Court Signals that Local Government Cannot Easily Evade Redevelopment Agreements

In a decision that bodes well for developers, the New Jersey Appellate Division upheld the enforceability of a long-term settlement agreement between certain Jersey City property developers (the “Developers”) and the City Council of Jersey City (the “City”).  The Agreement stems from a 2010 dispute in which the City “downgraded” the zoning of certain property owned by the Developers in Journal Square (the “Properties”), which restricted their ability to construct a high-rise condominium near the PATH station.  In Robinhood Plaza, Inc. v. City Council of City of Jersey City, Docket No. A-1070-15T2, 2017, WL 2535913, at *1 (App. Div. June 9, 2017), the Developers filed a complaint claiming that this “downgrade of zoning” violated the Local Redevelopment and Housing Law (“LRHL”), a statute intended to streamline and promote the development process.

The parties ultimately entered into a settlement agreement (the “Agreement”) whereby the Developers agreed to dedicate certain land to the City for public use, in exchange for the City’s adoption of an ordinance allowing the Developers to construct and maintain a high-rise condominium for a period of 50 years.  The City subsequently claimed that the Agreement was null and void because it created an undue restraint on the ability of the City to perform legislative functions in the future.  Both the trial court and the Appellate Division ultimately concluded that the Agreement was fully enforceable.  According to the Appellate Division, the purpose of the LRHL is to promote the development of long-term projects and the Court concluded that the City had the authority to enter into the Agreement and was bound by its terms.

While the decision is not precedential, it certainly demonstrates that our Courts are inclined to enforce governmental redevelopment agreements even when they span lengthy periods and will have the effect of binding subsequent governing bodies.