TEICHER AMERICAN COMMUNITIES AT THE MAJESTIC LLC v. THE CITY OF ASBURY PARK THE CITY OF ASBURY PARK PLANNING BOARD (2011)

This appeal concerns property owned by plaintiff Teicher American Communities at the Majestic, LLC (Teicher), and located in the Waterfront Redevelopment Area in Asbury Park. Plaintiff Asbury Partners, LLC (Asbury Partners) appeals from the February 27, 2006 Law Division order directing defendant City of Asbury Park (City) to adopt a zoning ordinance governing the property;  and from the May 27, 2006 order determining that the property is not subject to the substantive and procedural requirements of the City's 2002 Waterfront Redevelopment Plan (the Plan) and the Amended and Restated Redeveloper and Land Disposition Agreement between the City and Asbury Partners (the Redeveloper Agreement).   We reverse.

I.

In lieu of reciting the lengthy history of the City's efforts to redevelop its waterfront, we incorporate by reference the facts set forth in Jersey Urban Renewal, LLC v. City of Asbury Park, 377 N.J.Super.   232 (App.Div.), certif. denied, 185 N.J. 392 (2005) and D & M Asbury Realty, LLC v. City of Asbury Park, Nos. A-3022-03, A-3239-03, A-3240-03 (App.Div. January 24, 2006), certif. denied, 186 N.J. 607 (2006).   We highlight the facts relevant to this appeal.

In August 1984, the City adopted a resolution designating approximately two hundred and thirty acres of property between Grand Avenue and the waterfront as a blighted area in need of redevelopment (the Redevelopment Area).   In November 1984, the City adopted a redevelopment plan known as the Waterfront Redevelopment Plan, which provided a comprehensive outline for the overall redevelopment of properties located within the Redevelopment Area. The City amended the Waterfront Development Plan in 1987 and 1991.

The City adopted the Plan in 2002.   Unlike its predecessor plans, the Plan does not afford individual property owners the unqualified right to redevelop their own properties.   Rather, it requires block-by-block redevelopment through a single master developer with the use of “subsequent developers.”

The Plan states that it “supersedes and replaces all previous versions of the ․ Waterfront [Redevelopment] Plan ․ [and] contains all the City zoning and development controls for the Waterfront Redevelopment Area.” The Plan also states that “the development controls in this ․ Plan supersede all applicable provisions of all other Asbury Park development regulations including zoning requirements for the prime renewal and boardwalk area.”

After the Plan's adoption, the City entered into the Redeveloper Agreement, which reaffirmed Asbury Partners' designation as the exclusive master developer.   Section 2.2a provides that “[t]he City will not negotiate or entertain another Redeveloper or Developer in the Redevelopment Area, unless it is a Subsequent Developer, but only as to a party who has entered into a contract with [Asbury Partners] or with its consent.”   The agreement defines a “Subsequent Developer” as “a purchaser, assignee, or transferee of [Asbury Partners'] rights, interest and/or title in or to part of the Project, subject to the provisions of this Agreement and the Redevelopment Plan[.]”

The Plan divides the Redevelopment Area into three sub-areas:  (1) the Renovation/Infill Area;  (2) the Prime Renewal Area;  and (3) the Boardwalk Area. The principal use within the Redevelopment Area is residential, both single and multi-family dwellings.   Permitted conditional uses are live-work dwelling units, retail shops and commercial enterprises, which must be integrated within mixed-use buildings, and certain food-service businesses.   Commercial and retail uses are restricted to the ground-floor level.   Prohibited uses include any use with a drive-through facility, adult uses, and any freestanding signs.

The redevelopment area involved here is the Prime Renewal Area. The Plan limits construction in this area to 3,164 housing units, to be allocated among new housing units, replacement of existing units, hotel units, and “Ocean Mile Architectural Bonus,” and 450,000 square feet of retail space.   The new housing is a combination of two and three story townhouses and apartments located between buildings that are four and eight stories tall.   As for lot standards, the Plan prescribes, with certain exceptions, a minimum lot area of 15,000 square feet, with a minimum frontage of 100 feet.   The Plan also details on-and off-street parking and thoroughfare designations, design principles related to landscape architecture, controls for vehicular and pedestrian traffic, and design for open space, recreation, and community facilities along the boardwalk.

The City may acquire all property within the Prime Renewal Area for redevelopment purposes through eminent domain;  however, four properties of historical or artistic significance are conditionally exempt from eminent domain:  the Empress Hotel;  the Stone Pony;  the Berkeley Carteret Hotel;  and the Bergh Street Properties.   The City can acquire these properties only upon the happening of an eventuality which would undermine their historic or artistic values.   For example, the Stone Pony, a musical venue made famous by Bruce Springsteen and the E-Street Band, would be subject to taking if it ceased operating as a nightclub for six months.

Four other properties are also exempt from eminent domain:  the Monmouth Council Civil Service Housing Association;  Asbury Towers, a low- and moderate-income housing complex;  the Asbury Park sewerage treatment plant;  and the Salvation Army property (the property), which is the property at issue here.   The Plan itself does not specify any condition for these exemptions.   However, the Monmouth Council Civil Service Housing Association and the sewerage treatment plant are exempt from condemnation under the doctrine of prior use, Twp. of Weehawken v. Eerie R.R. Co., 20 N.J. 572, 578-79 (1976), and the Asbury Towers and Salvation Army properties are considered inherently beneficial uses that promotes the general welfare.   See Jayber, Inc. v. Mun. Council of W. Orange, 238 N.J.Super. 165, 175 (App.Div.), certif. denied,.  122 N.J. 142 (1990).

The property is described as Block 178, Lots 10 through 15 on the City's tax map.   It is located between Kingsley and Bergh Streets.   The Plan's central objective for properties located between Kingsley and Bergh Streets was to decrease building heights from mid-rise to townhouse scale to match the scale of the adjacent existing residential area.

The property includes a seven-story building with attached four-story and one-story additions, which the Salvation Army had used for decades for affordable housing for low-income senior citizens, many of whom were retired Salvation Army members.   The Salvation Army indicated to the City that it had no intention of selling the property and wanted to continue that use.   As a result, the City agreed to exempt the property from the Plan and permitted it to maintain its status as a pre-existing use.   The property would continue providing the same number of dwelling units, and was not included in the 3,164 housing units the Plan contemplated for the Prime Renewal Area. The Plan also provided for parking and vehicular circulation based on the property retaining its use and number of dwelling units.

Teicher contracted to purchase the property knowing of its location in the Redevelopment Area and of its status as a pre-existing use.   Nevertheless, prior to the closing of title, Teicher filed an application to amend the Plan to permit the construction of an additional 200 housing units on the property, plus retail space, a fitness center, and a spa.

Section 4.5 of the Plan authorizes the City to amend it under the following circumstances:

[U]pon compliance with the requirements of applicable law, the City ․ acting as a redevelopment authority, subject to study and recommendation of the Planning Board of the City of Asbury Park, may amend, revise or modify this Plan at any time, provided that, in respect to any land in the Redevelopment Area previously disposed of by the City for redevelopment in accordance with the provisions of the [P]lan, the City Council must first receive the written consent of such purchaser(s), or lessee(s) or their successor(s) in interest(s), whose land(s) in the sole opinion of the Redevelopment Agency would be adversely affected by amendment, revision or modification of the [P]lan.

However, section 2.3 of the Redeveloper Agreement restricts that right:

The parties ․ agree that there shall not be any further material changes of the Plan except by mutual consent of the parties and that the Planning Board will consider site plan submissions as per the Plan[.]

․

The Parties agree that if the ․ Plan needs to be amended, the party making the request shall do so in writing with supporting documentation reasonably satisfactory to the other party and the City or [Asbury Partners] will provide a reply within 45 days.   The reply will address only the conceptual response and any formal application to change the Plan must follow New Jersey [s]tatutes.   Failure to reply will be deemed a consent to the [a]mendment.   If one party believes the other has acted unreasonably in denying such consent, that party may submit the dispute to binding Arbitration as defined in Article 17 herein, each party to bear their own costs and the City and [Asbury Partners] to bear equally the cost of the arbitrator.

The City concluded that the Plan did not address or provide design guidelines for the property.   It passed a resolution authorizing the City of Asbury Park Planning Board (Planning Board) to review potential amendments to the Plan for the property, and to recommend whether or not (1) the property is subject to eminent domain;  (2) Teicher should make infrastructure contributions;  or (3) Teicher should pay for its proportional share of the infrastructure improvements and improvements to the sewerage treatment plant for odor control.

The Planning Board concluded that the Plan's development standards did not apply to the property.   It passed a resolution recommending that the City adopt several amendments to the Plan to add new design guidelines and zoning controls for the property;  however, it specifically made no recommendation on whether the property was subject to eminent domain.

Asbury Partners objected to any amendments to the Plan without its written consent.   As a result, the City declined to act upon the Planning Board's recommendation.

On July 6, 2005, Asbury Partners filed a complaint against Teicher alleging that Teicher's efforts to have the Plan amended constituted tortious interference with Asbury Partners' interests under the Redeveloper Agreement.   On August 3, 2005, Asbury Partners voluntarily dismissed the complaint to allow the parties time to reach an amicable resolution.   That attempt failed.

On September 9, 2005, Teicher filed a complaint for declaratory judgment against the City and Planning Board (Asbury-Teicher I).   In an amended complaint, Teicher sought, in part, a declaration that the City failed to zone the property for any viable use, and to compel the City to process its application.   On October 25, 2005, Asbury Partners re-filed its complaint against Teicher alleging tortious interference with contractual relations and with prospective economic advantage (Asbury-Teicher II).

Teicher and the City filed motions for partial summary judgment in Asbury-Teicher I, returnable in January 2006.   Asbury Partners filed a motion to consolidate the two actions, returnable in March 2006.   Prior to resolving the consolidation motion in Asbury-Teicher II, the judge granted Teicher's cross-motion in Asbury-Teicher I. In an oral decision rendered on February 27, 2006, the judge found, in part, that the property is unzoned because it is exempt from eminent domain under the Plan. In a confirming order, the judge ordered the City to adopt a zoning ordinance for the property within ninety days in accordance with the MLUL. The judge preserved Asbury Partners' claims in Asbury-Teicher II.

The trial judge subsequently granted Asbury Partners' motion for consolidation.   Asbury Partners then filed a motion for partial summary judgment seeking a declaration that Teicher must apply to become a subsequent developer in order to develop the property under the Plan, and that any amendments to the Plan require Asbury Partners' consent.   Teicher filed a cross-motion for partial summary judgment to dismiss the action.

In a May 26, 2006 oral decision, the trial judge granted Teicher's cross-motion.   The judge found, in part, that the property was not subject to the procedural and substantive requirements of the Plan and Redeveloper Agreement because it was unconditionally exempt from eminent domain.   In a confirming order entered May 27, 2006, the judge ordered the City to adopt a zoning ordinance governing the property.   This appeal followed.¹

II.

On appeal, Asbury Partners contends that the trial judge erred in concluding that the property was “unzoned,” not subject to the Plan's redevelopment standards and design controls, and not subject to the Plan's and Redeveloper Agreement's substantive and procedural requirements, including the provisions requiring Asbury Partners' written consent to amend the Plan. Asbury Partners also contends that the judge lacked the authority to order the City to adopt new zoning for the property.   We agree.

The Local Redevelopment and Housing Law (LRHL), N.J.S.A. 40A:12A-1 to -41, empowers and assists local governments in their efforts to arrest and reverse deterioration in housing, commercial and industrial installations.   N.J.S.A. 40A:12A-2.   It authorizes municipalities to designate areas in need of redevelopment or rehabilitation, and to adopt and implement a redevelopment plan.  N.J.S.A. 40A:12A-4 to -8. The redevelopment plan, when adopted,

shall supersede applicable provisions of the development regulations of the municipality or constitute an overlay zoning district within the redevelopment area.   When the redevelopment plan supersedes any provision of the development regulations, the ordinance adopting the redevelopment plan shall contain an explicit amendment to the zoning district map included in the zoning ordinance.   The zoning district map as amended shall indicate the redevelopment area to which the redevelopment plan applies.

[N.J.S.A. 40A:12A-7(c).]

Accordingly, “[i]n effect, the redevelopment plan becomes either all or part of the zoning for the redevelopment area.”  Weeden v. City Council of Trenton, 391 N.J.Super. 214, 224 (App.Div.2008).

As for the Plan, it specifically “supersedes and replaces all previous” plans, and its development controls “supersede all applicable provisions of all other ․ development regulations including zoning requirements for the [Prime Renewal Area].” Further, we have held that the Plan “delineates the standards applicable to all properties in the [Redevelopment Area]. It is, as such, the zoning ordinance for that part of Asbury Park[,]” and “all properties located in the [Redevelopment Area] are governed by the zoning strictures adopted by the Plan.” Jersey Urban, supra, 377 N.J.Super. at 235-36 (emphasis added).   Accordingly, the property is not unzoned.   Rather, because it is located within the Redevelopment Area, it is subject to the procedural and substantive requirements of the Plan and Redeveloper Agreement.

Although we reach this conclusion, we discern no reason why Teicher cannot seek an amendment to the Plan to permit its desired development.   If it does so, however, any amendment permitting it to integrate its proposed development is subject to the express provisions of the Plan and the Redeveloper Agreement requiring Asbury Partners' written consent.   Section 2.3 of the Redeveloper Agreement sets forth the procedure the parties must follow in order to amend the Plan.

Having reached this conclusion, we need not address Asbury Partners' contention that that judge lacked the authority to order the City to adopt new zoning for the property.

Reversed.

FOOTNOTES

FN1. In accordance with the May 27, 2006 order, on June 7, 2006, the City passed Ordinance 2784, which the court subsequently declared void as a matter of law because the City had not referred it to the Planning Board as required by N.J.S.A. 40A:12A-7(e).   On September 3, 2008, the City adopted Ordinance 2880, which Asbury Partners and Teicher challenged.   By consent order entered September 11, 2009, the court dismissed those challenges without prejudice pending the outcome of this appeal..  FN1. In accordance with the May 27, 2006 order, on June 7, 2006, the City passed Ordinance 2784, which the court subsequently declared void as a matter of law because the City had not referred it to the Planning Board as required by N.J.S.A. 40A:12A-7(e).   On September 3, 2008, the City adopted Ordinance 2880, which Asbury Partners and Teicher challenged.   By consent order entered September 11, 2009, the court dismissed those challenges without prejudice pending the outcome of this appeal.

PER CURIAM