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Iron Mountain Information Management, Inc. v. City of Newark

March 13, 2009

IRON MOUNTAIN INFORMATION MANAGEMENT, INC., PLAINTIFF-APPELLANT,
v.
CITY OF NEWARK, DEFENDANT-RESPONDENT, AND MUNICIPAL COUNCIL OF THE CITY OF NEWARK, CENTRAL PLANNING BOARD OF THE CITY OF NEWARK AND CITY OF NEWARK HOUSING AUTHORITY, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-9375-04.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued January 14, 2009

Before Judges Cuff, Fisher and Baxter.

The central question before us is whether the Law Division erred when it dismissed as untimely a commercial tenant's challenge to the City of Newark's redevelopment plan, even though that tenant never received individual notice that the property in which its business was located was targeted for redevelopment. In particular, we are called upon to decide whether a commercial tenant is entitled in the redevelopment context to the same rights that must be afforded to an owner of the property, as held in Harrison Redevelopment Agency v. DeRose, 398 N.J. Super. 361 (App. Div. 2008). There, we held the notice provisions of the Local Redevelopment and Housing Law (LRHL), N.J.S.A. 40A:12A-1 to -49, constitutionally infirm, and required fair and adequate contemporaneous individual written notice of the impending redevelopment process to the property owner. 398 N.J. Super. 361, 367-68 (App. Div. 2008). We further held that unless such constitutionally adequate notice is provided, the owner's right to challenge the redevelopment designation is preserved beyond the forty-five day limit established by statute and court rule. Id. at 368.

Notably, when the Legislature adopted the LRHL, it chose not to impose upon a governing body any obligation to provide commercial tenants with individual notice of a proposed blight designation. In fact, the LRHL treats commercial tenants no differently from any other member of the general public whose only notice of the proposed blight designation is publication of a hearing notice in a newspaper of general circulation once a week in each of the two weeks preceding the Planning Board meeting. N.J.S.A. 40A:12A-6(b)(3). This is in sharp contrast to the individual notice, however "spotty and incomplete," DeRose, supra, 398 N.J. Super. at 400, the Legislature required for property owners.

We now hold that a commercial tenancy does not trigger the enhanced notice requirements found necessary in DeRose to save the redevelopment statute's notice provisions from constitutional infirmity, unless its unit is noted in the tax assessor's records. The trial judge correctly held that plaintiff, a commercial tenant, was obliged to challenge the blight designation within forty-five days even though not afforded individual advance notice of such proposed designation. We thus affirm the trial judge's dismissal of plaintiff's complaint.

I.

Plaintiff, Iron Mountain Information Management, Inc., operates a document storage and retrieval business in a six-story, 350,000 square foot building (the building) located at 110 Edison Place in Newark. Situated on a 2.04 acre lot, the building is bordered by McCarter Highway and Edison Place. All six floors of the building, which was constructed in the early part of the twentieth century, are dedicated to plaintiff's business of storing files, stacked floor to ceiling, for law firms and hospitals. Plaintiff, the sole tenant in the building, has occupied the property since August 28, 1996, when it entered into a long-term lease with the owner, the Berkowitz Company, to rent the property until August 31, 2014, with the option to extend the term of the lease for two successive five-year periods.

The lease also afforded plaintiff the option to purchase the property "at a fixed formula during the period from September 1, 2006 [to] December 31, 2008," and provided plaintiff a right of first refusal if another party offered to purchase it. Finally, the lease entitles plaintiff to share, according to a fixed formula, in any proceeds realized by Berkowitz if the property is taken by eminent domain, but only if the taking occurred prior to September 1, 2007.

On April 12, 2004, defendant Municipal Council of the City of Newark (City Council) adopted a resolution authorizing the Planning Board to investigate whether a number of properties within a twenty-four acre zone known as the Core Area qualified as blighted pursuant to N.J.S.A. 40A:12A-5. The Berkowitz property was within that Core Area.

To complete the investigation ordered by City Council, the Planning Board commissioned Schoor DePalma to investigate whether the Core Area was blighted. On May 20, 2004, Schoor DePalma issued its investigative report answering that question in the affirmative, describing the Core Area as:

[e]xhibit[ing] a growing lack of proper utilization resulting in a stagnant and not fully productive condition of land, which is highlighted by the proliferation of parking lots as one of the dominant land uses, a high volume of vacant commercial space, conflicting land uses, and the low value of taxable improvements found throughout the study area.

With respect to the Berkowitz property, Schoor DePalma observed that its interior was in poor condition*fn1 and described it as "an obsolete building with a marginal economic use":

This building['s] . . . vertical design is obsolete for modern warehousing needs, which is evidenced by the leasing of the building to multiple tenants over at least the past 27 years. The area around the building has been transformed from the mixed-use residential, commercial and industrial area of the early 20th Century to the modern corporate office and business district of the 21st Century, leaving an obsolete building with a marginal economic use in the heart of the CBD [central business district].

In addition, the current storage use of the building generates minimal employment and creates a stagnant condition over half of Block 159, which when combined with the expanse of surface parking on the adjacent properties is a lack of proper utilization of land in the Central Business District.

It is unlikely that this condition will be remedied without some further assemblage [of] properties . . . .

The report then discussed the Berkowitz building in relation to the surface parking lots on the adjacent properties, and concluded that as a whole the properties qualified as blighted under N.J.S.A. 40A:12A-5(a), (d) and (e):

The surface parking lots consume over 4 acres (71% of the total 5.6-acre block) of downtown real estate while posting an improvement value of only 4%. These blocks are characterized by conditions that are obsolete, deleterious and unproductive, which qualify the block under criteria "a", "e" and "d" [of N.J.S.A. 40A:12A-5].

On June 9, 2004, the Planning Board held a public hearing on whether the Core Area qualified as blighted. Notice of the hearing was published in The Star-Ledger on May 22 and 29, 2004, and notice was mailed to Berkowitz. A representative appeared on behalf of Berkowitz, and objected to the Berkowitz property being designated blighted. No one appeared at the hearing on behalf of plaintiff.

On June 28, 2004, the Planning Board passed a resolution recommending that all of the properties in the Core Area be designated blighted. On July 14, 2004, City Council passed a resolution, approving the Planning Board's recommendation to declare the study area blighted, and adopting the Board's findings. City Council directed Schoor DePalma to draft a redevelopment plan for the Core Area.

On August 16, 2004, the Planning Board held a public hearing on the redevelopment plan proposed by Schoor DePalma. Two of the plan's provisions had significant implications for the Berkowitz property. First, the plan specified that warehouse facilities, such as the Berkowitz property, be excluded and prohibited. Second, the plan authorized the acquisition of most parcels within the Core Area, including the subject property. The plan identified the Berkowitz property as "an optional site in the plan" that "could remain, be modified, or demolished to make way for additional development." The plan provided ...


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