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MIFCO, Inc. v. Township Committee of Neptune


March 17, 2009


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-702-07.

Per curiam.


Argued December 10, 2008

Before Judges Cuff, Fisher and Baxter.

In this appeal, we review the trial judge's determination that a resolution, which declared plaintiff's property to be in need of redevelopment, was neither arbitrary, capricious nor unreasonable. We reverse.

Plaintiff MIFCO, Inc. is the owner of property located on Highway 35 in Neptune Township (Block 559, Lots 2 and 3) where plaintiff has operated the Midway Ice and Fuel Oil Company for approximately seventy years. By resolution dated June 13, 2005, the Township's governing body authorized the Planning Board to investigate whether an area on both sides of the North Channel of the Shark River Inlet, which included, among others, plaintiff's property, exhibited the characteristics of an area in need of redevelopment as defined by the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 to -73.*fn1

The Planning Board authorized T&M Associates to investigate the area*fn2 and render a report. Public hearings were conducted on December 5 and 20, 2006. At the end of the second hearing date, the Planning Board adopted a resolution recommending the study area to be in need of redevelopment except for certain lots within the area that were only declared in need of rehabilitation. As for the excepted lots, the resolution declared that "in making its recommendation for an area in need of rehabilitation, the Planning Board made no conclusions or findings as to whether [the excepted lots*fn3 ] either meet or do not meet the statutory criteria for an area in need of redevelopment."

Of those lots excepted from the Planning Board's finding of a need for redevelopment were businesses on the west side of Route 35, known as Mac's Bait and Tackle Shop (Block 555, Lot 15) and Jack's Rib and Ale House (Block 555, Lots 7-14 and 16), and one business on the east side of Route 35, known as Pilot Electric Company (Block 559.01, Lots 4-8). Both Pilot Electric's property and plaintiff's property are located on and consume the entirety of a small area -- described as a teardrop-shaped island -- surrounded by Route 35 and Railroad Avenue, which is depicted in the following reproduction of part of a map included in T&M's report*fn4

Plaintiff filed a timely complaint in lieu of prerogative writs seeking to set aside the resolution that declared plaintiff's property in need of redevelopment. Plaintiff asserted that the factual record failed to support a finding that its property was in need of redevelopment and, also, that defendants' actions were arbitrary, capricious and unreasonable because Pilot Electric's property was excepted from redevelopment despite the allegation that its location and condition is essentially indistinguishable from plaintiff's.

In considering plaintiff's contentions, the trial judge accurately recognized that "[t]he power to declare an area in need of redevelopment is granted to local governing bodies in order to correct housing, commercial and industrial deterioration which is not likely to be corrected by private action," citing N.J.S.A. 40A:12A-2(a). The judge also observed that the Planning Board found that plaintiff's property met the criteria set forth in N.J.S.A. 40A:12A-5(d), (e) and (h).

In examining the record to determine whether there was evidence to support the Planning Board's finding, the trial judge concluded that the subsection (e) criteria were not met because the Planning Board relied upon an interpretation of subsection (e) struck down by our Supreme Court in Gallenthin v. Borough of Paulsboro, 191 N.J. 344 (2007). Because defendants have not cross-appealed, we need not consider that point further.

In considering the Planning Board's application of subsection (d), the trial judge distinguished Spruce Manor Enterprises v. Borough of Bellmawr, 315 N.J. Super. 286 (Law Div. 1998), upon which plaintiff greatly relied both then and now, and held that unlike Spruce Manor Enterprises, the problems associated with the subject property are easily determined from an external inspection of the property.

The subject property is a nonconforming parcel in a size of only .39 acres. An external view of the property illustrates that it is overcrowded with numerous refrigerated storage containers, fuel tanks, trucks, vans and other heavy equipment on the premises.

Given the small size of the property, the intensity of the land use, and the substantial amount of ingress and egress into the site from a major highway (Highway 35) the subject property posed a threat to the public health and safety. In this situation, there was no need for an internal inspection [as in Spruce Manor Enterprises] in order to assess the external hazards the property posed to the public.

The Township of Neptune's planner visited the site of Midway Oil and Fuel Co., inspected the property and testified that due to the above mentioned reasons, the subject property satisfied criteria "d." In addition, the Township's Redevelopment Study and Preliminary Investigation Report, prepared by T&M Associates, established the same. As a result, the Board had sufficient evidence to conclude that the [p]laintiff's property satisfied the criteria set forth in N.J.S.A. 40A:12A-5(d).

We concur in this determination substantially for the reasons contained in the trial judge's written decision quoted above.*fn5

That would ordinarily be the end of the matter. However, as we have observed, plaintiff has claimed that its property was treated differently in that it received a redevelopment designation whereas other allegedly similarly-situated properties received only a rehabilitation designation. N.J.S.A. 40A:12A-14 states in relevant part that an area "may be determined to be in need of rehabilitation if the governing body of the municipality determines by resolution that there exists in that area [certain] conditions." Those conditions are:

(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 maintenance; and (3) a program of rehabilitation, as defined in [N.J.S.A. 40A:12A-3], may be expected to prevent further deterioration and promote the overall development of the community. [Ibid.]

As we have mentioned and illustrated, plaintiff's property is located on the southern half, and Pilot Electric's property is located on the northern half, of the teardrop-shaped island between Route 35 and Railroad Avenue. In considering plaintiff's disparate treatment theory, we acknowledge that it does not necessarily follow that the proximity of plaintiff's property to Pilot Electric's excepted property alone requires similar treatment, but an analysis of the disparate treatment argument must start with recognition of the fact that T&M's report made similar findings that both Pilot Electric's and plaintiff's properties were in need of redevelopment.

T&M found that the buildings on Pilot Electric's property were, as the trial judge restated, "in a state of disrepair with dilapidated and unsanitary conditions"; T&M also found that Pilot Electric's property "is nonconforming" -- as was plaintiff's -- in that "it totals 0.82 acres where a minimum lot size of 1.15 acres (50,000 square feet) is required." Obviously, in light of the fact that these properties are adjacent and surrounded by the same roadways, T&M's comments regarding ingress and egress, and the heavy flow of traffic in the area, as well as the property's nonconforming size -- all of which were circumstances relied upon in finding plaintiff's property in need of redevelopment -- would seem equally applicable to Pilot Electric's property.

In short, the record demonstrates a great number of similarities between plaintiff's and Pilot Electric's properties, and the only basis referred to by the trial judge for distinguishing between plaintiff and Pilot Electric was some brief and conclusory testimony, which was provided by T&M's representative at the hearing on December 20, 2006, that the property on the northern half of the teardrop-shaped island permitted an opportunity to redevelop other properties in a manner consistent with the Township's master plan. The judge viewed this testimony as supporting the contention that "[p]laintiff's property is located on the southern end of the island lending it to integration with a critical area of the development plan, specifically the reconfiguration of Highway 35." The judge found that this rendered the nature of plaintiff's property, for purposes of redevelopment, "distinct and unique" from Pilot Electric's property to the north. We do not share the judge's view that the record sufficiently demonstrates a legitimate distinction between plaintiff's and Pilot Electric's properties.

Indeed, we are particularly concerned about the change in the thrust of T&M's presentation once counsel for Pilot Electric, at the commencement of the second hearing, indicated to the Planning Board that he "had an opportunity to talk to [T&M's representative] for about four or five minutes beforehand, and we were just discussing a possible resolution to our situation" that might eliminate his need to cross-examine T&M's representative. Later, T&M provided the brief testimony that the trial judge referenced in his written opinion, and counsel for Pilot Electric sought a ruling regarding "our situation" before he waived cross-examination of T&M.

That is, the record suggests that -- at or around the time plaintiff's counsel rigorously cross-examined T&M's representative, which was frequently interrupted by the mayor, who is also an attorney, and the Planning Board's attorney*fn6 --Pilot Electric was pursuing an agreement to exclude its property from redevelopment. Ultimately, after T&M's view of the need for redevelopment of the entirety of the teardrop-shaped island changed by the end of the December 20 hearing, the Planning Board concluded that Pilot Electric's property was not in need of redevelopment.

Having carefully reviewed this record, we are not satisfied that the Planning Board did not act arbitrarily, capriciously or unreasonably in treating plaintiff's property differently from Pilot Electric's property. First, the record permits an inference that the evidence before the Planning Board, regarding the properties in the teardrop-shaped island, was tailored to conform to an agreement struck between Pilot Electric and the Planning Board rather than the facts as originally presented by T&M's report. Certainly, there is no substantial evidence to overcome what the record plainly reveals in this regard. Concerned Citizens of Princeton, Inc. v. Mayor and Council of Princeton, 370 N.J. Super. 429, 452 (App. Div.), certif. denied, 182 N.J. 139 (2004). Moreover, the record before the Planning Board is largely bereft of any understanding about the guidelines the Planning Board may have utilized in excepting some lots, but not others, from the declaration of redevelopment.

Accordingly, we remand to the trial court for a determination as to the circumstances that led to Pilot Electric being excepted from the declaration of redevelopment. The judge should also ascertain whether proper guidelines existed and were applied by the Planning Board in distinguishing between these properties. If it is found that there were no reasonable or property guidelines for such a distinction, the trial judge should remand for the development of standards, and a principled evaluation by the governing body of the determination of plaintiff's property as in need of redevelopment upon the application of those standards.

Reversed and remanded.

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