Dobco, Inc. v. Bergen Cnty. Improvement Auth.

• Decision Date: 08 July 2021
• Docket Number: A-2202-20,DOCKET NOS. A-2201-20
• Citation: 468 N.J.Super. 519,260 A.3d 55
• Parties: DOBCO, INC., Plaintiff-Appellant, v. BERGEN COUNTY IMPROVEMENT AUTHORITY and County of Bergen, Defendants-Respondents. Hossam Ibrahim, Plaintiff-Appellant, v. Bergen County Improvement Authority and County of Bergen, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

468 N.J.Super. 519

260 A.3d 55

DOBCO, INC., Plaintiff-Appellant,

v.BERGEN COUNTY IMPROVEMENT AUTHORITY and County of Bergen, Defendants-Respondents.

Hossam Ibrahim, Plaintiff-Appellant,

v.Bergen County Improvement Authority and County of Bergen, Defendants-Respondents.

DOCKET NOS. A-2201-20

A-2202-20

Superior Court of New Jersey, Appellate Division.

Argued June 1, 2021

Decided July 8, 2021

Greg Trif argued the cause for appellants Dobco, Inc. and Hossam Ibrahim (Trif & Modugno, LLC, attorneys; Greg Trif and Kyle H. Cassidy, of counsel and on the brief).

Mary Anne Groh argued the cause for respondent Bergen County Improvement Authority (Cleary Giacobbe Alfieri Jacobs, LLC, attorneys; Mary Anne Groh, of counsel and on the brief).

Leslie G. London argued the cause for respondent County of Bergen (McManimon, Scotland & Baumann, LLC, attorneys; Leslie G. London, Newark, of counsel and on the brief).

Before Judges Messano, Hoffman and Smith.

The opinion of the court was delivered by

MESSANO, P.J.A.D.

Pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 to -89 (the LRHL), a municipality may implement a redevelopment project directly, or it may authorize another public body to act as the "redevelopment entity." N.J.S.A. 40A:12A-4(c) ; see also N.J.S.A. 40A:12A-3 (defining "[r]edevelopment entity" as "an entity authorized by the governing body of a municipality pursuant to [ N.J.S.A. 40A:12A-4 ] to implement redevelopment plans and carry out redevelopment projects"). A county improvement authority organized pursuant to the County Improvement Authorities Law, N.J.S.A. 40:37A-44 to -135 (the CIAL), may serve as a designated redevelopment entity pursuant to the LRHL. N.J.S.A. 40A:12A-4(c). When the LRHL was enacted in 1992, only three types of public entities, other than municipalities, were authorized to act as redevelopment entities: municipal redevelopment agencies, municipal housing authorities, or county improvement authorities. L. 1992, c. 79, § 4; N.J.S.A. 40A:12A-4(c).¹ In 2017, the Legislature authorized municipal parking authorities to serve as designated redevelopment entities. L. 2017, c. 253; 40A:12A-4(c); see also N.J.S.A. 40:11A-4.1 (a section of the "Parking Authority Law," N.J.S.A. 40:11A-1 to -26 (the PAL), which permits a municipality to, by ordinance, "authorize its parking authority to serve as a redevelopment entity").

The Legislature granted redevelopment entities broad powers to effectuate a redevelopment plan, permitting the entity to

contract with ... redevelopers for the planning, replanning, construction, or undertaking of any project or redevelopment work, or any part thereof; negotiate and collect revenue from a redeveloper to defray the costs of the redevelopment entity, including where applicable the costs incurred in conjunction with bonds, notes or other obligations issued by the redevelopment entity, and to secure payment of such revenue; ... provide for extension of credit, or making of loans, to redevelopers to finance any project or redevelopment work, or upon a finding that the project or redevelopment work would not be undertaken but for the provision of financial assistance ... provide as part of a[ ] ... contract for capital grants to redevelopers; and ... contract with ... redevelopers for the opening, grading or closing of streets, roads, roadways, alleys, or other places or for the furnishing of facilities or for the acquisition by such agency of property options or property rights or for the furnishing of property or services in connection with a redevelopment area.

[ N.J.S.A. 40A:12A-8(f).]

With limitation irrelevant to these appeals, a redevelopment entity may "lease or convey property or improvements to any other party ... without public bidding and at such prices and upon such terms as it deems reasonable ... notwithstanding the provisions of any law, rule or regulation to the contrary." N.J.S.A. 40A:12A-8(g) (emphasis added). The designated redevelopment entity may "[d]o all things necessary or convenient to carry out its powers." N.J.S.A. 40A:12A-8(n).

However, the LRHL also provides that "[e]ach redevelopment agency and housing authority shall be subject to the provisions ... of the ‘Local Public Contracts Law’ " (the LPCL).² N.J.S.A. 40A:12A-23. (emphasis added). Municipal parking authorities authorized to act as redevelopment entities may "enter into ... any and all contracts ... necessary or useful ... to carry[ing] out any of the powers expressly granted to it by [the PAL] or any other acts subject to ... [the] ‘Local Public Contracts Law.’ " N.J.S.A. 40:11A-6(4)(l).

In 1979, the Legislature made sweeping changes to the CIAL which permitted county improvement authorities to serve as redevelopment entities for the first time. L. 1979, c. 275 §§ 31-34. Those amendments included: 1) the adoption of definitions relating to redevelopment projects identical to those in the subsequently enacted LRHL, N.J.S.A. 40:37A-45 ; and, 2) providing county improvement authorities with additional powers that allowed them to "plan[ ], initiat[e] and carry[ ] out redevelopment projects ... and ... dispos[e] ... of any property ... acquired in the area of such project," N.J.S.A. 40:37A-54(a) and (j), and "[t]o extend credit or make loans to redevelopers." N.J.S.A. 40:37A-55(q).

The Legislature also enacted a new section to the CIAL in 1979, N.J.S.A. 40:37A-55.1, which granted county improvement authorities broad powers "[f]or purposes of the redevelopment of blighted ... areas." However, those redevelopment powers were "subject to the provisions of this act." Ibid. Moreover, the Legislature did not amend N.J.S.A. 40:37A-55(t), which permits a county improvement authority "[t]o enter into any and all agreements or contracts ... and perform any and all acts or things necessary, convenient or desirable for the purposes of the authority or to carry out any power expressly given in this act subject to the ‘Local Public Contracts Law.’ " (emphasis added).

In these consolidated appeals, the three statutory schemes — the LRHL, the CIAL, and the LPCL — converge, requiring us to decide whether under the particular facts presented the Bergen County Improvement Authority (BCIA), designated by the City of Hackensack as the "redevelopment entity" for a portion of a duly designated redevelopment area — the historic Bergen County Courthouse (the Courthouse) — may select a "redeveloper" without regard to the LPCL. The BCIA and the County of Bergen (the County) contend that a redevelopment entity may choose a redeveloper without public bidding. See Vineland Constr. Co. v. Twp. of Pennsauken, 395 N.J. Super. 230, 255, 928 A.2d 856 (App. Div. 2007) (holding "the LRHL does not set forth any criteria governing the selection of a private redeveloper." (citing Bryant v. City of Atl. City, 309 N.J. Super. 596, 624, 707 A.2d 1072 (App. Div. 1998) ). Therefore, the BCIA and the County argue the BCIA may choose a "redeveloper" through a process that does not require public bidding, by first soliciting responses to requests for qualifications (RFQs), winnowing those responses, and then soliciting responses to requests for proposals (RFPs) from those on the shorter list.

In this case, the BCIA issued an RFQ which designated the general contractor for the project as the "redeveloper," and said the BCIA would contract with the general contractor to provide goods and services for the rehabilitation of the Courthouse. The redeveloper would be paid with public funds the BCIA obtained through the issuance and sale of bonds guaranteed by the County. In other words, unlike most redevelopment agreements, here, the "redeveloper" would be paid with public funds to provide goods and services to the BCIA that are typically subject to public bidding, but with no public bidding.

The trial court dismissed complaints brought by plaintiffs, Dobco, Inc. (Dobco), and one of its principals, Hossam Ibrahim, challenging the RFQ selection process. The court accepted the BCIA's and the County's arguments that because the BCIA was acting as a redevelopment entity pursuant to the LRHL, it need not comply with the LPCL. We disagree and reverse in A-2202-20. For other reasons, we affirm in A-2201-20.

I.

In 2011, Hackensack designated its downtown as an area in need of rehabilitation pursuant to the LRHL and adopted a redevelopment plan for the designated area. The redevelopment area included certain properties owned by the County, including the Courthouse (Project Site). In 2019, the BCIA adopted a resolution authorizing the issuance of up to $60 million in "County Guaranteed Governmental Lease Revenue Bonds" for the purpose of financing the "reconstruct[ion], rehabilitat[ion] and improve[ment] [of] certain County buildings," including the Courthouse. A resolution approved in September 2019 stated that the BCIA would use the proceeds from the bonds to finance the project and would "simultaneously ... enter into a lease purchase agreement with the County ... pursuant to which the [BCIA would] lease the Project to the County for its use and ultimately convey the Project to the County."³ The resolution also stated that the County agreed to guarantee the bonds "in order to assist the [BCIA] with the Project," and the Local Finance Board had approved the issuance of the bonds and the County's guarantee.

In October 2019, the County and the BCIA entered into an "Improvement Lease and Agreement," whereby the County agreed to lease certain buildings it owned to the BCIA for nominal rent in contemplation of the BCIA's completion of the "Improvement Project." The BCIA would then lease the improved real estate back to the County and ultimately convey the properties to the County at the end of the lease term.

On August 18, 2020, Hackensack adopted a resolution designating the BCIA as the "redevelopment entity" for the "Project Site." The resolution cited the BCIA's collaboration with the County "to facilitate the substantive rehabilitation and...