Can your town suddenly decide to zone one lot differently from its neighbors?

No. That’s “spot-zoning.” It’s illegal in New Jersey.

But there is an exception if the lot is arguably “blighted” or “in need of redevelopment,” according to a state law designed to help poor towns attract new construction.

The Local Redevelopment & Housing Law lists eight types of situations that can justify deeming a place “in need of redevelopment” and as such not subject to normal zoning laws: https://law.justia.com/codes/new-jersey/title-40a/section-40a-12a-5/

For years, real estate developers have abused that exception to achieve a kind of legalized spot zoning:

• They’ve used it to get around normal zoning laws in towns that have no trouble attracting investors.
• They’ve used it to sweep away normal zoning rules for properties that aren’t blighted at all.
• They’ve used it to qualify for whopping property tax breaks that enrich the developers at the expense of residents.
• Sometimes they’ve used it to get title to public land without the normal checks and balances.

The courts usually turn a blind eye to that kind of abuse.

One noteworthy exception is the 2007 case of Gallenthin v. Paulsboro, in which the state Supreme Court made clear that the mere fact that a property is operated in a less than optimal manner does not make it “stagnant and unproductive” within the meaning of N.J.S.A. 40A:12A-5(e).

https://law.justia.com/cases/new-jersey/supreme-court/2007/a-51-06-doc.html

Now it seems the Court is beginning to tighten up the criteria for designating a property “in need of redevelopment” on the grounds that it is “dilapidated, obsolete, overcrowded” or has “other deleterious conditions.”

In a case published this month, Malanga v. Township of West Orange, the Court rejected the designation of the West Orange library as an “area in need of redevelopment” within the meaning of N.J.S.A. 40A:12A-5(d) simply because it was old, out of style, and needed repair. The Court also put to rest the idea that the mere assertion that a place is dilapidated, obsolescent, etc. will suffice, or that courts should defer to the township’s judgment on that score.

https://law.justia.com/cases/new-jersey/supreme-court/2023/a-45-21.html

The Malanga case establishes that to satisfy N.J.S.A. 40A:12A-5(d), the township must show both:

1) evidence of “dilapidation, obsolescence, overcrowding, faulty arrangement or design, lack of ventilation, light and sanitary facilities, excessive land coverage, deleterious land use or obsolete layout”; and

2) that, as a result, the premises “are detrimental to the safety, health, morals, or welfare of the community.”

Great news for anyone concerned about reckless overdevelopment.

What effect will the Malanga case have on areas already designated in need of redevelopment? Ask an expert: