Gallenthin Revisited: Courts apply case to N.J. eminent domain decisions

Two recent decisions of the Appellate Division show that the N.J. Supreme Court decision in Gallenthin Realty v. Borough of Paulsboro  will be followed in pending cases, but Gallenthin is not the panacea envisioned by some property rights activists.

In the case of Citizens in Action v. Township of Mt. Holly, a unanimous opinion of the Appellate Division  affirmed Mt. Holly's finding of blight. The plaintiffs were a group of home owners who resided in or owned property in a section of Mt. Holly known as Mt. Holly Gardens. The trial court, after affording plaintiffs a hearing and an expansion of the record, affirmed the designation of an area in need of redevelopment. The Appellate Division affirmed the trial court and found that the municipality had met the burden under the LRHL of providing sustantial, credible evidence to support a finding of blight.  This case was argued in October 2006 and decided July 5, 2007, after the Gallenthin decision. The court discusses Gallenthin in the text of its opinion:

Redevelopment designations, like all municipal actions, are vested with a presumption of validity. Gallenthin Realty Dev., Inc. v. Borough of Paulsboro, ___ N.J. ___, ___ (2007) (slip op. at 41); Levin v. Twp. Comm. of Bridgewater, 57 N.J. 506, 537-39, app. dismissed, 404 U.S. 803, 92 S. Ct. 58, 30 L. Ed. 2d 35 (1971); Hirth v. City of Hoboken, 337 N.J. Super. 149, 154, 161 (App. Div. 2001). Judicial review of a redevelopment designation is limited to whether the designation is supported by substantial credible evidence. Gallenthin, supra, ___ N.J. at ___ (slip op. at 41). This heightened deference is codified in the LHRL, which provides that an "area in need of redevelopment" designation "if supported by substantial evidence . . . , shall be binding and conclusive upon all persons affected by the determination." N.J.S.A. 40A:12A-6b(5). Accordingly, it is not for the courts to "second guess" a municipal redevelopment action, "which bears with it a presumption of regularity."
Forbes v. Bd. of Trs. of S. Orange Vill., 312 N.J. Super. 519, 532 (App. Div.) certif. denied, 156 N.J. 411 (1998).

It is clear from the text of the opinion that the substantial credible evidence standard will be strictly enforced. It is equally clear in this case, that Mt. Holly's expert met the test. The presumption of the validity of the municipal action remains intact and it is a difficult issue for the objecting property owners to overcome. Neither the Courts nor the Legislature will deny a municipality the tool of eminent domain where they seek to redevelop clearly blighted properties.

On July 11, 2007, another three-judge appellate panel reversed a decision of Judge Lawrence Lawson, A.J.S.C., Monmouth County, which had affirmed the Boro of Belmar's blighting of waterfront property belonging to Freedman's Bakery in HJB v. Borough of Belmar. Ironically, Judge Lawson's trial court decision upholding blight in the Long Branch cases is presently pending before the Appellate Division and oral argument should be held this fall (City of Long Branch v. Anzalone and City of Long Branch v. Brower). Even more ironic, Freedman's Bakery is represented the same attorney who represents the City of Long Branch in Anzalone's appeal. As reported in the Abury Park Press:

The lawyer who fended off Belmar and its legal attempt to force a bakery to go along with a redevelopment plan said a court ruling in the conflict will have no bearing on a separate case involving the use of eminent domain in Long Branch.

Paul V. Fernicola, who represented Freedman's Bakery, said he is in a good position to make that statement because he is defending the city's use of eminent domain against the Anzalone family, which has owned a home near the city's oceanfront for nearly half a century.

It will be interesting to see how this perceived distinction plays out in the courts. Tne court in HJB v. Belmar stated the following:

The statutory language of subsection 5(d) requires that the conditions listed in the first part of the sentence be "detrimental to the safety, health, morals or welfare of the community." Although the Schoor DePalma investigation report, on which the Borough relies, may have established Freedman's Bakery's: "obsolescence," "faulty arrangements or design," "excessive land coverage," "deleterious land use" or "obsolete layout," there is no proof whatsoever that these conditions are detrimental to the safety, health, morals or welfare of the community. See Spruce Manor Enter. v. Borough of Bellmawr, 315 N.J. Super. 286 (Law Div. 1998) (holding that failure to meet current design standards could not, by itself, serve as a basis for a designation that area was in need of redevelopment). Moreover, the Constitution restricts government redevelopment to "blighted areas." Gallenthin, supra, ___ N.J. ___ (slip op. at 41-42) (citing N.J. Const. art. VIII, § 3, ¶ 1). As the Supreme Court observed in Gallenthin, "[t]he New Jersey Consitution does not permit government redevelopment of private property solely because the property is not used in an optimal manner." Ibid. Freedman's Bakery is not a blighted area even if its design is not optimal for its commercial purpose.

As a result of the decision in the Freedman Bakery case, Belmar's redevelopment project is at risk.