Taxpayer Appeal Upsets Redevelopment Designation in West Orange

by: Joseph Grather
1 Oct 2020

The Appellate Division issued an unpublished opinion on September 11, 2020, in the case of Kevin Malanga v. West Orange.

Mr. Malanga is a “resident taxpayer” within the Township of West Orange who appealed the designation of the Essex Green Shopping Center and the Executive Drive Office Park as a non-condemnation “area in need of redevelopment” under the Local Redevelopment & Housing Law. N.J.S.A. 40A:12A-1, et seq.  (“LRHL”).  Mr. Malanga lost in the trial court.

Under the LRHL, the redevelopment designation process starts with a referral from the governing body to the Planning Board for study and investigation.  Typically, the planning board retains a planner to prepare a report and then presides over a hearing to hear ‘any and all persons interested in or affected by the redevelopment designation’.   In this matter, a professional planner prepared a report and testified before the Board.  Evidently, the shopping center property had been purchased in 2017 for $97,000,000 and the office park property in 2018 for $14,000,000.  The shopping center had occupancy of about 75% while the office park had a vacancy rate of 58%.  The planner testified that criterion “d” of the statute applied and therefore the properties qualified as “in need of redevelopment.”

The planner was questioned about his opinion of the applicability of redevelopment criterion “d”, and the causal aspects of that section:

“At the moment, is it detrimental to the safety, health, morals or welfare of the community, not ten years in the future, right now?” The planner responded: “Currently, I don’t believe so.”

The planner attempted to buttress his opinion by testifying that the Township should be proactive in its planning efforts or the vacancy rates would continue to go up and the property would become blighted.

The planning board recommended designation and referred the matter back to the governing body.  The governing body resolved in accord with the Board recommendation.

Mr. Malanga challenged the action in the Law Division.  The trial court criticized the lack of evidence presented by the plaintiff and affirmed the municipal action designating the properties in need of redevelopment.  The trial court sustained the designation based on criteria “d” so it did not review whether criteria “b” was also satisfied.  Plaintiff appealed.

The grounds for the Appellate Division reversal is summarized best by the following paragraph:

“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.” [Slip op. at 14].

The most interesting aspect of the case comes from the obiter dictum on the last pages of the opinion, concluding with this remark:

“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
21 A-4036-18T3 affirm the trial court’s decision upholding the designation.”

The 2019 amendments broadened the statutory criteria to address the stagnation of retail and office centers that were beginning to suffer due to the changing demands of the marketplace.  And that was before COVID-19 reared its ugly head and has been crippling retail and office parks locally and regionally.

I suspect West Orange will be sending this one back to the Planning Board.