GILLETTE ENTERPRISES INC v. BOROUGH OF SAYREVILLE

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5838-10T1

GILLETTE ENTERPRISES, INC.,

Plaintiff-Appellant,

v.

BOROUGH OF SAYREVILLE and

SAYERVILLE ECONOMIC AND

REDEVELOPMENT AGENCY,

Defendants-Respondents.

_______________________________________

May 29, 2012

Argued February 28, 2012 Decided

Before Judges Messano, Yannotti and Espinosa.

On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-7359-10.

Timothy J. Hinlicky argued the cause for appellant.

Paul D. File argued the cause for respondent Borough of Sayreville (Vlasac & Shmaruk, L.L.C., attorneys; Mr. File, on the brief).

Robert G. Kenny argued the cause for respondent Sayreville Economic and Redevelopment Agency (Hoagland, Longo, Moran, Dunst & Doukas, L.L.P., attorneys; Richard J. Mirra, of counsel and on the brief).

PER CURIAM

Gillette Enterprises, Inc. (Gillette) appeals from an order entered by the Law Division on June 28, 2011, granting summary judgment to defendants Borough of Sayreville (Borough) and Sayreville Economic Redevelopment Agency (SERA). We affirm.

I.

We briefly summarize the relevant facts, drawn from the record before the trial court. In 1996, the Borough exercised its authority under the Local Redevelopment and Housing Law (LRHL), N.J.S.A. 40A:12A-1 to -49, and designated over 900 acres of land in the Borough as an "area in need of development." The Borough thereafter adopted Ordinance 517-97, which established SERA to act as the entity "responsible for the clearance, planning, development and redevelopment of such areas as for which the Redevelopment Plans may hereafter be adopted . . . [.]"

The Borough later adopted Ordinance 581-99 which established a Waterfront Redevelopment Plan (WRP) and identified the permissible uses of property in the Waterfront Redevelopment Area (WRA). Among other things, the ordinance provided that SERA

shall be the redevelopment entity directly responsible for the redevelopment project(s) which shall be subject to [the WRP], subject to final review and approval of the governing body as to the designation of any redeveloper and of any contract between [SERA] and/or the Borough and any redeveloper for the development and/or redevelopment of any portions of any area within the [WRA].

The LRHL provides, among other things, that applications for development of designated portions of the WRA must be submitted to the municipal planning board for its review and approval. N.J.S.A. 40A:12A-13. Furthermore, the Borough's Ordinance 26-75, as amended by Ordinance 750-01, provides that an application to develop property within the WRA must include "[a] fully executed Redevelopment Agreement," and a "[w]ritten verification that SERA has reviewed and approved the . . . [re]development plan[]."

In October 2001, SERA adopted a resolution designating Regal Limousine (Regal) as the redeveloper of a roughly four-and-one-half acre parcel of property within the part of the WRA designated as Parcel J. In the resolution, SERA approved Regal's plan to construct two new office buildings on the site, one of which would contain a garage. Regal and SERA later signed a redevelopment agreement. In February 2006, the Borough's planning board granted Regal preliminary and final major site plan approval for its development.

It appears that Regal started construction but later lost its financing and the property went into foreclosure. In December 2007, Gillette purchased the property from Regal at a private sale. Gillette thereafter requested that the Borough amend the WRP to allow it to construct senior citizens housing on the property. In March 2009, the Borough adopted Ordinance 85-09, amending the WRP to allow the construction of "[m]arket rate, age-restricted rental housing for persons [fifty-five] years old and older" on the property.

By letter dated April 9, 2009, SERA's counsel advised Gillette that any redevelopment application must first be submitted to SERA for its review and approval, and identified the plans and information Gillette was required to submit. SERA's counsel also explained that Gillette would need to establish an escrow fund of $5,000 "for the payment of reasonable costs incurred by [SERA] and its consultants in connection with the review of said application and plans and for the negotiation and preparation of the redevelopment agreement."

It appears that in June 2009, SERA presented Gillette with a proposed redevelopment agreement. Gillette objected to SERA's demand that it agree to pay a redevelopment fee of $10,000 per year during each year of construction, and the requirement that it maintain a $5,000 balance in the escrow account. Gillette and SERA could not resolve those issues. Even so, on October 22, 2009, SERA passed a resolution designating Gillette as "[c]onditional [r]edeveloper" of the subject property, subject to its execution within thirty days of the redevelopment agreement, in the form appended to the resolution. The attached agreement included the $10,000 annual redeveloper's fee and the required maintenance of the $5,000 balance in the escrow account. The agreement also stated that it would be null and void if Gillette did not obtain final non-appealable approvals and a loan commitment to complete the project by December 31, 2010.

By letter dated November 5, 2009, Gillette's President, James Gillette, wrote to the Borough's Mayor and Council and stated that Gillette would not agree to pay the annual redeveloper's fee or SERA's and the planning board's professional fees. He also objected to the "unreasonable time limitations to complete the project[.]" He asked that the property be taken out of the WRA and Gillette be permitted to proceed with the project "through normal planning board procedures[.]" He said that, otherwise, Gillette would have to construct warehouses on the site instead of the proposed "attractive and beneficial improvement[s]."

In February 2010, representatives of Gillette, SERA and the Borough's Council met in an attempt to resolve the differences over the terms of the redeveloper's agreement. They proposed a resolution of the disputed contract terms and presented it to SERA. SERA did not formally respond to the proposal. On July 21, 2010, Timothy J. Hinlicky (Hinlicky), Gillette's attorney, wrote to the Mayor and said that SERA had essentially rejected its position regarding the disputed contract terms.

In his letter, Hinlicky stated that SERA was improperly preventing the redevelopment of the property, contrary to the WRP and the purposes for which it was created. Alternatively, Hinlicky requested that the Borough rescind SERA's authority over the redevelopment and assume the authority itself or simply rezone the property.

The Mayor and Council considered this request at their meeting on August 23, 2010, and determined that the issues should be worked out by SERA and Gillette. They were unable to do so.

Gillette then filed an action in lieu of prerogative writs and for a declaratory judgment in the Law Division. Gillette sought a judgment: striking the allegedly unlawful provisions of the redeveloper's agreement requiring payment of the developer's fee and requiring it to pay the costs for SERA's consultants; ordering approval of Gillette's redevelopment application; and ordering a refund of the escrow charges it had previously paid.

The trial court scheduled the matter for hearing on Gillette's demand for a declaratory judgment, and SERA filed a motion for summary judgment. The court considered the matter on April 8, 2011.

The court placed its decision on the record on June 28, 2011. The court decided that Gillette's action in lieu of prerogative writs had been filed beyond the time prescribed by Rule 4:69-6(a). The court also found that Gillette had not established a basis to enlarge the time to file the action. The court nevertheless addressed the merits of Gillette's claims.

The trial court determined that SERA was authorized to require Gillette to pay the disputed fees and costs, and the amounts that Gillette was required to pay were reasonable. The court additionally determined that Gillette did not have "a right to a formal hearing before the [Borough's] governing body to determine the appropriateness of [the] terms in a redevelop[er's] agreement" between SERA and Gillette.

Accordingly, the court granted SERA's motion for summary judgment, and entered judgment for SERA and the Borough. The court memorialized its decision in an order dated June 28, 2011.

Gillette appeals and raises the following issues for our consideration:

POINT I

THE TRIAL COURT ERRED TO THE EXTENT IT DECIDED THAT SERA HAD THE NECESSARY LEGISLATIVE AUTHORITY UNDER THE LRHL TO LEVY AND COLLECT THE REDEVELOPER'S FEES FROM GILLETTE IN THIS CASE.

POINT II

THE LRHL DOES NOT SUPERSEDE THE MUNICIPAL LAND USE LAW AND THE LEGISLATURE DID NOT AUTHORIZE LOCAL REDEVELOPMENT ENTITIES TO DO WHAT MUNICIPALITIES AND PLANNING BOARDS OTHERWISE CANNOT DO UNDER THE LAW.

POINT III

THE TRIAL COURT ERRED IN UPHOLDING SERA'S USURPED PLANNING BOARD AUTHORITY UNDER THE LRHL AND THE [MUNICIPAL LAND USE LAW].

POINT IV

THE TRIAL COURT ERRED IN FAILING TO ADDRESS GILLETTE'S ADDITIONAL DISPUTED PROVISIONS OF SERA'S [REDEVELOPMENT AGREEMENT] FOR WHICH GILLETTE WAS ENTITLED TO DECLARATORY JUDGMENT RELIEF.

POINT V

THE TRIAL COURT ERRED IN DECIDING THAT SAYREVILLE OWED NO DUTY TO GILLETTE TO ACT IN THE MATTER IN ANY WAY.

POINT VI

THE TRIAL COURT ERRED IN DISMISSING GILLETTE'S COMPLAINT AS BARRED BY THE [FORTY-FIVE] DAY PREROGATIVE WRIT STATUTE OF LIMITATIONS RULE AND/OR BY WAY OF SUMMARY JUDGMENT.

II.

Gillette argues that the trial court erred by concluding that its action in lieu of prerogative writs was filed out of time. Rule 4:69-6(a) provides that such an action must be filed within forty-five days after the cause of action accrued. Rule 4:69-6(c) provides, however, that the court may enlarge the time within which the action may be filed "where it is manifest that the interest of justice so requires."

Here, the trial court determined that Gillette's cause of action accrued on October 22, 2009, when SERA adopted its resolution designating Gillette as the conditional redeveloper of the property and authorizing the execution of the redevelopment agreement, that included the provisions as to which Gillette had objected. The trial court additionally determined that Gillette had not shown any basis for enlargement of the time to file its complaint.

We agree with the trial court that Gillette's cause of action accrued as of October 22, 2009, because at that time, SERA required Gillette to execute the contract with the disputed terms. We are convinced, however, that Gillette established a basis for enlarging the time to file its complaint.

As we have explained, Gillette's President wrote to the Mayor and Council on November 5, 2009, and objected to being required to agree to pay the disputed fees and costs. In February 2010, representatives of Gillette, SERA and the Borough met in an effort to resolve the dispute. They presented a proposed resolution of the matter to the SERA, but SERA did not formally respond to that proposal.

In July 2010, Gillette's attorney wrote to the Mayor and Council, essentially seeking review of SERA's determination. He asked the Mayor and Council to withdraw authority for the redevelopment from SERA. The Mayor and Council considered the matter on August 23, 2010, and decided that Gillette and SERA should work out the issues on their own. They were unable to do so.

Because SERA continued to engage in discussions with Gillette concerning the disputed fee and costs after it adopted the October 22, 2009 resolution, the matter did not reach a point of finality until sometime after August 23, 2010, when it became clear that the parties could not resolve the dispute over those terms. Until that time, the matter had not crystallized to the extent required "to call forth the policy of repose" reflected in Rule 4:69-6(a). City of Hoboken v.City of Jersey City, 347 N.J. Super. 279, 299 n. 12 (App. Div. 2001) (quoting Schack v. Trimble, 28 N.J. 40, 48 (1958)). Moreover, Gillette raised issues of public interest that require adjudication, thereby warranting the enlargement of time for filing an action in lieu of prerogative writ. Ibid.

III.

Next, Gillette argues that SERA did not have authority to require it to agree to pay a redeveloper's fee and the professional costs SERA incurred for the review of Gillette's redevelopment plan and the agreement. We disagree.

The LRHL authorizes a municipal governing body to determine that an area is in need of redevelopment and to adopt a redevelopment plan. N.J.S.A. 40A:12A-4(a)(2) and (3). Under the LRHL, the municipality is responsible for implementing the plan and carrying out redevelopment projects. N.J.S.A. 40A:12A-4(c). It may do so directly or through a municipal redevelopment entity. Ibid.

The powers of the municipality or redevelopment entity to carry out the redevelopment plan are set forth in N.J.S.A. 40A:12A-8, and include the power to undertake redevelopment projects; acquire property by contract or condemnation; clear any area owned or acquired; install and construct streets; and contract for the provisions of professional services. N.J.S.A. 40A:12A-8(a),(b),(c),(d) and (e). Among other powers, a municipality or redevelopment entity also may

[a]rrange or contract with public agencies or redevelopers for the planning, replanning, construction, or undertaking of any project or redevelopment work, or any part thereof; negotiate andcollect revenue from aredeveloper to defray thecosts of the redevelopmententity, including where applicable the costs incurred in conjunction with bonds, notes or other obligations issued by the redevelopment entity, and to secure payment of such revenue; . . . .

[N.J.S.A. 40A:12A-8(f) (emphasis added).]

We are satisfied that N.J.S.A. 40A:12A-8(f) provides SERA with authority to require Gillette to agree to pay a redeveloper's fee and the professional costs incurred by SERA for the project and the agreement. In our view, the statute allows the redevelopment entity to require a redeveloper to agree "to defray" the entity's costs. Ibid. Those costs may include a portion of the entity's operating expenses, as well the costs the entity has incurred for consultants to review the project and the redevelopment agreement.

Gillette argues that because N.J.S.A. 40A:12A-8(f) only authorizes a municipality or redevelopment entity to "negotiate and collect revenue from a redeveloper to defray" its costs, the statute does not permit a municipality or redevelopment entity to require a redeveloper to pay such costs. The statute indicates, however, that when a municipality or redevelopment entity elects to have a redeveloper undertake a redevelopment project, it must do so pursuant to an agreement. We are convinced that, in negotiating the terms of the agreement, the redevelopment entity may require a redeveloper to agree to make payments "to defray" its costs. Ibid.

Gillette further argues that SERA may not require it to agree to pay the redeveloper's fee and other costs because it was not a "redeveloper." However, as we stated previously, in its resolution of October 22, 2009, SERA declared Gillette to be the conditional redeveloper of the property, subject to its execution of the redevelopment agreement. Therefore, SERA is authorized by N.J.S.A. 40A:12A-8(f) to collect the disputed fee and costs from Gillette upon its execution of the agreement.

Gillette additionally argues that the LHRL does not authorize SERA to require a redeveloper to agree to pay a redeveloper's fee and other costs when municipalities allegedly are not permitted to require such payments under the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -129. The question in this case is not whether the MLUL authorizes SERA to insist that a redeveloper agree to make payments to defray its costs, but rather whether the LRHL authorizes SERA to "negotiate and collect" such revenue pursuant to a redevelopment agreement. As we have explained, the LRHL empowers SERA to do so.

We are therefore satisfied that the trial court correctly determined that SERA had the statutory authority to require a redeveloper to agree to the payment of the disputed costs.

IV.

Gillette further argues that SERA's demand that it agree to pay the redeveloper's fee and other costs is arbitrary, capricious and unreasonable. Again, we disagree.

Here, SERA required Gillette to agree to pay an annual redevelopment fee of $10,000 until the construction of its project was complete. The record shows that SERA had budgeted administrative costs of $258,500 in 2008, and $223,000 in 2009. These costs include salary and wages, legal fees, accounting fees, auditor fees, insurance and other costs. They do not include professional expenses that SERA incurred on redevelopment applications.

SERA does not receive any taxpayer dollars or any other revenue from the Borough to pay its budgeted administrative costs. SERA explained that these costs are paid from fees collected from redevelopers as well as leases for a billboard and cell phone tower. SERA also explained that the amount of a particular redevelopment fee is determined on a case-by-case basis, after considering the size and scope of a proposed project.

We are satisfied that it was not unreasonable for SERA to require Gillette to agree to pay the annual redeveloper's fee to defray a portion of the agency's budgeted administrative costs until Gillette completes construction of its project. Moreover, the amount of the fee is reasonable.

SERA also required Gillette to agree to deposit $5,000 in an escrow account for the payment of professional fees related to the project and the agreement. Gillette did so and SERA subsequently paid certain professional fees out of the account leaving a deficit of $2,955.05. Gillette was required to deposit an additional $7,955.05 into the account to cover the deficit and replenish the $5,000.00 balance. In response, Gillette deposited $8,000.00. Thereafter, SERA incurred approximately $5,500.00 in additional professional fees again resulting in a deficit as of February 2010.

We are satisfied that it was not unreasonable for SERA to require Gillette to agree to pay the professional costs related to its redevelopment project, including costs associated with review of the redevelopment agreement by SERA's attorneys. Furthermore, the costs involved here are reasonable.

Gillette additionally contends that SERA acted arbitrarily, capriciously, and unreasonably by requiring that it agree to pay the redeveloper's fee and other costs, when it did not require such an agreement by Regal, the prior redeveloper for the site. However, as SERA notes, Regal's redevelopment project was different from Gillette's project, and it was approved by a different SERA board of commissioners.

Moreover, because its administrative costs have increased, SERA decided to insist that all redevelopers agree to pay redevelopment and professional fees. In any event, even if SERA should have required Regal to pay a redeveloper's fee and other costs, that would not preclude the agency from requiring Gillette and other redevelopers to pay such a fee and costs.

V.

In addition, Gillette maintains that the trial court erred by failing to address certain other objections it raised to terms of the redevelopment agreement. Gillette argues that SERA does not have authority to: (1) refuse to allow "for known bank construction financing conditions" and impose what Gillette claims are "unreasonable completion requirements" for the project; (2) refuse to identify the decision that would control in the event there is a difference between SERA and the planning board; (3) "deny mutuality of remedies" and require Gillette to continue to perform in the event of a breach; and (4) require additional submissions post-approval and reserve the right to impose additional approval requirements.

We note that in its complaint, Gillette challenged SERA's authority to require that it agree to pay the disputed redeveloper's fee and costs. Gillette also alleged that "SERA does not have has [sic] the legal right or authority to require deadlines for the progress and completion of a redevelopment project that are unreasonable in light of known current conditions and financing realities." It did not mention the other contract terms noted above.

We are nevertheless convinced that Gillette's argument is without merit. N.J.S.A. 40A:12A-9 states that certain covenants must be included in redeveloper agreements. The statute does not require a municipality or redevelopment entity to include the aforementioned provisions in the agreement, nor does it preclude a municipality or redevelopment entity from including other provisions in the agreement if it deems their inclusion to be appropriate.

Gillette further argues that the trial court erred by dismissing its claim against the Borough. Gillette maintains that, under the LRHL, the Borough has authority over SERA. Gillette says that the Borough had a duty to prevent SERA from extracting allegedly improper fees from redevelopers. We are satisfied that this argument is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.