SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1335-15T1

FRIENDS OF RAHWAY

BUSINESS, L.L.C.,

Plaintiff-Respondent/

Cross-Appellant,

v.

RAHWAY MUNICIPAL COUNCIL

AND CITY OF RAHWAY,

Defendants-Appellants/

Cross-Respondents.

_________________________________

Argued May 18, 2017 – Decided July 3, 2017

Before Judges Hoffman, O'Connor and Whipple.

On appeal from Superior Court of New Jersey, 

Law Division, Union County, Docket No. L-0410-

15.

Brian M. Hak argued the cause for appellants

(Weiner Lesniak, L.L.P., attorneys; Mr. Hak, 

of counsel and on the briefs; John P. Miller 

and Julia O. Donohue, on the briefs).

William H. Michelson argued the cause for 

respondents.

Robert S. Goldsmith argued the cause for 

amicus curiae Morristown Partners, Inc., d/b/a 

Morristown Partnership (Greenbaum, Rowe, 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." 

Although it is posted on the internet, this opinion is binding only on the 

parties in the case and its use in other cases is limited. R.1:36-3.
2 A-1335-15T1

Smith & Davis, L.L.P., attorneys; Mr. 

Goldsmith, of counsel and on the brief; Robert 

J. Flanagan, III, on the brief).

Edward Purcell argued the cause for amicus 

curiae New Jersey State League of 

Municipalities and New Jersey Institute of 

Local Government Attorneys (Mr. Purcell, 

Associate Counsel, on the brief).

Edward J. Trawinski argued the cause for 

amicus curiae New Jersey Managed Districts 

Association and Ironbound Business 

Improvement District (Schenck Price Smith & 

King, L.L.P., attorneys; Mr. Trawinski, on the 

brief).

Melanie R. Walter, Deputy Attorney General,

argued the cause for amicus curiae New Jersey 

Office of the Attorney General (Christopher 

S. Porrino, Attorney General, attorney; 

Melissa H. Raksa, Assistant Attorney General,

of counsel; Ms. Walter and Susan M. Scott, 

Deputy Attorneys General, on the brief).

PER CURIAM

Defendants Rahway Municipal Council and City of Rahway 

(Rahway) appeal from the October 19, 2015 Law Division order

invalidating a municipal ordinance enacted under the Special 

Improvement District (SID) statutes, N.J.S.A. 40:56-65 to -89. 

Plaintiff cross-appealed the denial of counsel fees. Four amicus 

briefs were submitted, with the court's approval. Because of the 

trial court's misinterpretation of N.J.S.A. 40:56-65 to -89, we 

reverse and vacate certain provisions of the October 19, 2015 
3 A-1335-15T1

order, affirm the denial of counsel fees, and remand for further 

proceedings. 

In September 1993, Rahway adopted Ordinance No. A-40-93, 

pursuant to N.J.S.A. 40:56-65 to -89, amending the Rahway Municipal 

Code to create a SID. The ordinance allowed the city to collect 

special assessments on affected properties. In 2014, Rahway

enacted Ordinance No. 0-42-14 (the Ordinance), expanding the SID 

to include all non-residential and non-public properties in the 

city, and residential properties with more than four units. Rahway

sent letters to affected property owners providing notice of a 

December 8, 2014 public hearing. Some affected property owners 

claim they only received the notices on December 5, 2014, but at 

least twenty-five members of the public attended.

Affected property owners formed plaintiff Friends of Rahway 

Business, L.L.C. to challenge the Ordinance, and filed a complaint

in the Law Division through plaintiff. The court conducted a 

hearing on October 9, 2015, where plaintiff argued Rahway had not 

utilized money from the SID since 1993 and the expansion of the 

SID was only to collect additional assessments. Plaintiff also 

argued the affected property owners were given insufficient notice 

for the Ordinance to be enacted, the scope of the SID was 

unprecedented, and defendants' actions amounted to constitutional 

violations entitling plaintiff to counsel fees. Rahway asserted
4 A-1335-15T1

all statutory notice requirements were satisfied, and the 

Ordinance is subject to a presumption of validity. Rahway

referenced other towns with similar SIDs and argued the statute 

does not prohibit a citywide SID. 

The judge disagreed with Rahway and invalidated the Ordinance 

in the October 19, 2015 order. The judge considered the 

legislative intent of the enabling statutes and found the 

legislature had not intended for a SID to encompass an entire 

city. The judge denied plaintiff counsel fees and failed to

address plaintiff's other arguments. This appeal followed. Amici

support and join in the arguments raised by Rahway, and urge us 

to overturn the judge's decision.

At the outset, we note our standard of review. A court may 

not substitute its judgment for that of a municipal body unless 

it is proven the Board's action was arbitrary, unreasonable or 

capricious. Cell S. of N.J., Inc. v. Zoning Bd. of Adjustment of 

W. Windsor Twp., 172 N.J. 75, 81 (2002) (citing Medici v. BPR Co., 

107 N.J. 1, 15 (1987)).

Rahway argues the trial judge should have yielded to the 

Ordinance's required presumption of validity. Rahway also assails 

four findings of the trial judge. Specifically, Rahway challenges 

the judge's findings that the SID statute does not allow: 1) a 

municipal-wide SID; 2) SIDs containing non-contiguous properties; 
5 A-1335-15T1

3) SIDs in an area of a municipality other than a traditional 

"downtown" area; and 4) SIDs containing non-commercial use, such 

as industrial and certain multi-family apartment properties. We 

address each argument in turn.

The judge considered the presumption of validity attached to 

municipal ordinances. Lake Valley Assocs., LLC v. Twp. of 

Pemberton, 411 N.J. Super. 501, 505 (App. Div.), certif. denied, 

202 N.J. 43 (2010). The SID statute provides "municipalities 

should be given the broadest possible discretion in establishing 

by local ordinance the self-help programs most consistent with 

their local needs, goals, and objectives." N.J.S.A. 40:56-

65(b)(3). In fact, the trial judge addressed the presumption by 

saying, "[t]his presumption may only be overcome by a showing that 

the [O]rdinance is arbitrary or unreasonable, or that it is 

constitutionally defective on its face[,]" and "a court need only 

decide whether the [O]rdinance represents a reasonable exercise 

of the legislature's delegation of authority to municipalities in 

enacting the SID statute." 

However, the judge determined "[c]ontrary to being 

presumptively valid, the court finds [the Ordinance], expanding 

the SID, to be irreconcilable with the enabling statutes and the 

legislative intent behind the states' enactment." The judge 

considered the Ordinance "an improper exercise of the authority 
6 A-1335-15T1

delegated to the City Council under the SID statutes," and ordered 

it invalidated. 

In Fanelli v. City of Trenton, 135 N.J. 582 (1994), our

Supreme Court stated,

In determining whether [an] ordinance is 

authorized by the SID statute, we do not pass 

on the wisdom of the City's plan. We need 

decide only whether the ordinance represents 

a reasonable exercise of the Legislature's 

delegation of authority to municipalities in 

enacting the SID statute. Furthermore, we 

interpret those delegated powers broadly.

[Fanelli, supra, 135 N.J. at 591 (citations 

omitted).] 

It is well established, a statute's plain language is the 

clearest indication of its meaning. Bergen Commercial Bank v. 

Sisler, 157 N.J. 188, 202 (1999) (citing Lehmann v. Toys 'R' Us,

Inc., 132 N.J. 587, 600-01 (1993); Grigoletti v. Ortho Pharm. 

Corp., 118 N.J. 89, 107-08 (1990)). When interpreting a statute, 

our "overriding goal is to give effect to the Legislature's 

intent." State v. D.A., 191 N.J. 158, 164 (2007) (citing 

DiProspero v. Penn, 183 N.J. 477, 492 (2005)). The best indicator

of that intent is "the plain [statutory] language chosen by the 

Legislature." State v. Perry, 439 N.J. Super. 514, 523 (App. 

Div.), certif. denied, 222 N.J. 306 (2015) (quoting State v. 

Gandhi, 201 N.J. 161, 176 (2010)). We thus read the text of a 

statute in accordance with its ordinary meaning unless otherwise 
7 A-1335-15T1

specified. Ibid.; see also N.J.S.A. 1:1-1 (explaining "words and 

phrases [in statutes] shall be read and construed with their 

context, and shall, unless inconsistent with the manifest intent 

of the legislature or unless another or different meaning is 

expressly indicated, be given their generally accepted meaning, 

according to the approved usage of the language.").

In cases where a plain reading of the statute "leads to a 

clear and unambiguous result, then the interpretive process should 

end, without resort to extrinsic sources." D.A., supra, 191 N.J.

at 164 (citing DiProspero, supra, 183 N.J. at 492). If, however,

the plain language of the statute is ambiguous, we may turn to 

extrinsic evidence to determine the Legislature's intent in 

enacting the statute. Ibid. Turning to such extrinsic evidence 

is also necessary if a plain reading of a statute renders "an 

absurd result" at odds with the Legislature's intent. Ibid.; 

State v. Williams, 218 N.J. 576, 586 (2014) (citing DiProspero, 

supra, 183 N.J. at 493). Such extrinsic evidence includes 

"legislative history, committee reports, and contemporaneous 

construction." DiProspero, supra, 183 N.J. at 492-93 (quoting 

Cherry Hill Manor Assocs. v. Faugno, 182 N.J. 64, 75 (2004)). Such 

evidence aids us in elucidating the Legislature's intent. We "may 

not rewrite a statute or add language that the Legislature 
8 A-1335-15T1

omitted." State v. Munafo, 222 N.J. 480, 488 (2015) (citing 

DiProspero, supra, 183 N.J. at 492).

The SID statute defines "special improvement district" as an 

area within a municipality designated by municipal ordinance as 

"an area in which a special assessment on property within the 

district shall be imposed for the purposes of promoting the 

economic and general welfare of the district and the municipality." 

N.J.S.A. 40:56-66(b). Our Supreme Court has held a special 

assessment is different from a tax, and such assessments reimburse 

the town for improvements made to SID properties. 2nd Roc-Hersey 

Assocs. v. Town of Morristown, 158 N.J. 581, 592-96 (1999). 

N.J.S.A. 40:56-68(b) allows a municipality to adopt a SID if 

the municipality finds:

(1) that an area within the municipality, as 

described by lot and block numbers and by 

street addresses in the enabling ordinance, 

would benefit from being designated as a 

special improvement district; (2) that a 

district management corporation would provide 

administrative and other services to benefit 

the businesses, employees, residents and 

consumers in the [SID]; (3) that a special 

assessment shall be imposed and collected by 

the municipality with the regular property tax 

payment or payment in lieu of taxes or 

otherwise, and that all or a portion of these 

payments shall be transferred to the district 

management corporation to effectuate the 

purposes of this amendatory and supplementary 

act and to exercise the powers given to it by 

municipal ordinance; and (4) that it is in the 

best interests of the municipality and the 
9 A-1335-15T1

public to create a [SID] and to designate a 

district management corporation; except that 

no district management corporation shall be 

designated to receive any funds or to exercise 

any powers pursuant to the provisions of this 

amendatory and supplementary act, unless the 

board of directors of that corporation shall 

include at least one member of the governing 

body of the municipality.

When creating the SID, the ordinance "may exempt residential 

properties, residential portions of mixed use properties, parcels 

with any number of residential units, or vacant properties located 

within the district from special assessment." N.J.S.A. 40:56-

66(b).

The statute allows the governing body to "authorize the 

commencement of studies and the development of preliminary plans 

and specifications relating to the creation and maintenance of a 

pedestrian mall facility or [SID], including, whenever possible, 

estimates of construction and maintenance, and costs and estimates 

of potential gross benefit assessment." N.J.S.A. 40:56-70.

The statute also provides for the designation of "downtown 

business improvement zones":

Any municipality which has adopted or adopts 

an ordinance authorizing the establishment of 

a [SID] pursuant to section 7 of P.L. 1972, 

c. 134 [N.J.S.A. 40:56-71] may, by ordinance, 

designate all or any portion of that district 

which contains primarily businesses providing 

retail goods and services as a "downtown 

business improvement zone," notwithstanding 
10 A-1335-15T1

that the designated zone is located within an 

urban enterprise zone.

[N.J.S.A. 40:56-71.2.]

The statute defines "downtown business improvement zone" as "a 

zone designated by a municipality, by ordinance, pursuant to 

section 2 of P.L.1998, c.115 in order to promote the economic 

revitalization of the municipality through the encouragement of 

business improvements within the downtown area." N.J.S.A. 40:56-

71.1.

Regarding imposition of a citywide SID, the trial judge made 

the following findings:

These words and phrases, read and construed 

within their context, indicate that the 

legislature's intent in enacting the statute 

was for SIDs to be considered specific regions 

within the larger municipality. No words or 

phrases in N.J.S.A. 40:56-66 indicate that the 

legislature intended the statute to be 

construed to mean that an entire municipality 

was envisaged as a potential SID.

The judge further found "[i]t is improbable that the legislature 

intended that an entire [c]ity could be considered a SID." 

Rahway asserts the size and boundaries of the SID are not the 

relevant inquiry. Rahway frames the issue as "whether the 

municipality's governing body could find the area, no matter where 

it is located, would benefit from being designated as a SID."
11 A-1335-15T1

Rahway challenges the trial judge's concern a municipal SID would 

amount to a special assessment for every nonresidential property.

We agree with defendants the SID statute does not specifically 

prohibit a citywide SID; the language of the pertinent statutory 

provisions merely suggests a SID could be a small, designated area 

within a municipality. For example, a SID is defined as an "area 

within a municipality" that the municipality designates through 

an ordinance. N.J.S.A. 40:56-66(b). Additionally, a municipality 

can create a SID if it finds "an area within the municipality . . 

. would benefit from being designated as a SID." N.J.S.A. 40:56-

68(b)(1) (emphasis added). 

The trial judge relied on the language in these statutes, as 

well as a news release from the Office of the Governor and a 

statement issued by the legislature when the 1984 amendment to the 

SID statute was enacted. However, the governor's press release 

indicated the legislation would allow "municipalities to create 

[SIDs] to promote economic growth and employment in downtown 

business districts," and the legislature's statement accompanying 

the enactment of the 1984 amendment stated the statute "would 

permit municipalities to establish [SIDs] to promote economic 

growth and employment in downtown business districts." Consistent 

with the legislature's intent, the SID statutes provide 

municipalities with broad discretion when creating SIDs, calling 
12 A-1335-15T1

into question the trial court's narrower reading of the statutes.

See N.J.S.A. 40:56-65(b)(3). Moreover, the New Jersey 

Constitution grants municipalities broad discretion: "The 

provisions of this Constitution and of any law concerning municipal 

corporations formed for local government, or concerning counties, 

shall be liberally construed in their favor." N.J. Const. art. 

IV, § VII, ¶ 11.

Nothing in the SID statutes specifically prohibits a citywide 

SID, provided a municipality can support such a SID with the

specific findings necessary to adopt a SID ordinance, as set forth 

at N.J.S.A. 40:56-68. This standard requires a municipality to 

support its determination an area would benefit from being a SID

and services would be provided to benefit individuals within the 

SID. Ibid.

Rahway asserts it met these requirements; however, such

evidence is not before this court, and the trial court did not 

reach this issue. Nevertheless, we are able and do find there is 

no prohibition against a municipality adopting a citywide SID, and 

we remand for the trial court to consider the merits of the

Ordinance itself.

Rahway also argues the trial judge incorrectly concluded the 

SID statute does not allow for a noncontiguous SID. The trial 

judge found, "The legislature's intent should not be misconstrued 
13 A-1335-15T1

to mean that a SID can be created anywhere in a municipality, in 

a noncontiguous manner, incorporating all commercial and 

industrial property, so long as the entire municipality benefits 

from the same." 

N.J.S.A. 40:56-66(b) allows exemptions from special 

assessments on certain properties within the SID. This follows 

the SID definition, which provides for "an area in which a special 

assessment on property within the district shall be imposed." 

Ibid. Thus, all properties within a SID are subject to the special 

assessment, unless they are subject to a possible exemption.

Here, the Ordinance included all non-residential and nonpublic properties in the city, as well as residential properties 

with more than four units.

1 Plaintiff argues the exemption of 

residential properties made the SID "noncontiguous," but the 

statute permits these exclusions. If the SID is the entire 

municipality, the only reason the SID is noncontiguous is its

exclusions. The court's determination a SID must be contiguous 

was erroneous because the statute specifically provides for 

exemptions of some properties within a SID, as the Ordinance did 

here. 

 

1 With the exception of the Merck campus within the city, which 

defendants assert is the only location zoned "for research 

development."
14 A-1335-15T1

Rahway also asserts the trial court erroneously found the SID 

statute only permits SIDs in downtown business districts. We 

agree. A separate section of the statute authorizes creation of 

"downtown business improvement zone[s]." N.J.S.A. 40:56-71.1.

Another portion provides, "Any municipality which has adopted or 

adopts an ordinance authorizing the establishment of a special 

improvement district . . . may, by ordinance, designate all or any 

portion of that district which contains primarily businesses 

providing retail goods and services as a 'downtown business 

improvement zone,' . . . ." N.J.S.A. 40:56-71.2. 

If the legislative intent for the creation of SIDs was to 

revitalize only "downtown business districts," the legislature 

would not have separately allowed for a "downtown business 

improvement zone" within a SID. The plain language of N.J.S.A.

40:56-71.2 is unambiguous.

Rahway finally argues the trial court improperly found noncommercial properties are not allowed within a SID. Rahway asserts 

the "trial court specifically held Class 4B (Industrial) and Class 

4C (Apartments-4 units and over) properties would not 'stand to 

benefit in the ways intended by the legislature when enacting the 

statute.'" The trial judge found "residential properties, or 

vacant lots, or mixed use properties . . . should be excluded" and 
15 A-1335-15T1

found they "should not be subject to a special assessment for such 

improvements and programs."

Having the discretion to exclude residential properties does 

not require a municipality to exclude residential properties from 

SIDs. Nothing in the statutes mandates these properties be 

excluded; on the contrary, the statute provides that these 

properties "may" be excluded. N.J.S.A. 40:56-66(b). Thus, the 

judge's findings "[t]he legislature recognized these types of 

properties were not the ones that would benefit from SID 

improvements" is inconsistent with a plain reading of the statute.

The judge's determination these properties must always be excluded 

is unsupported.

Rahway argues the trial court misconstrued the SID statutes

and argues sixty-seven SIDs within nineteen counties have 

established SIDs with similar characteristics to its own. However, 

this evidence was not included in the trial record. The only 

evidence before the trial court on this point was a map of 

Carteret. Accordingly, we decline to consider the arguments 

relating to the content of ordinances from other municipalities. 

See R. 2:5-4(a); R. 2:6-1(a).

2

 

2 Plaintiff argues Rahway violated Rule 2:6-1(a) by failing to 

include five certifications in its appendix included in the record 

before the trial court and inappropriately included 101 pages in 
16 A-1335-15T1

In its cross-appeal, plaintiff argues the Ordinance violated 

the constitutional rights of the affected property owners under 

the Equal Protection Clause and the Tax Uniformity Clause of the 

New Jersey Constitution and seeks counsel fees and litigation 

expenses under the New Jersey and Federal Civil Rights Acts. We 

disagree and affirm the denial of counsel fees.

Plaintiff relies on Tumpson v. Farina, 218 N.J. 450 (2014). 

In Tumpson, the New Jersey Supreme Court found a city clerk had 

violated the plaintiff's constitutional right when the clerk 

refused to accept a petition for a referendum for filing, and the 

Court held the failure to accept the petition violated a

substantive right protected by the New Jersey Civil Rights Act, 

N.J.S.A. 10:6-2(c). Tumpson, supra, 218 N.J. at 481-86. The 

Tumpson court found a "court may award the prevailing party 

 

its appendix that were not before the trial court. Rule 2.6-

1(a)(1) provides appellant's appendix must include "such other 

parts of the record, excluding the stenographic transcript, as are 

essential to the proper consideration of the issues, including 

such parts as the appellant should reasonably assume will be relied 

upon by the respondent in meeting the issues raised." The failure 

to submit the five certifications is not excused by any exception 

in Rule 2:6-1. However, plaintiff does not articulate why these 

certifications are relevant to our review. Thus, we need not 

consider this particular omission on defendant's part. 

However, plaintiff is correct that defendant's appendix pages 

Da241-322 were not included in the record before the trial court;

therefore, we do not consider this evidence on appeal. See R.

2:5-4(a).
17 A-1335-15T1

reasonable attorney's fees and costs" under the Civil Rights Act. 

Id. at 472 (citing N.J.S.A. 10:6-2(f)). To establish a violation 

of the Civil Rights Act, the affected property owners must prove 

(1) "'the Constitution or laws of this State' conferred on them a 

substantive right; (2) the [defendants] deprived them of that 

right; and (3) the [defendants were] 'acting under color of law'

when [they] did so." Id. at 473.

Here, plaintiff has not established any of these elements. 

Plaintiff argues the receipt of a tax bill that violated the 

enabling statute constitutes a "legal violation," and "at worst 

is unconstitutional." Thus, plaintiff seems to recognize this may

not be a constitutional issue; however, plaintiff does assert, 

"property rights are indistinguishable from civil rights" in this 

matter, and "the right not to pay a tax . . . has to be viewed as 

one of constitutional dimension." Plaintiff has not established

the substantive right violated by defendants, let alone provide

evidence to support its claim, beyond claiming a parallel to 

Tumpson. 

Affirmed in part, vacated in part, and remanded for further 

proceedings consistent with this opinion. We do not retain 

jurisdiction.