This is a regulatory takings case where the Florida Supreme Court, in a 5-2 decision, rejected the beachfront property owners’ challenge to a state law authorizing beach replenishment through creation of sand dunes and asserting public ownership to the created land area. The Florida Supreme Court concluded that the law did not constitute a compensable taking. See Robert H. Thomas' post at Inverse Condemnation blog:

In Walton County v. Stop the Beach Renourishment, Inc., 998 So.2d 1102 (Fla. Sep. 29, 2008), the Florida Supreme Court held that a state statute which prohibits "beach renourishment" without a permit did not effect a taking of littoral (beachfront) property, even though it altered the long-standing rights of the owners to accretion on their land and direct access to the ocean. The cert petition presents these questions:

The Florida Supreme Court invoked "nonexistent rules of state substantive law" to reverse 100 years of uniform holdings that littoral rights are constitutionally protected. In doing so, did the Florida Court's decision cause a "judicial taking" proscribed by the Fifth and Fourteenth Amendments to the United States Constitution?

Is the Florida Supreme Court's approval of a legislative scheme that eliminates constitutional littoral rights and replaces them with statutory rights a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

Is the Florida Supreme Court's approval of a legislative scheme that allows an executive agency to unilaterally modify a private landowner's property boundary without a judicial hearing or the payment of just compensation a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

The case has interesting implications in many states, and specifically New Jersey,  where the Army Corps of Engineers, operating through local municipalities, is seeking to accomplish beach replenishment along the entire length of Long Beach Island. See our January 29 post, "Eminent domain in Harvey Cedars."
 

Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, et al. Docket: 08-1151

• Opinion below (Supreme Court of Florida)
• Petition for certiorari
• Brief in opposition for respondent Florida Department of Environmental Protection
• Brief in opposition for respondents Walton County and City of Destin
• Petitioner’s reply
• Brief amicus curiae of Pacific Legal Foundation (in support of petitioner)
 

On May 21, the New Jersey Supreme Court granted certification to petitioner Iron Mountain Information Management, Inc. in a case which could be a precedent setting decision in eminent domain law. See the Appellate Division opinion in Iron Mountain Information Management, Inc. v. City of Newark et al (A6561-06) and discussion in our previous blog post, Notice to commercial tenants in eminent domain cases (March 23, 2009). The Supreme Court will consider the issue of notice to a commercial tenant within a redevelopment area under the Local Redevelopment Housing Law, as well as the underlying issue of blight. Below are the relevant documents that have been submitted to the Court and the order granting certification:

Order granting Petition for Certification

Petition for Certification

City of Newark Opposition Brief

Reply Brief in Support of Petition for Certification

Today the New Jersey Supreme Court unanimously decided that a condemnee may recover counsel fees and costs upon abandonment of a condemnation proceeding, pursuant to N.J.S.A. 20:3-26 (b), from the point at which the property is formally targeted for condemnation through the filing of the condemnation complaint and ensuing litigation. The court held that calculation of fees, as in all other cases, is governed by the reasonableness principles of RPC 1.5. Significantly, the Court held that, in the context of abandonment,  the right to recover costs and fees is not contingent to any degree on the success of the property owner’s defense strategy and, therefore, was not subject to modification by the application of RPC 1.5(a)(4) regarding the amount involved or the results obtained. Justice Virginia Long wrote for the Court. Download the opinion.

However, fees associated with the filing a prerogative writ, such as fighting a blight designation, are not recoverable. The tolling point in pre-litigation begins once the property owner receives notice that the property will be formally targeted for condemnation, such as receipt of an offer letter based on an appraisal. In the pre-litigation period,  any fees incurred in order to participate in bona fide negotiations per N.J.S.A 20:3-6, such as the costs of attorneys, appraisers, engineers and other experts, apply.  A condemnation complaint must be filed, and it must be either abandoned - no longer required for the project, or dismissed due to defenses raised by propery owner. The trial court has the discretion to mitigate the fees.

Listen to the N.J. Supreme Court oral arguments in West Orange v. 769 Associates LLC.

See prior blog post on the on the appellate division decision, "Recovering litigation costs when condemnation is abandoned" (December 28, 2007).

 Iron Mountain Information Management, Inc. v. City of Newark et al (A6561-06).
Download the case here.

Commercial tenants are not entitled to notice provisions of the Local Redevelopment Housing Law according to a recent decision of the New Jersey Appellate Division. In a unanimous decision approved for publication, the court affirmed Summary Judgment granted by the trial court to the City of Newark. The tenant, Iron Mountain Document Systems, Inc., has a long-term lease of a 350,000 square foot building, located at the corner of McCarter Highway and Edison Place. In addition to its lease, Iron Mountain negotiated an option to purchase and maintains a right of first refusal with the landlord.

Plaintiff, the sole tenant in the building, has occupied the property since August 28, 1996, when it entered into a long-term lease with the owner, the Berkowitz Company, to rent the property until August 31, 2014, with the option to extend the term of the lease for two successive five year periods.

The lease also afforded plaintiff the option to purchase the property "at a fixed formula during the period from September 1, 2006 [to] December 31, 2008," and provided plaintiff a right of first refusal if another party offered to purchase it. Finally, the lease entitles plaintiff to share, according to a fixed formula, in any proceeds realized by Berkowitz if the property is taken by eminent domain, but only if the taking occurred prior to September 1, 2007. [Slip Opinion at 4]

When courts decide cases on limited procedural issues, they do a disservice to the litigants by ignoring the substance of the case.  In this case, the Appellate Division held that a commercial tenant such as Iron Mountain was not entitled to notice under the LRHL. This ruling not only conflicts with the DeRose case, but it also conflicts with an older case, State v. Jan-Mar, Inc. 236 NJ Super 28 (App Div, 1989), which held that a commercial tenant with an option to purchase possesses a compensable property right that is recognizable in an eminent domain case. This affirmed a lower court ruling reported at 210 NJ Super 236 (Law Div, 1985). Jan-Mar is consistent with rulings in other states which treat options as a compensable interest in condemnation proceedings. See also Nichols on Eminent Domain Section 5.02.

The Appellate Division in Iron Mountain notes that tenants may raise blight issues as a defense to eminent domain in the condemnation case. The reasoning of the court is that the Eminent Domain Act, N.J.S.A. 20:3-1 and the Court Rules R.4:73-2 governing eminent domain assure that all owner/occupants are entitled to be named as defendants and participate in the eminent domain proceeding:

Unquestionably, the EDA provides clear and adequate procedural safeguards that protect a commercial tenant's leasehold interest in condemned property by affording the tenant the right to challenge the authority to condemn, and by affording him compensation for any losses that result from lease termination. As we have observed, the LRHL and the Eminent Domain Act must be read in tandem, not in isolation. DeRose, supra, 398 N.J. Super. at 409. The provisions of these related statutes must be "construed together as a unitary and harmonious whole." Am. Fire and Cas. Co. v. N.J. Div. of Taxation, 189 N.J. 65, 80 (2006) (citation omitted). So viewed, when the two statutes are read as a whole, it is evident that the notice procedures and substantive rights afforded a commercial tenant pursuant to the EDA make unnecessary any additional procedural safeguards at the earlier blight designation stage. Thus, plaintiff has not satisfied the second Mathews prong.
[Slip Op. at 25]

The problem with the court's reasoning is that the landlord could sell the building directly to Newark without eminent domain, and the tenant would be left with a relocation claim under the Relocation Assistance Act, N.J.S.A. 20: 4-1 and no eminent domain case within which to assert the value of its leasehold and its option.

Adopting a procedural device to decide the case on the notice issue, the Appellate Division avoided the substantive merits of the case where Iron Mountain argued that the building was not blighted under the recent New Jersey Supreme Court decision of Gallenthin v Paulsboro. Furthermore, the Iron Mountain case warranted reversal due to the complete absence of findings of fact and conclusions of law by the trial judge as required by R.1:7-4.

Iron Mountain will petition the New Jersey Supreme Court seeking certification of this matter, based on the conflicting appellate decisions which must be reconciled by the Court. See R. 2:12-4.
 

A large part of the project area includes the Atlantic Yards (ATURA), which was previously blighted. The court described the issues raised on appeal as follows:

While the principal focus of this appeal would appear to be upon the propriety of the ESDC's UDCA findings that the non-ATURA project blocks are blighted and that the proposed arena qualifies as a "civic project," petitioners in this hybrid article 78/declaratory judgment action have also raised numerous challenges to the adequacy of respondents' compliance with the State Environmental Quality Review Act (SEQRA), several of which survive for our review. Petitioners urge (1) that the PACB determination approving the ESDC's financial participation in the project was improper in the absence of environmental findings by the PACB; (2) that the ESDC's environmental review was deficient due to its failure to address the risk of a terrorist attack upon the project; (3) that the "build years" used by the ESDC in its Environmental Impact Statement (EIS) were irrational and skewed the ensuing analysis of the project's environmental effects; and (4) that because the ESDC failed to study and give due consideration to real estate market trends in the non-ATURA project area, it could not have adequately discharged its [*3]statutory obligation to consider alternatives to the proposed project not involving that area's development as part of an urban renewal project….” [Slip op. at paragraph 5]

Although vote of the court was 3-0 in favor of the defendants, Justice James M. Catterson issued a separate concurring opinion. Justice Catterson was highly critical of the defendant saying that “…the New York Urban Development Corporation Act is ultimately being used as a tool of the developer to displace and destroy neighborhoods that are ‘underutilized.’” 

This is the third court decision going against the lead plaintiff, Develop Don’t Destroy Brooklyn. The plaintiffs may appeal; however, there is no assurance that the New York Court of Appeals would take the case, as two dissents, out of the five justices hearing the case, in the Appellate Division are necessary in order for the case to proceed as of right to the Court of Appeals. 

Plaintiffs’ attorneys take particular issue with the court decision with regard to the deference given to the blight finding of the trial court. See the reaction from petitioners at Atlantic Yards Report by Norman Oder:

"We are going to request that the Court of Appeals review this case because it is the only court that is able to require a harder look at the facts, rather than blind obeisance given by the Empire State Development Corporation to the dictates of Forest City Ratner," said lead attorney Jeffrey S. Baker, who represents the 26 petitioners, including Develop Don't Destroy Brooklyn, which organized and funded the case.

"Judge Catterson’s concurrence that the ESDC 'is ultimately being used as a tool of the developer' is the reason why extreme deference is not warranted in this case," he said in a statement issued by DDDB. "The Court of Appeals is the only court that can break the chain of previous cases, and we eagerly await our opportunity to argue before it."

Baker added, "The appellate court is constrained by previous decisions regarding the issue of blight, decisions which have shown a high level of deference to government agency decisions. While we recognize the limitations this court is under, we do not think this is a similar type of case, particularly with the severe condemnation of the ESDC’s actions and decisions as put forth in Judge Catterson’s concurrence. This case will provide the Court of Appeals an opportunity to make it clear that judicial review is not a meaningless exercise and require agencies making blight determinations to do so for legitimate reasons and not simply to facilitate the goals of a developer with political connections."

The issuance of deference given to the blight findings of the lower court is important. In fact, the contract with AKRF, the consultant hired to perform the blight study, required the study of market trends around the project site which were never completed. The courts should not be rubber-stamping blight findings based on deference to the initial fact finder. Substantial credible evidence should be the standard. The New Jersey Supreme Court in Gallenthin Realty Development, Inc. v. Borough of Paulsboro (A-51-2006) clarified the standard, reversing the blight finding in that case and issuing an opinion which has become precedential in terms of what the courts should be considering with regard to blight determinations. See blog post about blight determination in Gallenthin.The New York Court of Appeals would do well to grant certification in this case.

Other relevant links:
New York Law Journal: Concerns 'Legitimate' But Project Proceeds (02-27-09)
NoLandGrab: Media coverage (02-27-09)

 

Cliffside Park lost its own municipal garage site when the municipality chose to redevelop the site (it was in an “area in need of redevelopment”) as part of a large redevelopment project.  Fairview property owner Bridget Tapkas leased her property to Cliffside Park, but Cliffside Park wants to own it outright and has threatened to condemn if they cannot acquire it through negotiation. Cliffside Park offered $1.3 million for the property. Tapkas won’t sell because she wants to save it for future expansion. Her family’s truck dealership is located on an adjoining parcel.

Fairview initially backed Tapkas in her dispute with Cliffside Park. "They are using, or misusing, the power of eminent domain outside the borders of Cliffside Park in the furtherance of the redevelopment plan," Fairview's Special Counsel Carmine Alampi told the Bergen Record in late January. Two weeks later, Alampi made a 180 degree turn and spoke out about teaming up with Cliffside Park to create a joint DPW garage facility on the Tapkas property. According to Alampi, Fairview would "reconsider our opposition to the condemnation." This latest twist presents a thornier problem for Judge Doyne. The case is already a nest of municipal intrigue.  

(a) Any real property, capital improvement, personal property or any interest or estate whatsoever therein, including easements, water, water power, or water rights, either within or without the county or municipality, except that no such property belonging to the State or any of its agencies, a county or any municipality shall be acquired without its express consent, ...

The Tapkas property is not owned by a municipality (Fairview); therefore, this section of the statute would not apply to Cliffside Park's attempt to acquire Tapkas' property, which is privately owned and located in the adjoining community of Fairview. This section of the statute only applies to municipally-owned property and, therefore, is not applicable to this situation.

However, a joint garage is another matter. In all likelihood, this would be upheld as a public purpose, assuming the site selection was not arbitrary and capricious. And Fairview could condemn property within its own borders for a municipal garage. Cliffside Park's borough attorney, Christos Diktas cites Governor Corzine’s desire to see “regionalization,” a sharing of costs and municipal services, as a legal rationale to move forward. According to the reports in the New Jersey Law Journal, the planned joint DPW garage would be built with a county grant. Governor Corzine's plan to cut municipal costs is not backed up by any statutory authority to do what is proposed here by Cliffside Park.

Judge Doyne has adjourned the matter twice in order to allow the municipal attorneys to work out an agreement prior to March 16. The property owner offered Cliffside Park a long term lease with extensions. This seems to be a reasonable way to resolve this issue without resorting to eminent domain to seize the property. 

After 22 years in Newark, Multicolor Corp.'s building was condemned for the Prudential Center arena and the property owner was forced to move out of the building pictured above in April 2007. The property owner, Jorge Aguayo, is still waiting for relocation assistance.

Denial of Relocation Benefits by the City of Newark, Newark Housing Authority and their developer, the New Jersey Devils

A disturbing trend has occurred with the downturn of the redevelopment market. The taking agencies and their developers are refusing to comply with the Relocation Assistance Act N.J.S.A. 20:4-1 and the Regulations N.J.A.C. 5:11:1. This Act and the Regulations obligate the taking agency to pay any owner occupant displaced by a public project relocation benefits. Relocation benefits vary according to the size and complexity of the displaced operation. Generally, they include the cost of moving all furniture fixtures and equipment to the relocation site. They also include the cost of reestablishing the business – new phones, computer hook ups, etc. Where there is production equipment requiring reinstallation and debugging, relocation will pay the costs of installing the equipment and modifying the new building to accommodate the equipment being moved. N.J.A.C. 5:11-39 (a) (1-5). See blog post “Relocation Assistance: The step-child of eminent domain.” (January 11, 2007)

The Newark Housing Authority (NHA) has taken the extraordinary position that they will not pay multiple tenants dislocated for the Prudential Arena project for the New Jersey Devils. This forces these tenants to litigate for payments to which they are entitled by statute. All relocation litigation is before the Office of Administrative Law (OAL). There is no provision in the statute or regulations to reimburse the dislocated tenant for attorneys’ fees and costs. Beyond that, the refusal to pay puts the businesses in jeopardy. Some businesses have temporarily moved equipment into storage. However, their business equipment is captive until the moving and the storage fees are paid. Multicolor Corporation was condemned and the company was forced to move their plant to Coplay, Pennsylvania, in April 2007. See "Fuzzy Math," Star-Ledger (March 20, 2007). The company’s equipment remains in storage. No payments have been made for the move and the storage, and the new building requires substantial modifications to accommodate the large, heavy equipment required to manufacture their product.

The only option available to aggrieved property owners is the OAL route which routinely takes 6-8 months and is not final as the head of the agency – in these cases, the Division of Community Affairs can accept, modify or reverse the OAL judge.
 

Newark Housing Authority’s defense is that the “Devils made them do it.” NHA has a contract with the New Jersey Devils – similar to other redevelopment contracts obligating the New Jersey Devils to pay the costs of acquisition, relocation, and related professional fees. When the New Jersey Devils refused to pay, Newark Housing Authority threw up its hands and forced the property owners to litigate: The process is bleeding the property owners further. This relocation issue must be addressed by Senator Ronald Rice and the Community and Urban Affairs Committee if and when eminent domain reform is ever accomplished by the New Jersey legislature. See Senate Committee Substitute Bill 559 and 757. The legislature should amend the Relocation Assistance Act to provide for the payment of counsel fees to litigants who are forced to sue to obtain their statutory benefits.

The Public Advocate of New Jersey, Ronald Chen, issued a report in November 2008, Evicted from the American Dream: The Redevelopment of Mount Holly Gardens. The Public Advocate’s words in that report apply equally to the travesty being perpetuated on these dislocated property owners in Newark:

The first duty of any local government is to its existing residents. The law should not permit a municipality to proceed on the assumption that some of its residents, regardless of their economic status, will simply disappear for the convenience of those who remain or who arrive to replace those who have left. It is our hope that statutory reform will reconcile the laws governing compensation and relocation with the overriding principle that the costs of redeveloping a community should not be borne by those who can least afford it.

Relocation assistance isn’t optional! It is integral to the eminent domain process. New Jersey Devils President Jeffrey Van Der Beek, the prime beneficiary of government largesse, and the Newark Mayor Cory Booker, who chose to continue with the arena project when he took office in 2006, should step up to the plate and do the right thing.

A new and insidious attack on property owner rights is being undertaken by the Borough of Harvey Cedars on Long Beach Island. In December 2008, Harvey Cedars filed eminent domain complaints against beach front property owners. The borough seeks the right to acquire an easement across the width of ocean frontage. The stated purpose: Protect the oceanfront properties from beach erosion by constructing a 25-foot high sand dune.The easement is permanent, with the right to come on to the property and replenish the dune as required. The easement is assignable – to whom we don’t know. The easement area will be planted with vegetation – dune grass or pine trees? They’re not saying.
 

The Molliver appraisals are absurd. The loss of ocean views will result in damage to the remainder which far exceeds the amount offered. See State v. Silver, 92 NJ507, 514, (1983).

There are multiple technical flaws in the complaints. The complaints cite, as authority to condemn, the Local Redevelopment Housing Law (LRHL) N.J.S.A. 40A:12A-1, et seq. This on its face is a gross error. These properties have not been blighted; there has been no blight hearing by the planning board as required by N.J.S.A. 40A:12A-7. The borough has not declared the subject properties to be in need of redevelopment and certainly could not sustain such a finding under the N.J. Supreme Court decision in Gallenthin Realty Development, Inc. v. Borough of Paulsboro . There is, therefore, no legal authority to acquire the easements under the LRHL statue and the New Jersey Constitution, Article VIII, Section III, Paragraph 1. The complaints also mistakenly seek a "fee simple" interest in the area to be acquired. The underlying ordinance adopted by Harvey Cedars, without proper legal authority, authorizes the acquisition of "easements."

The owners have filed answers to the complaints and object to the appointment of condemnation commissioners. The owners will also file motions to dismiss the complaints and ask the court to award counsel fees and costs pursuant to N.J.S.A. 20:3-26(b). See also West Orange v. 769 Associates LLC (A-5677-05). 

A hearing is scheduled before the Ocean County Assignment Judge Vincent Grasso, Friday February 6 at the Ocean County Courthouse in Toms River. The hearing is required by statute, N.J.S.A. 20:3-11, Township of Bridgewater v. Yarnell (64 NJ 211 (1974), Bergen County vs. Hackensack, 39 NJ 377 (1963).
 

Settlement discussions in the Long Branch eminent domain cases began on December 22 before Judge Thomas W. Cavanagh, Jr., who was designated by Monmouth County Assignment Judge Lawrence Lawson to conference legal counsel and concerned parties in City of Long Branch vs. Anzalone. The case was remanded to Judge Lawson by the Appellate Division (See the opinion issued August 7, 2008). Subsequent cross petitions for certification filed with the Supreme Court by the City of Long Branch and the property owners were denied. A key player in the settlement discussions, which will continue on January 15, will be the designated developer - a joint venture of Hovnanian subsidiary Matzell and Mumford and the Applied Companies of Hoboken.

Recent statements by Mayor Schneider in the press have given impetus to the hopes of the MTOTSA property owners to finally have the eminent domain complaints dismissed. A fitting Christmas present for Louis Anzalone, age 91, and the other property owners who have fought long and hard to keep their homes will be a final resolution of these cases, resulting in a dismissal of the condemnation complaints, payment of reasonable counsel fees and costs, and the adoption of a new zoning ordinance for their neighborhood that includes the continued existence of single family residential as originally anticipated by the master plan for the redevelopment adopted in 1996.
 

Union Township business owner Raul Rodriguez was one of 22 property owners who successfully fought the blight designation and the use of eminent domain in Union Township, New Jersey.

This Friday, December 5, attorneys for Union Township will move before the Hon. Walter R. Barisonek for reconsideration of the court's rejection of the township's redevelopment plan. The township will present their alternative theory for rehabilitation, in place of redevelopment. This theory is equally without merit, as was the township's original argument in support of redevelopment, based on the findings of fact and conclusions of law issued by Union County Assignment Judge Walter R. Barisonek issued on October 18, 2008. Judge Barisonek's 55-page oral opinion rejected Union Township’s attempt to blight its downtown area. Download the transcript of Judge Barisonek's opinion here.

Judge Barisonek's opinion is significant for two reasons. The court rejected Union’s attempt to find this area located at the intersection of Stuyvesant and Morris Avenues to be an area in need of redevelopment. The Planning Board had adopted the opinion of its planning expert, The Metro Company, that the properties within the study area were blighted under the Local Redevelopment Housing Laws (LRHL). N.J.S.A. 40A:12-5c, d and e. The court first identified a misapplication of the law by the Planning Board based on the erroneous advice of counsel, Planning Board Attorney, Daniel McCarthy and Special Redevelopment Counsel Jennifer Credidio of McManimon & Scotland, Newark, New Jersey. The court found that the advice of counsel was misleading involving the use of the term “blighted area”. N.J. Constitution, Article 8, Sec. 3, paragraph 1 and “area in need of redevelopment” as found and defined in the LRHL N.J.S.A. 40a:12-5. It should be noted that the New Jersey courts have found these phrases to be synonymous. See N.J.S.A. 40A:12A-6(c) and Concerned Citizens of Princeton, Gallenthin Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007). The court also cited the recent Appellate Division case of City of Long Branch v. Anzalone, Docket No. A-0067-06T2, which was decided on August 7, 2008, and reiterated that the blighted areas clause of the New Jersey Constitution controls when redevelopment is the sole public purpose for a taking. Anzalone, supra. at p. 16.

The court further found a fatal flaw in the Metro Report relied upon by the Board:

“There is also a fatal flaw to the Planning Board’s adoption of the Metro Report, I find, in the fact that this report failed to utilize the proper statutory criteria for designated area in need of redevelopment.”

“Metro, basically, says that if it violates the zoning laws and is in good condition, but not productive, it’s in need of redevelopment. That is not what the law says under Gallenthin or Anzalone. This is directly contrary, I find, to the holding in Gallenthin, that it has to be blighted and it has to lack a fully productive use. This is not a proper ground on which a determination of redevelopment should be made. It has to be blighted. See Gallenthin, at 365. Furthermore, it’s clear from a reading of the statements made by the Planning Board members at the hearings that some members did not believe the area in question to be blighted, but still recommended the area to be classified as an area in need of redevelopment. This is contrary to the correct wording of 40A:12A-6(c). It’s quite apparent that the Metro Report, and subsequently the Planning Board, misapplied the proper law in making the determination of this area as being in need of redevelopment.”

Based on the flawed legal advice and misapplication of the law by the Planning Board, the court rejected Union’s argument that the township decision to declare this an area in need of redevelopment was entitled to a perception of validity. See Levin vs. Town of Bridgewater, 57 N.J. 506 (1971). The court found that Union’s expert report was completely devoid of the “substantial credible evidence” necessary to support a finding of blight. ERECTC v. Perth Amboy, 38 N.J. Super. 268, 277-281 (App. Div. 2005). The court quoted the New Jersey Supreme Court in Gallenthin in general:

“If a board member who otherwise should not have taken part in the hearings does so, and this has the potential to taint the outcome of the proceedings, the action of the Board pursuant to this improper influence should be voided.”

The court here found that the participation and comments by Committeemen Florio was improper. The court concluded Mr. Florio’s comments and participation at the Board hearing was calculated to influence the Board and was in part based on the erroneous advice of counsel discussed above.
 

Monmouth County Assignment Judge Lawrence M. Lawson rejected two motions to stay two eminent domain jury trials in the cases City of Long Branch v. DeLuca and City of Long Branch v. Angelides yesterday. Long Branch filed a motion seeking an indefinite stay of these condemnation trials, scheduled respectively for November 3 and December 8, 2008.

Attorney Paul Fernicola argued on behalf of Long Branch that the DeLuca and Angelides trials should be stayed because of the pending certification before the New Jersey Supreme Court in the City of Long Branch v. Anzalone and companion cases. Judge Lawson agreed with the property owners, and noted there was no nexus between the DeLuca and Angelides cases and the pending Anzalone case.

Both the DeLuca and Angelides properties are part of what is known as the MTOTSA (Marine Terrace, Ocean Terrace, Seaview Avenue) neighborhood. The DeLuca family has a long history in Long Branch. The DeLucas had objected to the right to take their house on Ocean Terrace pictured above, but decided not to go forward with an appeal after Judge Lawson affirmed the city's right to take in his June 22, 2006, opinion. Judge Lawson's opinion was appealed by the other MTOTSA property owners, and reversed and remanded by the Appellate Division on August 7, 2008. Angelides never contested the right to take.

The DeLuca and Angelides properties are now owned by the city of Long Branch and its developer by virtue of the filing of the declarations of taking and the deposit of the estimated compensation in the Superior Court Trust Fund. N.J.S.A. 20:3-19. The only remaining issue for DeLuca and Angelides is the jury trial, which will establish the just compensation due them under the New Jersey Constitution, Article 1, paragraph 20.

"That ship has sailed," said Judge Lawson to attorney Fernicola, noting that the takings cannot be abandoned without the consent of the respective property owners once title has passed to the condemning authority. N.J.S.A. 20:3-35.

In addition, if the condemnation cases are abandoned, the city is obligated to pay counsel fees and costs to the property owners. N.J.S.A. 20:3-26(b). See blog post on Township of West Orange v. 769 Associates. As of the date of this post, neither Peter Wegener (who represents Angelides) nor I have been contacted by Long Branch to discuss settlement, contrary to Mayor Schneider's statement in the Asbury Park Press that attorneys for the property owners "won't come to the table."

A Hudson County jury awarded $18.6 million on September 22 to property owners Ronald, Katherine, and Lynn Kerrigan for 3.41 acres acquired by the Jersey City Redevelopment Agency (JCRA). The unanimous verdict was reached by 8 jurors, concluding the 10-day eminent domain trial before Judge Mark J. Baber.

The property, with 500 feet of frontage on the tidewater basin opposite Liberty State Park, is located at the lower end of Jersey Avenue and has unobstructed panoramic views south and east of lower Manhattan, Ellis Island, and the Statue of Liberty. The property was zoned R4, high rise residential, by Jersey City in 1974, 30 years prior to the filing of the condemnation complaint and date of valuation on August 26, 2004. N.J.S.A. 20:3-30(b). The initial offer of JCRA was $1.25 million based on the appraisal of Robert VonEnken, MAI, of the firm of Grubb & Ellis, New York. Mr. Von Enken valued the property as industrial land based on its current use as an industrial facility leased to the Warren George Co., a geotechnical drilling operation, which utilized the property’s waterfront for its tugboats, barges, and drill rigs which were used for test borings in the Hudson River and elsewhere.

In April 2008, Judge Baber ruled the 1974 R4 zoning was applicable to the acquisition. This resulted in new appraisals from JCRA increasing the value to $3.8 million. Mr. Von Enken hypothesized a 10 year interim industrial use, followed by the residential use in 2014. The residential value was estimated to be $6 million, discounted by 10 years to the date of valuation. To this he added the interim industrial use value, based on capitalization of income from the Warren George lease. The legal validity of this theory is questionable. Discounted cash flow analysis has been criticized and rejected by the New Jersey Tax Court. See University Plaza Realty Corp. v. Hackensack, 12 NJ Tax 354, 366-367 (1992), affirmed 264 NJ Super 355 (App. Div 1993).

The property owners presented values of $25 million and $31 million respectively from appraisal experts Maurice Stack of Stack, Coolahan & Stack of Hoboken, and Louis Izenberg, MAI, of Parsippany. The jury also heard engineering and planning experts testify. Richard Price, P.P., of Phillips Price Shapiro, New York, testified for JCRA as did Fred Worstel, P.E. from Dresdner Robin, Jersey City. Peter Steck, P.P., presented planning testimony for the Kerrigans, and Michael Spillane, P.E., Rockaway, New Jersey, testified as the Kerrigan’s engineer. Both Mr. Stack and Mr. Izenberg adopted planner Peter Steck’s opinion that 420 residential units could be constructed on the property. The appraisers valued the residential units at $70,000 and $75,000 per unit respectively. 

The jury deliberated more than 5 hours and reviewed hundreds of exhibits in evidence before rendering its verdict. Predictably, Robert Antonicello, executive director of JCRA, indicated that JCRA would appeal the verdict. Liberty Harbor North developer, Peter Mocco, had no comment for the Jersey Journal. (See "Jury says Jersey City must pay owners $18.6 million for land it seized," by Ken Thorbourne.)

A major concern of the Kerrigans, assuming the verdict is upheld on appeal, is the issue of payment. The Kerrigans will ask the court to immediately order the JCRA increase its statutory deposit to $3.8 million commensurate with its revised appraisal. N.J.S.A. 20:3-18. The Kerrigans will also ask the court to force JCRA to post a bond or deposit the judgment in the Superior Court Trust Fund pending appeal, R 2:9-5, R 2:9-6. JCRA’s answer will be that they have a developers’ agreement pursuant to the Local Redevelopment Housing Law (LRHL) with the developer, Liberty Harbor North LLC (Peter Mocco), obligating Liberty Harbor North to pay all costs related to the acquisition (i.e. attorneys fees, experts fees, acquisition costs, and relocation costs.) N.J.S.A. 40A:12A-8, N.J.S.A. 20:4-1.

The property owner has no way of knowing the financial assets of the developer, Liberty Harbor North LLC. This is further complicated by the fact that this entity is not a party to the condemnation case. See City of Asbury Park v. Asbury Park Towers, 388 NJ Super 1 (App. Div. 2006). The developer is the wizard behind the curtain. The developer controls all the financial aspects of the acquisition, but the developer is not answerable to the jurisdiction of the Superior Court in the context of the condemnation case. See also JCRA v. Costello, 252 NJ Super 247 (App. Div. 1991) cert denied, 126 NJ 332 (1991).

It is problematic that under current market conditions, neither JCRA nor the developer will be able to borrow the funds necessary to satisfy the judgment. JCRA, as plaintiff, must pay the judgment. Liberty Harbor North, as developer, must reimburse JCRA per their developer’s agreement. This developer controls, by virtue of its redevelopment agreement, 85 acres of the most valuable property along the Hudson River waterfront. The redevelopment agreement was signed in 1985, when Gerald McCann was mayor of Jersey City. If JCRA/Liberty Harbor North LLC cannot bond the judgment or deposit the full amount into Superior Court Trust Fund, Jersey City should take the necessary steps to rescind the JCRA contract with Liberty Harbor North LLC. The city could then bring in developers with a more solid financial footing. The Jersey City waterfront renaissance, often referred to as the “Gold Coast,” has seen large successful investments by the largest developers: Toll Bros, Metro Homes, Pulte Homes, the Trump Organization, K Hovnanian, and of course, Goldman Sachs. It’s time to reconsider the wisdom of putting all this prime real estate in the hands of one entity.

It is expected that the JCRA will file a motion for a new trial, which must be done within 20 days of the verdict. R 4:49-1(a), (b) This is the first step in anticipation of an appeal, which must be filed within 45 days of the order entering final judgment. R 2:4-1(a).  

Lillian Anzalone died at home this morning. She was 91. Mrs. Anzalone was born in Newark on February 10, 1917. She was a buyer of women’s clothes in New York before she married Louis Anzalone in 1954.

Together, the Anzalones and their son, Thomas, lived at 32 Ocean Terrace, Long Branch.Their house stands at the epicenter of the MTOTSA neighborhood’s eminent domain fight. It was the first home the Anzalones bought and the only one they ever owned. Mrs. Anzalone, who suffered from congestive heart failure and other health problems, attended the oral arguments in the appellate division in May. The family was elated when the court reversed the blight determination last month. See the Star Ledger video filmed on August 8.

Mrs. Anzalone is the third elderly home owner who protested, fought and advocated for property rights, but ultimately succumbed to illness before obtaining closure in the Long Branch eminent domain cases. The other MTOTSA neighbors who died were Al Viviano and Anna DeFaria. Mrs. Anzalone will be missed by her husband of 54 years, her son, and all her neighbors, who were united in the battle to keep their homes. The home owners are in the process of petitioning the New Jersey Supreme Court to dismiss the condemnation complaints.

Viewing will take place from 2-4 p.m. and 7-9 p.m. on Friday September 12 at Megaro Memorial Home at 503 Union Avenue, Belleville. A funeral mass will be held Saturday morning, September 13, at St. Lucy's R.C. Church in Newark.

The cross petition is for the limited purpose of affirming the Appellate Division’s finding that “there was not substantial evidence of blight," and dismissing the condemnation complaints outright. See R. 2:12-3(b). The theory for dismissal of the complaints is simple: Since there is no evidence of blight under Article VIII, Section III, paragraph 1 of the New Jersey Constitution and the Local Redevelopment Housing Law, N.J.S.A. 40A:12A-5, there can be no eminent domain action sustained. There simply is no support in the statute or redevelopment law for the trial court to conduct additional hearings on blight in these cases.

However, as we will discuss in this opinion, substantial activity has occurred in implementing the redevelopment plan. Although we attribute to these cases pipeline retroactivity of the Gallenthin holding, fairness dictates that the matter be remanded to afford the City an opportunity to amplify the record in an effort to meet the Gallenthin standard. (Harrison Redevelopment Agency v. DeRose, 398 NJ Super, 361, 420 (App. Div. 2008)

The Harrison v. DeRose case required further proceedings before the trial court because of the notice provisions which the appellate division found were not adequate to assure the property owners due process.  In Gallenthin, Justice Zazzalli noted that the municipality could revisit the blight process, but that contemplates a new proceeding before the muncipal planning board, not a hearing before the trial court. The planning board is the entity charged under the LRHL  N.J.S.A 40A:12A-6(a):

No area of a municipality shall be determined a redevelopment area unless the governing body of the municipality shall, by resolution, authorize the planning board to undertake a preliminary investigation to determine whether the proprosed area is a redevelopment area according to the criteria set forth in section 5 of P.L. 1992, c.79 (C.40A:12-5). Such determination shall be made after public notice and public hearing as provided in subsection b. of this section. The governing body of a municipality shall assign the conduct of the investigation and hearing to the planning board of the municipality

 See our blog post on the Harrison cases.    [Download Harrison v. DeRose here]

ERETC LLC v. Perth Amboy, 381 NJ Super 268 (App Div 2005) held that the planning board, not the Superior Court, is the proper venue for additional hearings regarding blight determination. Thus, there is a conflict in the appellate decisions regarding the appropriate remedy in this type of situtation, and the Supreme Court should grant certification to reconcile its opinion in Gallenthin with these two appellate division cases.  [Download the ERETC case here]

The Anzalone case does not need a hearing to develop a record. This process, the finding of blight, took place in 1996 before the Long Branch Planning Board, which is where it belongs. The Superior Court Law Division is not empowered to make additional factual findings beyond what was established in 1996.  Anything further would give the city of Long Branch a second bite at the apple.  The Beachfront North Phase I project, as envisioned by the Thompson Design Group in 1996, has been built. The project is complete. It’s over—dismiss the complaints!

Once the complaints are dismissed, the only remaining issue is for the court to award the property owners reasonable costs and attorneys’ fees. N.J.S.A. 20:3-26(b) provides:

If the court renders final judgment that the condemnor cannot acquire the real property by condemnation or, if the condemnation action is abandoned by the condemnor, then the court shall award the owner of any right, or title to, or interest in such real property, such sum as will reimburse such owner for his reasonable costs, disbursements and expenses actually incurred, including reasonable attorney, appraisal, and engineering fees.

See our blog post on West Orange v. 769 Associates. [Download the case here]

Attorneys for the property owners expect to receive the city’s brief no later than September 9 and will make the city's position available to the public on this blog upon receipt. Briefs in support of the property owners will also be published here, on or before September 14, 2008. It is expected that the League of Municipalities will continue to support Long Branch. The Public Advocate has indicated they will support our position as they did in the Appellate Division.
 

We agree with appellants that, in light of the principles laid down in Gallenthin, the City did not find actual blight under any subsection of N.J.S.A. 40A:12A-5, that the record lacked substantial evidence that could have supported the New Jersey Constitution's standard for finding blight, and that the absence of substantial evidence of blight compels reversal.

Although the Appellate Division left the door open for the city to supplement the record to prove blight, this will be highly problematic, and it is doubtful they will be able to produce a qualified planning expert who will reach that conclusion. An additional problem for Long Branch will be the recent decision of Judge Lawson in the prerogative writ suit, Park Steel v. Borough of Neptune City, in which he relied substantially on the Gallenthin v. Borough of Paulsboro, 191 N.J. 344 (2007) case and the ERETC v. City of Perth Amboy, 381 N.J. Super. 268 (App. Div. 2005) case. In the Park Steel case, which was decided on May 7 and released July 7, 2008, Judge Lawson found that Neptune did not meet the test to provide substantial credible evidence of blight.  Download the Appellate opinion in City of Long Branch v Anzalone.

The property owners will file motions before Judge Lawson seeking to dismiss the complaints and will ask the court to award counsel fees and costs pursuant to N.J.S.A. 20:3-26(b) and the case of City of West Orange v. 769 Associates, LLC (397 N.J. Super. 244 (App. Div. 2007). Given the very strong language of the Appellate Court cited above regarding the lack of substantial credible evidence of blight, it appears that Judge Lawson should dismiss these condemnation complaints. If Long Branch elects to pursue its rights under the Local Redevelopment Housing Law, the matter should proceed to the Long Branch Planning Board where a new record can be developed. There is no authority for the condemnation complaints to remain viable where the Appellate Court has found the city did not comply with its statutory obligations regarding blight.