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In re Application for Project Authorization Under the New Jersey Register of Historic Places Act

July 30, 2009


On appeal from the New Jersey Department of Environmental Protection.

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



Submitted June 1, 2009

Before Judges Carchman, Sabatino and Simonelli.

Respondent New Jersey Department of Environmental Protection (DEP) granted the application of respondent Camden Redevelopment Agency (CRA) to acquire and demolish the Sears, Roebuck and Company Retail Department Store (Sears building), located at 1300 Admiral Wilson Boulevard in Camden (Sears property).*fn1 The CRA and respondent Campbell Soup Company (Campbell Soup) initially sought approval to acquire the Sears property and to demolish the Sears building as part of a proposed amendment to the Gateway Redevelopment Plan (Gateway plan), adopted by the City of Camden (City) in 2006. The Gateway plan's purpose was to revitalize businesses, institutions, and housing, and to create new development opportunities in the area known as the "Gateway Redevelopment Area" (Gateway area).

Appellants Ilan Zaken (Zaken), Miskeen Originals, L.L.C. (Miskeen Originals), and Dr. Denim, Inc. (Dr. Denim),*fn2 who claim an interest in the Sears property, challenge the DEP's decision, contending that: (1) the CRA lacked standing to apply for and receive demolition authorization for the Sears building; and (2) DEP's grant of the application was arbitrary, capricious and unreasonable, and unsupported by the record. Appellants argue that the CRA failed to establish that demolition of the Sears building would result in a public benefit, and that there were no feasible or prudent alternatives to the demolition. We affirm.

The following facts are pertinent to our review. The Gateway area traditionally served as a transitional neighborhood and industrial hub but underwent a decline during the late twentieth century. It consists primarily of vacant and under-utilized land, and deteriorated and abandoned properties. It is bounded by Interstate 676 on the south and west, by the Admiral Wilson Boulevard (U.S. Route 30) on the north, and by the Cooper River on the east. In June 2003, the City adopted the Gateway Determination of Need Study, which identified the Gateway area as an area in need of redevelopment.

The Gateway area includes the Sears property, which encompasses approximately four acres. The Sears building located on the property was constructed in 1927, with an addition to the rear constructed in 1947. The two-story, 125,000-square-foot building served as a Sears retail department store until the store closed in 1971. After that a variety of commercial and non-commercial tenants occupied the building. It apparently became unoccupied in January 2007.

In May 2000, the Sears building was placed on the New Jersey Register of Historic Places for its commercial "Classical Revival" architecture and its design by George C. Nimmons and Company, a renowned commercial architectural firm. In addition to architecture, this historic building was deemed significant in the areas of commerce, community planning and development, and social history. The building was also placed on the National Register of Historic Places under two criteria:

A. Property is associated with events that have made a significant contribution to the broad patterns of our history.

C. Property embodies the distinctive characteristics of a type, period, or method of construction or represents the work of a master, or possesses high artistic values, or represents a significant and distinguishable entity whose components lack individual distinction.*fn3

In 2006, the City adopted the Gateway plan, which did not identify the Sears property as a property to be acquired or a property that may be acquired.

On May 16, 2006, Zaken entered into an agreement of sale to purchase the Sears property for $2,750,000. He planned to use the Sears building for appellants' manufacturing and distribution operations, for office and warehouse space, and for a retail store and recording studio. However, the transfer of title did not occur, and on January 8, 2007, appellants filed a complaint in the Superior Court, Camden County, seeking specific performance.

On February 6, 2007, the CRA, the redevelopment agency responsible for the acquisition and disposition of properties; the City; the County of Camden (County); and the New Jersey Economic Development Authority (EDA), the coordinating state agency for the project, entered into a Project Development Agreement (PDA) to induce Campbell Soup to expand its existing facilities in Camden and to actively participate in the development of an office park in the Gateway area.

The PDA also acknowledged that Campbell Soup had been located in Camden since that company's inception in 1869, and that the company was the sole Fortune 500 company with headquarters in Camden. The PDA further acknowledged that retention and expansion of Campbell Soup's world headquarters in Camden would accomplish a major public benefit, stating that the company was a major employer in the region with more than 1200 employees and "hundreds of additional jobs in the city for outside contractors and their employees."

As part of its involvement, Campbell Soup agreed to make site improvements, to rehabilitate structures on its campus located directly south of the office park area, and to construct a new two-story, 80,000-square-foot office building. Campbell Soup also agreed to invest $72 million, including $58.5 million for construction of the new building, and $13.5 million for rehabilitation of its existing structures. According to an EDA news release, Campbell Soup would use approximately 40 acres of the proposed 110-acre office park.

The PDA acknowledged that the Sears building was an impediment to the development of a quality office park. Campbell Soup, therefore, proposed to contribute $2.9 million to the CRA to acquire the Sears property and to demolish the Sears building.

Campbell Soup further agreed to act as master redeveloper of the office park and to use its own resources to attract other corporate clients to move there. The City, County, and State also made financial commitments to invest approximately $23 million to improve or create the area's infrastructure. The day after the parties signed the PDA, Governor Corzine was quoted in a news release as saying:

This deal demonstrates the importance and the benefits of public-private partnerships in helping our communities thrive. . . . Stimulating economic growth is vital to our ongoing efforts to revitalize Camden, and this collaboration between Campbell and state, county, and local government represents an important sign of renewal for the city.

Sometime after executing the PDA, the CRA and Campbell Soup sought an amendment of the Gateway plan from the City of Camden Planning Board (Planning Board). The amendment added the Sears property to the project. At a public hearing on April 18, 2007, the Planning Board recommended that the City adopt the amendment.

The CRA and Campbell Soup also sought approval from the City of Camden Historic Preservation Commission (Camden HPC) for a Certificate of Appropriateness to demolish the Sears building. After two public hearings, the Camden HPC recommended that the Planning Board deny the certificate. The Planning Board declined to follow that recommendation and, instead, adopted a resolution granting the certificate.

The CRA obtained several expert reports, including an existing conditions assessment report by S. Harris & Co., dated May 15, 2007, which recognized the financial aspects that must be considered when recommending alternative uses for the Sears building. The report stated that:

The overall condition of the building's structure is stable and sound. There are localized areas of distress and structural instability, but these issues can be corrected. The 1947 building campaign at the west end of the building is a lesser quality construction, but it also does not pose a structural concern. The greatest concerns within the building are hazardous materials and the severe mold growth that has been fostered and now infests all of the walls, floors, and ceiling tiles within the structure. Related to the mold is the deterioration of the roofing materials through which water has penetrated the interiors and helped spawn the mold colonies. Poor maintenance and the inefficiency of existing systems has also aided in the degradation of the interior environment.

This building can be reused, but the costs involved in redeveloping the site may make it unrealistic to do so. Due to the extensive remediation required, the interior demolition, and remaining usable square footage, the building may no longer provide the city a useful and marketable property. By going through several alternative scenarios of reuse, we have come to the conclusion that any attempt at reuse of the entire building would make the site very difficult to market and to efficiently get the best value for the property as a whole. If the economic environment were different, we might in fact advocate that full rehabilitation of the entire building could provide an average return on investment, but this is not the case.

An alternative analysis report by S. Harris & Co. explored five options involving total or partial rehabilitation or demolition of the Sears building. The report concluded that all the options were "technically and physically feasible," but that rehabilitation was not financially viable.

A feasibility assessment report by Urban Partners analyzed the economic feasibility of the five proposed alternatives to demolition. After evaluating development costs, available financing, tax credits, and the alternative projects' economics, the report concluded that the financing gaps were too large for them to be financially feasible with one exception. It concluded that demolition of the Sears building to create a cleared site for construction of a three-story, 175,000-square-foot office building was the only financially feasible option.

Relying on its experts' findings, the CRA determined that rehabilitation of the Sears building required the removal of hazardous materials including mold, asbestos, and lead-based paint, the replacement of roofs, and the installation of new drainage, mechanical, plumbing, electrical, and fire suppression systems. The building's rehabilitation also had to address several areas of settlement, major displacement and cracking of exterior ...

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