EMINENT DOMAIN PROPOSED LEGISLATURE: N.J. Assembly Bill 4089 threatens property owners
The companion cases of Housing Authority of the City of New Brunswick v. Suydam Investors, 177 N.J. 2 (2003)
and NJ Transit Corp. v. Cat in the Hat 177 NJ 29 (2003) gave the N.J. Supreme Court's imprimatur to the New Jersey Department of Transportation's methodology for handling environmental issues in the context of condemnation matters.
The Cat in the Hat affirmed the use of the environmental clauses which DoT inserts in every condemnation complaint. Suydam addressed the more important issue as to how the property effected by environmental contaminants should be valued. The Court concluded, and condemning authorities have fallen into line, that the properties acquired should be valued as if remediated, and the condemnor reserves the right to maintain a separate action for remediation for cleanup costs. Suydam, a case handled by our firm, was approved for settlement on December 21 by Middlesex County Assignment Judge Robert Longhi for $2.05M. See SUITS & DEALS, January 17, 2005, reprinted with permission of the New Jersey Law Journal.
This method of operation which has been accepted by both property owners and major condemning authorities, such as New Jersey Department of Transportation and the New Jersey School Construction Corporation, is now under threat. On Monday, June 13, 2005 the Assembly Committee on Environment and Solid Waste will consider Assembly Bill #4089, sponsored by Assemblyman John Wisniewski, District 19 Middlesex County, a bill which effectively would reverse Suydam and potentially effect hundreds of pending condemnation cases. If this bill is adopted, it would be a major threat to just compensation: the bill "requires that contamination be considered in property valuation in condemnation proceeding." It would open the door, especially in redevelopment projects, for municipalities, in conjunction with developers, to submit grossly inflated cleanup estimates, which would be used to leverage the property owner and bludgeon them into submission.
This is not an exaggeration of what would happen if Bill #4089 were enacted. There are numerous examples in the state of developers acting in conjunction with municipalities seeking to assemble development sites at the lowest cost possible. For example, if a property is worth $10M as if remediated, the condemning authority could say, "We estimate the cost of $9M or more, so we will only give you $1M." Or, if they were really aggressive, they might say, "The clean up costs exceed our estimate of value, and we're offering you zero; and, by the way, here's the bill for the remainder of the cleanup cost."
This issue is being pushed in the Assembly by the Middlesex County Democratic machine, which is upset with Superior Court Judge Longhi's ruling in case of Sayreville Economic and Redevelopment Agency (SERA) v. National Lead Industries, Inc. Judge Lunghi ordered Sayreville to put up the entire amount ($30M) of its estimated appraisal of the National Lead site. He would not permit the condemning authority to deduct environment clean up costs from the estimate of fair market value. This ruling effectively blew the budget of the Middlesex County Freeholders who had initially estimated a cost of $20M for the acquisition and related costs.
Lunghi's decision was affirmed by the Appellate Decision, Per Curiam, on December 28, 2004. (Docket No. A-3727-02T2).
Legislation should not be introduced based on one single case. The legislators should consider carefully the statewide impact of their action.