March 8, 2012
JUDITH S. FELD, ROBERT M. FELD, AND THE FOUR FELDS, INC., D/B/A L. EPSTEIN HARDWARE CO., PLAINTIFFS-APPELLANTS,
THE CITY OF ORANGE TOWNSHIP, AND RPM DEVELOPMENT, LLC, DEFENDANTS-RESPONDENTS, AND ORANGE PRESERVATION PARTNERS, L.P., DEFENDANT.
On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-10421-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued December 19, 2011 -
Before Judges Sabatino, Ashrafi and Fasciale.
Plaintiffs are non-resident property owners and taxpayers in the City of Orange Township ("Orange" or "the township"). They have filed at least eight lawsuits against Orange and its governing officials challenging various municipal actions.
This appeal is from a November 19, 2010 order of the Law Division dismissing plaintiffs' action in lieu of prerogative writs. Plaintiffs sought to set aside the conveyance by Orange of sixteen parcels of land in a blighted area to a private entity, defendant RPM Development, LLC, ("RPM"), for the purpose of building affordable housing and revitalizing commerce in the township. Plaintiffs also appeal from a February 4, 2011 order of the Law Division denying their motion for reconsideration. We now affirm the Law Division's orders.
In its November 19, 2010 oral decision, the Law Division described Orange as "a distressed city with an ailing economy and acute shortage of affordable housing, and a declining tax base." In 2003, Orange enacted the Hope VI Redevelopment Plan to address some of these problems. In 2009, the plan was amended and renamed the Central Orange Redevelopment Plan. Pursuant to the redevelopment plan, Orange obtained a grant of $1.5 million from the New Jersey Department of Community Affairs' Neighborhood Stabilization Program and title to properties within the blighted area.
On November 4, 2009, the township council adopted Resolution 335-2009, which authorized the sale of sixteen lots to defendant RPM, a private for-profit developer of low-income housing. The resolution stated that the land would be conveyed in exchange for one dollar per parcel and certain specified commitments made by RPM for prompt development of the lots. RPM agreed to construct one- and two-family houses on the land within thirty-six months. It also agreed to employ minority workers and city residents, to make residents of Orange a minimum thirty-five percent of the construction workforce and twenty percent of the permanent workforce, to purchase goods and services from local merchants and businesses, and to implement traffic and safety controls as needed. On March 2, 2010, RPM and Orange entered into a redevelopment agreement that included the conditions of the conveyance as stated in the resolution.
Before the redevelopment agreement was executed, however, plaintiffs filed their complaint in lieu of prerogative writs to set aside Resolution 335-2009 conveying the land. In what might be described as a scattershot approach to litigation, plaintiffs raised many issues, which they have repeated in their brief on appeal.*fn1 Plaintiffs' arguments boil down to three primary claims: (1) that conveyance of the land required enactment of an ordinance by the municipal governing body and could not be effected by means of a resolution; (2) that the township council acted arbitrarily, capriciously, and unreasonably in conveying municipal land because there was inadequate consideration for the conveyance and no appraisals were obtained, among other reasons; and (3) that RPM failed to provide a so-called "pay-to-play certificate" before the township entered into the agreement to convey the land.
The standard of judicial review applicable to actions of municipal governments is highly deferential. Courts do not sit in judgment of the wisdom of municipal actions. Municipal ordinances and resolutions are presumed to be valid and rational. See First Peoples Bank of N.J. v. Twp. of Medford, 126 N.J. 413, 418 (1991); Hutton Park Gardens v. Town Council of W. Orange, 68 N.J. 543, 564 (1975). In the absence of a constitutional or statutory violation, municipal action may be overturned only if it was arbitrary, capricious, or unreasonable. Powerhouse Arts Dist. Neighborhood Ass'n v. City Council of Jersey City, 413 N.J. Super. 322, 332 (App. Div. 2010), certif. denied, 205 N.J. 79 (2011).
We reject plaintiffs' contention that Orange could not legally convey its blighted parcels to RPM without enacting an ordinance. N.J.S.A. 40A:12-13 lists three specific ways that a municipality can sell property it owns. One is by public auction, N.J.S.A. 40A:12-13(a); the second is by private sale in five specific circumstances, N.J.S.A. 40A:12-13(b); and the third is by private sale to a developer under the "Local Redevelopment and Housing Law" (N.J.S.A. 40A:12A-1 to -73), N.J.S.A. 40A:12-13(c). An ordinance must be enacted to authorize private sales by municipalities under subsection (b) of the statute. Subsection (c), however, is silent as to what form of municipal action is required to authorize private sales to a developer under the Local Redevelopment and Housing Law.
Plaintiffs argue that the subsections should be read in conformity so that municipalities are deemed authorized to act only by ordinance when they sell land to a private entity. Defendants respond that municipalities are free under subsection
(c) to choose between acting by ordinance or resolution.
In Fraser v. Township of Teaneck, 1 N.J. 503, 507 (1949), the Court stated: "it is well settled that where a statute fails to indicate whether the power should be exercised by ordinance or resolution it may be done by either means." Accord Twp. of N. Bergen v. City of Jersey City, 232 N.J. Super. 219, 224 (App. Div.), certif. denied, 117 N.J. 632 (1989). Because N.J.S.A. 40A:12-13(c) does not require action by enactment of an ordinance, a resolution suffices for the conveyance of municipally-owned land to a developer under the Local Redevelopment and Housing Law.
Plaintiffs cite Middletown Township PBA Local 124 v. Township of Middletown, 193 N.J. 1, 16 (2007), and argue for a "more nuanced" analysis of when municipal action requires an ordinance to satisfy the interest of public awareness. In Middletown, the Court considered whether an ordinance or resolution was required to approve a collective bargaining agreement by which the municipality agreed to pay for the health care costs of certain retired employees as authorized by N.J.S.A. 40A:10-23. Middletown, supra, 193 N.J. at 15-16. Because the statute did not explicitly require either an ordinance or a resolution, the Court held that neither was required. Ibid. The holding of Middletown is not contrary to our reading of N.J.S.A. 40A:12-13(c) in this case.
Plaintiffs also cite a footnote in In re Ordinance 04-75, 192 N.J. 446, 460-61 n.9 (2007), that discusses differences between an ordinance and a resolution. Among other things, the footnote states that a "municipal determination may be in the form of a resolution when the determination . . . is not applicable widely throughout the municipality." Ibid. (citations and quotation marks omitted). Defendants argue that the conveyance of the property in this case was not a municipal action that was "applicable widely throughout Orange" because it did not affect other properties, residents, or taxpayers. We need not adopt that position to reach our conclusion that a resolution was adequate in this case because the authorizing statute did not prohibit it. The cited footnote does not overrule Fraser, supra, 1 N.J. at 507, and Twp. of N. Bergen, supra, 232 N.J. Super. at 224, which accord the municipality the option of acting by a resolution in lieu of an ordinance.
Nor was the conveyance a donation of land to a private party, as plaintiffs allege, in violation of the New Jersey Constitution. Article VIII, section III, paragraph 3 of the State Constitution states: "No donation of land or appropriation of money shall be made by the State or any county or municipal corporation to or for the use of any society, association or corporation whatever." The properties in this case were conveyed in exchange for consideration of one dollar and, more important, the obligations undertaken by RPM to develop them with affordable housing within three years, to employ minority and local residents, to utilize local merchants and businesses, and to implement traffic and safety controls. These obligations provided benefit to the residents and taxpayers of Orange and were valuable consideration in exchange for the land.
Furthermore, an appraisal of the land was not required since it would not have affected the conveyance. We have not been provided transcripts of the township council hearings leading to the adoption of Resolution 335-2009. It appears that the council determined that its objective of developing the land with affordable housing did not allow for substantial monetary compensation for sale of the land. The actual value of the land would not have made any difference in the sale price. As it existed, the land was not benefiting the township. Its sale at a hypothetical higher dollar amount might have gained additional revenue for the township, but, apparently, it would not have accomplished the objective of promptly revitalizing the area and producing much-needed affordable housing for township residents.
A municipality is free to exercise business judgment in making decisions that accomplish valid municipal objectives. Ott v. Town of W. New York, 92 N.J. Super. 184, 198 (Law Div. 1966). "A court will uphold such an exercise of discretion unless 'arbitrary or capricious, contrary to law, or unconstitutional.'" Powerhouse Arts Dist., supra, 413 N.J. Super. at 332 (quoting Downtown Residents for Sane Dev. v. City of Hoboken, 242 N.J. Super. 329, 332 (App. Div. 1990)).
It is undisputed that Orange contains blighted areas in need of redevelopment. The township council had a valid objective of revitalizing the Central Orange Redevelopment District. The municipal officials exercised their discretion in conveying the properties to RPM in pursuit of that objective.
Plaintiffs further argue that Resolution 335-2009 is invalid because it does not include findings of reasonableness as to the consideration given in exchange for the public property. In support of that argument, they cite N.J.S.A. 40A:12A-8, which states in relevant part:
Upon the adoption of a redevelopment plan pursuant to [N.J.S.A. 40A:12A-7], the municipality . . . may:
g. . . . [L]ease or convey property or improvements to any other party pursuant to this section, without public bidding and at such prices and upon such terms as it deems reasonable, provided that the lease or conveyance is made in conjunction with a redevelopment plan, notwithstanding the provisions of any law, rule, or regulation to the contrary.
Plaintiffs contend this statute required the municipal governing body to make explicit findings of the reasonableness of all the terms of a private sale transaction. But the statute includes no such requirement. Cf. Powerhouse Arts Dist., supra, 413 N.J. Super. at 332 (adoption of municipal ordinance ordinarily does not require formal findings of fact). The statute grants broad powers to municipalities to "carry out and effectuate the purposes of this act and the terms of the redevelopment plan." N.J.S.A. 40A:12A-8. The reasonableness of municipal actions might be challenged on their merits under appropriate standards of judicial review, but the absence of explicit findings is not itself a basis for setting aside the transaction.
Furthermore, because transcripts of the council hearings have not been provided, we do not know whether the township council indicated its findings on the record, or whether the record as a whole contains substantial, credible evidence supporting the council's decision. See N.J. Soc'y for Prevention of Cruelty to Animals v. N.J. Dep't of Agric., 196 N.J. 366, 384-85 (2008). It was plaintiffs' obligation to provide such materials for review when attacking the bona fides of the township's decision.
Plaintiffs argue that Orange did not include several required documents and items of information in the agenda packet that was publicly disclosed eight days before the council meeting of November 4, 2009. They also contend that notice of use restrictions on the conveyed properties was not provided to the public.
Plaintiffs' attorney attended the November 4, 2009 meeting. Although he raised objections and made inquiries regarding the resolution, he did not object to the use or inclusion of information not provided in the agenda packet. Any deficiencies in notice to the public or the procedures employed should have been raised before the township council and corrected at that time. Also, plaintiffs acknowledge that they now have all required information, but they do not state how the information that was omitted prejudiced their interests. They have not shown plain error, clearly capable of producing an unjust result, Rule 2:10-2, in the township's omission of certain documents in the agenda packet for the meeting.
In sum, we conclude plaintiffs have not shown that the decision of the township council to convey the land to RPM by adopting Resolution 335-2009 was arbitrary, capricious, or unreasonable.
In their motion for reconsideration before the Law Division, plaintiffs for the first time argued that RPM was required to submit a "pay-to-play certification" in accordance with N.J.S.A. 19:44A-20.8(a). The Law Division declined to consider plaintiffs' contention because the issue was not raised at pre-trial conferences. The court's case management orders of May 6 and July 23, 2010, entered pursuant to Rules 4:5B-2 and 4:69-4, listed all issues to be argued in the case and made no mention of the "pay-to-play" argument. In their motion for reconsideration, plaintiffs stated they did not raise the issue earlier because counsel "didn't really understand the pay-to-play" laws until it came to his attention from other litigation.
The parties acknowledge that RPM contributed a total of $1,250 to some political campaigns in Orange. N.J.S.A. 19:44A-20.26 requires parties and bidders seeking public contracts to include a list of campaign contributions made to local politicians within the prior year if those contributions must be reported under The New Jersey Campaign Contributions and Expenditures Reporting Act, N.J.S.A. 19:44A-1 to -25.
Plaintiffs did not seek timely review of RPM's compliance with these statutes. A decision on the merits of the issue would have required a full opportunity for defendants to argue whether and how the relevant statutory provisions might have applied to the circumstances of this case.
In addition, plaintiffs have not presented in this appeal legal authority that would require nullification of a conveyance of land on the "pay-to-play" ground that they raised only in their motion for reconsideration. The penalty provided by the statute for failure of a business entity to comply with the "pay-to-play" requirements is a fine. N.J.S.A. 19:44A-20.26(d). We decline to reverse the Law Division's judgment dismissing plaintiffs' complaint on this belatedly-raised ground. The Law Division did not abuse its discretion by declining to consider matters that were not properly raised in plaintiffs' prerogative writs action.
We have considered the additional arguments made in plaintiffs' brief but conclude that they are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).