Eminent domain hurts business owners fighting for relocation assistance in Newark


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.

The city of Newark, through its office of property management, actually administered the relocation process for the arena project. Ellen Harris, Chief legal officer for the Newark Housing Authority, testified under oath in the MultiColor case that she did not even have a relocation file on Multicolor Corp. and that the files were with the City of Newark. However, the Newark Housing Authority, a separate municipal corporation, is the condemning authority; and as such, it is their legal obligation to pay relocation benefits.

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.