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NJ Redevelopment Forum 2020 - Mlenak

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NJ Redevelopment Forum 2020 - Mlenak

  1. 1. New Jersey Redevelopment Forum New Brunswick, New Jersey IGNITE! NEW JERSEY’S LAND BANK LAW March 6, 2020
  2. 2. New Jersey Redevelopment Forum New Brunswick, New Jersey IGNITE! NEW JERSEY’S LAND BANK LAW March 6, 2020
  3. 3. ©2017 Greenbaum, Rowe, Smith & Davis LLP3 Source: 2004 Kirwan Institute for Study of Race & Ethnicity, Ohio State University
  4. 4. Leading Up to the Law • Borough of Glassboro v. Grossman • Glassboro tried to condemn property in a redevelopment area for an unspecified purpose related to its ongoing $450 million redevelopment • Property owners challenged the purpose of the taking. ©2017 Greenbaum, Rowe, Smith & Davis LLP4
  5. 5. Glassboro v. Grossman (Continued) • Local Redevelopment and Housing Law provides for the power of eminent domain when the taking is “necessary for the redevelopment project.” • Court found here that the municipality failed to demonstrate that necessity and essentially saw the taking as land banking, which it found improper. ©2017 Greenbaum, Rowe, Smith & Davis LLP5
  6. 6. Casino Reinvestment Development Authority v. Birnbaum • CRDA has statutory authority under its enabling legislation to condemn property for its projects. • CRDA had plans for a redevelopment project in the South Inlet of Atlantic City to coincide with the construction of the Revel Casino (now the Ocean Resort) • As part of its long-term vision, it sought to condemn property in the area. ©2017 Greenbaum, Rowe, Smith & Davis LLP6
  7. 7. Casino Reinvestment Development Authority v. Birnbaum (Continued) • While the CRDA had a general plan for the redevelopment, the courts found that there was no specific project that had certainty. • Court pointed out Revel bankruptcy, the economy, and proposed legislation that would divest the CRDA of some powers as evidence of the uncertainty of the Project. • Confirms Grossman holding that land banking is not a permissible purpose of eminent domain. ©2017 Greenbaum, Rowe, Smith & Davis LLP7
  8. 8. Land Banking Policy • While law has its origins from 2018, the passage of the bill is seen as a reaction to these cases. • The law unmistakably pronounces that the “continued presence and proliferation” of “vacant, abandoned and other problem properties” has a negative effect on public health and welfare. • The law now recognizes “land banking” as a valid public purpose with respect to eminent domain. ©2017 Greenbaum, Rowe, Smith & Davis LLP8
  9. 9. Land Banking Policy • Ultimate purpose set forth in the law is to help offset difficult economic conditions and high foreclosure rates. • Zombie foreclosures • Increase in vacant and abandoned properties have impeded economic development and reduced property taxes. ©2017 Greenbaum, Rowe, Smith & Davis LLP9
  10. 10. Land Banking Elsewhere • Land Banking is not new – it’s been used successfully in other jurisdictions. • Examples: • New York • Michigan • Ohio • Results of studies surveying the economic and social impacts of land banking in those states have been uniformly positive. • Found to have made significant strides in improving distressed neighborhoods. ©2017 Greenbaum, Rowe, Smith & Davis LLP10
  11. 11. Basics of Land Banking • Signed into law on July 9, 2019 • Allows Local Governments to establish land bank entities • Land bank entities can hold, purchase, sell, lease and maintain properties in trust with municipality pursuant to a Land Bank Agreement ©2017 Greenbaum, Rowe, Smith & Davis LLP11
  12. 12. Land Bank Entities: What Can They Be? • Must be designated by Ordinance with Agreement • Redevelopment Entities created pursuant to LRHL • County Improvement Authority • Agency or Department of Municipality • Municipality Itself • Non-Profit Corporation ©2017 Greenbaum, Rowe, Smith & Davis LLP12
  13. 13. Land Bank Entities: What Can They Do? • Hold municipal vacant property in trust. • Purchase property to be held. • Manage such property • Lease such property. • Sell such property. • Purchase and sell tax liens and foreclose such liens. ©2017 Greenbaum, Rowe, Smith & Davis LLP13
  14. 14. Public Procedures • One of the biggest benefits of the Land Bank Law is that it does not subject Land Bank Entities to: • Local Public Contracts Law • Local Lands and Buildings Law ©2017 Greenbaum, Rowe, Smith & Davis LLP14
  15. 15. Land Bank Agreements • Land Bank Agreements must be in place between a municipality and the Land Bank Entity • Shall set forth terms and conditions of its powers and the level of oversight the municipality deems necessary • Must address the costs and revenues of the Land Bank Entity and its acquisitions, leases and sales. ©2017 Greenbaum, Rowe, Smith & Davis LLP15
  16. 16. Community Advisory Board • Must be created within 6 months of designation. • Shall consist of representatives of recognized community associations and non-profits in municipality • LBE shall adopt policies and procedures to ensure advisory board is provided information and an opportunity to provide input. ©2017 Greenbaum, Rowe, Smith & Davis LLP16
  17. 17. LBE Database • One of the key features of land banking for developers is the public database feature. • Each LBE is required to make publicly available on its webpage, all current and former land bank properties, the identity of the owners, and the sales price of each property sold and purchased by the LBE. • Valuable for redevelopers! ©2017 Greenbaum, Rowe, Smith & Davis LLP17
  18. 18. Other Features • The Properties held by the LBE on behalf of the municipality are for a public purpose, therefore the properties shall be tax exempt. • The Land Bank Entity can collect up to 50% of municipal taxes or municipality’s share of PILOT payments derived by properties sold by the LBE for a period of up to 10 years following a sale or conveyance of the property.* • *This only applies if properties had no taxes paid for at least 2 years prior to inclusion in land bank. ©2017 Greenbaum, Rowe, Smith & Davis LLP18
  19. 19. Constitutional Concerns? • Municipalities will need to be cautious in utilizing the new law. • After all, if the Appellate Division in Grossman and Birnbaum found that land banking did not satisfy the constitutional prerequisite for eminent domain, how would a reviewing court treat this new law? • Does not create new condemnation authority. ©2017 Greenbaum, Rowe, Smith & Davis LLP19
  20. 20. Process • Municipality holds public meeting to solicit public advice on the substance and intent of the Land Bank Agreement • Municipality adopts ordinance approving the Agreement including findings delineating the need for land banking activity. • The Land Bank Entity is created (if necessary) and its governing body or board adopts a resolution authorizing the Agreement. ©2017 Greenbaum, Rowe, Smith & Davis LLP20
  21. 21. CONTACT INFORMATION If you have any questions about this or any other redevelopment legal issue, please do not hesitate to contact me at: Steven Mlenak (732) 476-2526 smlenak@greenbaumlaw.com ©2017 Greenbaum, Rowe, Smith & Davis LLP21

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