Roe v. Kervick

• Citation: 199 A.2d 834,42 N.J. 191
• Decision Date: 20 April 1964
• Docket Number: No. A--91,A--91
• Parties: Robert A. ROE, Commissioner, etc., et al., Plaintiffs-Respondents, v. John A. KERVICK, State Treasurer of the State of New Jersey, Defendant-Appellant.
• Court: United States State Supreme Court (New Jersey)

Page 191

42 N.J. 191

199 A.2d 834

Robert A. ROE, Commissioner, etc., et al., Plaintiffs-Respondents, v. John A. KERVICK, State Treasurer of the State of New Jersey,

Defendant-Appellant.

No. A--91.

Supreme Court of New Jersey.

Argued Jan. 20, 21, 1964.

Decided April 20, 1964.

Daniel Amster, Waldwick, for defendant-appellant.

Alan B. Handler, Deputy Atty. Gen., for plaintiffs-respondents (Arthur J. Sills, Atty. Gen., attorney).

The opinion of the Court was delivered by

FRANCIS, J.

This is a proceeding under N.J.S. 2A:16--50 et seq., N.J.S.A., seeking a declaratory judgment as to the constitutionality of L.1962, c. 204, N.J.S.A. 13:1B--15.13 et seq., commonly called 'The New Jersey State Area Redevelopment Assistance Act.' The action was necessary because the defendant State Treasurer declined to lend money as authorized by the statute for the use of the New Jersey Area Redevelopment Authority. The declination was based primarily upon his doubt as to whether the various loans or advances of money contemplated by the legislation constituted a lending of the credit of the State, county or municipality, or loans or appropriation of money of the State, county or municipality in aid of a private person, association or corporation in violation of Article VIII, Section II, paragraph 1, and Section III, paragraphs 2 and 3 of the State Constitution. The Superior Court, Law Division, declared the act constitutional. This appeal followed and we certified it before argument in the Appellate Division.

I.

The Area Redevelopment Assistance Act created in the Department of Conservation and Economic Development the New Jersey Area Redevelopment Authority, 'a public corporation and government instrumentality' of the State. Members of the managing board of the Authority are: (1) the Commissioner of Conservation and Economic Development, (2) Commissioner of Banking and Insurance, (3) Commissioner of Labor and Industry, (4) the State Treasurer, and (5) five public members appointed by the Governor with the advice and consent of the Senate. L.1962, c. 204, § 3, N.J.S.A. 13:1B--15.15.

The purpose of the act was declared to be 'to assist area redevelopment agencies to establish area redevelopment projects within the State, to assist in obtaining such Federal financial assistance as may be available and to provide such additional financial assistance as may be required, which assistance shall not exceed, in total, 10% Of the cost of establishing an area redevelopment project which cost shall be divided equally between the authority and the municipality or county or other public or quasi-public agency which is qualified to provide such assistance.' Id. § 4, N.J.S.A. 13:1B--15.16.

Among other things, the Authority is given powers, (1) to determine on application of an area redevelopment agency the financial assistance required by it to establish and maintain an area redevelopment project, and whether such agency has qualified for federal financial assistance; (2) to approve the agencies which meet the conditions specified in the act for financial assistance; (3) to enter into agreements with counties and municipalities to provide for financial assistance to such approved agencies; (4) upon proper application of such agencies to make loans to them from moneys held in the area redevelopment fund, and to provide for repayment as required by the act; to purchase, upon application of such agencies, evidences of indebtedness, and to provide for repayment as required by the act; (5) to make all contracts and execute the necessary instruments to accomplish the statutory purposes; (6) to accept grants from, and to enter into contracts or other transactions with any federal agency; (7) to determine, upon proper application of area redevelopment agencies, whether the declared public purpose of the act will be accomplished by the establishment of an area redevelopment project in a redevelopment area; (8) to take title by foreclosure to any project where the acquisition is necessary to protect any loan previously made by the Authority, and to sell, transfer and convey any such project to a responsible buyer, or if a sale, transfer or conveyance cannot be accomplished promptly, then but only then, in order to minimize financial losses and to sustain employment, the Authority may lease the project to a responsible tenant; (9) under rules and regulations prescribed by the Authority, it may assign or sell at public or private sale or otherwise dispose of for cash or credit on terms and for consideration it deems reasonable, any evidence of indebtedness, contract, claim personal property or security held by it in connection with loans made or evidences of indebtedness purchased or held under the act; (10) to deal freely by way of improvement, rental or sale with real or personal property acquired in connection with loans made or evidences of indebtedness purchased under the act. Id. § 5, N.J.S.A. 13:1B--15.17.

The terms 'redevelopment area,' area 'redevelopment agency' and 'area redevelopment project' or 'project' are defined specifically. 'Redevelopment area' is any area within the State which has been designated as such by the Secretary of Commerce of the United States pursuant to the provisions of Public Law 87--27 (1961), the Federal Area Redevelopment Act, 42 U.S.C.A. § 2501 et seq. 'Area redevelopment agency' means '* * * any person, partnership, firm, company or corporation deemed by the authority after proper investigation to be capable of assuming all obligations prescribed by the authority in the establishment of an area redevelopment project and in the operation of an industrial or commercial enterprise therein or thereon.'

'Area redevelopment project' means

'* * * the acquisition and development of land within a redevelopment area, the construction of new buildings, the rehabilitation of abandoned or unoccupied buildings and the alteration, conversion or enlargement of existing buildings which undertaking comprises or is connected with or part of an industrial enterprise established or to be established by an area redevelopment agency and many also include, in cases of demonstrated need, machinery and equipment.' Id. § 1(e), (h), (g), N.J.S.A. 13:1B--15.13(e), (h), (g).

When the Authority decides upon application of an area redevelopment agency that the establishment of a project will be to the economic well-being of the area in which it will be located, a contract may be made to furnish the agency with an amount not in excess of 10% Of the cost thereof which sum 'shall be provided 1/2 by a loan from the authority to the agency and 1/2 by a loan from a county of municipality in which the agency is located * * *.' Id. § 6, N.J.S.A. 13:1B--15.18. The financial assistance shall be supplied On such terms and interest as the Authority determines and, unless otherwise decided, it shall be secured by a mortgage of the agency on the project. Except as permitted by the act, the mortgage must be a second mortgage and subordinate only to the mortgage securing the first lien obligation issued to secure the commitment of funds from independent and responsible sources and used in the financing of the project. The money furnished by the Authority to the area redevelopment agencies is to be withdrawn from the area redevelopment fund. Id. § 7, N.J.S.A. 13:1B--15.19. That fund is not derived from tax revenues but from a 30-year noninterestbearing loan not exceeding $500,000 which the State Treasurer is authorized to make out of the escheat account established by N.J.S. 2A:37--41 N.J.S.A. Id. § 10, N.J.S.A. 13:1B--15.21 note. The fund is to be held by the State Treasurer for purposes of the act, money to be paid therefrom on warrant or other order of the treasurer of the Authority or other person authorized to do so by the Authority with the approval of the Commissioner of Conservation and Economic Development. Id. § 9, N.J.S.A. 13:1B--15.21.

The first circumstance which must come into being before proceedings relating to a specific project can be initiated under the act is a designation by the United States Secretary of Commerce that the area where the project is to be located is a 'redevelopment area.' The Secretary is authorized to make such designation under certain standards and regulations established by the Federal Area Redevelopment Act, supra, 42 U.S.C.A. § 2501, adopted May 1, 1961. The New Jersey act complements and integrates with the federal statute which seeks to establish a pattern of national and state cooperative action for dealing with local depressed area redevelopment. See Congressional declaration of purpose, 42 U.S.C.A. § 2501. Under section 2504, the Secretary is required to designate as redevelopment areas those areas within the United States wherein he determines there has existed 'substantial and persistent unemployment' for an extended period of time. In making the determination he is directed to use standards generally comparable to those set forth in paragraphs (1) and (2) of the section. These paragraphs are as follows:

'(1) (W)here the Secretary of Labor finds that the rate of unemployment, excluding unemployment due primarily to temporary or seasonal factors, is currently 6 per centum or more and has averaged at least 6 per centum for the qualifying time periods specified in paragraph (2); and

(2) where the Secretary of Labor finds that the annual average rate of unemployment has been at least--

(A) 50 per centum above the national average for three of the preceding four calendar years, or

(B) 75 per centum above the national average for two of the preceding three calendar years, or

(C) 100 per centum above the national average for one of the preceding two calendar years.'

The Secretary of Labor is directed by the same section to find the facts and provide the data to be used by the Secretary in designating the redevelopment areas.

Subsection (6) of section 2504 requires the Secretary of Commerce to...