NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2281-16T4

MEPT JOURNAL SQUARE URBAN

RENEWAL, LLC, MEPT JOURNAL 

SQUARE TOWER NORTH URBAN 

RENEWAL, LLC, and MEPT JOURNAL

SQUARE TOWER SOUTH URBAN 

RENEWAL, LLC,

Plaintiffs-Respondents,

v.

THE CITY OF JERSEY CITY,

Defendant-Appellant. 

_______________________________________

Argued January 17, 2018 – Decided

Before Judges Fuentes, Manahan and Suter.

On appeal from Superior Court of New Jersey, 

Law Division, Hudson County, Docket No. 

L-3177-15.

Vijayant Pawar argued the cause for 

appellant (Pawar Gilgallon & Rudy, LLC, 

attorneys; Vijayant Pawar, on the brief).

Lawrence Bluestone argued the cause for 

respondents (Genova Burns, LLC, attorneys; 

Jennifer Borek, of counsel and on the brief;

Michael C. McQueeny, on the brief).

Adam M. Gordon argued the cause for amicus 

curiae Fair Share Housing Center (Fair Share 

Housing Center, attorneys; Kevin D. Walsh 

and Adam M. Gordon, on the brief).

APPROVED FOR PUBLICATION

August 9, 2018

APPELLATE DIVISION

August 9, 2018
2 A-2281-16T4

The opinion of the court was delivered by

FUENTES, P.J.A.D.

In this appeal, this court must determine whether a 

municipality may condition the grant of tax abatements pursuant 

to the Long Term Tax Exemption Law (LTTEL), N.J.S.A. 40A:20-1 to 

-22, upon three urban renewal entities1 making a prepayment of two 

million dollars, characterized as "a portion" of the Annual Service 

Charge the entities would pay in lieu of property taxes after the 

project was completed. The three urban renewal entities and the 

municipality agreed to this arrangement in Prepayment Agreements

that were subsequently approved by the municipality's governing 

body in a resolution and expressly made part of the ordinance 

approving the tax abatements. These Prepayment Agreements 

predated the Financial Agreements that otherwise memorialized the 

terms of the tax abatements granted by the municipality.

We are also asked to determine the validity of a provision 

in the Financial Agreements that required the three urban renewal 

entities to pay a combined $710,769 initial contribution to the 

municipality's Affordable Housing Trust Fund (AHTF). However, 

unlike the two-million dollar prepayment required under the 

 

1 See N.J.S.A. 40A:20-3(g) and N.J.S.A. 40A:20-5, which limit the 

operations of urban renewal entities and requires them to mitigate 

the harm caused to people displaced or affected by the project. 
3 A-2281-16T4

combined three Prepayment Agreements, the AHTF was part of the 

Financial Agreements and was based on a $1500 per unit basis for

the two residential redevelopment projects that would construct a 

total of 1615 residential units, and a $1.50 per square foot basis

for the commercial project, based on a gross, not leasable, square 

footage of 280,385. Furthermore, the total AHTF contribution made 

by each entity was subject to "contingencies" that were clearly 

described in the Financial Agreements and included a percentage 

payment schedule based on the completion of each individual 

project.

These issues arise in the context of a verified complaint 

filed in the Law Division by MEPT Journal Square Urban Renewal, 

LLC, MEPT Journal Square Tower North Urban Renewal, LLC, and MEPT 

Journal Square Tower South Urban Renewal, LLC (collectively 

"plaintiffs"), against the City of Jersey City (City), after these 

urban renewal entities decided not go forward with these 

redevelopment projects. Plaintiffs sought declaratory relief in 

the form of a judicial determination that the prepayment 

arrangement crafted by the parties in the Prepayment Agreements

were ultra vires and void ab initio because they lacked statutory 

support under the LTTEL. Plaintiffs also sought injunctive relief 

in the form of a judgment from the Law Division compelling the 

City to refund the initial contributions made to the AHTF and a 
4 A-2281-16T4

refund of the two million dollar prepayment. The project was 

never built.

After joinder of issue, the Law Division granted plaintiffs'

unopposed motion to proceed summarily, established an expedited 

briefing schedule, and set the matter down for oral argument and, 

if necessary, "limited testimony." On February 5, 2016, the trial 

court heard oral argument from counsel and reserved decision. In 

a letter-opinion dated August 16, 2016, the trial judge found the 

Prepayment Agreements to be "a run-around that essentially 

nullifies the requirement of the LTTEL, and . . . the financial 

agreement, that annual service charges shall not be due until 

substantial completion of the urban renewal project." The court 

declared the "prepayment agreements were void from their 

inception." 

With respect to the contributions plaintiffs made to the 

City's AHTF, the trial court concluded the Fair Housing Act (FHA), 

N.J.S.A. 52:27D-301 to -329, did not provide the City with the 

legal authority to condition the grant of tax abatements upon a 

redeveloper contributing to its AHTF. Relying on the Supreme 

Court's analysis in Holmdel Builders Ass'n v. Holmdel, 121 N.J. 

550 (1990), the court concluded that the "fairness and 

reasonableness of imposing an AHTF contribution fund payment on 

[p]laintiffs evaporated when the [p]laintiffs no longer possessed, 
5 A-2281-16T4

enjoyed, or consumed the land." The trial judge thus ordered the 

City to refund the AHTF contributions plaintiffs made in 2009 as 

a condition of obtaining the tax abatements pursuant to the LTTEL. 

In a Final Order of Judgment dated October 4, 2016, the court 

granted judgment to plaintiffs and against the City in the amount 

of $2,710,769, based on the $2,000,000 prepayment and the $710,769 

AHTF contribution. On November 9, 2016, the City filed a motion 

for reconsideration pursuant to Rule 4:49-2. Among the arguments 

raised therein, the City, for the first time, claimed the trial 

court erred in proceeding in a summary fashion and requested "the 

opportunity to exchange discovery." In an order dated January 12, 

2017, the trial court denied the City's motion for reconsideration 

as both untimely and substantively without merit.

The City now appeals arguing the trial court erred when it 

interpreted the LTTEL to prohibit the prepayment plaintiffs made 

as a condition of obtaining the tax abatement. The City claims 

the Prepayment Agreements and the Financial Agreements requiring 

plaintiffs to contribute to the AHTF were valid, enforceable 

provisions negotiated by the parties under traditional principles 

of contract law. The City also argues the court erred when it 

failed to consider the arguments in its motion for reconsideration 

and in denying the City's request for discovery. For the first 

time on appeal, the City argues that plaintiffs' complaint should 
6 A-2281-16T4

have been dismissed as untimely under Rule 4:69-6(a). Finally, 

the City argues the court misconstrued the 2008 amendments to the 

FHA when it granted plaintiffs' application to refund the AHTF 

contribution. 

As a threshold issue, plaintiffs argue the trial court 

correctly proceeded in a summary fashion because the issues raised 

in this case strictly involve matters of law. Plaintiffs further 

argue the trial court correctly concluded that the City did not 

have any authority under the LTTEL to condition the grant of a tax 

abatement upon the prepayment of Annual Service Charges. Thus, 

the court correctly declared the Prepayment Agreements were void 

ab initio. Plaintiffs also argue the court properly exercised its 

discretionary authority when it denied the City's motion for 

reconsideration. Plaintiffs also claim the City is procedurally 

barred from arguing, for the first time in its motion for 

reconsideration, that this cause of action is untimely under Rule

4:69-6(a). Plaintiffs argue that the rules that govern actions 

in lieu of prerogative writs do not apply to a complaint brought 

pursuant to the Declaratory Judgment Act, N.J.S.A. 2A:16-50 to -

62, to determine the validity of a contract.

On August 29, 2017, after both sides had submitted their 

briefs in this appeal, this court entered a sua sponte order 

inviting the Fair Share Housing Center (Fair Share) to participate 
7 A-2281-16T4

in this appeal in an amicus curiae capacity, limited to the 

question of whether the City has an obligation to return to 

plaintiffs the $710,769 AHTF contribution.2 Fair Share accepted 

this court's request, submitted a brief limited to this issue, and 

participated at oral argument. Fair Share urges this court to 

reverse the trial court's decision ordering the City to return the 

AHTF contributions received by plaintiffs as a condition of a tax 

abatement pursuant to the LTTEL. Fair Share argues the trial 

court erred in relying on the FHA and the Court's decision in 

Holmdel to evaluate the lawfulness of the AHTF contributions.

According to Fair Share, the Legislature decisively 

distinguished LTTEL trust fund contributions under N.J.S.A. 

40A:12A-4.1, from a municipality's right to impose and collect 

development fees under N.J.S.A. 52:27D-329.2 of the FHA. Although 

both the parties and the trial court acknowledged the City's 

authority under LTTEL to impose AHTF contributions by ordinance 

and as a provision in the Financial Agreements, they incorrectly

 

2 Fair Share has served the judiciary in this capacity on numerous 

occasions. See Toll Bros. v. Twp. of W. Windsor, 173 N.J. 502 

(2002); In re Declaratory Judgment Actions Filed by Various 

Municipalities, Cty. of Ocean, 446 N.J. Super. 259 (App. Div. 

2016); Homes of Hope, Inc. v. Eastampton Twp. Land Use Planning 

Bd., 409 N.J. Super. 330 (App. Div. 2009); Oceanport Holding, 

L.L.C. v. Borough of Oceanport, 396 N.J. Super. 622 (App. Div. 

2007). 
8 A-2281-16T4

conflated the inapplicable FHA requirements to invalidate the AHTF 

contributions under LTTEL. Stated differently, plaintiffs'

$710,769 contribution to the City's AHTF as a condition of the tax 

abatement is expressly sanctioned by the Legislature under the 

LTTEL, N.J.S.A. 40A:12A-4.2. 

After considering the arguments of the parties, we affirm the 

trial court's decision finding no statutory support under the 

LTTEL for the City to condition the grant of tax abatements to 

plaintiffs upon the prepayment of two million dollars, 

characterized as a credit against the Annual Service Charge the 

entities would pay after the project was completed. These

Prepayment Agreements are ultra vires under the LTTEL, and 

unenforceable as a matter of public policy.

We reach a different conclusion with respect to the City's

decision to condition the grant of these tax abatements upon 

plaintiffs contributing to the municipality's AHTF. We agree with 

the legal arguments advanced by amicus Fair Share that these 

contributions are expressly authorized by the Legislature under 

the LTTEL in N.J.S.A. 40A:12A—4.2, and are independent from and 

unrelated to the FHA. We thus reverse the order of the trial 

court requiring the City to refund the $710,769 contribution 

plaintiffs made to the City's AHTF as a condition for receiving 

the tax abatements. The provisions in the Financial Agreements 
9 A-2281-16T4

requiring the payment of these AHTF contributions and the municipal 

ordinance subsequently adopted by the City Council confirming 

these AHTF contributions as a material condition of the tax 

abatements are statutorily supported in the LTTEL. 

We recite the following facts from the record presented to 

the Law Division.

I

A

Financial Agreements

On May 15, 2009, plaintiffs and the City entered into three 

separate Financial Agreements that contained the terms and 

conditions of the long term tax abatements granted to plaintiffs 

pursuant to the LTTEL. The City granted a tax abatement for three 

separate projects, which were authorized by the City Council

through three separate ordinances. Each ordinance was 

supplemented by the Financial Agreements. 

Ordinance 08-165, recognized MEPT Journal Square Tower North 

Urban Renewal, LLC (Tower North), as the urban renewal entity 

"formed and qualified to do business" under the provisions of the 

LTTEL, and "the owner of Unit 2," one of three units described as 

the Tower North of Residential Rental Building, a property located 

within the boundaries of the Journal Square Redevelopment Plan. 

One of the Recitals of the Financial Agreement corresponding to 
10 A-2281-16T4

Ordinance 08-165 disclosed that Tower North planned to construct 

approximately 922 residential rental units in a tower 

approximately sixty-eight stories tall.

Ordinance 08-166 recognized MEPT Journal Square Tower South

Urban Renewal, LLC (Tower South) as an urban renewal entity and 

"owner of Unit three," a property located within the boundaries 

of the Journal Square Redevelopment Plan. The Recitals of the 

Financial Agreement disclosed that Tower South planned to 

construct approximately 693 residential rental units in a tower 

approximately fifty stories tall.

Ordinance 08-164 recognized MEPT Journal Square Urban 

Renewal, LLC (MEPT Journal Square) as an urban renewal entity and 

owner of the Commercial Unit, a property located within the 

boundaries of the Journal Square Redevelopment Plan. The Recitals 

of the Financial Agreement disclosed that the Commercial Unit 

would have an approximately 210,000 square-foot area, consisting 

of 700 parking spaces, and 70,585 square feet of retail space, for 

a total of 280,385 gross square feet in a seven story building.

The Financial Agreements provided that these three projects 

"shall be construed and enforced in accordance with the laws of 

the State of New Jersey . . . [and] in the event of a conflict 

between [the financial agreements] and the [LTTEL], the [LTTEL] 

shall govern . . . ." They were to "remain in effect for the 
11 A-2281-16T4

earlier of 35 years from the date of the adoption of [their 

instituting ordinances] . . . or 30 years from the date of 

Substantial Completion of the Project." 

Article IV of the Financial Agreement for Tower North, titled

"ANNUAL SERVICE CHARGE" described the payments plaintiffs agreed 

to pay "in consideration of the tax exemption."

3 Plaintiffs agreed

to pay an annual service charge in "an amount equal to the greater 

of: the Minimum Annual Service Charge or an Annual Service Charge 

equal to ten percent [] of the Annual Gross Revenue." The "greater 

of the Annual Service Charge or Minimum Annual Service Charge . . 

. shall be due on the first day of the month following the 

Substantial Completion of the Project."

The Financial Agreements defined "Annual Service Charge" as 

"the amount the Entity has agreed to pay the City for municipal 

services supplied to the Project, which sum is in lieu of any 

taxes . . . ." "Minimum Annual Service Charges" are "the taxes 

levied against the real property in the area covered by the Project 

in the last full tax year in which the area was subject to taxation, 

which [for Tower North] the parties agree is $173,223." The 

minimum annual service charge for Tower South was $121,256, and 

 

3 The other two Financial Agreements for Tower South and the 

Commercial Unit contained identical language, differing only in 

the amount the particular urban renewal entity agreed to pay.
12 A-2281-16T4

$51,967 for the Commercial Unit. The minimum annual service 

charges plaintiffs agreed to pay totaled $346,446.00. The minimum 

annual service charges served as the floor for the amount of the 

Annual Service Charge to be paid. Plaintiffs were also required 

to pay a County Annual Service Charge and an Administrative Fee. 

B

AHTF Contributions

All three Financial Agreements also contained the following 

provision in Article IV, Section 4.6, titled "Affordable Housing 

Contribution and Remedies":

A. Contribution. The Entity shall pay the City

. . . as a contribution subject to the 

contingencies set forth below. The sum shall 

be due and payable as follows:

i. 25% on or before the execution 

of the exemption Financial 

Agreement, but not later than 60 

days after the adoption of the 

Ordinance approving this tax 

exemption;

ii. 25% on or before the Substantial 

Completion of the project approved 

for [the urban renewal entity];

iii. 25% on or before the 

Substantial Completion of this 

Project; and 
13 A-2281-16T4

iv. 25% on or before the Substantial 

Completion of the project approved 

for [the urban renewal entity].

[4]

The Entity acknowledges that the City relies 

on these payments and will enter into 

agreements in anticipation of receiving such 

funds in a timely manner.

B. Remedies. In the event that the Entity 

fails to timely pay the contributions, the 

amount unpaid shall be added to the service 

charge and shall bear the highest rate of 

interest permitted in the case of unpaid taxes 

or tax liens on the land until paid.

Section 4.7, titled Material Conditions, characterized a 

series of payments and service charges the entity agreed to pay 

as "Material Conditions of this Agreement." AHTF contributions 

were included in this list of "Material Conditions." The AHTF 

contribution assessed to Tower North was based on $1500 x 922 

units, totaling $1,383,000; Tower South was based on $1500 x 693 

units, totaling $1,039,500; and the Commercial Unit was based on 

$1.50 per square foot "based upon gross, not leaseable, [sic] 

square footage of 280,385," totaling $420,578. The three 

ordinances adopted by the City Council approving the tax abatements 

 

4 The event that triggered plaintiffs' obligation to pay the third 

25% installment of its total AFTF contribution varied. In the 

Tower North and the Commercial Unit Financial Agreements, the 

third 25% of the total AHTF contribution was due on or before the 

Substantial Completion of Tower South. In the Tower South 

Financial Agreement, the third 25% of the total AHTF contribution 

was due on or before the Substantial Completion of Tower North. 
14 A-2281-16T4

also included, as a condition, the AHTF contributions based on the 

calculation methodology reflected in Article IV, Section 4.6 of 

the Financial Agreements.

On June 5, 2009, plaintiffs' counsel wrote a letter to the 

City Administrator memorializing the release of $2,710,769, 

"representing the Two Million ($2,000,000) Dollar prepayment 

amount in the aggregate for all the [F]inancial Agreements relating 

to the tax abatement and the twenty-five percent (25%) firstinstallment of the Affordable Housing Contribution Payment in the 

amount of Seven Hundred Ten Thousand Seven Hundred Sixty-Nine 

($710,769) Dollars, which amounts were paid under the Tax Abatement 

Documents . . . ." Plaintiffs' counsel had held these funds in 

escrow "until such time as that certain ordinance of the County

of Hudson is passed and deemed final . . . ." Counsel acknowledged 

that "[a]s of June 3, 2009, the County Ordinance was passed and 

adopted without challenge."

C

Prepayment Agreements

On May 11, 2009, plaintiffs and defendant entered into three 

separate Prepayment Agreements, one for each of the three urban 

renewal entities. The three ordinances adopted by the City Council 

approving the tax abatements contained the following clause

acknowledging the material nature of these Prepayment Agreements: 
15 A-2281-16T4

"This Ordinance shall be contingent upon the execution by the 

Entity of the Prepayment and Contribution Agreements for each of 

the three (3) condominiums forming the Journal Square 

Development." (Emphasis added).

The Prepayment Agreements began with the following recitals:

WHEREAS, Entity has been authorized by the 

City to construct a project . . . under the 

Law with attendant tax exemption benefits as 

provided in the Law and pursuant to a certain 

Financial Agreement . . .; and

WHEREAS, Entity recognizes that the Annual 

Services Charges payable under the Law with 

respect to its Project will not begin to 

accrue to the City until the Project is 

completed; and

WHEREAS, the City is in immediate need of 

additional funds for use during this fiscal 

year; and 

WHEREAS, Entity is willing to prepay the 

Annual Service Charges in the amounts as set 

forth herein that will accrue from the Project

in exchange for the City's agreement to credit 

such payments through credits against future 

Annual Service Charges that will become due;

and

WHEREAS, by the adoption of Resolution . . . 

on November 25, 2008, in order to allow the 

City to anticipate and rely on the funds and 

properly account for the funds, the City of 

Jersey City approve[d ]the prepayment of 

Annual Service Charge and authorize[d] the 

execution of an agreement . . . .

Under these agreements, the urban renewal entities were 

required to prepay Annual Service Charges that would not accrue 
16 A-2281-16T4

until the completion of their particular project. The prepayment 

would only be credited against future annual service charges to 

be collected over the first four years following the substantial 

completion of the project. The entities acknowledged that the 

City was relying on this prepayment and "will enter into agreements 

in anticipation of receiving such funds in a timely manner." Thus, 

"[a]ny late payment of the Prepayment . . . shall bear interest 

at the rate of 6% until paid." Conversely, because the entities 

were not obligated under the LTTEL to enter into these Prepayment 

Agreements, the prepayments were in essence an interest-free loan 

to the City.

However, as the following provisions in the Prepayment 

Agreements show, the City viewed this arrangement differently:

B. Credit. [The] City agrees to give Entity 

a credit, without interest, against the Annual 

Service Charges otherwise due under the 

Financial Agreement in the following manner:

(i) For each of the first four (4) 

years that the Entity is obligated 

under the Financial Agreement to pay 

Annual Service Charges, the Entity 

shall be entitled to a credit 

against such charges estimated as 

follows [for Tower South]: $175,000 

in 2010; $175,000 in 2011; $175,000 

in 2012; and $175,000 in 2013, with 

the credit prorated for the first 
17 A-2281-16T4

year and last year if such years are

less than full calendar years;[5]

(ii) The Annual Service Charges are 

to be paid quarterly under the 

Financial Agreement. The credits 

hereunder are to be taken against 

the earliest quarterly payments in 

each year until the annual amount of 

the credit, or appropriate pro rata 

portion for less than a full year, 

has been recouped in full by the 

Entity;

. . . .

(iv) Notwithstanding, under no circumstances 

shall the Entity be entitled to a credit in 

excess of the amount of the actual Annual 

Service Charges (that is, excluding any credit 

for the land taxes) actually paid by the 

Entity.

C. No Additional Credit. In the event the 

Entity is unable to recover its Prepayment as 

a credit against the Annual Service Charge, 

in whole or in part, for any reason, then any 

Prepayment balance otherwise due, shall be 

forfeited. 

D. Coordination of Credit. The Office of Tax 

Abatement of the City shall notify the 

appropriate taxing authorities of this credit 

arrangement so that the bills for Annual 

Service Charges when issued will reflect the 

credit.

Section 3. Payments. All payments due 

hereunder shall be sent to the Director of the 

 

5 North Tower was entitled to the following credits against the 

annual service charge: $250,000 in 2010; $250,000 in 2011; $250,000 

in 2012; and $250,000 in 2013. The Commercial Unit was entitled 

to the following credits against the annual service charge: $75,000 

in 2010; $75,000 in 2011; $75,000 in 2012; and $75,000 in 2013. 
18 A-2281-16T4

Office of Tax Abatement, with a copy to the 

Business Administrator.

The three urban renewal entities involved here made three 

prepayments totaling $2,000,000; Tower North paid $1,000,000; 

Tower South paid $700,000; and Commercial Unit paid $300,000. 

D

Termination of the Project and Sale of the Property

In the brief filed in this appeal, plaintiffs claim they 

originally intended to go forward with the three projects described 

in the Financial Agreements. However, they "refrained from 

building the Project for more than five years." No further 

information is included in the appellate record that explains or 

provides any reasons for plaintiffs' decision in this respect.

On December 29, 2014, plaintiffs conveyed all of the 

undeveloped properties to One Journal Square Partners Urban 

Renewal Company, LLC, One Journal Square Tower South Urban Renewal 

Company, LLC, and One Journal Square Tower North Urban Renewal 

Company, LLC (collectively "One Journal Square"), a redeveloper 

unrelated to the original project. In plaintiffs' verified 

complaint, Robert B. Edwards, the President of MEPT Journal Square 

avers:

One Journal Square did not take assignment of 

and did not become a successor entity under 

the terms of the Financial Agreements and/or 

the Prepayment Agreements.
19 A-2281-16T4

Thus, the Financial Agreements and the 

Prepayment Agreements are no longer in effect 

and [p]laintiffs will never receive any of the

benefits contemplated under those Agreements.

. . . [O]n or about April 2, 2015, [p]laintiffs 

sought a repayment of the Prepayment from the 

City, by virtue of the fact that no Annual 

Service Charges had accrued, and the City's 

only purported claim to the Prepayment was an 

upfront loan required of [p]laintiffs in order 

to receive the tax abatement.

[(Emphasis added).] 

The appellate record includes a copy of an email from 

plaintiffs' counsel to an unidentified person that appears to have 

some connection with the City. This individual invoked a provision 

in the Prepayment Agreements that stated: "In the event the Entity 

is unable to recover its Prepayment as a credit against the Annual 

Service Charge, in whole or in part, for any reason, then any 

Prepayment balance otherwise due, shall be forfeited."

II

Prepayment Agreements with the City

The Law Division decided this matter strictly on its 

interpretation of the LTTEL and the FHA. We review questions 

related to statutory interpretation de novo, without affording any

deference to the trial court. State v. Revie, 220 N.J. 126, 132 

(2014). In construing a statute, our role "'is to determine and 

effectuate the Legislature's intent.'" State v. Friedman, 209 N.J. 
20 A-2281-16T4

102, 117 (2012) (quoting Bosland v. Warnock Dodge, Inc., 197 N.J. 

543, 553 (2009)). "'[T]he starting point of all statutory 

interpretation must be the language used in the enactment.' We 

construe the words of a statute 'in context with related provisions 

so as to give sense to the legislation as a whole.'" Spade v. 

Select Comfort Corp., 232 N.J. 504, 515 (2018) (first quoting DCPP 

v. Y.N., 220 N.J. 165, 178 (2014); then quoting N. Jersey Media 

Grp., Inc. v. Twp. of Lyndhurst, 229 N.J. 541, 570 (2017)).

Guided by these well-settled principles, we start our 

analysis by recognizing that in enacting the LTTEL, the Legislature 

intended to eliminate unnecessary, redundant laws that impeded the 

elimination of blighted areas and at the same time promote laws 

that "encourage[d] private capital and participation by private 

enterprise" to contribute in the restoration of deteriorated or 

neglected properties. N.J.S.A. 40A:20-2. In furtherance of this 

public policy, the Legislature authorized municipalities "to 

contribute toward this purpose through the use of special financial 

arrangements, including the granting of property tax exemptions 

with respect to land and the buildings . . . ." Ibid. The 

Legislature declared "that the provisions of [LTTEL] are one means 

of accomplishing the redevelopment and rehabilitation purposes of 

the 'Local Redevelopment and Housing Law,' [N.J.S.A. 40A:12A-1 to 
21 A-2281-16T4

-49] . . . and that this act should be construed in conjunction 

with that act." Ibid.

In enacting the LTTEL, the Legislature carefully crafted a 

statutory scheme that provides municipalities with the means to 

carry out the public policy underpinning the act. One of the key 

issues concern the parameters of the financial agreements that set 

the terms between the City and the urban renewal entities. 

Pursuant to N.J.S.A. 40A:20-4, "[t]he governing body of a 

municipality which has adopted a redevelopment plan pursuant to 

the 'Local Redevelopment and Housing Law,' . . . may enter into a 

financial agreement with an urban renewal entity . . . ." However, 

the form and content of the "financial agreement shall include, 

but not be limited to, those provisions set forth in [other 

sections of the LTTEL]. Ibid. For example, N.J.S.A. 40A:20-8 

delineates the contents of application forms, the process for 

review by the "mayor or other chief executive officer," and the 

final approval by the municipal governing body. 

N.J.S.A. 40A:20-9 sets forth the statutory requirements of 

the "financial agreement," an issue of particular relevance here. 

The statute requires: 

Every approved project shall be evidenced by 

a financial agreement between the municipality 

and the urban renewal entity. The agreement 

shall be prepared by the entity and submitted 

as a separate part of its application for 
22 A-2281-16T4

project approval. The agreement shall not 

take effect until approved by ordinance of the 

municipality. Any amendments or modifications 

of the agreement made thereafter shall be by 

mutual consent of the municipality and the 

urban renewal entity, and shall be subject to 

approval by ordinance of the municipal 

governing body upon recommendation of the 

mayor or other chief executive officer of the 

municipality prior to taking effect.

N.J.S.A. 40A:20-9 further requires that the financial agreement 

be fully performed "within 30 years from the date of completion 

of the project . . . ."

"Where the statute sets forth the procedure to be followed, 

no governing body, or subdivision thereof, has the power to adopt 

any other method of procedure." Midtown Props., Inc. v. Twp. of 

Madison, 68 N.J. Super. 197, 207 (Law Div. 1961), aff'd o.b., 78 

N.J. Super. 471 (App. Div. 1963)). Here, N.J.S.A. 40A:20-9 

requires that financial agreements include the following specific 

provisions:

a. That the profits of or dividends payable 

by the urban renewal entity shall be limited

according to terms appropriate for the type 

of entity in conformance with the provisions 

of [the LTTEL].

b. That all improvements and land, to the 

extent authorized pursuant to [N.J.S.A. 

40A:20-12], in the project to be constructed 

or acquired by the urban renewal entity shall 

be exempt from taxation as provided in [the 

LTTEL].
23 A-2281-16T4

c. That the urban renewal entity shall make 

payments for municipal services as provided 

in [the LTTEL].

d. That the urban renewal entity shall submit 

annually, within 90 days after the close of 

its fiscal year, its auditor's reports to the 

mayor and governing body of the municipality.

e. That the urban renewal entity shall, upon 

request, permit inspection of property, 

equipment, buildings and other facilities of 

the entity, and also permit examination and 

audit of its books, contracts, records, 

documents and papers by authorized 

representatives of the municipality or the 

State.

f. That in the event of any dispute between 

the parties matters in controversy shall be 

resolved by arbitration in the manner provided 

in the financial agreement.

g. That operation under the financial 

agreement shall be terminable by the urban 

renewal entity in the manner provided by [the 

LTTEL].

h. That the urban renewal entity shall at all 

times prior to the expiration or other 

termination of the financial agreement remain 

bound by the provisions of [the LTTEL].

Conspicuously missing from this detailed recitation is any 

direct reference or even oblique allusion to any authority that 

would permit a municipality to enter into a separate agreement in 

which a municipality may condition the grant of a tax abatement 

upon the urban renewal entity agreeing to prepay "a portion" of 

its Annual Service Charge. Stated differently, where specific 
24 A-2281-16T4

procedures are provided by the Legislature, a municipality may not 

rely upon or resort to its claimed police powers. See Dome Realty, 

Inc. v. City of Paterson, 83 N.J. 212, 232-33 (1980).

The City argues we should review the enforceability of the 

Prepayment Agreements under traditional principles of contract 

law. This argument is irreconcilable with one of our State's 

governing principles that "a municipality is a creature of the 

Legislature, and as such is a government of enumerated powers 

which can act only by delegated authority." Inganamort v. Ft. 

Lee, 72 N.J. 412, 417 (1977). Thus, "while a public body may make 

contracts as an individual, it can only do so within its express 

or implied powers . . . ." Kress v. La Villa, 335 N.J. Super. 

400, 410 (App. Div. 2000) (quoting Midtown Props., Inc., 68 N.J. 

Super. at 208). The City's authority to grant tax abatements is 

exclusively derived from the LTTEL. The Legislature delegated 

this authority to the City as a means of revitalizing blighted 

areas by encouraging the participation of private enterprise to 

restore deteriorated or neglected properties. N.J.S.A. 40A:20-2.

Moreover, in our view, the Prepayment Agreements the City and 

plaintiffs entered into have all the trappings of an iniquitous, 

mutually beneficial gratuity. It allowed the redevelopers to 

secure the tax abatement they sought, and granted the City 

immediate access to two million dollars to balm the revenue 
25 A-2281-16T4

shortfall it was experiencing at the time, without raising property 

taxes or reducing municipal services. The recitals of the 

Prepayment Agreements unequivocally reveal the meretricious quid 

pro quo of the Prepayment Agreements:

WHEREAS, Entity recognizes that the Annual 

Services Charges payable under the Law with 

respect to its Project will not begin to 

accrue to the City until the Project is 

completed; and

WHEREAS, the City is in immediate need of 

additional funds for use during this fiscal 

year; and

WHEREAS, Entity is willing to prepay the 

Annual Service Charges in the amounts as set 

forth herein that will accrue from the Project 

in exchange for the City's agreement to credit 

such payments through credits against future 

Annual Service Charges that will become due;

and

WHEREAS, by the adoption of Resolution . . . 

on November 25, 2008, in order to allow the 

City to anticipate and rely on the funds and 

properly account for the funds, the City of 

Jersey City approved the prepayment of Annual 

Service Charge and authorize the execution of 

an agreement . . . .

[(Emphasis added).]

We confidently conclude that this arrangement concocted by 

the City to alleviate an immediate revenue shortfall was not

envisioned, or even remotely contemplated, by the Legislature when 

it adopted the LTTEL. 
26 A-2281-16T4

III

Contributions to the Affordable Housing Trust Fund

When it adopted the LTTEL, the Legislature declared "that the 

provisions of [LTTEL] are one means of accomplishing the 

redevelopment and rehabilitation purposes of the 'Local 

Redevelopment and Housing Law', . . . and that this act should be 

construed in conjunction with that act." N.J.S.A. 40A:20-2 

(emphasis added). The Legislature amended the Local Redevelopment 

and Housing Law in 2003 as follows:

Any municipality that has designated a 

redevelopment area, provides for a tax 

abatement within that redevelopment area and 

has adopted a housing element . . . may, by 

ordinance, require, as a condition for 

granting a tax abatement, that the developer 

set aside affordable residential units or 

contribute to an affordable housing trust fund 

established by the municipality. The 

requirement may be imposed upon developers of 

market rate residential or non-residential 

construction or both, at the discretion of the 

municipality.

[N.J.S.A. 40A:12A-4.1 (emphasis added).]

Thus, in sharp contrast to the Prepayment Agreements we have 

invalidated here, the Legislature expressly authorized

municipalities to adopt an ordinance to require an urban renewal 

entity to contribute to a municipal affordable housing trust fund 

as a condition of receiving a tax exemption under the LTTEL. 

Furthermore, as N.J.S.A. 40A:12A-4.1 makes clear, the municipality 
27 A-2281-16T4

may impose this requirement "upon developers of market rate 

residential or non-residential construction or both, at the 

discretion of the municipality."

The Legislature also codified the methods for calculating 

AHTF contributions: 

Any municipality that makes the receipt of a 

tax abatement conditional upon the 

contribution to an affordable housing trust 

fund shall include within the ordinance 

detailed guidelines establishing the 

parameters of this requirement including, but 

not limited to, the following:

a. standards governing the extent of 

the contribution based on the value 

of construction for market rate 

residential or non-residential 

construction, as the case may be; 

provided, however, that this 

contribution shall not exceed 

$1,500 per unit for market rate 

residential construction, $1.50 per 

square foot for commercial 

construction, and 10 cents per 

square foot for industrial 

construction;

b. a schedule of payments based upon 

phase of construction; and

c. parameters governing the 

expenditure of those funds, 

legitimate purposes for which those 

funds may be used, and the extent 

to which funds may be used by the 

municipality for administration.

[N.J.S.A. 40A:12A-4.2.]
28 A-2281-16T4

Here, the City adopted three separate ordinances that 

incorporated the "Affordable Housing Contribution" provisions 

described in Article IV, Section 4.6 of all three Financial 

Agreements. As we explained in detail in Subsection I-B, the City 

ordinances imposed AHTF contributions upon Towers North and South, 

the two urban renewal entities that were constructing residential 

projects, based on $1500 per unit. The AHTF contribution that the 

City imposed on the urban renewal entity that was constructing the 

Commercial Unit was based on a $1.50 per square foot of "gross,

not leaseable" space. The ordinances further established a twentyfive percent installment plan for the payment of the AHTF 

contributions. The $710,769 at issue in this case represents the 

first twenty-five percent installment payment due under this plan. 

We hold the methods the City employed were consistent with the 

statutory guidelines established in N.J.S.A. 40A:12A-4.2.

The trial court's decision invalidating these AHTF 

contributions erroneously applied the provisions in the FHA and 

the Supreme Court's analysis in Holmdel. We hold the City was 

entitled to condition the grant of tax abatements upon a 

redeveloper's contributions to the municipal AHTF pursuant to 

N.J.S.A. 40A:12A-4.1. Finally, we affirm the Law Division's order 

denying the City's motion for reconsideration as untimely under 

Rule 4:49-2, for the reasons expressed by this court in Hayes v. 
29 A-2281-16T4

Turnersville Chrysler Jeep, 453 N.J. Super. 309, 312-313 (App. 

Div. 2018). 

IV

Summary

We affirm the Law Division's judgment invalidating the 

Prepayment Agreements entered into by the parties on May 15, 2009, 

as ultra vires and unenforceable, and requiring the City to refund 

plaintiffs the two million dollars plaintiffs paid thereunder. 

We reverse the court's decision invalidating the $710,769 

contribution plaintiffs made to the City's AHTF pursuant to 

N.J.S.A. 40A:12A-4.1 of the Local Redevelopment and Housing Law, 

as applied in this case through the LTTEL. The remaining 

arguments raised by the City in this appeal lack sufficient merit 

to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed in part and reversed in part.