Challenge to Redevelopment Action Decades After Finding of Blight Denied

by: Joseph Grather
25 Jan 2017


The Appellate Division recently analyzed an old blight designation in Ocean County in a January 18, 2017 opinion.  You may have to read it more than once to understand the convoluted fact pattern.  Or, you may want to skip ahead to the legal analysis because it is short and to the point.

Two tracts of land were designated blighted by the Township of Lakewood in 1987 and 1996.  The first tract was known as the Southwest Acquisition Area and comprised 240+ acres.  The second was known as the Pine River Village Tract comprising about 20+ acres.  No one challenged the blight/in need of redevelopment designation.  The Township owned about 75% of the land within the redevelopment area.  In 1999, the Township published Requests for Proposals (RFP) for redevelopment of both tracts.  The Township only received two responses.

In 2000, the Township entered into an Option Agreement with Cedarbridge, which gave Cedarbridge rights to purchase and develop both tracts.  The parties agreed that the fair market value of the land was less than the “cost per acre of constructing infrastructure improvements required to service the premises.” (Slip. op at 12).  In 2003, Cedarbridge assigned its option to purchase the Pine River Tract to Educational Endowment Fund, Inc. (EEF) (an entity related to Cedarbridge).  Immediately thereafter, EEF contracted to sell the parcel to Somerset Development for $6,000,0000.  The transaction closed two years later for a consideration of $9,000,000.  The Township understood that the purchase price would be used to fund infrastructure improvements.  Title was transferred from the Township to Somerset on March 18, 2005.

In November 2010, Plaintiffs – two residents of the Township – filed a prerogative writ action to challenge the Township’s actions in 1999 and 2000 which resulted in the execution of the option agreement with Cedarbridge.  Plaintiffs’ complaint alleged violations of the Local Redevelopment and Housing Law (N.J.S.A. 40A:12A-1, et seq.)  The complaint was amended three times before the trial commenced in August of 2013.  Plaintiff’s motion to amend the complaint a fourth time after the trial started was denied.  Two of plaintiffs expert witnesses were barred from testifying for failure to disclose reports prior to trial.

Most of plaintiffs’ evidence at trial questioned the validity of the RFP.  But, the trial court ruled that the LRHL did not require RFPs, and otherwise, the Township’s action contracting with Cedarbridge was entitled to a presumption of validity.  The trial court found no evidence that the Township’s action was not in conformity with the redevelopment law.  And again, granted defendants’ motion to dismiss per R. 4:37-2(b) for involuntary dismissal at the close of plaintiffs’ case.  The Appellate Division affirmed for the reasons given by the trial court.

On appeal, plaintiffs argued that the Option Agreement violated the Establishment Clause of the Constitution. The Appellate Division “declined to address it” because it was not raised below.  Also, the appellate division did not reach the question whether it was proper for the court to have extended the time to appeal ten years beyond the statutory time period.

Case closed?