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Borough of Glassboro v. Grossman

Superior Court of New Jersey, Appellate Division

January 7, 2019

BOROUGH OF GLASSBORO, Plaintiff-Respondent,

          Argued December 10, 2018

          On appeal from Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-0075-18.

          R. William Potter argued the cause for appellants (Potter and Dickson, attorneys; R. William Potter and Peter Dickson, on the briefs).

          M. James Maley, Jr., argued the cause for respondent (Maley Givens, PC, attorneys; M. James Maley, Jr., Erin E. Simone, and Kevin Diduch, on the brief).

          Robert J. McNamara (Institute for Justice) of the Virginia bar, admitted pro hac vice, argued the cause for amicus curiae Institute for Justice (McKirdy, Riskin, Olson & DellaPelle, PC and Robert J. McNamara, attorneys; Anthony F. DellaPelle and Robert J. McNamara, on the brief).

          Before Judges Sabatino, Haas and Sumners.


          SABATINO, P.J.A.D.

         In this accelerated appeal, we must consider the evidentiary implications of a key provision within the Local Redevelopment and Housing Law ("LRHL"), N.J.S.A. 40A:12A-1 to -49. The provision in question, N.J.S.A. 40A:12A-8(c), authorizes a municipality or redevelopment agency to acquire by condemnation lands or buildings which are "necessary for the redevelopment project."

         Specifically, we must address what showing, if any, of necessity the municipality or agency must make in order to condemn a parcel located within the redevelopment zone and take it from its owners. Existing case law instructs such a taking must at least have a reasonable basis. The case law does not make clear, however, whether the condemning authority can simply proclaim that it needs the parcel for redevelopment, or whether the condemnor must do more if the taking is challenged and present proof of necessity tied to a specific project.

         For the reasons that follow, we hold that if a landowner within the redevelopment area contests the necessity of a condemnation pursuant to N.J.S.A. 40A:12A-8(c), the statute logically requires the condemning authority to articulate a definitive need to acquire the parcel for an identified redevelopment project. That articulated need must be more specific than the mere "stockpiling" of real estate that might, hypothetically, be useful for a redevelopment project in the future. In addition, the condemning authority in such a contested case must present to the court at least some evidence - consisting of facts, expert opinion, or both - that provides reasonable substantiation of the need. To hold otherwise and allow the condemning authority merely to proclaim a need, without having any obligation to substantiate its existence, would improperly read the term "necessary" out of the Legislature's enactment.

         In light of our legal conclusion, we reverse the trial court's decision allowing the Borough of Glassboro to acquire defendants' property because the Borough presented no evidence substantiating that the property is necessary for the purpose of future public parking, a need that was asserted in conclusory fashion in the Borough's verified complaint. Consequently, we revoke the Borough's declaration of taking and vacate the trial court's appointment of condemnation commissioners to value the property. Our ruling is without prejudice to the Borough pursuing a new complaint with appropriate evidential support.

         We reject defendants' other arguments for reversal, including their claims that the Borough has acted in bad faith and thereby forfeited its power to condemn, and that the Borough is estopped from arguing that it needs or will need the subject property for public parking due to an unpublished opinion in an unrelated zoning case.


         The subject property is a mostly vacant lot consisting of .91 acres, designated on the municipal tax map as Block 29, Lot 17, and also known as 24-26 North Academy Street in the Borough of Glassboro. A small "derelict structure" is on the property. According to the Borough's brief, the property is about a block away from an ongoing redevelopment activity in Glassboro that contemplates 190, 600 square feet of retail space, 81, 000 square feet of classroom space, 1, 870 student-housing beds, 109 apartments, and a 1.75-acre park. The overall cost of the redevelopment is estimated at $450 million.

         The title documents in the appendix reflect the property is currently owned by defendants Jack Grossman and Matthew Roche. Grossman and Roche acquired the property in October 2002. A sale contract, recorded September 27, 2016, reflects that codefendant Dan DeSilvio has entered into an agreement with Roche and Grossman to purchase the property from them for $125, 000. The purchase price is payable with $25, 000 down and a $100, 000 balance to be paid in installments through August 2020.[1]

         According to DeSilvio's certifications, he and his wife, both of whom are graduates of Rowan University in Glassboro, hope to develop the lot and other nearby parcels they have acquired. In particular, the DeSilvios plan to "erect mixed residential, commercial, [and] retail [buildings] to service the growing needs of nearby Rowan University for student housing and to provide economic stimulus to the downtown . . . [through] . . . an infusion of 'walkable' urban housing."

         As defendants acknowledge, their property is located within a redevelopment area, pursuant to a redevelopment designation adopted by the Borough in a May 2000 ordinance. Under the LRHL, a municipality is authorized to designate a "redevelopment area," also referred to as an "area in need of redevelopment," if the area meets certain conditions and certain procedures are followed. N.J.S.A. 40A:12A-5 and -6.

         Once an area is designated a "redevelopment area," a municipality must adopt a "redevelopment plan" before going forward. N.J.S.A. 40A:12A-7. A "redevelopment plan" is defined in the LRHL as:

[A] plan adopted by the governing body of a municipality for the redevelopment or rehabilitation of all or any part of a redevelopment area, or an area in need of redevelopment, which plan shall be sufficiently complete to indicate its relationship to definite municipal objectives as to appropriate land uses, public transportation and utilities, recreational and municipal facilities, and other public improvements; and to indicate proposed land uses and building requirements in the redevelopment area or area in need of rehabilitation, or both.
[N.J.S.A. 40A:12A-3 (emphasis added).]

         As noted at the outset of this opinion, once a redevelopment plan is adopted, the municipality is empowered, among other things, to:

Acquire, by condemnation, any land or building which is necessary for the redevelopment project, pursuant to . . . the "Eminent Domain Act of 1971," [N.J.S.A. 20:3-1 to -50], provided that the land or building is located within (1) an area that was determined to be in need of redevelopment prior to the effective date of P.L. 2013, c. 159, or (2) a Condemnation Redevelopment Area.[2]
[N.J.S.A. 40A:12A-8(c) (emphasis added).]

         A "redevelopment project" is broadly defined under the LRHL as:

[A]ny work or undertaking pursuant to a redevelopment plan; such undertaking may include any buildings, land, including demolition, clearance or removal of buildings from land, equipment, facilities, or other real or personal properties which are necessary, convenient, or desirable appurtenances, such as but not limited to streets, sewers, utilities, parks, site preparation, landscaping, and administrative, community, health, recreational, educational, and welfare facilities."
[N.J.S.A. 40A:12A-3 (emphasis added).]

         Here, the Borough established a redevelopment area by ordinance over eighteen years ago. The redevelopment ordinance has been amended in major respects three times. In each instance, Block 29, where defendants' lot is located, has been included within the redevelopment area. The first amendment to the plan was adopted by ordinance on December 9, 2003. The second amendment was adopted by ordinance on February 22, 2005. The third amendment was adopted by ordinance on December 27, 2007.

         A significant aspect of the third amendment is that it creates two separate zoning districts: the Arts District and a separate Entertainment District. Residential uses are allowed in the Arts District. However, the Entertainment District, which includes the subject property, does not allow residential uses. If the subject property is not taken from them by the Borough, the DeSilvios apparently expect to apply for use variances that would enable them to include residential units within their anticipated mixed-use development.

         Eventually, the Borough decided to acquire defendants' property. Toward that end, the Borough hired an appraiser who performed an inspection of the property on May 23, 2017. The appraiser was there a week early, as the notice provided to defendants had stated that the inspection would take place on May 30. After this scheduling glitch was discovered, the appraiser met with defendant DeSilvio and his wife at the property on May 30 and had further discussions.

         The Borough's appraiser issued a report, which he completed on August 8, 2017. Using a "Sales Comparison Approach" method, the appraiser valued the property at $125, 000, which is the same price that DeSilvio is paying Grossman and Roche pursuant to the September 2016 installment contract. However, DeSilvio contends that the $125, 000 price he is paying is a distressed-sale figure. He maintains the parcel is worth far more, apparently because of the property's development potential.

         Following the appraisal, the Borough offered defendants $125, 000 for the property. Defendants did not make any counteroffer before the present ...

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