Not So Fast! Hackensack Property Owners Challenge Redevelopment Designation of Sears Site

As we turn our calendars to 2026, a major redevelopment battle is unfolding in Hackensack, where the owners of the former Sears property on Main Street have filed suit against the City and its Planning Board. The complaint—filed by Arcolo Hackensack LLC and related entities—paints a picture of a redevelopment process the plaintiffs allege was rushed, unsupported by evidence, and ultimately unconstitutional. As of late November 2025, the case is pending in the Law Division, awaiting an answer from the municipal defendants.

The Property at the Center of the Dispute

The lawsuit focuses on 440–468 Main Street, the well‑known former Sears Roebuck property. Although Sears vacated the property years ago, the land remains subject to a decades‑old ground lease that traces back to 1946. The plaintiffs purchased their interests in 2023 from affiliated predecessor entities.

The property sits within the City’s long‑established Main Street Rehabilitation Area, created as part of Hackensack’s broader effort to revitalize its downtown corridor. Over the last decade, the city has adopted multiple redevelopment plans affecting these and nearby parcels.

A Rapid Escalation of Redevelopment Actions

According to the lawsuit, redevelopment discussions have shifted significantly in recent years. The turning point came in January 2023, when the City and the ground lessee (Transform Operating Stores, LLC, successor to Sears) reached a settlement designating the lessee as the redeveloper for the site. The plaintiffs allege they learned of this designation only after it occurred.

A series of official actions followed:

• August 2023: The City designated the property an “Area in Need of Redevelopment” (non‑condemnation).
• 2024: Following litigation, the City repealed the non-condemnation designation and launched a new investigation— this time seeking a condemnation‑based designation.
• February 2025: After a public hearing, and relying primarily on the City Planner’s report, the Planning Board recommended the condemnation‑based designation to the Council.
• February 25, 2025: The City Council adopted the “Second Designation,” authorizing redevelopment with condemnation.
• March 2025: The City adopted a new “Former Sears Site Redevelopment Plan.”
• August 2025: A newly elected administration terminated a financial agreement with Russo Acquisitions, the developer that had contracted to buy plaintiffs’ interests.
• October 2025: Russo terminated the sale, prompting plaintiffs to file suit in late November 2025.

Plaintiffs’ Core Argument: The City Cut Corners

The complaint alleges that the City and Planning Board violated the Local Redevelopment and Housing Law (LRHL) in several ways:

1. Lack of Substantial Evidence

The City Planner concluded the property had been “vacant for more than two years,” a key statutory criterion allowing condemnation under N.J.S.A. 40A:12A‑5(b). But, according to plaintiffs, the “investigation” merely cited one site inspection, one newspaper article, and one phone call with the City’s Building Department.

Plaintiffs argue that the Planner did not interview the owners, review leases, or conduct any meaningful inquiry into whether the property satisfied the statutory definition of vacancy, particularly given the existence of an active ground lease and a tenant on‑site.

2. Procedural and Notice Defects

Plaintiffs also assert that the City failed to provide proper written notice, failed to publish notice as required by the statute, and did not notify property owners within 10 days of adoption. If proven, any of these procedural defects could potentially invalidate the entire redevelopment process.

3. Arbitrary and Capricious Decision‑Making

The complaint describes the City’s actions as “predetermined,” “arbitrary,” “unreasonable,” and “undertaken in bad faith.” Plaintiffs allege they were denied a meaningful opportunity to participate and that political considerations—not sound planning principles—motivated the process.

The Constitutional Claims

The lawsuit also raises constitutional challenges under both New Jersey and federal law. The plaintiffs argue:

• The property is not blighted, a constitutional prerequisite for eminent domain in New Jersey.
• Condemnation for private redevelopment of non‑blighted property violates the N.J. Constitution.
• The process deprived them of property without due process, violating the Fifth and Fourteenth Amendments.
• If the LRHL permits condemnation based solely on a two‑year vacancy, then the statute is unconstitutional as applied.

What’s at Stake

If the plaintiffs succeed, the City’s redevelopment actions for the former Sears site could be invalidated, potentially requiring the process to start anew. For municipalities, the case serves as a reminder that redevelopment actions must be supported by substantial evidence, and procedural requirements must be strictly adhered to.

Conclusion

We will continue to monitor this case as additional filings appear on the docket. Questions surrounding redevelopment and the potential use of eminent domain often arise together, and our firm has deep experience in both areas. MROD’s attorneys frequently challenge redevelopment designations on behalf of property owners, fighting to prevent the misuse of eminent domain and the negative impacts of a “condemnation redevelopment area” designation.

Feel free to contact us for an initial consultation