Steven Mlenak Ignite! Redevelopment presentation

1. New Jersey Redevelopment Forum
New Brunswick, New Jersey
IGNITE!
NEW JERSEY’S LAND BANK LAW
March 6, 2020

2. New Jersey Redevelopment Forum
New Brunswick, New Jersey
IGNITE!
NEW JERSEY’S LAND BANK LAW
March 6, 2020

3. ©2017 Greenbaum, Rowe, Smith & Davis LLP3
Source: 2004 Kirwan Institute for Study of Race & Ethnicity, Ohio State University

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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