Eminent Domain: Unholy Alliance between Developers & Municipal Officials

"Excessive development and eminent domain abuse, bought and paid for with the corrupt cash of unscrupulous campaign donors, is a scourge on New Jersey, driving families from their homes to build the next strip mall. However, with strict campaign finance regulations, we can begin to turn the tide on the influence developers wield in the political realm." - Senator Ellen Karcher in the Asbury Park Press

State Senator Ellen Karcher (D-Monmouth, 12th District) is one of those rare politicians who is not afraid to take on the political establishment. Her bill, S1576, attacks "pay to play" which is at the root of no-bid deals, awarded by municipal government to developers who have funneled campaign cash to elected officials either directly or through donations to state or county organizations. Senator Karcher seeks to eliminate developer money and its pervasive influence on the political process.

"I crafted this bill as a direct response to the corruption surrounding development deals we've witnessed in Monmouth County. As scandal after scandal is revealed, we can no longer ignore the outcry to curb the influence of developers in the political and planning process.

For too long, developers have bankrolled local elections and then expected, and in some cases demanded, favorable treatment from office holders and local zoning and planning boards. This has led to poor planning, dense overdevelopment, loss of open space, congested roads, crowded classrooms and increased property taxes. With this scheme, developers are enriched and homeowners are socked with the costs."

Senator Karcher's bill is an important step and must be implemented statewide to prevent eminent domain abuse which allows developers to take people's homes and businesses for private gain in exchange for political contributions. Governor-elect Corzine has endorsed S1576 and has issued a campaign pledge regarding eminent domain. But as Senator Karcher says, "the time for talk is over. Today, I urge my colleagues to adopt S-1576 to end pay-to-play, stop wheeling and get the corrupting influence of developer money out of politics once and for all."

Lawyers are a big part of the redevelopment process. Teaneck's DeCotiis Fitzpatrick, Newark's Sills Cummis and Woodbridge's Greenbaum Rowe - all large well-established firms in New Jersey and politically connected - provide expertise that enables developers and municipalities to implement redevelopment projects. All of these firms have established "redevelopment law practice groups" designed to take advantage of more than 1000 redevelopment projects that 190 of the state's 566 municipalities have launched in the past five years. (See "Real Estate Law: There's gold in them there redevelopments" by John M. Covaleski, New Jersey Lawyer, March 28, 2005). Lawyers contacted by the same publication immediately after the Kelo decision in June said, "it would be one more tool in the redeveloper's toolbox."

In the November 14th issue of New Jersey Lawyer, "Lawyers: Halt Anti-Kelo Stampede" by Dana E. Sullivan, we read that developers and their attorneys are lobbying vigorously against some of the changes being proposed by legislators. The attorneys now express surprise at the public backlash to the Kelo decision. Redevelopment attorneys saw Kelo as nothing new - the U.S. Supreme Court had approved the process in 1954 in Berman v. Parker, and the New Jersey Constitution Article VIII, Paragraph 3 says takings for blight are a public purpose. The New Jersey legislature has expanded the definition of blight in the Local Redevelopment Housing Law and the Courts have approved Forbes v. South Orange; Concerned Citizens of Princeton.

So what's going on? Kelo, on its face, supports takings for economic benefit. This week, a seminar in Atlantic City at the annual convention of the League of Municipalities drew hundreds to a packed auditorium at the Atlantic City Convention Center. Many spoke in favor of the use of eminent domain. "It is a power of last resort, but it's absolutely necessary," said Robert Goldsmith, President of Downtown New Jersey, who said that almost 90% of all properties are acquired by negotiation. The power of last resort is a quote often heard by developers and municipalities. It's like the bankrobber who says, "I won't shoot if you give me the money."

In his article, "The Condemnation Nation - The Big Business of Eminent Domain," in Harpers Magazine (October 2005), Joshua Kurlantzick writes, "To defend eminent domain as it is now practiced, therefore, is not a defense of our social compact with government, of the need for individuals to make sacrifices in the face of progress; it is an endorsement of a municipal-corporate collusion that now operates like a machine."
Property owners, who are targeted for traditional public use projects (roads, schools, railroads, parks), while not always happy, recognize the public good served by the project. This is not the case in redevelopment projects where one private owner is asked to relinquish his home or business which will be turned over to another private owner for redevelopment. All of this occurs with the municipality standing behind developer, threatening the property owner with the power of eminent domain if the property owner refuses to relinquish his private property rights.

The answer is in the hands of legislators, who must be in step with their constituents and put a stop to eminent domain abuse.

Written By:Fred Strahlendorf On November 20, 2005 1:37 AM

Carlin & Ward is on top of whatever is happening in all of the eminent domain concerns in New Jersey and elsewhere. I salute them. Please e-mail me if you have any concerns about what is going on in New Jersey. I am one of the best testimonials you could ever hope for. Bill Ward is the man. He turned our lives around. Please talk to him before you sign anything.

Written By:Carola Solomonoff On November 21, 2005 10:14 AM

Interesting to see that redevelopment attorneys, like political representatives, underestimated the loathing the Kelo decision would evoke in the public.

Written By:H. Heerwig On November 25, 2005 11:35 AM

Does anyone know if an individual or entity has ever sued the developer or agency for a part or all of their profit on a private to private eminent domain case on top of the so called "fair
market value"? If so, can you give me past or current cases I can research? If not, do you think that this would be possible?

My premise is that if the developer and or agency would have given us the opportunity to build what they want, we would have been able to reep the rewards of such a development. Thank you in advance for your insight to these questions.

Written By:Al Granell On November 25, 2005 10:08 PM

Kelo in New London, Encap in New Jersey, Cherokee development of Porete Avenue in North Arlington, NJ. The results of Kelo are echoing all over the state. It's all about the money. New Jersey needs help today; We need New Jersey Senate Bill SCR-139 passed.

Written By:William J. Ward, Esq. On December 4, 2005 11:49 AM

Mr. Heerwig,

Thank you for your comment. I don't know of any reported cases where the property owner has sued the developer regarding profits derived from the property condemned. You are going to run up against against what we call the scope of the project rule; that is, any increase or decrease in market value caused by the project of the condemning authority should be factored out of the valuation equation. The leading case is Jersey City Redevelopment Authority v. Kugler 58NJ, a N.J. Supreme Court Case.

A more interesting question, which might be pursued by aggrieved property owners such as those in Long Branch, would focus on so-called "fair market values" offered by the developer/municipality that are far below market value and where the profits derived from the condominium construction are enormous. This might provide a cause of action under the New Jersey Consumer Fraud statute. A successful litigant asserting consumer fraud would be entitled to damages as well as counsel fees and costs. However, this would involve hourly litigation fees against defendants who have unlimited resources; and, no matter what the trial court ruling, an appeal would ensue because of the novel issues raised.

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