Eminent Domain and Conflicts of Interest

"A court confronted with a plausible accusation of impermissible favoritism to private parties should treat the objection as a serious one and review the record to see if it has merit, though with the presumption that the government's actions were reasonable and intended to serve a public purpose." -Justice Anthony M. Kennedy, concurring with the majority in Kelo v. New London

In yesterday's Asbury Park Press, Dana Berliner of the Institute of Justice says, "Those who benefit from the virtually unrestricted use of eminent domain - local governments, developers and planners´┐Żwill be frantically lobbying and trying to scotch any attempt to dimininish their power."

Other than the jury verdict of $500,000 plus interest in the City of Long Branch v. Strahlendorf, the developers have not had any great setbacks in that city's attempt to redevelop its beachfront through the power of eminent domain. All the property owner has left in a condemnation case is the argument over value. The prices offered in 2002 for the first phase of Beachfront North were obscene. Fred and Dorothy Strahlendorf's final offer from Long Branch was $179,500. Bruce McCloud's offer, for a seventeen room house 400 feet from the beach, was $140,000. The right to take on the 2002 cases is long gone - the properties have been condemned, the houses have been demolished, and the new condominiums have been constructed and sold at prices that range from $600,000 to $1,200,000.

Many property owner advocates are pinning their hopes on proposed changes by state legislators. But there is hope in the courts: Judge Costello recently threw out Bloomfield's eminent domain complaint in the case of Township of Bloomfield v. 110 Washington Street. She did it because of conflicts of interest in the township attorney representing both the planning board and the mayor and counsel during the approval of the blight study and she further found that the blight study was fatally flawed. Download the article in the New Jersey Law Journal.

Similar issues can be raised in Long Branch. The blight study is flawed and there is a conflict of interest.

A recent development gives hope to the remaining property owners who wish to contest the right to take. Greenbaum Rowe, long time counsel to Long Branch on redevelopment matters, has resigned. Apparently, Arthur Greenbaum, a senior name partner in the firm, has been on the board of directors of K. Hovnanian since 1991. Hovnanian is the joint-venture partner of Applied Management, the designated redeveloper for Beachfront North. It is Hovnanian, through their subsidiary Matzell & Mumford, who built the condos at Beachfront North. This blatant conflict of interest, revealed last week, taints the redevelopment process going back to 1996 and the adoption of the declaration of blight for these properties.

The Greenbaum firm has been involved with Long Branch's redevelopment efforts since the beginning. They were involved with the blight studies, the ordinances approving blight, related resolutions, and served as counsel for Long Branch on some of the condemnation cases. While earning legal fees from Long Branch, the Greenbaum firm was simultaneously acquiring properties which ultimately benefited Hovnanian. And Arthur Greenbaum, the senior partner, benefits because he a shareholder and a member of the board of directors of the very same company, K. Hovnanian, that stands to profit substantially from the redevelopment project.

This is more than the appearance of conflict. It is actual conflict, and a municipality such as Long Branch cannot waive it. Long Branch and the Greenbaum firm should have disclosed this information a long time ago. However, they did not, and a mere disclosure at this juncture does not cure what has transpired. If this conflict were disclosed earlier, property owners such as Bruce McCloud, who vehemently opposed the taking of their property, would have raised this issue as a defense to the taking.

The remaining property owners in Beachfront North who have not yet been condemned have received appraisal offers. None of the owners have settled and we expect condemnation complaints will be filed forthwith. These property owners will be contesting the right to take their property. The Greenbaum Rowe/Long Branch conflict of interest issue will be one of the legal issues raised with Monmouth County Assignment Judge Lawrence Lawson when hearings are held to determine the validity of Long Branch's attempt to acquire these properties by eminent domain.

Ed. note: The City of Long Branch v. Anzalone was settled on September 15, 2009, after negotiations. The Anzalones claimed that the trial court erred by not allowing discovery on how the various conflicts of interest of city officials and the City's law firms might have influenced the decision to include their property in the redevelopment. In the Appellate Division opinion of August 7, 2008, the court wrote, "We find no reversible error in the trial court's findings regarding conflicts of interest, bona fide negotiations, or delegation of eminent domain authority." (Slip opinion, 6.)

Written By:TT On August 28, 2005 9:08 PM

You may want to check out APPLIED MANAGEMENT. This company was owned by the Hoboken Developer/attorney , Joe Barry prior to his bribery conviction. He is now serving a 25 month sentence for that conviction. Ownership has sinced been transferred to his sons.

Written By:WJW On August 28, 2005 10:36 PM

We are aware of Joseph Barry, his history, and his connection with Long Branch.

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