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MDK Development, LLC v. City of Hoboken

August 3, 2009

MDK DEVELOPMENT, LLC, AND MAURICE J. DEGENNARO, TAXPAYER OF THE CITY OF HOBOKEN, PLAINTIFFS-APPELLANTS/CROSS-RESPONDENTS,
v.
THE CITY OF HOBOKEN, AND S. HEKEMIAN GROUP, LLC, DEFENDANTS-RESPONDENTS/ CROSS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-475-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted:*fn1 May 20, 2009

Before Judges Cuff, C.L. Miniman and Baxter.

This appeal concerns a redevelopment project in Hoboken. Following three attempts to obtain conforming bids to redevelop the site of the municipal garage, the City of Hoboken (the City) selected a redeveloper. Plaintiffs, a developer, who had participated in the two earlier efforts, and a taxpayer filed an action in lieu of prerogative writs to challenge the award. Plaintiffs appeal from an order granting summary judgment in favor of the City and the designated redeveloper. We affirm.

In 2006, to effectuate the redevelopment and sale of its public works garage, the Hoboken City Council (City Council) designated the property fronting Observer Highway between Willow and Park Avenues an area in need of redevelopment pursuant to the Local Redevelopment and Housing Law (LRHL), N.J.S.A. 40A:12A-1 to -73. The City Council then hired Phillips Preiss Shapiro Associates, Inc. (PPSA), planning consultants, to prepare a redevelopment strategy. PPSA received substantial input from the Observer Highway Redevelopment Advisory Committee (Advisory Committee).

The Advisory Committee met frequently and worked with planners and architects to develop a consensus regarding the redevelopment of the garage property and to balance the desire to sell the property for full and fair market value with the desire to avoid a poorly planned, tall and bulky structure and the loss of open space, views and sunlight. The Advisory Committee recommended that redevelopment of the garage property include a mixed-use building with a 9/7 story configuration*fn2 and no more than 240 residential units. PPSA incorporated these recommendations into its redevelopment plan, which was submitted on April 19, 2006. The City Council reviewed and adopted the redevelopment plan by ordinance dated May 3, 2006.

The first request for proposals (RFP) placed significant weight on the proposed purchase price in evaluating submissions. The City Council received two proposals and rejected both.

In late 2006, the City Council undertook a less formal solicitation process. Concerned that 240 residential units could not be built in the 9/7 story configuration, the City Council solicited proposals for larger buildings; specifically, a 12/10/8 configuration that would allow up to twelve stories in the southeast portion of the building, ten stories in the center portion, and eight stories along the far side. The City Council anticipated receiving the best proposal for each of the configurations. The 2006 solicitation yielded six proposals from developer entities URSA Tarragon, Trammell Crow Residential (TCR) and plaintiff MDK Development, LLC (MDK), all of which were rejected by the Advisory Committee. The Advisory Committee concluded that the 2006 solicitation process produced "lowball" offers for the 9/7 story configuration. As a result, the Advisory Committee recommended the implementation of a third process that would give the 9/7 story configuration a "fair shake" by allowing for two types of proposals:

(1) Proposals conforming to the 9/7 story configuration of the Redevelopment Plan and having a minimum purchase price of $25 million; and

(2) Alternate proposals for development that exceeds the 9/7 story configuration of the Redevelopment Plan and having a maximum purchase price of $25 million.

Proposals for the 9/7 story configuration were to be given absolute preference over proposals for larger developments. However, if no 9/7 story proposals were received or the first two processes had not produced any proposals exceeding the suggested $25 million minimum, then an alternate proposal would be selected based upon numerous design criteria intended to encourage the smallest building size feasible at a purchase price of $25 million.

By resolution dated August 20, 2007, the City Council rejected all of the proposals received through the late 2006 solicitation. That resolution further authorized a third RFP, which allowed for two types of proposals: (1) a bid of at least $25.5 million for development consistent with the redevelopment plan, particularly the limitations on building height, or (2) an alternate bid of exactly $25.5 million for development consistent with the redevelopment plan, except that the building height shall not exceed a 12/10/8 story configuration. In addition, a bidder could submit only one bid and had to choose between the project as described in the redevelopment plan or the alternate proposal. Also, if one or more acceptable conforming bids were submitted, the City Council could select from the conforming bids a proposal based upon a number of factors set forth in the RFP. The August 2007 resolution also addressed the fact that the 12/10/8 story configuration was not set forth in the redevelopment plan. It stated:

6. If no acceptable Conforming Bids are submitted, the City Council may select contingent upon the subsequent amendment of the Redevelopment Plan, a proposal from the Alternate Bids based upon a number of factors to be set forth in the RFP, including developer qualifications and experience, and the development plan (particularly with regard to the minimization of building height and footprint).

On October 1, 2007, the City Council issued the 2007 RFP. It contained over 100 pages and numerous forms of agreement prepared by legal counsel specifically for the 2007 RFP. It also included two sets of design criteria prepared by PPSA for the evaluation of conforming and alternate proposals. The former was intended to evaluate the price and design components of competing conforming proposals, while the latter was intended to evaluate various design ...


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