Redevelopment Explained

Introduction

This series is based on the writings of a concerned Rutherford resident.  While this citizen is not an attorney, she is an avid reader and researcher with a background in Finance and Banking.  All of the information supplied is readily available online.

Our town is on the precipice of significant and permanent change led by the officials elected to act in our best interests.  With ## zones currently slated for Redevelopment, including the historic William Carlos Williams Center for the Performing Arts and the block known as the Holman Property, these changes will dramatically reshape Rutherford’s business district and beyond.  

Much of the machinations behind this drive occurred with little knowledge or oversight from the public – in part due to lack of public involvement in meetings, but also due to lack of communication by the Mayor and Council (M&C).  Thanks to public outcry, this is changing: the Mayor and Council have stepped up transparency with such initiatives as ‘The Rutherford Report’ published after each M&C meeting, as well as open discussions of development issues, as with the Holman during the 2/8/21 M&C meeting.  Much of the disconnect between the actions of the M&C and the community could have been avoided had the Council insisted that developers adhere to the Master Plan.  This is our main objective: Adherence to the Master Plan.

 Local Redevelopment and Housing Law (LRHL) Explained

Article One

Municipal officials and developers are required to follow the Local Redevelopment and Housing Law (LRHL).  Adopted in 1992 this law establishes the rules and principles by which NJ municipalities may undertake redevelopment. 

 The law:

  • establishes the criteria and procedures for designating areas in need of redevelopment, using 8 criteria of "blight".

  • once a redevelopment zone is determined it establishes the ability to provide tax incentives, both long and short-term, known as PILOT (Payment In Lieu of Taxes) agreements

  • defines the roles and responsibilities of the governing body, planning board and redevelopment entity

  • describes the contents of a redevelopment plan

  • authorizes the use of eminent domain (Note: Not all plans include eminent domain provisions.)

  • defines the provisions of a redeveloper agreement (Note: This would include who pays for condemnation displacement, environmental clean-up, and public utility work – items to be negotiated; not automatically the responsibility of the developer.)

  • The summary steps to a redevelopment plan:

  1. Selection of a redevelopment area for investigation by the Planning Board and approval by the governing body, follow a public hearing by the Planning Board.  Usually, a planning consultant or city planner works on this effort in which the area to be redeveloped is designated.  The criteria must meet at least one of 8 "blight" criteria. 

  2. Formulation of a redevelopment plan, includes a mini master plan and zoning ordinance for the area.  The statute outlines the requirements for the plan in detail, which is managed by the Planning Board, and must include public hearings in which the details of eminent domain, and other impactful changes are discussed with the community.  

  3. The Planning Board Review and its Public Hearings are not “a courtesy”; they are required by law and must be conducted with full transparency.

  4. The Implementation stage is a private-public joint venture which designates a redeveloper and the formulation of a redevelopment agreement. 

    Note: The Mayor and Council cannot overrule the Planning Board's recommendations without a majority of the full governing body and are required to outline their reasoning. 

The NJ chapter of the American Planning Association states "a municipality or redevelopment entity typically issues a Request for Qualification (RFQ) or a Request for Proposal (RFP) to experienced redevelopers.”  The Redeveloper is then selected from those who submit entries. Though the municipality or redevelopment entity may decide to select a redeveloper through a direct negotiation process, the APA plainly states that “this is not considered a fair and open process”.  This is, however, how our Municipal Government has proceeded – without competitive bidding – to this point, though we are hopeful this will change.

Area in Need of Rehabilitation

Article Two

The same law which establishes the rules governing the determination of an Area in Need of Redevelopment also provides for the alternative designation of an Area in Need of Rehabilitation.  This designation is especially important to our community as it allows for the preservation of historic properties and those of architectural significance – or even, simply, neighborhood architectural integrity, as outlined in the Master Plan. (PDF)

Further, with the Rehabilitation designation, the use of Eminent Domain is not an option, nor is there an option for a long-term PILOT, such as was issued for The Parker.  There is still an incentive for a developer, however, through the option of a short-term, 5-year tax reduction/exemption.  This affords renovation of existing structures and may include additional new construction or enlargement of existing structures. Many areas, including New York and other large cities, don’t necessarily tear down older buildings; they convert them to new purposes.  Old warehouses and manufacturing buildings are now house expensive loft dwellings.  

Area In Need Of Redevelopment Designation Process

Article Three

Authority to declare an area in need of redevelopment or an area in need of rehabilitation is created pursuant to 40A:12A-1 et seq. the "Local Redevelopment and Housing Law" (Redevelopment Law). This review will focus on the area in need of redevelopment designation process.

Under Redevelopment Law, the Governing Body has the power to:

  1. Initiate an investigation to determine whether an area is need of redevelopment;

  2. Make a determination that an area is in need of redevelopment (after an investigation and recommendation from the Planning Board);

  3. Adopt a redevelopment plan; and

  4. Carry out a redevelopment plan or create a redevelopment authority to carry out redevelopment plans.

Under Redevelopment Law, the Planning Board has the power to:

  1. Conduct, when authorized by the Governing Body, an investigation to determine whether an area is need of redevelopment and conduct a public hearing and make a recommendation to the Governing Body concerning the designation; and

  2. Make recommendations concerning a redevelopment plan or prepare a redevelopment plan, if so requested by the Governing Body.

What Establishing an Area in Need of Redevelopment Makes Possible:

  1. The Redevelopment Plan for the area can be developed specifically for the area and even for a specific project.

  2. The redevelopment authority may provide long term tax abatements on improvements to the site and may also create a Payment in Lieu of Taxes or PILOT for the area.

  3. The redevelopment authority may issue Redevelopment Area Bonds to assist in financing development of the site.

  4. The redevelopment authority may select a redeveloper for the site and enter into agreements and contracts with the redeveloper in support of effectuating the redevelopment.