Eminent Domain in Asbury Park: An offer you can refuse
The dictionary defines goniff as a Yiddish word for a "thief." Having received an offer for their property from Asbury Partners LLC, the designated developer for the Asbury Park beachfront, Thomas and Donna Orlando now know the meaning of that term.
The Orlandos purchased a fully renovated three-family house located two blocks from the beach for $575,000 in September 2004. In December 2005, the Orlandos received the offer and appraisal from Asbury Partners in the amount of $330,000, premised on the appraisal of Donald Moliver. This offer is significantly less than the first mortgage on the property.
Under normal circumstances, we would expect Mr. Moliver and Asbury Partners would consider the sale of the subject property and the fact that the beachfront real estate has increased since 2004, not only in Asbury Park but in New Jersey in general. Therefore, a reasonable starting point would be at least ten percent over the purchase price or approximately $630,000.
Under normal circumstances, a homeowner would not need a lawyer in an eminent domain action of this sort, because a recent arms-length sale of the subject property is the best evidence of value. But this transaction, like others we've seen in Long Branch and Asbury Park, is driven by greed. The developers are dictating the terms, and their objective is to buy the property as cheaply as possible. The municipality is complicit in this arrangement as they will institute eminent domain proceedings to acquire the owner's site, absent an agreement with the owner. This scenario, while outrageous, is by no means unusual where the unholy alliance is at work., i.e. developers and compliant politicians.
The settled rule in New Jersey and other states is that any increase or decrease of the market value of the property acquired or caused by the project of the condemning authority should be factored out of the market value determination. See the following cases:
? Jersey City Redevlopment Agency v. Kugler, 58 N.J. 374, 379 (1971);
? Housing Authority, Atlantic City v. Atlantic City Expo., 62 N.J. 322 (1973)
? Jersey City Redevlopment Agency v. Mack Properties Co. No. 3, 280 N.J. Super. 553, 568-69 (App. Div. 1995);
? State, Dept. of Environmental Protection v. S. Nalbone Trucking Co., Inc., 128 N.J. Super. 370, 377 (App. Div. 1974);
? United States v. Miller, 317 U.S. 369, 375, 87 L.Ed. 251, 63 S. Ct. 276 (1943).
The Moliver appraisal perverts this rule by claiming that all market increases are attributable to projects of the City of Asbury Park and Asbury Partners LLC. This position is unsupported by the reality of prior abortive redevelopment efforts undertaken by Asbury Park. The entire beachfront has been blighted since January 1984. The initial redevelopment efforts by Carabetta and Vaccaro were stopped as a result of Carabetta's bankruptcy in 1992.
Asbury Partners LLC, using money from M.D. Sass Company, purchased Carabetta's rights in the bankruptcy proceeding and paid the City of Asbury Park $6.5M for tax liens on the properties. These funds were desperately needed by the City of Asbury Park to stave off its own pending insolvency. For these payments Asbury Partners took over Carabetta's project and developed a new plan. Carabetta, it should be noted, never completed anything. He left a rusting structural steel monument at Ocean Avenue and Second Street for the last fifteen years. Asbury Partners LLC also have not completed anything, although they have grandiose plans. Where then is the enhancement to the real estate market which they claim in Moliver's appraisal to be attributed to their project?
It's not there. Rather, value in the market in Monmouth County in general and in beachfront properties in particular have dramatically increased in the last ten years. Properties like Mr. Orlando's - two to three blocks from the beach - are difficult to find. The Orlando's property is in a quiet residential area, adjoining second Avenue and the lake. This property is valuable because of its location. Asbury Partners LLC, and their "project" such as it is, have had little impact, yet they use the "scope of the project" rule to argue Orlando's property is worth $330,000 as of December 2005. This is $245,000 less than the Orlandos paid for the property in 2004.
Last week, the Appellate Division in the case of DM Asbury Realty LLC et al v. The City of Asbury Park and Asbury Partners LLC unanimously, in a 65-page opinion issued by Judges Conley, Weissbard, and Winkelstein, decided that the property owners numerous issues raised on appeal were without merit. The opinion affirms an earlier unreported opinion by Judge Lawson, A.J.S.C. Monmouth County, who similarly dismissed all of the arguments raised by the property owners. The appellate panel concluded that the law division judge properly granted summary judgment on each of the plaintiff's claims. Download the opinion.
The issues raised included:
1. Whether the plan's failure to permit property owners to develop their own properties, except with the approval of the designated developer constituted a taking
2. Whether the City improperly ceded its legislative authority to the designated developer, a private entity;
3. Whether the plan placed an illegal 30-year moratorium on private development within the redevelopment area
4. Whether the manner in which the properties were chosen for redevelopment violated plaintiffs equal protection rights
5. Whether the City had improper motives for including certain properties in the plan
6. Whether the City's reliance on an unlicensed planner rendered the passage of the ordinance invalid and
7. Whether plaintiffs were denied adequate discovery.
Unless this case is granted certification by the New Jersey Supreme Court, which is unlikely, the municipality and the developer are now free to prepare their appraisals and make acquisition offers to the affected property owners. In all likelihood, if Moliver has been hired to do all the appraisals for the Asbury Park beachfront project, a skewed approach to market value will be evident to all property owners once they receive their offers. But unlike an offer from the Godfather, this is an offer you can refuse.
Neptune Township did a low balling thing of their own. A few months before they announced any redevelopment, they decided to do new appraisals for tax purposes. When we got our appraisal, our home had increased very little in comparison to homes in other areas of Neptune. But I decided to see if I could get it even lower. I met with the township for about two minutes and they lowered the appraisal several thousand more. While all of Neptune were getting huge tax increases, our taxes went way down. A couple of months later their first redevelopement plan came out and our home was on the chopping block. And now with a really low appraisal. Politicians!
What was the property tax assessment on the Orlandos' property, adjusted to fair market value? For example, if they were paying property taxes on the property as if the value is at least $575,000, or perhaps its estimated fair market value of $630,000, then surely any court of claims will use that assessment to begin its value calculation. Am I'm sure that the Orlandos did nothing to argue before the tax assessors that their property were worth less than its fair market value.
Assessed values are normally not admissible in eminent domain cases. In this instance, Asbury kept the assessments low in anticipation of acquisition. Long Branch did the same thing in their projects. We are getting our own appraisal in the Orlando case.
It just doesn't seem fair, and they say these guys aren't corrupt? What happened to the FBI investigations of the former councilman and people running Asbury Park ? They allow the city / mayor / council / redevelopers the ability to just take whatever properties they so desire from people? How about setting standards and building codes, reasonable ones, and allowing those that choose to stay, the chance to stay and fix up their properties? How about our wonderful government? Why aren't they offering money to the people to bring their own properties up to par? There's plenty of people out there that would gladly stay and upgrade. Eminent domain was created to takeover properties for the greater good of the area (for public use, to save land, etc.), not to hand over to greedy developers that take advantage of people while greasing the palms of local politicians! If the FBI came back and tapped some phone lines again, they'd find alot more corruption this time around than the last. I wish the Orlandos luck in their case and I totally support them.
I am an appraiser specializing in eminent domain (for property owners) in NY. I am also an Asbury Park resident and have been an outspoken critic of the City's (failure) redevelopment and its use of eminent domain. I am well versed in "project enhancement" and "condemnation blight" and have spoken about these concepts to property owners in AP. Since most of my work is in NYS where there are bench trials for eminent domain, I am dismayed at the decisions reached by a jury of peers in NJ. I find the Orlando case to be egregious and in NY, no judge would make an award less than what someone paid shortly before... I am going to make it my point to bring this issue concerning the Orlandos to light, because it shows just how dishonest Asbury Partners and its cohorts are. Molliver should be ashamed of himself.