fundamental question in unpublished decisions.

The importance of such matters of timeliness is heightened by the fact that the LRHL does not, as it is presently worded, require a municipal governing body to provide individual advance notice to an owner that it is considering designating his or her property for redevelopment, and thus may take that property in the future through the power of eminent domain. Nor are property owners entitled under the LRHL to individual notice after a governing body approves such a designation, unless the owner had previously filed a written objection while the proposed redevelopment was being preliminarily evaluated by the local planning board.

We now rule on these unsettled questions of widespread importance, and the related question of the validity of the LRHL's notice provisions under the Federal and State Constitutions.

We hold that, unless a municipality provides the property owner with contemporaneous written notice that fairly alerts the owner that (1) his or her property has been designated for redevelopment, (2) the designation operates as a finding of public purpose and authorizes the municipality to acquire the property against the owner's will, and (3) informs the owner of the time limits within which the owner may take legal action to challenge that designation, an owner constitutionally preserves the right to contest the designation, by way of affirmative defense to an ensuing condemnation action. Absent such adequate notice, the owner's right to raise such defenses is preserved, even beyond forty-five days after the designation is adopted.

Conversely, we also hold that if the municipality's notice does contain these constitutionally-essential components, an owner who wishes to challenge the designation presumptively must bring an action, in lieu of prerogative writs, within forty-five days of the municipality's adoption of the designation. The owner who is provided with such adequate notice ordinarily cannot wait to raise those objections as a defense in a future condemnation action. This presumption of a time bar shall be especially strong with respect to general attacks on the validity of the redevelopment designation raising issues that are not specific to the owner's parcel. In recognition of our judiciary's ultimate constitutional authority over matters of practice and procedure, trial judges retain the residual power, however, to extend the time for the assertion of all claims of invalidity, where necessary to serve the interests of justice, even after the forty-five days have elapsed.

By so ruling, we endeavor to harmonize the terms and objectives of the LRHL with those of the Eminent Domain Act, N.J.S.A. 20:3-1 to -50, and our Rules of Court. Such a harmonized reading of the applicable statutes and rules also ensures that our redevelopment laws pass muster under the Due Process Clause of the Federal Constitution and separation of powers principles under the State Constitution. It also relieves property owners and the public at large of the burdens of engaging in premature litigation, so that owners are not forced to go to court unless and until they receive fair and adequate notice of the municipality's adverse determination and of its right to take their properties.

Because the notice afforded to property owners in this case was constitutionally inadequate, the Law Division erred in deeming time-barred appellant's defenses to the attempted condemnation of his property. We therefore vacate its orders and remand for further proceedings. On remand, the trial court shall consider the merits of appellant's contention that the proposed taking of his property for redevelopment violates the LRHL and the Blighted Areas Clause of the New Jersey Constitution. In particular, the trial court must assess, among other things, whether the forced acquisition of appellant's land for redevelopment satisfies the criteria the Supreme Court recently expressed in Gallenthin Realty Dev., Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007).

I.

Although we have been called upon to resolve several rather abstract issues arising under our laws and constitutions, we undertake that responsibility mindful that these cases, in a very tangible way, involve a real community, and the real people who live, work and own property there. That community is the Town of Harrison, a small enclave in Hudson County consisting of 1.2 square miles and inhabited by about 15,000 residents.

Harrison's Characteristics and Its Economic History

The Town of Harrison is bordered on the west and south by the Passaic River, on the north by East Newark, and on the east by Kearny. The Town is bisected by Route 280, and includes a stop on the PATH rail line that runs from Newark to New York City. The Harrison waterfront area along the Passaic River was originally settled in the seventeenth century, as the river provided an important means of transportation. By the early part of the twentieth century, the Town had attracted substantial industry, including manufacturers of brick, wire cloth, gypsum, cans, elevators and trunks, as well as an oil refinery and a lumber yard. These industries took advantage of the area's proximity to the Passaic River and the numerous rail lines traversing the Town. The Town's residential districts were mainly situated away from the Passaic River and the industrial and commercial zones. The Town once housed a professional baseball stadium, which has since been demolished.

As the economy matured, many of the heavy industrial businesses in Harrison gradually began to cease their operations. Factory buildings in the Town were largely replaced or adapted to light industrial uses. Warehouses and distribution facilities became more prevalent. These trends increased truck traffic on local streets. The PATH station's ridership precipitated the need for greater commuter parking. As the old industrial firms in Harrison closed shop, the Town's tax base diminished.

Meanwhile, the surrounding region underwent its own transformation. In recent decades, substantial investment and redevelopment have occurred nearby in the City of Newark, whose commercial district is situated close to Harrison on the opposite side of the Passaic River. Those changes in Newark include, among other things, the construction of several modern office towers; new classroom buildings for Rutgers University and Seton Hall University; an additional federal courthouse and refurbished State court buildings; the New Jersey Performing Arts Center; an ice hockey arena; and a minor-league baseball park.

Anthony J. DeRose, His Business and the Subject Property

Defendant Anthony J. DeRose*fn3 is a small-business owner who has operated Tony's Truck Tire Repair for thirty-six years. DeRose runs the business with his wife and one part-time employee. For years, Tony's Truck Tire Repair has obtained work through a contract with the New Jersey Turnpike Authority. The contract authorizes DeRose's company to change and repair bus and truck tires of vehicles that become disabled on the Turnpike between Exits 13 and 18W. The repair shop is on call twenty-four hours per day, seven days per week. When the shop receives a call for assistance, its service truck goes to the location of the disabled vehicle. The tire repairs are usually performed roadside, although occasionally the disabled vehicle is taken back to the shop.

On September 8, 1997, DeRose purchased a property in Harrison designated as Block 99, Lots 40 to 44, and more commonly known as 200-208 Middlesex Street. The sale price was $260,000. The property consists of .29 acres, and is located in the town's "I-B" industrial zone. The property houses a 11,500 square-foot brick structure, most of which is a garage. The structure was built in the early 1900's as part of the former Driver-Harris factory complex.

Since acquiring the property, DeRose has used it to conduct the business of Tony's Truck Tire Repair. He keeps his two service vans and a small dump truck on site, plus an inventory of about three hundred varieties of tires. DeRose rents out a portion of the property to an HVAC contracting firm, which also uses the premises as a base for off-site service calls. There is no retail activity on the premises. The business uses on site conform with the requirements of the I-B zone. In or about 2000, DeRose performed various renovations to the property, including the installation of new electrical and gas service, upgraded plumbing, new doors, walls and window frames, and new sidewalks and a concrete apron.

The record reflects that Tony's Truck Tire Repair has generally earned gross revenues of $500,000 to $600,000 annually. The business takes advantage of its close proximity to an interchange of the Turnpike, allowing it to respond quickly to roadside service calls. DeRose contends that his company has never received a citation for municipal code violations, and that he has operated it profitably and without complaints from neighbors. A professional appraisal of the property conducted in 2007 at the Town's request valued the property at $780,000.*fn4

Harrison's Redevelopment Activities

Recognizing the disadvantages of Harrison's old industrial character and its shrinking tax base, Town officials began to embark on a path towards an ambitious redevelopment, one that ultimately involved almost a third of the Town's acreage. In May 1995, a study of the Town's Master Plan recommended that the governing body pursue such redevelopment. On April 1, 1997, the Harrison Mayor and Council authorized the Town's Planning Board to conduct "a preliminary investigation" as to whether an area within the Town, identified by blocks and lots in an attached schedule, qualified as an "area in need of redevelopment," pursuant to N.J.S.A. 40A:12A-5.

The area in question, generally located in the western portion of the Town near the Passaic River, "represents approximately 32 percent of the Town's area" and "consists of 250 acres of land located on the Passaic River and between and around Interstate Route 280 and the Amtrak railroad tracks in Harrison." As described in the record, the structures within the targeted area, generally built in the early 1900's, had been "part of large industrial complexes" that were used primarily for commercial purposes, though some were used as residences.

As requested by the governing body, the Planning Board passed a resolution on May 9, 1997, commissioning the planning firm of Moskowitz, Heyer and Gruel to prepare a map of the Study Area, evaluate the properties within that area under the redevelopment criteria set forth in the LRHL, and specify those properties that the firm deemed to be in need of redevelopment or rehabilitation. The Board's resolution was published in local newspapers.

The Gruel Report

In July 1997 the consultants issued a forty-eight page report, plus appendices, under the signature of Susan S. Gruel, P.P. (the "Gruel Report"). The Gruel Report concluded that every one of the eighty parcels identified in the schedule attached to the Town's prior resolution was in need of redevelopment or otherwise suitable for acquisition under the criteria of the LRHL. Throughout her report, Gruel noted that properties within the area under study were "underutilized" and in need of repair. She observed that "[i]n an effort to reuse the structures once associated with [the former] large [industrial] complexes, individual buildings have been sold or leased to independent operations, with little improvements or alterations, or consideration of new accesses or circulation patterns." Gruel opined that "[t]his piecemeal reuse and diverse ownership has [led] to underutilization and obsolescence of large-scale factory buildings."

With respect to transportation, Gruel observed that "[n]ew development in the Study Area has been constrained by the problems of internal accessibility despite its excellent regional access." She added that "[t]raffic congestion, narrow roads, inadequate internal circulation patterns and poor road conditions have hampered new development in the area" and that any redevelopment "will require investment in roadway improvements" and the planning of "efficient internal circulation patterns."

As to the subject property at 200-208 Middlesex Street, "Parcel #28," which was then owned by Irving Adler,*fn5 the Gruel Report presented the following observations:

Parcel #28 contains a brick 1-story manufacturing structure and a brick 1-story garage structure, both of early 20th century construction. These structures are remnants of the Driver-Harris factory complex. The 1-story structure is utilized for Custom Concepts custom cabinetry manufacturing operations. The 2-story garage has sliding aluminum doors and is utilized for dump truck storage, not related to the cabinetry operation. Trucks utilizing this garage must maneuver in the South Second Street right-of-way to back into the garage. The two structures completely cover all five lots in this area. A trash dumpster is stored on the public sidewalk in front of the structure that fronts on Middlesex Street.

Based upon these observations, Gruel concluded that Parcel #28 was specifically in need of redevelopment under the LRHL's criteria, as set forth at N.J.S.A. 40A:12A-5(d) and (e):

Redevelopment Criteria: This parcel meets criteria d and e [of N.J.S.A. 40A:12A-5].

The structures of this parcel lack proper utilization. They have been altered little for the new operations therein. The garage structure is underutilized and is not appropriately utilized. The manufacturing building is approaching obsolescence due to its age.

The Planning Board's Preliminary Investigation

After receiving the Gruel Report, the Planning Board issued a written notice, dated July 17, 1997, announcing that it would conduct a public hearing, pursuant to N.J.S.A. 40A:12A-6, on August 7, 1997. The notice was signed by the Town Engineer. The stated purpose of the hearing was "to determine whether portions of the Town of Harrison, as more particularly described [therein], should be designated as a 'redevelopment area' according to criteria set forth in Section 5 of the [LRHL]."

Because it is germane to the constitutional arguments before us, we present the full text of that notice:

PLANNING BOARD

TOWN OF HARRISON

HUDSON COUNTY

NEW JERSEY

NOTICE

PLEASE TAKE NOTICE that on Thursday August 7, 1997 at 7:00 p.m., at the Harrison High School Auditorium, 1 North Fifth Street, Harrison, New Jersey, the Planning Board of the Town of Harrison will hold a public hearing pursuant to Section 6 of the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq. The purpose of the hearing will be to undertake a preliminary investigation to determine whether portions of the Town of Harrison, as more particularly described below, should be designated as a "redevelopment area" according to criteria set forth in Section 5 of the Local Redevelopment and Housing Law.

The area which is the subject of this preliminary investigation (referred to herein as the "Study Area") consists of approximately 250 acres of land located on the Passaic River and between and/or around Interstate Route 280 and the Amtrak railroad tracks in the Town of Harrison. The western border of the Study Area stretches south along the Passaic River from Harrison Avenue to the Flexo-Craft light industrial complex at the south end of vacated First Street. The Study Area then extends eastward along the Passaic River toward the end of Cape May Street and the PATH property and northward to the Amtrak railroad tracks, Interstate Route 280, and Bergen Street.

A map delineating the Study Area has been prepared and may be inspected at the Office of the Municipal Clerk, 318 Harrison Avenue, Harrison, New Jersey. For the convenience of readers of this notice, a copy of this map is included as a part of this notice.

A report entitled "Redevelopment Area Study, Town of Harrison, Hudson County, New Jersey" prepared by Moskowitz, Heyer & Gruel, P.A., community planning consultants, dated July 1997, has also been prepared and a copy is also available for inspection in the Office of the Municipal Clerk at the address stated above.

If interested, you may appear and be heard at the public hearing.

Joseph A. Cundari, Engineer

Town of Harrison

Dated: July 17, 1997

This notice announcing the Planning Board's August 7 public hearing was published in The Star Ledger and The Jersey Journal on July 23 and 28, 1997. The notice was republished in The Jersey Journal on the day of the hearing. Additionally, the notice was broadcasted on a local cable access channel on each of the two days preceding the hearing.

Apart from these means of general publication, the Planning Board's notice was sent, via certified mail, to all property owners within the designated area on July 24, 1997. At the time these notices were sent, DeRose did not yet own the subject premises at 200-208 Middlesex Street, as he then was under contract to purchase them from Irving Adler. However, DeRose acknowledges that he separately received a mailed copy of the notice because he had owned another parcel*fn6 at that time in the designated area.

The August 7, 1997 Planning Board Meeting

The Planning Board conducted the anticipated public hearing on August 7, 1997. The Board prepared and distributed a two-page handout to members of the public who were in attendance. The handout contained three sections, covering (1) the purpose of the meeting, (2) the general purposes of redevelopment, and (3) a statement preemptively addressing residents' concerns on how they might be affected.

With respect to the purpose of the meeting, the handout advised residents that the Planning Board's determination that night "will not be a final binding decision" and that the Town Council would have "the final say":

THE PURPOSE OF TONIGHT'S MEETING Tonight the Board will hold a public hearing on whether a particular segment of the Town meets state statutory criteria for designation as a "redevelopment area." The location and boundaries of this area (the "Study Area") will be identified early in tonight's meeting.

The Board has been directed to undertake the investigation of this issue by the Town Council. The Board's decision on the issue will not be a final binding decision. Rather, it will be a recommendation to the Town Council. The Town Council will have the final say on the issue. [Emphasis added.]

In its next section, the handout summarized the general legislative purposes of redevelopment in favorable language. It also informed the attendees that the designation of land as a redevelopment area was only "the first step" in the redevelopment process:

THE PURPOSE OF REDEVELOPMENT

The New Jersey Legislature has enacted laws that permit municipalities to redevelop areas in their communities where facilities are deteriorated, not fully productive, or otherwise detrimental to the safety or welfare of the community. Redevelopment can improve and restore property values, provide new business and housing opportunities, create jobs, improve the municipal tax base, and create a better community in which to live. The designation of an area as a "redevelopment area" is the first step in the redevelopment process. [Emphasis added.]

Anticipating that residents at the meeting might worry about the individual ramifications of redevelopment, the handout advised that such impacts would not be addressed that evening, but rather would be addressed at a future time. The handout emphasized this advice with italics:

HOW WILL YOU BE AFFECTED?

What kind of redevelopment might take place, and how property owners may be affected, will not be discussed or decided at tonight's hearing. These questions can only be answered when a "redevelopment plan" is adopted. By law, the redevelopment plan must follow the designation as a "redevelopment area."

Before a redevelopment plan is adopted, there must be additional public hearings, and interested parties will have the opportunity to be heard on the specifics of the plan and how the plan might affect them.

The handout also included a list of instructions for the meeting. The instructions stated that, after the Board Chairperson made opening remarks, the Town Planner would provide "a brief presentation . . . explaining the limits of the Study Area and the basis for the proposal." The instructions directed residents to fill out printed cards in advance if they wished to speak, noting that when such speakers were recognized by the Chair, they would be "permitted to ask questions, make statements, and present evidence."

During the course of the August 7 meeting, Gruel provided a general overview of the contents of her written report and the basis for her recommendations. The transcript indicates that copies of the Gruel Report were not available to the public to peruse at the hearing. When one property owner in attendance complained about the Report's unavailability, the Planning Board's counsel instructed her that copies of the Report could be inspected in the office of the town clerk and at the municipal library.*fn7

Several residents addressed the Planning Board at the August 7 hearing and raised questions about the proposed redevelopment. However, those residents did not present formal evidence or testimony from any ...


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