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Kane Properties, L.L.C v. City of Hoboken

November 16, 2011

KANE PROPERTIES, L.L.C., PLAINTIFF-APPELLANT,
v.
CITY OF HOBOKEN, NEW JERSEY AND CITY OF HOBOKEN CITY COUNCIL, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-3395-10.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued October 12, 2011

Before Judges Payne, Reisner and Hayden.

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

Plaintiff Kane Properties, L.L.C., appeals from a March 3, 2011 order of the Law Division, affirming the decision of the Hoboken City Council reversing variances granted to plaintiff by the municipal zoning board.

To summarize, plaintiff sought (d) variances to build a twelve-story seventy-two-unit residential building with a parking garage and an on-premises day care center, in an I-2 industrial zone. After extensive hearings, the Hoboken Board of Adjustment (Board) granted the variances. On a challenge filed by Skyline Condominium Association (Skyline), which operates a nearby fifteen-story residential building, the City Council (Council) disapproved the Board's grant of variances for residential use, and for exceeding floor area, story height and building height restrictions. The Council approved the variance for a day care center, and that approval is not at issue here. Plaintiff then filed a Law Division action in lieu of prerogative writs, challenging the Council's decision.

Reiterating arguments it unsuccessfully raised in the Law Division, plaintiff first contends that the Council's decision was tainted by the participation of the City's recently-appointed Corporation Counsel, an attorney who had previously represented Skyline in the Board hearings. In the alternative, plaintiff argues that the Council's decision was arbitrary and capricious because it was not supported by the record evidence. At oral argument, plaintiff's appellate counsel urged that, even if we were to rule for plaintiff on the conflict issue, a remand to the Council is unnecessary because the evidence supporting the variance is so one-sided in its favor that plaintiff is entitled to variance relief as a matter of law.

Based on this record, we cannot agree that plaintiff was necessarily entitled to prevail on its application, but we conclude that the Corporation Counsel's participation, despite a clear conflict of interest, requires that the matter be remanded to the Council for reconsideration. Accordingly, we reverse the March 3, 2011 Law Division order on appeal, vacate the May 5, 2010 City Council resolution, and remand this matter to the Council for further proceedings consistent with this opinion.

I

This was the most pertinent evidence introduced at the Board hearing. The property is located in an I-2 industrial zone, in which residential uses are not permitted.*fn1 However, following the "gentrification" of Hoboken and neighboring Jersey City, there are in fact many high-rise residential buildings in the zone and just across the municipal border in Jersey City.

The property owner, Anthony Rey, testified about the problems he had in running a meat and cheese wholesaling operation in an area that had significant non-conforming residential uses. He alleged that his residential neighbors, particularly Skyline, drove his business out of the area by constantly complaining about noise and fumes from the refrigerated delivery trucks that arrived at his cold-storage warehouse. According to Rey, local law enforcement authorities repeatedly issued citations to Rey and his suppliers, as a result of which, in 2001, he moved his operation to another city. The property was still vacant and boarded up at the time of the hearing in 2009.

According to Rey, he was unable to sell or rent the Hoboken site to any other industrial user, because they were all afraid that they would likewise be the subject of complaints from the residential neighbors. However, on cross-examination, he was unable to provide specifics about when and to whom he had attempted to sell the property. He also admitted that he had never listed the property with a broker for either sale or lease. He never sought tax relief from the City because the building was empty and unused. He further conceded that although he was threatened with "stiff penalties for failure to comply," he "wasn't fined." Beyond a couple of letters sent in 1992, he did not direct his attorney to take action in response to the threatened enforcement actions. Nor did he ever reach out to his neighbors at Skyline to try to resolve their concerns.

On cross-examination, he denied needing to move his operation in order to obtain more space. But he admitted that when he moved his operation to North Bergen in 2001, he also merged his company with a second company, with which he had been in negotiations since 1998. The site in North Bergen was larger than the one in Hoboken.

At the time of the hearing, the property was under contract to buyers who conditioned their purchase on obtaining variances for residential construction. Asked how he finally happened to find a buyer for his property, Rey explained that after many years, he agreed to sell to someone who worked at the fire station across the street from the property. He claimed he did not use a broker and arrived at a price without getting an appraisal. In response to questions from the Board, Rey admitted he never thought of trying to sell the property to anyone who might use it for retail purposes, or other non-warehouse uses allowed by the zoning ordinance. He wanted to sell to a similar user who would also buy the freezers and other equipment in the building.

The applicant also presented expert testimony from Kenneth Ochab, a professional planner. He offered several reasons in support of granting the (d) variances. First, he opined that the property had been zoned into inutility, because the industrial uses permitted in the I-2 zone were no longer economically viable in that area of Hoboken. Second, the property was blighted and underutilized, and the proposed development would remedy that situation. He also opined that the dominant use in the surrounding Hoboken neighborhood, and the adjacent Jersey City neighborhood, was high-rise residential buildings, and the proposed project was consistent with that use. The addition of an attractive residential high-rise, in place of a boarded-up old warehouse, would improve the visual environment along Newark Street, which was one of the gateways into Hoboken. Ochab further testified that the proposed development was consistent with the master plans of both Hoboken and Jersey City and, finally, that it was consistent with the intent and purpose of the Municipal Land Use Law, N.J.S.A. 40:55D-1 to -112. In the latter regard, he noted that building urban high-rise housing was consistent with the state development policy to reduce suburban sprawl and conserve open space.

On cross-examination, Ochab agreed that the Hoboken master plan, which recommended residential use for this zone, was last updated in 2004, and the City Council had not adopted it. He admitted that the I-2 zone permitted retail uses, but he insisted that the site was too small for a "substantial commercial or retail facility." He also opined that there were food stores and a strip mall nearby that "already met the retail demand" in the area. He further opined that a small retail store with off-street parking would encounter the same objections from neighbors about "truck deliveries and traffic and noise" that Rey experienced.

Despite conceding that the zoning allowed a comprehensive list of retail uses, including liquor stores, drive-through dry cleaners, and beauty salons, Ochab insisted that none of those businesses could be viable at that location. He also testified that "[w]hen you have an emerging development pattern, such as residential, it stands to reason that continuation of that pattern is good planning, and that other uses, which may not be as compatible is not good planning." He admitted that the Southwest District Redevelopment Study, on which he ...


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