Title: Gallenthin Realty Development, Inc. v. Borough of Paulsboro

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). The Gallenthin family has owned the Gallenthin property since 1951, although it has enjoyed the parcel as early as 1902, when it used the land to moor barges transporting produce from Mantua to Philadelphia. As it currently exists, the property is bounded on its western edge by Mantua Avenue, on its eastern edge by Mantua Creek, which flows into the Delaware River, and on its southern tip by an industrial facility, across from which is a residential section of Paulsboro. The property s northern edge abuts a packaging facility and an inactive British Petroleum (BP) storage site, which fronts the Delaware River across from Philadelphia International Airport. Gallenthin Realty Development, Inc., George Gallenthin, III, and Cindy Gallenthin (collectively, Gallenthin) own the property with clear, quieted title. The land consists mostly of undeveloped open space and has been identified as protected wetlands by the DEP. There is also an unused railroad spur tracing the property s western edge, an active gas pipeline bisecting the property, and several mooring pylons designed to receive boats navigating Mantua Creek. At Gallenthin s request, the Paulsboro Planning Board (Board) rezoned the property in 1998 from manufacturing to marine industrial business park, thereby permitting various commercial, light industrial, and mixed non-residential uses. The property has periodically been used as a deposit site for dredging materials over the years. Gallenthin also leased portions of the property to an environmental clean-up organization in 1977 and 1978 for river access, employee parking and storage. Additionally, since 1977, a wild growing reed, phragmites australis (phragmites) has been harvested from the Gallenthin property three times a year. The phragmites reed is used as cattle feed and is recognized by the EPA as a valuable plant species that actively neutralizes soil pollutants. In 1998, the town of Paulsboro adopted a new master plan that referenced seven broadly defined areas of Paulsboro that should be redeveloped to stimulate economic rehabilitation. The Gallenthin property was not included in the initial master plan. In 1999, the Board was authorized to investigate whether several parcels, primarily the BP facility and an adjacent Dow/Essex Chemical (Dow) property, could be designated as in need of development pursuant to the criteria set forth in N.J.S.A. 40A:12A-5(e). That resolution did not encompass the Gallenthin property. The investigative reports, prepared by Remington & Vernick Engineers, Inc. (R&V) and presented to Paulsboro, concluded that the parcels comprising the study meet the statutory definition for an area in need of development. Paulsboro adopted R&V s recommendations in December 2002 and designated the implicated property as the BP/Dow Redevelopment Area. Also in 2000, BP and Dow retained URS Corporation (URS) to conduct a two-phase Site Development Study of their combined facilities. In Phase II of that report presented in 2002, it was first suggested that the Gallenthin property be included in the BP/Dow redevelopment project in respect of discussions of access routes to the property. Paulsboro asked R&V to look into the URS report, leading to R&V ultimately recommending the inclusion of the Gallenthin property in the redevelopment project based on the conclusion that the property was in need of redevelopment, a designation that would subject the Gallenthin property to taking by eminent domain. After a hearing, the Planning Board recommended that the Gallenthin property be included in the BP/Dow Redevelopment Area. That recommendation was adopted by the governing body in May 2003, which designated the Gallenthin property as a redevelopment area. In June 2003, Gallenthin filed a complaint in lieu of prerogative writs, challenging Paulsboro s designation of the property as in need of redevelopment. Gallenthin claimed that the property did not meet any of the statutory criteria necessary for that designation. The complaint further alleged procedural flaws in the Borough s enactment of the redevelopment ordinance and other improprieties. The Law Division dismissed Gallenthin s complaint, finding that Paulsboro meticulously adhered to the Local Redevelopment and Housing Law s (LRHL) procedural requirements and that the Borough s inclusion of the Gallenthin property in the redevelopment plan was supported by substantial evidence. The Appellate Division affirmed that decision. The Supreme Court granted certification. HELD: Because the New Jersey Constitution authorizes government redevelopment of only blighted areas, the Legislature did not intend N.J.S.A. 40A:12A-5(e) to apply in circumstances where the sole basis for redevelopment is that the property is not fully productive. Rather, subsection 5(e) applies only to areas that, as a whole, are stagnant and unproductive because of issues of title, diversity of ownership, or other similar conditions. Therefore, the Borough of Paulsboro s redevelopment classification in respect of the Gallenthin property is invalidated. 1. The Constitution expressly authorizes municipalities to engage in redevelopment of blighted areas. The State may take private property only for a public use. Under the Blighted Areas Clause of the New Jersey Constitution, the clearance, replanning, development, or redevelopment of blighted areas shall be a public purpose and public use for which private property may be taken or acquired. The LRHL empowers municipalities to designate property as in need of redevelopment and thus subject to the State s eminent domain power. (Pp. 15-20) 2. It is the Court s duty to construe a statute so as to render it constitutional if it is reasonably susceptible to such an interpretation. When the Blighted Areas Clause was adopted in 1947, the framers were concerned with addressing the deterioration of certain sections of older cities that were causing an economic domino effect devastating surrounding properties. The Blighted Areas Clause enabled municipalities to intervene, stop further economic degradation, and provide incentives for economic investment. Although the meaning of blight has evolved, the term retains its essential characteristic: deterioration or stagnation that negatively affects surrounding properties. That articulation of the term s essential meaning is consistent with other states statutory definitions of blight. (Pp. 20-28) 3. Paulsboro interprets subsection 5(e) to permit redevelopment of any property that is stagnant or not fully productive yet potentially valuable for contributing to and serving the general welfare. Under that approach, any property that is operated in less than optimal manner is arguably blighted. If such an all-encompassing definition were adopted, most property in the State would be eligible for redevelopment. Such an approach is not reconcilable with the New Jersey Constitution. (P. 29) 4. Because it must be presumed that the Legislature intended subsection 5(e) to function in a constitutional manner, and because subsection 5(e) is reasonably susceptible to an alternative interpretation, the Court concludes that the Legislature intended N.J.S.A. 40A:12A-5(e) to apply only to property that has become stagnant because of issues of title, diversity of ownership, or other similar conditions. By adopting that construction, the Court avoids rendering subsection 5(e) unconstitutional and gives effect to the Legislature s original purpose in adopting the language that would become subsection 5(e). (Pp. 30-38) 5. Paulsboro s only reason for designating the Gallenthin property as in need of redevelopment was that it was not being utilized in a fully productive manner. Those considerations, standing alone, are insufficient to engage the municipality s power to designate property as in need of development and, therefore, subject to eminent domain. Further, there is no evidence in the record that the broader redevelopment area suffered from a lack of proper utilization caused by conditions of title of the real property therein. The record is also silent as to whether the Borough considered the benefits of the protected wetlands in finding that the property was in need of redevelopment. Lastly, the record contains no evidence suggesting that the Gallenthin property is integral to the larger BP/Dow Redevelopment Area or that the Planning Board based its determination on anything other than the property not being fully productive. As such, Paulsboro s redevelopment determination in respect of the Gallenthin property was beyond the scope of subsection 5(e) and must be invalidated. This holding does not prejudice any future inquiry by the Borough regarding whether the property is in need of redevelopment based on any other legitimate grounds. (Pp. 38-40) 6. The Court further notes that municipal redevelopment designations are entitled to deference provided that they are supported by substantial evidence on the record. However, the substantial evidence standard is not met if a municipality s decision is supported by only the net opinion of an expert. A municipality must establish a record that contains more than a bland recitation of applicable statutory criteria and that those criteria are met. (Pp 40-41) Judgment of the Appellate Division is REVERSED and Paulsboro s redevelopment designation in respect of the Gallenthin property is INVALIDATED. JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE, RIVERA-SOTO and HOENS join in CHIEF JUSTICE ZAZZALI S opinion. SUPREME COURT OF NEW JERSEY A- 51 September Term 2006 GALLENTHIN REALTY DEVELOPMENT, INC., a New Jersey Corporation and/or GEORGE A. and CYNTHIA L. GALLENTHIN III, h/w, both jointly and severally, Plaintiffs-Appellants, v. BOROUGH OF PAULSBORO, a New Jersey Municipality and/or PLANNING BOARD OF BOROUGH OF PAULSBORO and/or PAULSBORO REDEVELOPMENT AGENCY, jointly and severally, Defendants-Respondents. Argued April 26, 2007 Decided June 13, 2007 On certification to the Superior Court, Appellate Division. Peter D. Dickson argued the cause for appellants (Potter and Dickson, attorneys; Mr. Dickson and R. William Potter, on the briefs). M. James Maley, Jr., argued the cause for respondents (Maley & Associates, attorneys; Mr. Maley, Elizabeth L. Bancroft, Emily K. Givens, Joseph F. Kunicki, and Erin E. Simone, on the briefs). Ronald K. Chen, Public Advocate, argued the cause for amicus curiae Public Advocate of New Jersey (Mr. Chen, attorney; Mr. Chen, Brian Weeks, Deputy Public Advocate, Alexander D. Gladney, Assistant Deputy Public Advocate and Catherine Weiss, Director, Division of Public Interest Advocacy, of counsel and on the brief). Robert S. Goldsmith argued the cause for amici curiae New Jersey State League of Municipalities, Downtown New Jersey, Inc. and New Jersey Chapter-American Planning Association (Greenbaum, Rowe, Smith and Davis, attorneys; Robert Beckelman, on the brief). Carter H. Strickland, Jr., Staff Attorney, Rutgers Environmental Law Clinic, submitted a brief on behalf of amici curiae New Jersey Audubon Society and New Jersey Conservation Foundation. Kenneth E. Meiser submitted a brief on behalf of amicus curiae New Jersey Builders Association (Hill Wallack, attorneys; Mr. Meiser and Anne L.H. Studholme, on the brief). Peter H. Wegener submitted a brief on behalf of amicus curiae Institute For Justice (Bathgate, Wegener & Wolf, attorneys; Mr. Wegener and Jeff Rowes, a member of the New York bar, on the brief). CHIEF JUSTICE ZAZZALI delivered the opinion of the Court. Gallenthin Realty Development, Inc. owns a sixty-three-acre parcel of largely vacant wetlands in the Borough of Paulsboro. In 2003, Paulsboro classified the Gallenthin property as in need of redevelopment under N.J.S.A. 40A:12A-5(e) because the property s unimproved condition rendered it not fully productive. Such a classification subjects property to taking by eminent domain. N.J.S.A. 40A:12A-8(c). The trial court and Appellate Division upheld Paulsboro s redevelopment designation. Because the New Jersey Constitution authorizes government redevelopment of only blighted areas, we conclude that the Legislature did not intend N.J.S.A. 40A:12A-5(e) to apply in circumstances where the sole basis for redevelopment is that the property is not fully productive. We therefore invalidate Paulsboro s redevelopment classification concerning the Gallenthin property and hold that N.J.S.A. 40A:12A-5(e) applies only to areas that, as a whole, are stagnant and unproductive because of issues of title, diversity of ownership, or other similar conditions. Owing principally to the instances of stagnant and not fully productive condition of land and circumstance of rail line underutilization, this report concludes that existing conditions, as described herein, satisfy the statutory criteria necessary to deem the study area an area in need of redevelopment. [(Internal heading omitted).] The report made no reference to the URS proposal that the Gallenthin property be included because of access problems associated with the larger BP/Dow Redevelopment Area. In April 2003, the Planning Board held a public hearing regarding the classification of the Gallenthin property as in need of redevelopment. The Planning Board s professional planner, George Stevenson, presented the redevelopment plan and testified that the Gallenthin property should be included in the plan. Stevenson had previously conducted a physical inspection of the property and presented photographs of the property at the hearing. Commenting on the photographs, Stevenson testified: [W]e find [a] condition that lends itself to economic deterioration. That is, you have no improvement; you have vacant unimproved conditions. There s just no activity, and I would suggest to the board that if there would be improvement upon those parcels, particularly if there would be improvement in conjunction with the plan that s been previously approved, the aggregate . . . would be beneficial to the municipality in that there would be commerce occurring, there would be job creation resulting from that commerce occurring and the bottom line [is] it would certainly enhance the tax base for the municipality, and so I am able to state to the board that because we have vacant, unimproved conditions, because there s bits of land that could otherwise be more beneficial to use for the overall welfare of this municipality, that these lands are considered to be an area in need of redevelopment. Criteria E [(N.J.S.A. 40A:12A-5(e))] of all the criteria, it s the criteria that I would point to. At no point during Stevenson s testimony did he recommend including the Gallenthin property in the redevelopment plan because it was needed for construction of an access road. Plaintiffs planning expert, Paul Szymanski, testified regarding the application of the statutory criteria. Szymanski began by emphasizing that Stevenson s recommendation was based exclusively on N.J.S.A. 40A:12A-5(e), not the alternative theory expressed in the URS report that the property may be an important adjunct to the BP/Dow Redevelopment Area. Szymanski then provided his own interpretation and application of N.J.S.A. 40A:12A-5(e): I m not sure that other conditions is . . . as broad as counsel s trying to make it because there [are] other sections in the . . . redevelopment law that even are broader and [more] vague[]. I think that these other conditions relate to the issues dealing with title and ownership and something similar, and I think it should be looked at in a more narrow sense as similar conditions rather than any conditions. Szymanski also testified that in his opinion the current use of the property for farming, open space, and occasional dredging was sufficient to preclude classifying the property as not fully productive under N.J.S.A. 40A:12A-5(e). Additionally, Szymanski noted that the Gallenthin property was not necessary for the BP/Dow Redevelopment Area. He observed that because much of the property was protected wetlands, significant development by the Borough was not feasible. He concluded that the Gallenthin property could not contribute meaningfully to the redevelopment plan because an environmental recreation area would not produce key ratables and would not achieve the overall goals and objectives of [the] redevelopment program. George Gallenthin also testified. He reiterated that phragmites had been harvested from the property since 1997 and stated that he was actively pursuing the property s use as a dredging depot. He admitted that he had not obtained the requisite DEP water permits but testified that the permits were easily obtained once dredging commenced. At the conclusion of the hearing, the Planning Board determined that the Gallenthin property should be included in the BP/Dow Redevelopment Area. The board emphasized that its decision was based on the reasons expressed in the Remington & Vernick report and Stevenson s testimony. In May 2003, the Governing Body adopted the Planning Board s recommendation and designated the Gallenthin property as a redevelopment area. [(Emphasis added).] Pursuant to that authorization, the Legislature enacted the Local Redevelopment and Housing Law (LRHL), N.J.S.A. 40A:12A-1 to -49, which empowers municipalities to designate property as in need of redevelopment and thus subject to the State s eminent domain power. See N.J.S.A. 40A:12A-3 (defining redevelopment area or in need of redevelopment as pursuant to constitutional authority of Blighted Areas Clause). In designating the Gallenthin property as in need of redevelopment, Paulsboro relied on N.J.S.A. 40A:12A-5(e), which permits a municipality to classify land as in need of redevelopment if it finds a growing lack or total lack of proper utilization of areas caused by the condition of the title, diverse ownership of the real property therein or other conditions, resulting in a stagnant or not fully productive condition of land potentially useful and valuable for contributing to and serving the public health, safety and welfare. [(Emphasis added).] Paulsboro therefore asserts that an area may be classified as in need of redevelopment so long as it is not fully productive and the property is potentially useful and valuable for contributing to and serving the public health, safety and welfare. According to Paulsboro, the phrase other conditions refers to any possible condition. Paulsboro also claims that because the statute literally reads stagnant or not fully productive, subsection 5(e) is most reasonably read to interchange the meanings of stagnant and not fully productive. Plaintiffs respond that Paulsboro s interpretation of N.J.S.A. 40A:12A-5(e) is unconstitutional because it exceeds the Blighted Areas Clause s delegation of authority. According to plaintiffs, the Blighted Areas Clause authorizes the redevelopment of only blighted areas and Paulsboro s interpretation of subsection 5(e) impermissibly extends a municipality s redevelopment authority to any property that is not fully productive. This appeal therefore requires us to ascertain the meaning of the term blighted as used in the New Jersey Constitution, and determine whether Paulsboro s interpretation of N.J.S.A. 40A:12A-5(e) is within the scope of that term. Because those issues present questions of law, we review them de novo. Hodges v. Sasil Corp., 189 N.J. 210, 220-21 (2007) (citing Balsamides v. Protameen Chems., Inc., 160 N.J. 352, 372 (1999)). These depressed areas go steadily down hill. The original occupants move away, the rents fall, landlords lose income and they make up for it by taking in more families per house. It s impossible to keep the properties in good condition, the houses deteriorate more and more, and what was once a good section of the town is on the way to becoming a slum. Naturally, this slump in value is not confined to the original area affected. It spreads to neighboring blocks. No one person . . . can counteract this spread, because no one can afford to sink money into a blighted area . . . because the improvement is so small that it cannot turn the tide of deterioration. [Id. at 742-43.] Barus also noted that prior legislation aimed at slum clearance had been unsuccessful in securing private investment because of the understandable fear that those statutes would be declared unconstitutional. Id. 743-44. The Blighted Areas Clause was intended to alleviate those concerns and facilitate investment in blighted areas. Id. at 744; see McClintock v. City of Trenton, 47 N.J. 102, 105 (1966) ( [T]his blighted area provision was adopted to remove any doubts with regard to earlier pertinent legislation. ) (citations omitted). The legislation referenced by Barus, the 1944 Redevelopment Companies Law, L. 1944, c. 169, and the 1946 Urban Redevelopment Law, L. 1946, c. 52, contained descriptions of blight. The Redevelopment Companies Law described blighted areas as areas . . . where there exist substandard conditions and [un]sanitary housing conditions owing to obsolescence, deterioration and dilapidation of buildings, or excessive land coverage, lack of planning, of public facilities, of sufficient light, air and space, and improper design and arrangement of living quarters. L. 1944, c. 169, 2. Likewise, the Urban Redevelopment Law sought to remedy congested, dilapidated, substandard, unsanitary and dangerous housing conditions, which were a menace and a social and economic liabilit[y]. L. 1946, c. 52, 2. Accordingly, in adopting the Blighted Areas Clause, the framers were concerned with addressing a particular phenomenon, namely, the deterioration of certain sections of older cities that were causing an economic domino effect devastating surrounding properties. The Blighted Areas Clause enabled municipalities to intervene, stop further economic degradation, and provide incentives for private investment. [Wilson, supra, 27 N.J. at 370.] Recognizing the important role of redevelopment in our society, we concluded that the BAA s definition of blight was within the bounds of the Constitution. Id. at 382 ( [N]o reasonable argument can be made that the connotation ascribed to [ blight ] overreaches the public purpose sought to be promoted by the Constitution. ). In 1971, we revisited the validity of the BAA s definition of blight and held that the BAA applied to more than slum clearance. Levin v. Twp. Comm. of Bridgewater, 57 N.J. 506, 511-16, 545 (1971); see also Jersey City Chapter of the Prop. Owners Prot. Ass n v. Jersey City, 55 N.J. 86, 96 (1969) (noting that BAA applied to more than perceptually offensive slums ). Specifically, we approved redevelopment plans aimed at suburban and rural areas and upheld the acquisition of land in that context. Levin, supra, 57 N.J. at 512. Thus, Levin expanded the definition of blight to include areas that were not necessarily contemplated by the framers but were within the true sense and meaning of the term. See Bd. of Chosen Freeholders of Morris, supra, 159 N.J. at 576 (explaining that Constitution must accommodate true sense and meaning of the language used ) (quotation and citations omitted). That said, blight still has a negative connotation. In Levin, supra, for example, we found that the parcels at issue were preventing the proper development of surrounding properties because they had reached a stage of stagnation and unproductiveness. 57 N.J. at 512, 538. In Wilson, supra, we noted that much of the designated area contained dilapidated homes and other buildings, which were obviously beyond restoration, 27 N.J. at 394, and we observed that community redevelopment was a means of removing the decadent effect . . . on neighboring property values, id. at 370. Although the meaning of blight has evolved, the term retains its essential characteristic: deterioration or stagnation that negatively affects surrounding properties. [L. 1949, c. 300, 1.] The Redevelopment Agencies Law contained a similar explanation regarding its version of subsection (e). It noted that the provision was added to include property that was blighted or becoming blighted due to inadequate planning of the area, or excessive land coverage, or deleterious land use, or the unsound subdivision plotting and street and road mapping, or obsolete layout, or a combination of these factors. L. 1949, c. 306, 2. In sum, because we must presume that the Legislature intended subsection (e) to function in a constitutional manner, and because subsection (e) is reasonably susceptible to an alternative interpretation, we conclude that the Legislature intended N.J.S.A. 40A:12A-5(e) to apply only to property that has become stagnant because of issues of title, diversity of ownership, or other similar conditions. By adopting that construction, we avoid rendering N.J.S.A. 40A:12A-5(e) unconstitutional and give effect to the Legislature s original purpose in adopting the language that would become subsection 5(e). SUPREME COURT OF NEW JERSEY NO. A-51 SEPTEMBER TERM 2006 ON CERTIFICATION TO Appellate Division, Superior Court GALLENTHIN REALTY DEVELOPMENT, INC., a New Jersey Corporation and/or GEORGE A. and CYNTHIA L. GALLENTHIN III, h/w, both Jointly and severally, Plaintiffs-Appellants, v. BOROUGH OF PAULSBORO, a New Jersey Municipality and/or PLANNING BOARD OF BOROUGH OF PAULSBORO and/or PAULSBORO REDEVELOPMENT AGENCY, jointly and severally, Defendants-Respondents. DECIDED June 13, 2007 Chief Justice Zazzali PRESIDING OPINION BY Chief Justice Zazzali CONCURRING/DISSENTING OPINIONS BY DISSENTING OPINION BY