Court Opinion

ID: 4564773
Source: CourtListenerOpinion
Date Created: 2020-09-11 14:07:04.146472+00
Date Added: 2024-06-11T12:32:38.475778
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-4036-18T3

KEVIN MALANGA,

         Plaintiff-Appellant,

v.

TOWNSHIP OF WEST ORANGE,
TOWNSHIP OF WEST ORANGE
PLANNING BOARD, and
TOWNSHIP OF WEST ORANGE
TOWNSHIP COUNCIL,

         Defendants-Respondents,

and

WEST ORANGE OFFICE
EXECUTIVE PARK, LLC,

     Defendant/Intervenor-
     Respondent.
________________________________

                   Argued March 10, 2020 – Decided September 11, 2020

                   Before Judges Fisher, Accurso and Gilson.

                   On appeal from the Superior Court of New Jersey,
                   Law Division, Essex County, Docket No. L-1137-18.
              James M. Turteltaub argued the cause for appellant
              (Carlin & Ward, PC, attorneys; James M. Turteltaub,
              of counsel and on the briefs).

              Richard D. Trenk and Kenneth D. McPherson III
              argued the cause for respondents Township of West
              Orange, Township of West Orange Township Council
              and Township of West Orange Planning Board
              (McManimon, Scotland & Baumann, LLC, and
              Kenneth D. McPherson III, attorneys; Richard D.
              Trenk and Patrick J. Dwyer, on the joint brief).

              Robert S. Goldsmith argued the cause for intervenor-
              respondent West Orange Office Executive Park, LLC
              (Greenbaum, Rowe, Smith & Davis, LLP, attorneys,
              join in the brief of respondents Township of West
              Orange, Township of West Orange Township Council
              and Township of West Orange Planning Board).

PER CURIAM

      Resident taxpayer plaintiff Kevin Malanga appeals from the dismissal of

his complaint in lieu of prerogative writs challenging the Township of West

Orange's designation of the Essex Green Shopping Center and the Executive

Drive Office Park as a non-condemnation area in need of redevelopment

pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1

to -73. Because the record lacks substantial evidence to support the finding,

we reverse.

      In September 2017, the West Orange Township Council adopted a

resolution directing the Township's Planning Board to investigate and

                                                                        A-4036-18T3
                                       2
determine whether the properties located on Executive Drive and Rooney

Circle, five lots in Block 155, 40.02, 40.03, 41.02, 42.01 and 42.02, and all of

Block 155.21, met the criteria of an area in need of redevelopment in N.J.S.A.

40A:12A-5. The following month, Paul Grygiel, the Board's consultant

planner, submitted a report of his study of the area to the Planning Board.

      In preparing his report, Mr. Grygiel surveyed the uses and conditions of

the properties in the study area and nearby areas, including their ownership

and occupancy. He also reviewed municipal records, including the municipal

tax map and Township tax records; the existing zoning ordinance and map; the

2004 West Orange reexamination report and the 2010 Master Plan update. He

researched office and retail markets in New Jersey and met with the owners

and property manager of the shopping center and with the architect and

property owner of the office park.

      The area targeted for redevelopment consists of about seventy acres in

the center of West Orange in the area of Prospect Avenue and Interstate 280,

which Mr. Grygiel described as "developed with an office park and shopping

center, both of which are characterized by outdated buildings and relatively

high vacancy rates." According to Mr. Grygiel, the Essex Green shopping

center, situated on more than thirty-five acres, was built in 1957, with its last

                                                                           A-4036-18T3
                                         3
major renovation undertaken in 1991, although he noted more recent

improvements throughout the site, including a restaurant pad for TGI Fridays.

Mr. Grygiel reported the occupancy rate at seventy-seven percent, with major

tenants including Shop Rite, Sears Outlet, Total Wine, AMC Theaters and

Panera Bread. Macy's had recently vacated, with its outlet store brand, Macy 's

Backstage, occupying some of its former space.

      The shopping center was purchased by Clarion Partners, an investment

firm with over $40 billion under management, for $97 million the year before.

Based on his site visit and discussions with the property manager, Mr. Grygiel

concluded the size and layout of many of the retail units "are long and

awkwardly laid out," and are "outdated by today's retail standards." The

property manager reported "the mechanical and HVAC systems in many of the

vacant units are old and are in need of replacement." The property is serviced

by a central loading dock with a network of underground tunnels with each

retail unit having a basement to receive deliveries and store goods. There are

no elevators from the basements to the retail floor, resulting in many tenants

taking deliveries via the doors on the retail floor, creating potential conflicts

with cars and pedestrians.

                                                                           A-4036-18T3
                                         4
      Mr. Grygiel determined the central building was aged "and is close to

being or could be considered actually functionally obsolete," and "the retail

units in need of significant renovation." He concluded the retail units, "[i]n

their unused state, . . . are detrimental to the public welfare, especially when

considering municipal land use policies which are meant to encourage the

updating and upkeep of existing commercial development in the Township."

He opined the shopping center met the criteria for an area in need of

redevelopment under N.J.S.A. 40A:12A-5(b) "due to its partially vacant

condition and unfavorable prospects for re-tenanting," and under N.J.S.A.

40A:12A-5(d) based on "the odd configuration of the central shopping center

building, overall dated aesthetic, impractical loading system, and unsuitable

retail units" and "outdated layouts and designs."

      The Executive Drive Office Park, a complex of four buildings across

thirty-two acres was also under new ownership, having been purchased by

intervenor West Orange Executive Park, LLC for approximately $14 million

earlier in the year. Although all four buildings have frontage along the I-280

right of way, there is no access from the highway. Instead, access is provided

by a private road, Executive Drive, essentially a spur of Rooney Circle, which

winds through the office park providing access to all four buildings.

                                                                          A-4036-18T3
                                         5
      The office park was developed over more than a dozen years, with

buildings going up in 1971, 1977, 1978 and 1984. Each building is serviced

by a surface parking lot. Major tenants at the time of Mr. Grygiel's study

included Lincoln Tech, GEICO and the Department of Homeland Security.

The new owner's architect told Mr. Grygiel that the buildings are considered

"Class C" office space. In his report, Mr. Grygiel wrote that "[a]s there is an

oversupply of dated, suburban office buildings in New Jersey, there is no real

market for Class C office space at this time, or in the foreseeable future." The

new owner reported a vacancy rate of fifty-eight percent, which Mr. Grygiel

reported was nearly double the vacancy rates of suburban office space in New

Jersey.

      Mr. Grygiel noted the buildings were "poorly placed" on the site, tucked

in as they were behind the shopping center, with little visibility from Rooney

Circle on the approach through the shopping center or from I-280 as

landscaping screens the buildings from the highway. Mr. Grygiel noted that

"[m]odern office users are seeking open, daylighted spaces with multiple

amenities" on site, and the only amenity on this site was a small, dated

cafeteria. He found the buildings had dated facades and interiors that were in

                                                                           A-4036-18T3
                                        6
only fair condition, and that updating "the outdated mechanical, electrical and

plumbing systems would take a significant amount of investment."

      Mr. Grygiel concluded the office park properties qualified as an area in

need of redevelopment under criteria (b) of the Redevelopment Act "due to the

partially vacant condition and unfavorable prospects of re-tenanting" based on

the office park's "inferior location," its odd, outdated layout, dearth of natural

light and lack of on-sight amenities. He also found the "obsolescent location"

and layout of the office park provided "little or no options" for upgrades,

qualifying the office park for a redevelopment designation under criteria (d) of

the Redevelopment Act.

      The Planning Board held two nights of public hearings on the proposed

designation in accordance with N.J.S.A. 40A:12A-6. Mr. Grygiel was the only

witness. After he summarized his findings, Board members and members of

the public put questions to him. There were a number of objectors, with many

directing questions and comments to the wisdom of the Town offering

redevelopment incentives to the well-capitalized new owners of these

properties, instead of leaving to them the costs of upgrading their investments.

Both the Board chair and Mr. Grygiel repeatedly attempted to explain that the

only issue before the Planning Board was whether the preliminary

                                                                           A-4036-18T3
                                         7
investigation undertaken by Mr. Grygiel allowed the Board to conclude that

the properties met the statutory criteria for an area in need of redevelopment

under section 5 of the Redevelopment Act.

      Notwithstanding the general objections voiced by many members of the

public, there were some relevant questions put to the planner. In response to

several questions about occupancy of the shopping center and the office park,

Mr. Grygiel stated the owners provided him the information about the vacancy

rates, and that he did not review the leases himself. After several members of

the public and at least one member of the Board expressed the desire to have

the owners appear before the Planning Board to address the vacancy rates at

their properties, the planner said he would speak to the owners about having a

representative who could testify about such matters appear at the next hearing.

      At the second hearing, Mr. Grygiel reported he contacted the

representatives of the owners that had appeared before the Town Council when

it voted to approve the resolution authorizing his firm to undertake the

preliminary investigation of whether the area qualified for redevelopment, who

declined to appear before the Planning Board. He also testified that viewing

the empty storefronts at the shopping center allowed him to confirm the 23.5

percent vacancy rate reported by management of the shopping center was

                                                                           A-4036-18T3
                                        8
likely accurate. Although he could not similarly verify the vacancy rate at the

office park, he was able to say based on the number of cars he saw in the

parking lots and by viewing the building directories and walking some

common areas that the complex was not nearly fully occupied. Mr. Grygiel

testified in response to questions from the public that he could not say how

long the vacancies at either the shopping center of the office park had

persisted. He testified in response to questions about "discontinuance of use"

that none of the buildings in the study area was "100 percent vacant."

      Mr. Grygiel also responded to questions from members of the Board and

the public at both hearings about the condition of the properties in relation to

the statutory criteria, and specifically the requirement in section 5(d) of the

Redevelopment Law that conditions be "detrimental to the safety, health,

morals, or welfare of the community." Plaintiff asked Mr. Grygiel to "point

out" where in the report he had concluded that the conditions of the property

were "detrimental to the safety, health, morals, or welfare of the community."

Mr. Grygiel responded:

            Well, it talks — the report talks generally about the
            Township's planning objectives and it's a — for this
            particular section of the town, that the intention is for
            being an economic driver to have — to be occupied
            essentially. And that if the current conditions persist
            and vacancy continues, that it will no longer be

                                                                           A-4036-18T3
                                         9
            serving that purpose. That's detrimental to the general
            welfare of the Township.

      Plaintiff followed up, asking, "At the moment, is it detrimental to the

safety, health, morals or welfare of the community, not ten years in the future,

right now?" Mr. Grygiel responded: "Currently, I don't believe so." Plaintiff

asked Mr. Grygiel again about this at the next hearing. After getting the

planner to again agree the conditions he found, such as "obsolete layout" must

be detrimental to the safety, health, morals or welfare of the community in

order to qualify for redevelopment under section 5(d), plaintiff asserted the

planner had nowhere explained "how that's the case." Mr. Grygiel responded:

            What I've talked about are the broader trends in office
            and retail and how these properties, if they go down
            the current road, are going to be, again, more obsolete
            and this is an important part of the Township that it
            should be — the Township should be proactive about
            the planning.

            [Emphasis added.]

      Following the hearing, the Planning Board voted six to one in favor of

recommending the designation. It subsequently adopted a one-page resolution

stating only that the Board had received Mr. Grygiel's report, that the report

concluded that the shopping center and office park "qualified for

redevelopment designation under either criteria 'b' or 'd'" of section 5 of the

                                                                          A-4036-18T3
                                       10
Redevelopment Law, and that "the Board hereby agrees with the conclusion of

the Redevelopment Study" conducted by Mr. Grygiel that the properties

"qualify as an 'area in need of redevelopment' in accordance with N.J.S.A.

40A:12A."1 The Township Council subsequently voted to accept the Planning

Board's recommendation, likewise not detailing the basis for the finding

beyond stating that the Planning Board, "after completing its investigation and

public hearing . . . concluded that there was sufficient credible evidence to

support findings that satisfy the criteria" in section 5 of the Redevelopment

Law.

       Plaintiff timely filed this action in lieu of prerogative writs and the trial

court granted the motion to intervene by the owner of the office park. After

hearing argument, the court issued a written decision dismissing the complaint.

The court found the Redevelopment Law "specifically allows for

redevelopment of an area due to obsolescence, faulty arrangement or design,

lack of ventilation and light, obsolete layout, or a combination" of them, and

that Mr. Grygiel found evidence of those factors for both properties. The court

1
  See 62-64 Main St., L.L.C. v. Mayor & Council of City of Hackensack, 221
N.J. 129, 157 (2015) (noting a resolution that fails to "clearly articulate the
factual findings that support the statutory criteria for designating an area as in
need of redevelopment. . . . disserves the municipality and the parties").
                                                                             A-4036-18T3
                                         11
noted that the objectors did not introduce any evidence at the hearing, leaving

Mr. Grygiel's opinion as the only evidence in the record. The court found the

Planning Board and Council "[a]fter proper legislative procedures, . . .

accepted [the planner's] recommendations that the facts set forth above are

detrimental to the safety, health, morals, or welfare to the community."

      Finding the designation "supported by substantial evidence in the

record," the court found itself "bound to affirm that determination." Having

concluded the Town satisfied the criteria under section 5(d) of the statute that

the shopping center and office park were in need of redevelopment, the court

concluded in did not need to address whether the criteria under 5(b) were also

satisfied.

      We review a trial court's decision sustaining or setting aside a

municipality's decision that an area is in need of redevelopment using the same

standard that governs the trial court. Levin v. Twp. Comm. of Bridgewater, 57

N.J. 506, 537 (1971). We are to approach review of a municipality's blight

determination "with an acute awareness of the salutary social and economic

policy which prompted the various slum clearance and redevelopment

statutes." Ibid.

                                                                           A-4036-18T3
                                       12
      Although "remind[ing] planning boards and governing bodies that they

have an obligation to rigorously comply with the statutory criteria for

determining whether an area is in need of redevelopment," 62-64 Main St., 221

N.J. at 156, our Supreme Court regularly reminds us that "after the municipal

authorities have rendered a decision that an area is in need of redevelopment,

that decision is 'invested with a presumption of validity.'" Id. at 157 (quoting

Levin, 57 N.J. at 537). In order to effectuate "the salutary social and economic

policy" that animates the Redevelopment Law, the Court has instructed that we

are "to interpret the powers granted to the local planning board liberally and to

accept its exercise of the powers so long as a necessarily indulgent judicial eye

finds a reasonable basis, i.e., substantial evidence, to support the action taken."

Levin, 57 N.J. at 537.

      At the time this case was decided in the trial court, the relevant portions

of section 5 of the Redevelopment Law read as follows:

            A delineated area may be determined to be in need of
            redevelopment if, after investigation, notice and
            hearing as provided in section 6 of P.L.1992, c. 79
            (C.40A:12A-6), the governing body of the
            municipality by resolution concludes that within the
            delineated area any of the following conditions is
            found:

            b. The discontinuance of the use of buildings
            previously used for commercial, manufacturing, or

                                                                           A-4036-18T3
                                       13
            industrial purposes; the abandonment of such
            buildings; or the same being allowed to fall into so
            great a state of disrepair as to be untenantable.

            d. Areas with buildings or improvements which, by
            reason of dilapidation, obsolescence, overcrowding,
            faulty arrangement or design, lack of ventilation, light
            and sanitary facilities, excessive land coverage,
            deleterious land use or obsolete layout, or any
            combination of these or other factors, are detrimental
            to the safety, health, morals, or welfare of the
            community.

            [N.J.S.A. 40A:12A-5(b) and (d).]

      Having synopsized the key testimony underlying the Planning Board's

finding that the shopping center and office park comprised an area in need of

redevelopment, we think it plain that even viewing the finding with the most

indulgent of judicial eyes that it cannot stand. The problem is that Mr.

Grygiel, while cataloging the dated design, layout and mechanical systems of

these properties under section 5(d), could not opine that any of those factors,

singly or in combination, were "detrimental to the safety, health, morals, or

welfare of the community" at the present time.

      The report Mr. Grygiel authored states as to both the shopping center

and the office park only that each "qualifie[d] under criteria 'd' due to their

obsolete layout and faulty arrangement and design." The report does not

explain how the flaws described affected the community's safety, health,

                                                                           A-4036-18T3
                                        14
morals or welfare. When asked point blank at the first night of hearings

whether those conditions were detrimental to safety, health, morals or welfare,

right now, "not ten years in the future," Mr. Grygiel replied: "Currently, I

don't believe so." That was an admission that neither the municipal bodies nor

the trial court was free to ignore.

      The most Mr. Grygiel could offer was that his "report talks generally

about the Township’s planning objectives . . . for this particular section of the

town," specifically the 2004 Reexamination Report's encouragement of

development that "generates employment opportunities and beneficial

commercial/retail activity." He asserted that for the properties to serve as

intended in the Master Plan as "an economic driver" they need "to be occupied

essentially. And that if the current conditions persist and vacancy continues,

that it will no longer be serving that purpose." Mr. Grygiel concluded

"[T]hat’s detrimental to the general welfare of the Township."

      We, of course, accept that a commercial area could be found in need of

redevelopment based not only on "economic deterioration in tax revenue

terms" but also based on "the adverse physical conditions of property that

individually or in combination impeded its reasonable productivity and

resulted in its negative impact upon the general welfare and economic well -

                                                                          A-4036-18T3
                                       15
being of the community." Forbes v. Bd. of Trs. of S. Orange Vill., 312 N.J.

Super. 519, 525 (App. Div. 1998). We said so in Forbes and repeated it in

Concerned Citizens of Princeton, Inc. v. Mayor & Council of Princeton, 370

N.J. Super. 429, 458-59 (App. Div. 2004).

      The Redevelopment Law under section 5(d), however, requires a finding

that the conditions specified "are detrimental to the safety, health, morals, or

welfare of the community," not that they will become so at some unspecified

point in the future. See ERETC, L.L.C. v. City of Perth Amboy, 381 N.J.

Super. 268, 279 (App. Div. 2005) (holding dilapidation insufficient to

designate an area in need of redevelopment without detriment to the safety,

health, morals or welfare). A desire to engage in "proactive planning" does

not permit a municipality to designate an area in need of redevelopment in

anticipation that conditions will cause it to become a detriment to the

community in the future. See 99 Cents Only Stores v. Lancaster

Redevelopment Agency, 237 F. Supp. 2d 1123 (C.D. Cal. 2001), dismissed, 60

Fed. Appx. 123 (9th Cir. 2003) (notion of avoiding future blight was entirely

speculative and wholly without support under California's Community

Redevelopment Law (CRL), and thus city's efforts to condemn retailer's

property due to concern regarding future blight would violate public use

                                                                          A-4036-18T3
                                       16
clause); cf. Gallenthin Realty Dev., Inc. v. Borough of Paulsboro, 191 N.J.

344, 365 (2007) (noting definition of "blight" could not be so broad as to make

"most property in the State . . . eligible for redevelopment").

      "[P]lanning boards and governing bodies . . . have an obligation to

rigorously comply with the statutory criteria for determining whether an area is

in need of redevelopment." 62-64 Main Street, 221 N.J. at 156. Because Mr.

Grygiel was unable to offer the opinion that the obsolete layout and faulty

arrangement and design of the shopping center and the office park was

currently detrimental to the general welfare of the community, the record

lacked substantial evidence to support the Planning Board's finding, adopted

by the Township Council, that the properties were in need of redevelopment

under section 5(d).

      Although the trial court did not reach the Planning Board's determination

that the finding could also be supported under section 5(b), we are satisfied

that section, as it existed at the time of the decision, is of no avail to the

Township. Before its recent amendment, section 5(b) provided that a

delineated area could be found to be in need of redevelopment if,

             b. The discontinuance of the use of buildings
             previously used for commercial, manufacturing, or
             industrial purposes; the abandonment of such

                                                                             A-4036-18T3
                                         17
             buildings; or the same being allowed to fall into so
             great a state of disrepair as to be untenantable.

             [N.J.S.A. 40A:12A-5(b).]

      Mr. Grygiel admitted that neither the shopping center nor office park had

been abandoned or permitted to fall into such disrepair as to be untenantable.

He contended, however, that the tenant vacancies in the shopping center and

office park could constitute "[t]he discontinuance of the use of buildings

previously used for commercial . . . purposes." We disagree, because the

planner admitted that all of the buildings in both the shopping center and the

office park continued to be used, none was vacant. See Gallenthin, 191 N.J. at

365 (noting a "statute's plain language is the most reliable indicium" of the

Legislature's intent).

      Our reading of the plain meaning of "discontinuance of use" is

buttressed by the Legislature's recent amendment of section 5(b) to add the

underlined language.

             b. The discontinuance of the use of a building or
             buildings previously used for commercial, retail,
             shopping malls or plazas, office parks, manufacturing,
             or industrial purposes; the abandonment of such
             building or buildings; significant vacancies of such
             building or buildings for at least two consecutive
             years; or the same being allowed to fall into so great a
             state of disrepair as to be untenantable.

                                                                         A-4036-18T3
                                        18
            [L. 2019, c. 229, § 1, eff. Aug. 9, 2019; N.J.S.A.
            40A:12A-5(b).]

If discontinuance of use could encompass a building still in use although

suffering significant vacancies, there would appear no need for the

amendment. See Kasper v. Bd. of Trs. of the Teachers' Pension & Annuity

Fund, 164 N.J. 564, 577 (2000) (noting the presumption that a change

evidences "a departure from the old law," is strongest when the Legislature

does not overhaul the entire statute but enacts only "an isolated independent

amendment"). A committee statement to the bill provided it would

            allow municipalities to use the powers authorized
            under Article VIII, Section III, paragraph 1 of the
            State Constitution to redevelop these "stranded
            assets."[2] By specifying that a vacant shopping mall
            or office park is an area in need of redevelopment, a
            municipality can offer potential private sector partners
            redevelopment tools such as tax exemptions and
            abatements to encourage them to repurpose these
            stranded assets.

            [Assembly Commerce and Econ. Dev. Comm.
            Statement with Comm. Amendments to A. 1700
            (L. 2019, c. 229) (Sept. 13, 2018).]

2
  Sponsor’s Statement to A. 1700 (L. 2019, c. 229) ("[L]arge corporate office
parks and large shopping malls have become obsolete, vacant, and difficult to
market, today they are characterized in development circles as "stranded
assets.").
                                                                        A-4036-18T3
                                      19
      Thus, it appears that the Legislature, by expanding the criteria of section

5(b), has addressed precisely the issues identified by Mr. Grygiel in his report

to the Planning Board about the oversupply of "dated, suburban office

buildings" and the inability of the shopping center to effectively compete,

despite its key location in the Township, because it "does not comport with

modern retail standards." Defendants have not asked that we decide this

appeal under the current statute by resorting to the time of decision rule. See

R. Neumann & Co. v. City of Hoboken, 437 N.J. Super. 384, 395 (App. Div.

2014) (applying 2013 amendments to the Redevelopment Law effective after

the designation of an area in need of rehabilitation to the issues on appeal); see

also Cox & Koenig, New Jersey Zoning and Land Use Administration §19-3.5

(2020) (noting the time of application rule, N.J.S.A. 40:55D-10.5 applies only

to municipal ordinances). Even were we to do so, however, the result would

be unchanged.

      Although it appears likely that the study area might well qualify for

designation as an area in need of redevelopment under the 2019 amendment to

the Redevelopment Law, the absence of any information in the record about

how long the vacancies in either the shopping center or the office park had

persisted would prevent us from applying the current version of section 5(b) to

                                                                          A-4036-18T3
                                       20
affirm the trial court's decision upholding the designation. Accordingly, we

invalidate the designation of the area as one in need of redevelopment and

reverse the April 5, 2019 order that upheld it.

      Reversed.

                                                                       A-4036-18T3
                                       21