July 14, 2008
SILVER OAKS PROPERTIES, INC., A NEW JERSEY CORPORATION, PLAINTIFF-APPELLANT,
BOROUGH OF MATAWAN, A BODY POLITIC OF THE STATE OF NEW JERSEY, MICHAEL CANNON, DEBRA BURAGINA, JOSEPH PENNIPLEDE, PAUL BUCCELLATO, DONNA GOULD AND SHARON ROSELLI, INDIVIDUALLY REPRESENTING THE INDIVIDUAL ELECTED OFFICIALS OF THE BOROUGH OF MATAWAN, K. HOVNANIAN COMPANIES, MACK-CALI REALTY CORPORATION, AND COLUMBIA GROUP, DEFENDANTS-RESPONDENTS, AND NJT CORPORATION AND TOWNSHIP OF ABERDEEN, A BODY POLITIC OF THE STATE OF NEW JERSEY, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-250-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 12, 2008
Before Judges Axelrad, Payne and Messano.
Plaintiff, Silver Oak Properties, Inc., appeals from three orders dated January 8, 2007, that 1) denied its motion for summary judgment; 2) granted summary judgment to defendants, the Borough of Matawan, its elected officials, defendants Michael Cannon, Debra Buragina, Joseph Penniplede, Paul Buccellato, Donna Gould, and Sharon Roselli (collectively, Matawan); and 3) granted defendants K. Hovnanian Companies, Mack-Cali Realty Corporation, and the Columbia Group (collectively, the Columbia Group), summary judgment and dismissed plaintiff's complaint with prejudice. Plaintiff argues that Matawan's decision to designate the Columbia Group as the developer of its "train station project" was "arbitrary and capricious"; that the decision was "not supported by any factual findings"; that Matawan failed to comply with statutory requirements in designating the Columbia Group as the developer; and that the selection of the Columbia Group was as a result of improper political pressure. We have considered these arguments in light of the record and applicable legal standards. We affirm.
The Aberdeen-Matawan train station (the Station) is located on the border of Aberdeen Township and the Borough of Matawan. Both towns considered the area surrounding the Station to be underutilized and otherwise eligible for redevelopment pursuant to the Local Redevelopment and Housing Law (LRHL), N.J.S.A. 40A:12A-1 to -73. Aberdeen designated a 59.5 acre area surrounding the Station as a redevelopment area in 1999, and Matawan followed suit on July 5, 2000, designating 44.23 acres of land surrounding the Station for its redevelopment.
Each town initially hired its own consultant to formulate a redevelopment plan for the area within its respective border. Aberdeen hired Coppola & Coppola Associates (Coppola), a municipal planning firm, which formulated a plan that emphasized retail and commercial development that Aberdeen believed would increase its tax revenues, diversify its tax base, and stimulate the local economy. Aberdeen's plan included a residential component of 291 luxury apartments to be built by plaintiff pursuant to approvals secured prior to adoption of the redevelopment plan, as well commercial and retail space.
Matawan hired THP, Inc. (THP) to prepare its plan and also created a "Mayor's Task Force" to solicit public input and serve as liaison to the governing body. Matawan's plan called for a mixed-use development consisting of mid-rise apartments or townhouses, office and retail space, a hotel, and open space for recreation. Both municipal plans noted a concern for increased residential development given the already overburdened joint school district.
Matawan and Aberdeen soon recognized that their redevelopment goals might be more easily accomplished if they worked in concert. Therefore, in contemplation of a cooperative redevelopment effort, they entered into an interlocal services agreement, pursuant to the Interlocal Services Act, N.J.S.A. 40:8A-1 to -11. The agreement created a joint management committee (JMC) to "coordinate planning, development and implementation of the Aberdeen/Matawan Plan, the Aberdeen Plan, and the Matawan Plan," consisting of three members from each municipality. The JMC was also charged with the task of formulating a request for proposals (RFP), receiving and reviewing those responses, and ultimately recommending a developer to the governing bodies of Aberdeen and Matawan for final approval. Aberdeen was designated the "lead agency" for the project.
Although the municipalities intended to cooperate in their redevelopment efforts, their agreement recognized that they might not agree upon a unified redevelopment plan or upon a single redeveloper for the project. The agreement stated, "[T]he parties  agree that each party shall have ultimate control over the selection of development uses and developers to implement the overall Aberdeen/Matawan Plan, the Aberdeen Plan and the Matawan Plan as it relates to its respective municipality." Under the agreement, the JMC would select and make a non-binding recommendation to each municipality regarding a designated developer. Each municipality was able to terminate the agreement by not agreeing to the JMC's recommendations, or upon ninety days' written notice.
The JMC hired Coppola to prepare a combined plan for the Station's redevelopment that incorporated the two municipal plans. The JMC issued an RFP seeking developers to submit proposals consistent with the combined plan and each of the individual municipal plans. Each respondent was advised to consider the possibility that [Aberdeen and Matawan] may not agree with the selection and recommendations of the JMC . . . and the Interlocal Services Agreement and this RFP provides for [Matawan] to select and negotiate directly with any Respondent for the redevelopment of the Matawan Parcels located in the Matawan Redevelopment Area.
The developer or developers chosen would be designated to negotiate a redevelopment agreement with the municipalities, and would have the exclusive right to negotiate for a period of 120 days.
Five developers submitted proposals, the JMC conducted interviews with all five, and plaintiff and the Columbia Group survived the interview process. The JMC asked Coppola to review the two competing proposals against the redevelopment plans adopted. The Columbia Group's proposal contained more residential development, and less commercial and retail development, than called for in the redevelopment plan. Plaintiff's proposal also contained more residential development than the redevelopment plan, but less than the Columbia Group's proposal.
Coppola determined that plaintiff's proposal most closely matched the redevelopment plan and that the Columbia Group proposal did not "meet the letter or the spirit of the economic redevelopment plan" because of its emphasis on residential development, its lack of a [payment in lieu of taxes] program, and its lack of a specific infrastructure plan. Coppola recommended the JMC select plaintiff as developer for the project.
The record reveals a factual dispute as to what occurred next. Plaintiff contends that in October 2002, the JMC unanimously approved a resolution recommending its selection as the designated developer for the joint project, and further agreed to present the recommendation to each town's respective governing body. However, Matawan counters by contending that no such resolution was provided to its governing body and that Aberdeen unilaterally approved a resolution designating plaintiff as its developer, thus effectively terminating the interlocal services agreement. On December 3, 2002, Matawan approved a resolution that granted the Columbia Group the exclusive right to negotiate a redevelopment agreement for a period of 120 days.*fn1
On January 16, 2003, plaintiff filed its complaint in lieu of prerogative writs against Matawan, the Columbia Group, NJT Corporation, a subsidiary of N.J. Transit and the owner of some of the land in the redevelopment area, and Aberdeen.*fn2 The complaint alleged that Matawan's decision to designate the Columbia Group for negotiation of a redevelopment agreement was arbitrary and capricious. Plaintiff demanded that Matawan's designation of the Columbia Group as redeveloper be set aside and that it be designated instead. Plaintiff also alleged that the designation was in violation of the New Jersey Local Public Contracts Law, N.J.S.A. 40A:11-1 to -51, and 42 U.S.C.A. § 1983, for which plaintiff sought monetary damages, counsel fees and costs.
When discovery closed, Matawan and the Columbia Group moved for summary judgment. Plaintiff cross-moved for summary judgment in its favor. The motion judge heard oral argument on November 3, 2006, and on January 8, 2007, issued an oral opinion denying plaintiff's cross-motion, and granting Matawan's and the Columbia Group's motions for summary judgment. This appeal followed.*fn3
Plaintiff argues that Matawan acted in an arbitrary, capricious and unreasonable manner when it designated the Columbia Group as its redeveloper for the Station because it ignored the recommendations of its own consultants and the stated goals of its own redevelopment plan. Plaintiff further argues that the decision was not based upon "any factual findings," additional evidence of its arbitrary nature. Plaintiff also contends that Matawan violated the LRHL by essentially amending the redevelopment plan without notice and opportunity to be heard through acceptance of the Columbia Group's non-conforming submission. Finally, plaintiff asserts that Matawan designated the Columbia Group as a result of improper and undue political pressure. We find none of the arguments persuasive.
We begin by noting that the acts of a municipal governing body are presumptively valid. Bryant v. City of Atl. City, 309 N.J. Super. 596, 610 (App. Div. 1998). Absent a showing to the contrary, we presume that the actions of a municipality are rationally taken based upon knowledge and experience. Id. Overcoming the presumption of validity is a heavy burden that the challenger of municipal action must meet in order to prevail. Id. "This presumption can be overcome only by proofs that preclude the possibility that there could have been any set of facts known to the legislative body . . . [that] would rationally support a conclusion that the enactment is in the public interest." Id. (quoting Hutton Park Gardens v. West Orange Twp. Council, 68 N.J. 543, 564-65 (1975))(citations omitted). "When two actions are open to a municipal body, municipal action is not arbitrary and capricious if exercised honestly and upon due consideration, even if an erroneous conclusion is reached." Bryant, supra, 309 N.J. Super. at 610 (citing Worthington v. Fauver, 88 N.J. 183, 204-05 (1982)).
The LRHL was enacted to "codify, simplify and concentrate prior enactments relative to local redevelopment and housing, to the end that the legal mechanisms for such improvement may be more efficiently employed." N.J.S.A. 40A:12A-2(d). Once a redevelopment plan is adopted, the municipal government is charged with implementing the plan. N.J.S.A. 40A:12A-8. It has broad powers under the LRHL to, among other things, "contract with . . . redevelopers for the planning, replanning, construction, or undertaking of any project or redevelopment work." Id.
"[T]he LRHL does not set forth any criteria governing the selection of a private redeveloper." Vineland Constr. Co., Inc. v. Township of Pennsauken, 395 N.J. Super. 230, 255 (App. Div. 2007). We have noted, "Given the absence of any legislated selection criteria, the designation of a redeveloper, like all municipal actions, is a discretionary act, vested with a presumption of validity, that will be upheld where any state of facts may reasonably be conceived to justify the action." Ibid.
Viewed against this backdrop of general principles, we conclude, as did the motion judge, that plaintiff failed to demonstrate any reason why Matawan's selection of the Columbia Group should be overturned as arbitrary, capricious, and unreasonable, or as having been made in a manner otherwise contrary to the LRHL. We have noted that a variance between the adopted redevelopment plan and the ultimate agreement negotiated by the municipality does not serve as a basis to reverse the municipal action. In Bryant, for example, we rejected plaintiffs' argument that Atlantic City acted in an arbitrary, capricious, and unreasonable manner by approving a redevelopment agreement that significantly differed from the previously-adopted redevelopment plan. 309 N.J. Super. at 617.
We noted, "[T]he [LRHL] does not require that the [r]edevelopment [p]lan mirror the ultimately approved redevelopment project." Ibid. We also recognized that a redevelopment agreement will differ from the original plan because various contingencies arise during negotiations between the developer and the municipality. Ibid. Furthermore, the LRHL does not require amendment of the original redevelopment plan to include provisions similar to those contained in the redevelopment agreement. Id. Lastly, we observed there is nothing in the statutory scheme that requires a municipality to issue a request for qualifications (RFQ), and that even if an RFQ is issued, there is no statutory requirement that the redevelopment agreement ultimately negotiated actually conform to it. Id. at 624. Therefore, plaintiff's argument that the process employed by Matawan violated the LRHL because the Columbia Group's proposal differed from the overall contours of the redevelopment plan is unpersuasive.
Plaintiff's more generic assertion that Matawan acted in an arbitrary, capricious, and unreasonable way because its decision could not be rationally supported by any set of facts simply ignores much of the evidence in the record. For example, the council members considered the submissions and reviewed them along with the recommendations of the consultants. Some believed the Columbia Group's proposal was the most aesthetically pleasing and most consistent with Matawan's "small town feel." The council members were familiar with the Columbia Group's reputation, experience, and strong financial position. Conversely, the council expressed concerns about plaintiff's proposal, noting that some of plaintiff's prior developments were too large and inconsistent with the desired aesthetic. They expressed concerns about the likely financial success of plaintiff's development strategy. In short, plaintiff failed to exclude the possibility that Matawan's decision was rationally based upon factors appropriate to the exercise of its discretionary authority.
The last reason argued by plaintiff as a reason for overturning Matawan's designation is that the Columbia Group was chosen for improper political reasons that were contrary to the public good. Plaintiff alleged that State Senator Joseph Kyrillos introduced a representative from the Columbia Group to members of the Borough Council at a public meeting, but off the record, in November 2002. When questioned about the introduction, the senator allegedly stated that he was "trying to help a constituent." Plaintiff offered the certification of Matawan's former administrator who claimed that one of the municipal officials, defendant Joseph Penniplede, told him that the Columbia Group was chosen because it was Kyrillos' choice. Plaintiff further alleged that Kyrillos received in excess of $45,000 in campaign contributions, over a four year period, from the head of the Columbia Group and related entities.
In Vineland Constr. Co., supra, 395 N.J. Super. at 245, the plaintiff argued that the designation of a rival redeveloper was arbitrary, capricious, and unreasonable "because it was motivated by improper political considerations." Id. at 245-46. It alleged that the designee, through the intercession of the governor, was able to meet with and secure an agreement with the State Department of Environmental Protection (the DEP) regarding the public dedication of some land in the redevelopment area. Id. at 246. After striking an alternative arrangement with the DEP, the designee and the municipality finalized the redevelopment agreement. Id. Within weeks thereafter, a principal of the developer contributed $20,000 to the Democratic State Committee. Id.
We concluded that the municipality's decision was not based upon improper political pressure. Id. at 257-58. We acknowledged that the developer's political connections may have facilitated a prompt meeting with the municipality and the DEP, but concluded that the municipality's designation was based upon other legitimate factors. Id. at 257-58.
In this case, Matawan had already conducted preliminary reviews of the various development proposals, and, through the selection process, was already considering the Columbia Group's proposal at the time of the contact with Senator Kyrillos. It is certainly possible that the developer's political connections secured a prompt meeting with Matawan's public officials. However, in the end, we cannot conclude on the record presented that those connections were an illicit reason for the designation.