CITY OF CAMDEN v. JANE KENNY, et al.

This case can also be found at 336 N.J. Super. 53.
 

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
 

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-544-00T3

CITY OF CAMDEN, a Municipal
Corporation of the State of New
Jersey,

Appellants,

v.

JANE KENNY, Commissioner of the
New Jersey Department of Community
Affairs of the State of New Jersey,
THE LOCAL FINANCE BOARD, ULRICH
STEINBERG, Director of the Division
of Local Government Services and
NORTON BONAPARTE,

Respondents.
_______________________________________

Argued: December 6, 2000 - Decided: 12/22/00

Before Judges King, Coburn and Landau.

On appeal from the Superior Court of New
Jersey, Law Division, Camden County, L-2750-
00, and the Local Finance Board.

Marc A. Riondino, Acting City Attorney, argued
the cause for appellant.

Daniel P. Reynolds, Senior Deputy Attorney
General, argued the cause for respondents
(John J. Farmer, Jr., Attorney General of New
Jersey, attorney; Mary Jacobson, Assistant

Attorney General, of counsel; Mr. Reynolds,
Keith A. Costil, Senior Deputy Attorney
General, on the brief).

The opinion of the court was delivered by

KING, P.J.A.D.

I

This is an accelerated appeal by the City of Camden (City)
from the action of the Local Finance Board (LFB). In a resolution
of September 29, 2000 the LFB adopted an order issued on September
22 by the Director of the Division of Local Government Services of
the Department of Community Affairs authorizing the appointment of
Norton N. Bonaparte, Jr. as the City's business administrator.
The LFB authorized appointing Bonaparte through its authority
under the "Local Government Supervision Act of 1947," N.J.S.A.
52:27BB-1 to -100 (Supervision Act). The City has been under
supervision pursuant to the Supervision Act, N.J.S.A. 52:27BB-54,
since May 10, 2000 because of its "unsound financial condition."
According to the Attorney General, the Supervision Act has only
been invoked a half-a-dozen times in its 52-year history and has
never been challenged in court. The City does not claim that the
Supervision Act is inapplicable in its current financial
circumstances. Rather, the City contends the LFB and the Director
have, in this instance, exceeded their powers under the Supervision
Act and violated long-standing traditions of "home rule" and local
autonomy. We disagree and affirm the LFB's power to appoint a new
business administrator.
II
On April 14, 2000 the LFB conducted a hearing and evaluated
the financial condition of the City. After hearing testimony, the
LFB adopted a resolution requesting that the Attorney General file
an application to obtain a judicial determination that "gross
failure[s]" by the City "substantially jeopardizes the fiscal
integrity of the municipality." N.J.S.A. 52:27BB-55(6). Upon such
a determination, the LFB could initiate action pursuant to N.J.S.A.
52:27BB-56 to determine whether the City should be placed under the
Board's supervision pursuant to the Supervision Act.
The Attorney General filed such an action for a judicial
determination on April 18, 2000. On May 5, Judge Orlando heard
argument and issued a ruling in favor of the LFB, finding
specifically that:

the undisputed facts show that defendant City
of Camden has grossly failed to comply with
the Local Fiscal Affairs Law and the Local
Budget Law, and that this gross failure has
substantially jeopardized the fiscal integrity
of the City of Camden.

The LFB then promptly conducted a hearing on May 10 to
consider whether the City should be placed under its supervision
pursuant to Article 4 of the Supervision Act, N.J.S.A. 52:27BB-54
to -95.1. The LFB adopted a resolution on the same date placing
the City under supervision. The elaborate resolution recited the
judicial determination of "gross failure" and invoked the myriad
powers under the Act, including the section dealing with personnel,
N.J.S.A. 52:27BB-66.1, the appointment and dismissal power over
municipal employees in an effort to rectify the City's financial
problems.
Upon the adoption of the resolution, it was submitted to the
State Treasurer, the Attorney General, and the Commissioner of the
Department of Community Affairs for review and approval in
accordance with N.J.S.A. 52:27BB-56. Immediately, on May 10, all
three cabinet officers approved the LFB's action and the resolution
became effective. The City took no appeal from this final
decision. The LFB's supervision ensued.
On September 13, pursuant to N.J.S.A. 52:27BB-66.1, the LFB
adopted a resolution directing that the procedures in this statute
be implemented to provide for the appointment of a new business
administrator. The City's present administrator, Preston Taylor,
had decided to resign on October 31. The September 13 resolution
firmly but politely recited the LFB's "expectation" and design, in
pertinent part, as follows:

WHEREAS, in adopting the aforementioned
resolution, the Local Finance Board
specifically provided that the provisions of
N.J.S.A. 52:27BB-66.1 were to be placed in
effect in the City of Camden; and

WHEREAS, the provisions of N.J.S.A.
52:27BB-66.1 set forth procedures providing
for the appointment of municipal employees
within municipalities subject to the
supervision of the Local Finance Board under
Article 4 of the Local Government Supervision
Act, N.J.S.A. 52:27BB-54 et seq., and

WHEREAS, the Local Finance Board has
determined it to be both necessary and
appropriate to authorize and direct that the
procedures set forth at N.J.S.A. 52:27BB-66.1
be utilized for the purpose of making a
permanent appointment to the position of

business administrator in the City of Camden;
and

WHEREAS, THE Local Finance Board's
determination in this regard is premised upon
its consideration of a variety of
circumstances relating to the present fiscal
condition of the City of Camden including, but
not limited to, the decision of the present
business administrator of the City of Camden
to resign as of October 31, 2000; and

WHEREAS in light of these circumstances
and in order to facilitate the rehabilitation
of the financial affairs of the City of
Camden, the Local Finance Board has determined
to authorize and direct that the procedures
set forth in N.J.S.A. 52:27BB-66.1 pertaining
to the appointment of municipal employees in
the City of Camden be utilized for the purpose
of providing for the permanent appointment of
a business administrator in the City; and

WHEREAS, the Local Finance Board has
further determined that the actions required
to be taken for the purpose of providing for
the permanent appointment of a business
administrator in the City of Camden be
undertaken and completed by September 22,
2000; and

WHEREAS, in authorizing and directing
that the procedures set forth in N.J.S.A.
52:27BB-66.1 be undertaken and completed by
that date, it is the expectation of the Local
Finance Board that the governing body of the
City of Camden will work in a cooperative
manner with the Director of the Division of
Local Government Services for the purpose of
providing for a permanent appointment to the
position of business administrator in the City
of Camden; and

WHEREAS, it is also the expectation of
the Local Finance Board that the

implementation of the procedures set forth in
N.J.S.A. 52:27BB-66.1 will be undertaken to
provide for the permanent appointment of
Norton Bonaparte as the business administrator
of the City of Camden,

NOW, THEREFORE, BE IT RESOLVED, that the
Local Finance Board, pursuant to its authority
under N.J.S.A. 52:27BB-66.1 of Article 4 of
the Local Government Supervision Act, N.J.S.A.
52:27BB-54 et seq., hereby authorizes and
directs that the procedures set forth in
N.J.S.A. 52:27BB-66.1 pertaining to the
appointment of municipal employees in the City
of Camden be implemented for the purpose of
providing for this permanent appointment of a
business administrator in the City of Camden
to replace the City's present business
administrator; and

BE IT FURTHER RESOLVED, that the Local
Finance Board has further determined that the
actions required to be taken for the purpose
of providing for the permanent appointment of
a business administrator in the City of Camden
be undertaken and completed by September 22,
2000; and

BE IT FURTHER RESOLVED, that, in
authorizing and directing that the procedures
set forth in N.J.S.A. 52:27BB-66.1 be
undertaken and completed by that date, it is
the expectation of the Local Finance Board
that the governing body of the City of Camden
will work in a cooperative manner with the
Director of the Local Government Services for
the purpose of providing for a permanent
appointment to the position of business
administrator in the City of Camden. [Emphasis
added.]

On September 22, the City Council, in defiance of the LFB's
resolution of September 13, voted to approve the appointment of
Mayor Milton Milan's selection, Heriberto Colon, as business

administrator, and not to appoint Bonaparte. Upon learning of this
action, the Director, acting pursuant to N.J.S.A. 52:27BB-66.1, on
September 22 issued an order to the City terminating Colon's status
and directing that Bonaparte be appointed business administrator;
the order stated in full:

ORDER OF THE DIRECTOR OF THE DIVISION OF LOCAL
GOVERNMENT SERVICES

TO: MAYOR AND CITY COUNCIL OF THE CITY OF
CAMDEN

This order is being issued pursuant to my
authority under N.J.S.A. 52:27BB-66.1 and
N.J.S.A. 52:27BB-60 of Article 4 of the Local
Government Supervision Act and constitutes an
order and directive of the Director of the
Division of Local Government Services for the
purposes of those statutes as well as N.J.S.A.
52:27BB-15.

As you are aware, the Local Finance Board
adopted a resolution on September 13, 2000 for
the purpose of authorizing that the procedures
set forth in N.J.S.A. 52:27BB-66.1 be utilized
for the purpose of making a permanent
appointment to the position of business
administrator in the City of Camden. In doing
so, the Local Finance Board made clear its
expectation that the actions to be taken
pursuant to its resolution would provide for
the permanent appointment of Norton Bonaparte
as business administrator of the City of
Camden. The Board's resolution accordingly
authorized that the procedures set forth in
N.J.S.A. 52:27BB-66.1 be implemented for the
purpose of providing for "this appointment" to
be made.

The City Council has, in disregard of the
Local Finance Board's resolution of September
13, 2000, taken action to appoint an
individual other than Norton Bonaparte to the
position of business administrator of the
City. In doing so, the City Council has acted

in clear contravention of the Board's
resolution. More specifically, the individual
which the City Council has sought to place in
this position, Heriberto Colon, is not the
individual which the Board's resolution
authorized be permanently appointed as the
City's business administrator.

The rehabilitation of the City's
financial affairs is the very reason why
supervision of the City of Camden by the Local
Finance Board and the Division of Local
Government Services has been placed in effect
under Article 4 of the Local Government
Supervision Act. Norton Bonaparte possesses
the requisite qualifications and experience to
effectuate the financial rehabilitation of the
City's financial affairs while serving as the
City's business administrator. As Director of
the Division of Local Government Services and
Chairman of the Local Finance Board, it is
clear to me and, as the Board's resolution of
September 13, 2000 makes clear, to the Board
that Mr. Bonaparte's appointment to the
position of business administrator of the City
is necessary to achieve this purpose.
Moreover, it was the only appointment
authorized under the Board's resolution.

In light of the foregoing, it is hereby
ordered and directed that, pursuant to my
authority under N.J.S.A. 52:27BB-66.1 and
N.J.S.A. 52:27BB-60 and the resolution adopted
by the Local Finance Board on September 13,
2000, whatever status the governing body may
have sought to confer upon Heriberto Colon as
business administrator of the City of Camden
is hereby terminated. Further, pursuant to my
authority under the aforementioned statutes
and resolution, it is hereby ordered and
directed that Norton Bonaparte is hereby
appointed as business administrator of the
City of Camden effective October 2, 2000.

Consistent with the provisions of

N.J.S.A. 52:27BB-15, the City of Camden may
seek review of this order before the Local
Finance Board by requesting such review in
accordance with the provisions of that
statute. Should the City fail to seek review
within the time period set forth therein, it
will be precluded from seeking to challenge
this order in any other forum.

/s/
ULRICH H. STEINBERG, JR., DIRECTOR
DIVISION OF LOCAL GOVERNMENT SERVICES

The City's attorney requested immediate relief from this order
from the LFB. In response, the LFB conducted a hearing on
September 29 to review the Director's order. The LFB concluded
that the Director's order was a proper implementation of the LFB's
earlier resolution of September 13. The LFB also expressed its
view that because of experience, qualifications and expertise, the
appointment of Bonaparte was necessary to achieve rehabilitation of
the City's financial affairs.
The City appealed on September 29; we denied a stay and
accelerated the appeal. Meanwhile, the State applied to Judge
Orlando for enforcement on September 22; on November 2 he enforced
the Director's order appointing Bonaparte as business
administrator.
III
The City contends that the State "does not have the power to
appoint a business administrator for a municipality pursuant to the
Supervision Act." We disagree. The order of the director on
September 22, confirmed by the LFB's resolution of September 29,
was squarely authorized by the second paragraph of N.J.S.A.
52:27BB-66.1 which states, "The board may authorize the
municipality to appoint or dismiss unclassified persons in
managerial positions necessary to the rehabilitation of the
financial affairs of the municipality without regard to any
procedural or other statutory requirements." The business
administrator was clearly an unclassified person in a managerial
position. The City's brief quite properly describes the business
administrator as the "chief operating officer" of the municipality
who is "directly accountable to the mayor." This is the City's key
management position, essential to any meaningful reform.
As a general proposition, properly exercised state power over

municipalities trumps local control. "As creatures of the state,
local governments are generally subject to the control of the
state. There is a corresponding presumption that state legislation
creating a state agency preempts local government control." 1
Eugene McQuillin, Municipal Corporations 3 A. 19 (3d ed. 1999).
"Legislative authority over municipal corporations and their civil,
political and governmental powers exists, except as limited by the
federal and state constitutions. [A]nd such legislative power is
often referred to as plenary, supreme, absolute, complete, or
unlimited." 2 Eugene McQuillin, Municipal Corporations 4.03 (3d ed.
1996). In this respect, Chief Justice Vanderbilt said:

It is fundamental in our law that there is no
inherent right of local self-government beyond
the control of the State, and that
municipalities are but creations of the State,
limited in their powers and capable of
exercising only those powers of government
granted to them by the Legislature. . . .

[Wagner v. Newark, 24 N.J. 467, 474 (1957)
(citations omitted)].

Several years earlier, the Chief Justice stated in Bucino v.
Malone, 12 N.J. 330, 345 (1953): "In New Jersey local government
has always been a creation of the Legislature. The people have no
inherent right of local self-government beyond the control of the
State. (citations omitted.)."
Against this background, we have no difficultly concluding
that the strong remedial powers granted the LFB to correct gross
financial failings at the municipal level must prevail over the
general power of the Mayor and City Council to appoint and confirm
a business administrator, as in more normal circumstances. See
N.J.S.A. 40:69A-43(b). The Supervision Act grants to the LFB and
the Director of the Division of Local Government Services clear
authority and power to supervise municipalities in need of
financial assistance. N.J.S.A. 52:27BB-6 states that, "[t]he
division [Division of Local Finance in the State Department of
Community Affairs] shall exercise State regulatory and supervisory
powers over local government, assist local government in the
solution of its problems, and plan and guide needed readjustments
for effective local self-government." The purpose of the
Supervision Act, N.J.S.A. 52:27BB-54, calls for the State to impose
"special restraints" to "forestall serious defaults" which "burden

local taxpayers and destroy the efficiency of local services."
Where local government fails and crumbles, the State has been
empowered to reassemble the pieces.
N.J.S.A. 52:27BB-66.1 specifically speaks to personnel reform,
whether classified or unclassified, union or non-union. Without
the power to effect reform in personnel, the LFB's efficacy in this
situation is chimerical. Government is run by people, not machines
or computers. As noted, the key paragraph in N.J.S.A. 52:27BB-66.1
dealing with personnel supervision states:

The board may authorize the municipality to
appoint or dismiss unclassified persons in
managerial positions necessary to the
rehabilitation of the financial affairs of the
municipality without regard to any procedural
or other statutory requirements.

The Supervision Act also states that "[f]or the purposes of this
article, the director shall have, in addition to his other powers,
authority to issue and enforce orders as authorized by law for
other orders issued by him." N.J.S.A. 52:27BB-67. Further,
N.J.S.A. 52:27BB-90 allows the Director to exercise the powers
vested in the LFB with the board's approval. The Legislature also
declared that "[t]his article shall be construed liberally to give
effect to its intent that unsound financial conditions in
municipalities shall be forestalled and corrected." N.J.S.A.
52:27BB-68. Because the Supervision Act is remedial in nature,
aimed at the fiscal rehabilitation of municipalities subject to its
provisions, the Act's purposes should be liberally construed to
achieve this "express legislative intent and purpose[]." League of
Municipalities, 158 N.J. 211, 225 (1999).
The Supervision Act demonstrates the Legislature's desire to
vest expansive emergency power in the LFB and the Director to
eliminate financial distress in municipalities. Article 4 of the
Supervision Act dealing with "Unsound Financial Conditions" in
municipalities describes many strategies which the LFB may use, in
addition to the personnel powers under N.J.S.A. 52:27BB-66.1:

1. severe limitations on debt and other
financial obligations. N.J.S.A. 52:27BB-
57.

2. limitations on appropriations and
expenditures. N.J.S.A. 52:27BB-58.

3. requirement of liquidation or refinancing
of debt. N.J.S.A. 52:27BB-61.

4. placing a municipality under the
supervision of the Municipal Finance
Commission. N.J.S.A. 5:27BB-65.

5. control of tax collection and
administration of miscellaneous revenues.
N.J.S.A. 52:27BB-73, 73, -75, -76.

6. appointment of a fiscal control officer.
N.J.S.A. 52:27BB-80, -81.

7. liquidation of old liabilities. N.J.S.A.
52:27BB-82, -83.

8. negotiation of cooperative agreements
with other counties. N.J.S.A. 52:27BB-
84.

9. instructing the Director to act as a
controller. N.J.S.A. 52:27BB-85, -86.

10. approving or disapproving the
municipalities' proposed annual budgets.
N.J.S.A. 52:27BB-87.

Against this background of the pantheon of powers of the LFB
and the Director, we construe the second paragraph of 66.1 of
Article 4 of the Supervision Act generously, to accomplish the
obvious intent of the Legislature to stem fiscal bleeding and
administrative ineptness in distressed municipalities. See
N.J.S.A. 52:27BB-68 (this Article shall be construed liberally to
effect its intent that unsound financial conditions shall be
forestalled and corrected). Section 66.1 states "the board may
authorize the municipality to appoint or dismiss unclassified
persons as necessary to the rehabilitation of the financial affairs
of the municipality without regard to any" other requirements. We
view this as more than a mere "power of suggestion," as the City
argues. Indeed, our dictionary defines "authorize" as more than
merely precatory but "to endorse, empower, justify, or permit by or
as if by some recognized or proper authority." Webster's Third New
International Dictionary 146 (Merriam 1966).

While N.J.S.A. 52:278B-66.1 uses the words "may authorize,"
this was not intended to diminish the legislative purpose to make
clear that when implemented under the Supervision Act, remedial
measures deemed essential by the LFB cannot be frustrated or
overborne by the governing body of an ailing municipality. The
authorization contemplated by the Supervision Act was designed to
establish the basis for exercise of the Board's power to cause
appointments or dismissals without regard to the usual procedural,
statutory, civil service or collective bargaining requirements. In
the context of Article 4's array of vital powers conferred on the
LFB and the Director in these situations, and the manifest
legislative purpose, we read 66.1 as giving the LFB the power to
tell the City to appoint a particular business administrator when
the City is under the Supervision Act.
As we stated several years ago in County of Camden v. S.
Jersey Port, 312 N.J. Super. 387, 396-97 (App. Div. 1998), in
construing the South Jersey Port Corporation Act, N.J.S.A. 12:11A-1
to -29, where judicial interpretation was required to resolve a
novel problem:

The clearest indication of an Act's
meaning is its plain language. National Waste
Recycling, Inc. v. Middlesex Cty. Improvement
Auth., 150 N.J. 209, 223, 695 A.2d 1381
(1997). However, in times when the statute's
plain language creates ambiguities, courts
must interpret the statute in a manner
consistent with the legislative intent. State
v. Szemple, 135 N.J. 406, 422, 640 A.2d 817
(1994). It is the general intent of the
statute that controls the interpretation of
its parts. Ibid.; Kimmelman v. Henkels &
McCoy, Inc., 108 N.J. 123, 128, 527 A.2d 1368
(1987). "'[S]tatutes are to be read sensibly
rather than literally and the controlling
legislative intent is to be presumed as
"consonant to reason and good discretion."'"
Roig v. Kelsey, 135 N.J. 500, 515, 641 A.2d
248 (1994) (quoting Schierstead v. Brigantine,
29 N.J. 220, 230, 148 A.2d 591 (1959) (quoting
Morris Canal & Banking Co. v. Central R.R., 16
N.J.Eq. 419, 428 (Ch. 1863))). Put simply,
courts should avoid interpreting a statute in
a manner that leads to an absurd, anomalous,
or unreasonable result. Strasenburgh v.

Straubmuller, 146 N.J. 527, 542, 683 A.2d 818
(1996); Reisman v. Great Am. Recreation, Inc.,
266 N.J. Super. 87, 96, 628 A.2d 801 (App.
Div.), certif. denied, 134 N.J. 560, 636 A.2d
519 (993). Statutory interpretations should
turn on the breadth of legislative objectives
and the common sense of the situation. Jersey
City Chapter, Property Owner's Protective
Ass'n v. City Council, 55 N.J. 86, 100, 259
A.2d 698 (1969).

*****

Moreover, N.J.S.A. 12:11A-26 compels this
court to construe the South Jersey Port
Corporation Act liberally in order to advance
its purposes.

[Id.]

If we adopt the City's reasoning, under the third paragraph of
66.1 the LFB and the Director could control, appoint and dismiss
the "rank and file" employees, but not the key employees, an absurd
result. We are guided by the "legislative objective and the common
sense of the situation" in so construing 66.1. See also Alan J.
Cornblatt, P.A. v. Barow, 153 N.J. 218, 231 (1998).
The City's assertion that the Board's action has gone beyond
the supervisory role envisioned by the Legislature is without
merit. The Board and the Director have acted within the broad
grant of power of the Supervision Act.
IV
We next consider the City's contention that the LFB's actions
are unconstitutional and somehow disenfranchise the voters of the
City. The Supervision Act is not "special legislation." Article
4, 7, 9 of the New Jersey Constitution states, "[t]he Legislature
shall not pass any private, special or local laws: . . . (13)
Regulating the internal affairs of municipalities formed for local
government and counties, except as otherwise in this Constitution
provided." Had the Act applied only to Camden, or to any other
municipality specifically, it would be unconstitutional. The
Legislature passed a general law which applies to any municipality
which meets its definitions.
We fully realize that Article 4, 7, 11 states, "[t]he
provisions of this Constitution and of any law concerning municipal

corporations formed for local government, or concerning counties,
shall be liberally construed in their favor." However, as recited,
there is no ambiguity as to the intentions of the Supervision Act.
Moreover, the so-called "Home Rule" tradition in this State,
strongly relied upon by the City, is not founded on our
Constitution or any statutes pertinent to this circumstance.
V
Finally, we conclude that the action by the LFB and the
Director was not invalidated by their decision to decline to
exercise progressive remedies under the Local Government
Supervision Act of 1947. As observed, the Supervision Act grants
both the LFB and the Director very substantial authority over
municipalities in times of fiscal crises. For example, N.J.S.A.
52:27BB-46 allows for the inspection of local administration.
N.J.S.A. 52:27BB-47 allows the LFB to inquire into the financial
affairs of municipalities. N.J.S.A. 52:27BB-80 states that "[t]he
board may recommend to the local governing body that a fiscal
control officer be appointed." N.J.S.A. 52:27BB-82 states, "[t]he
director shall exercise in the name of the municipality, all powers
pertaining to the enforcement of obligations that are vested by law
in the municipality." N.J.S.A. 52:27BB-85 states that "[i]f the
board finds that sound fiscal conditions will be promoted by the
exercise of a control function in the municipality and that the
function is not, or cannot be, maintained in a practical manner by
regular local officers, the board may instruct the director to
perform the control function." N.J.S.A. 52:27BB-87 allows the
director to submit alternate budgets for the municipality.
N.J.S.A. 52:27BB-56 explicitly requires the Board to identify
which of the supervisory powers set forth in the Act it believes
should be placed in effect in a municipality subject to its
supervision under the Act but sets no priority for these remedies.
The City's assertion that the Director and the LFB must employ
certain lesser remedial options before more severe ones are used
conflicts with the plain language of the Act and is without merit.
Further, N.J.S.A. 52:27BB-23 states that "[i]t shall be the duty of
the governing body and officers of a political subdivision of the
State to co-operate with the director and the board toward giving
effect to the purposes of this act, and the powers and duties of
the division." Absent some sort of patent abuse of discretion, and
certainly none is here manifest, we will not disturb the remedy of
appointment of the business administrator imposed by the LFB and
the Director pursuant to the statute.
Affirmed.