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Milford Mill 128, LLC v. Borough of Milford

May 2, 2008


On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-99-07.

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



Argued April 7, 2008

Before Judges Graves, Sabatino and Alvarez.

Plaintiff Milford Mill 128, LLC, the contract purchaser of property designated for redevelopment in the Borough of Milford ("Borough"), appeals an order issued by the Law Division on May 23, 2007. The order in question dismissed plaintiff's lawsuit against the Borough and the Borough's Joint Planning Board and Zoning Board of Adjustment ("the Joint Board") concerning the subject property, insofar as the lawsuit challenged the Borough's present redevelopment plan. We affirm the judge's order, without prejudice to plaintiff or the title owner bringing a potential inverse condemnation action against the municipality, or other future proceedings raising new issues.


The subject property consists of about seventy acres of land, identified on the Borough's tax map as Block 19, Lot 51 and Block 13, Lot 5.01. Plaintiff is the contract purchaser of that entire tract. Plaintiff is also the contract purchaser of about forty adjoining acres in the Township of Alexandria.*fn1

Together the two parcels are commonly known as the "Curtis Paper Mill Site."

The paper mill, after many years of operation, closed in 2001. The former mill site has not been in active use since that time. The Milford portion of the site includes several dormant manufacturing buildings, loading docks, a former water treatment plant, several outbuildings, and wetlands. The property is traversed by a creek and a rail line, and abuts the Delaware River. The site has significant environmental contamination issues.*fn2

The former mill was in financial distress. According to a Borough resolution in the record, the mill is in arrears for over one million dollars in local property taxes. In 2003, the mill's corporate owner filed an action in the Ohio courts for the assignment of its assets for the benefit of creditors. At the same time, various creditors of the mill filed an involuntary bankruptcy petition in the United States Bankruptcy Court for the District of New Jersey.

Under the Bankruptcy Court's direction, the defunct mill was offered for sale at an auction in June 2004, and plaintiff bid for the property.*fn3 Subsequently, plaintiff and the assignee of the mill's assets entered into a purchase and sale agreement on November 7, 2005. Pursuant to that agreement, plaintiff agreed to buy the entire property, including the Alexandria portion of the mill, for $7.5 million, payable in installments and subject to numerous conditions. As one of those conditions, the purchase contract acknowledged that the Borough's approval "is required to change the zoning on the . . . [p]roperty and enable [the] [p]urchaser to effectively develop [it]." Plaintiff thereby undertook in the contract to file "a request for an ordinance to change the current zoning on the . . . [p]roperty to a reasonably acceptable density for residential development."

In the meantime, the Borough pursued steps for the redevelopment of the property, pursuant to the Local Redevelopment and Housing Law ("LRHL"), N.J.S.A. 40A:12A-1 to -49. At the Borough Council's request, the Joint Board*fn4 conducted a preliminary investigation of the site, on notice to the property owner and to the local community, pursuant to N.J.S.A. 40A:12A-5. At a hearing on September 11, 2003, the Joint Board adopted a resolution, finding that the mill property met the LRHL's criteria of an area in need of redevelopment, as set forth in N.J.S.A. 40A:12A-5(a), (d), (e) and (h).

Among other things, the Joint Board determined that many of the structures on the former mill site are "substandard, unsafe, unsanitary, dilapidated, or obsolete or . . . are so lacking in light, air[,] or space, as to be conducive to unwholesome living or working conditions." N.J.S.A. 40A:12A-5(a). These circumstances have produced "a stagnant or not fully productive condition of land potentially useful and valuable for contributing to and serving the public health, safety and welfare." N.J.S.A. 40A:12A-5(e). No other properties were included in the redevelopment study area.

On March 1, 2004, the Borough Council adopted the Joint Board's recommendations, passing a resolution that designated the property as an area in need of redevelopment under the LRHL. See N.J.S.A. 40A:12A-6(b)(5). Pursuant to the LRHL, the redevelopment designation was transmitted to the State Commissioner of the Department of Community Affairs, who acknowledged it in a letter to the Borough dated April 26, 2004. The Commissioner's letter specifically noted that the property "comprises an area in which redevelopment is to be encouraged."

Thereafter, on January 18, 2005, the Borough Council adopted, by ordinance, a Redevelopment Plan for the property. See N.J.S.A. 40A:12A-7. The Redevelopment Plan was prepared with the assistance of a professional planner hired by the municipality.

As part of its aims, the Redevelopment Plan envisions the "[d]evelopment of the southern [twenty-one] acres of the site as a mix of non-residential development to provide tax ratables lost to the Borough with the closure of the former paper manufacturing facility." Additionally, the Redevelopment Plan seeks to maintain "the village quality of the Borough," by including "a limited number of small-lot single family residential dwellings organized around a neighborhood park and greenways." The Redevelopment Plan also contemplates "a mix of professional offices and housing, which may include affordable units," open space and passive recreation areas, public access to the riverfront, pedestrian trails, and a village square.

These elements in the Redevelopment Plan are consistent with the Borough's 2002 report re-examining its master plan, including the master plan's stated goals of retaining the Borough's "small-town" atmosphere, while also promoting commercial uses that "meet the needs of both local and regional populations." The Redevelopment Plan provides for overlay zoning, which leaves the underlying industrial zoning for the property in place if the property is not redeveloped.

Specifically, the Redevelopment Plan for the seventy-acre tract calls for: (1) thirteen acres with thirty-one residential units no higher than thirty-five feet; (2) 2.8 acres of mixed-use development for medical and other professional offices, together with affordable housing; (3) twenty-three acres for light industrial development, including light manufacturing, health and fitness facilities, commercial recreation uses, and film production facilities; (4) 1.1 acres for public uses; and (5) about thirty acres set aside for open ...

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