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There are seven statutory criteria that qualify an area as being in need of redevelopment. The seven criteria are commonly identified by the letter corresponding to the paragraphs in Section 5 of the LRHL (N.J.S.A. 40A:12A-6). Generally, properties located within an area in need of redevelopment will meet more than one of the criteria. However, only one of the seven need be found for a delineated area to be determined in need of redevelopment.
The "a" Criteria - Deterioration
For an area to qualify as being in need of redevelopment pursuant to the "a" criteria, the planning board must find that the buildings in the area have deteriorated or fallen into such a state of disrepair that they constitute a threat to the people who live or work in them. Consequently, when analyzing the applicability of the "a" criteria, the planning board should focus on the physical conditions within the study area. This means that the professionals preparing the preliminary investigation report will need to visit the study area and assess the physical conditions of each of the properties in the area.
If deterioration is severe, it often will be apparent from an exterior inspection of the building or buildings in the area. However, an interior examination of the building may sometimes be necessary. Photos should be used to document any evidence of deterioration and disrepair. Documentation of physical conditions also may be videotaped if it is appropriate and the expense warranted.
Buildings or properties that have been neglected for long periods of time are frequently subject to numerous local code enforcement actions. Consequently, an analysis of applicability of the "a" criteria should include a review of local building, housing, fire, health, and property-maintenance code records.
The "b" Criteria - Abandoned Commercial and Industrial Buildings
Vacant and abandoned commercial and industrial buildings constitute another example of the conditions historically associated with "blighted" areas or areas in need of redevelopment. The existence of these buildings within a study area will be readily apparent and can be easily documented during a site visit. As with the "a" criteria, the existence of vacant and abandoned commercial buildings will likely have triggered the investigation in the first place. When in doubt, historic records and photographs, interviews with property owners and local officials, and a review of local tax assessment records will help to document cases of abandonment. While it may be useful to know how long a building has remained unoccupied, no minimum time frame is required to qualify the building as abandoned under the "b" criteria.
Typically, buildings that meet the "b" criteria will exhibit sufficient deterioration to meet the "a" criteria as well. However, to meet the "b" criteria, the deterioration or disrepair must be so extensive that the building may be considered "untenantable," as per the statutory criteria. It is important to remember that the "b" criteria is applicable only to commercial and industrial buildings and not to residential buildings. However, the nonresidential component of a mixed-use building, which contains both residential and commercial uses, can meet the "b" criteria.
The "c" Criteria - Public and Vacant Land
Property owned by a municipality, county, housing authority, or redevelopment entity may be designated in need of redevelopment pursuant to the "c" criteria. However, care must be taken in establishing the planning reasons for the designation, particularly when only a publicly owned parcel or tract of land will be designated as an area in need of redevelopment. A recent court decision has determined that public ownership alone is not a sufficient reason for such a designation. The reasons why the development potential of a publicly owned property may be limited, such as its location, "remoteness," lack of access, topography, or soil conditions should be specified in findings of the preliminary investigation report.
The "c" criteria enables municipalities to use the redevelopment process to generate private development interest in surplus public lands and get them back on the tax rolls. Over time, municipalities may obtain ownership of various properties through tax foreclosure. By designating these publicly owned parcels in need of redevelopment, the municipality is able to convey the parcel to a redeveloper without having to go through the public bidding process. The redeveloper is then required by a redeveloper agreement to redevelop them in accordance with a redevelopment plan. In contrast, the public bidding process allows the transfer of publicly owned properties to a private entity at a public sale, but does not effectively result in their redevelopment consistent with municipal objectives.
Privately owned land that has remained unimproved and vacant for at least ten years also may be designated in need of redevelopment pursuant to the "c" criteria. As with publicly owned land, it also must be shown that a vacant parcel is not likely to be developed through private investment because of development constraints resulting from its location, remoteness from other developed areas of the community, lack of access, topography, or soil conditions.
The "d" Criteria - Obsolete Layout and Design
While the "a" and "b" criteria focus on the condition of the buildings on a property, the "d" criteria focuses on site layout and design In addition, the 'd' criteria expands the analysis of the statutory criteria to include a review of the condition of other site improvements, such as accessory structures and parking lots. Some of the factors to be reviewed in analyzing a study area for the applicability of the "d" criteria include the location and relationship of buildings, accessory structures and other site improvements, onsite circulation and parking, land use conflicts, as well as lot and building coverages within the study area.
In general, properties that meet the "d" criteria are being used in a manner not consistent with modern land use planning standards or practices. Given the flexible nature of the "d" criteria, it often is used (along with the "e" criteria) in suburban settings, where deterioration and abandonment are not issues.
The "e" Criteria: Underutilization
The "e" criteria is applicable in circumstances where there is a quantifiable economic "underutilization" or "lack of proper utilization" of properties in a study area. This may be the result of property ownership and title problems, property configuration, or "other factors" that limit the economic viability and marketability of the properties in a study area and depress property values. Properties that meet the "e" criteria may include obsolete commercial and industrial facilities that may no longer be marketable, properties exhibiting poor design and arrangement consistent with the "d" criteria, or areas not developed in a manner consistent with the objectives of a municipality's zoning and master plan.
One of the indicators used to measure the economic productivity of a property is the ratio of the assessed value of the improvements on the property to the value of the land. The assessed values of land and improvements for a particular property are found in local property tax records. Developed properties in areas that are economically viable typically have improvement-to-land ratios of 2:1 or greater. Ratios of less than 2:1 may offer evidence of underutilization.
A low improvement-to-land ratio, in itself, is not absolute proof that a property is in need of redevelopment. Improvement-to-land ratios should also be analyzed in connection with other evidence - such as the physical condition of the property or site layout - to determine the applicability of the statutory criteria. It may be necessary to compare ratios within the study area to those in surrounding areas or in other parts of the community. For example, the property values and tax revenue generated from two comparable blocks, one within the study area and one within an area considered economically stable, should be compared to determine the appropriate threshold in identifying underutilization.
It is important to note that a property may not be economically "underutilized," but may exhibit a lack of "proper utilization" in relation to a municipality's overall land use goals and objectives. Thus, the property would still meet the "e" criteria, but the analysis would focus on broader land use planning issues and concerns. This type of analysis is less empirical and involves a review of the local master plan and other planning documents to determine whether or not the area is developing in a manner consistent with a municipality's comprehensive plan.
The "f" Criteria - Fire and Natural Disasters
The "f" criteria is intended to permit the redevelopment of a large area in a community that has been destroyed or where the property values have been materially reduced by a sudden natural disaster. It was first added to the old urban renewal statutes after a catastrophic fire in Passaic destroyed several city blocks. When the state's redevelopment laws were updated in 1992, the "f" criteria was retained, but the minimum tract area that could qualify for designation was reduced from ten to five contiguous acres.
A recent example of the application of the "f" criteria occurred in two municipalities along the Raritan River in central New Jersey that experienced extensive flood damage during 1999's Hurricane Floyd. The municipalities of Manville and Bound Brook used emergency flood-assistance funds to redevelop their flood-ravaged areas. Bound Brook has adopted a redevelopment plan, and Manville is considering redevelopment of several key properties along its downtown corridor.
The "g" Criteria - Urban Enterprise Zones
The Urban Enterprise Zone Act added criteria "g" to the redevelopment statute. Under the "g" criteria, urban enterprise zones (UEZs) designated by the New Jersey Urban Enterprise Zone Authority automatically qualify as areas in need of redevelopment for the purposes of granting long- and short-term tax abatements and exemptions. However, if a municipality wants to exercise any other redevelopment powers within the UEZ, including the power of eminent domain, it must prove that the area meets one or more of the other statutory criteria and formally designate the area in need of redevelopment pursuant to the procedures in the LRHL. A redevelopment plan for the area also must be adopted.