Eminent domain victory for Mulberry Street property owners

Yesterday, Essex County Superior Court Judge Marie P. Simonelli issued a detailed 71-paged opinion in Mulberry Street Area Property Owner's Group v. City of Newark  (download PDF- 2 MB) and threw out Newark’s attempts to blight the Mulberry Street project area. The area consists of 14 acres of land improved with a mix of residential and commercial buildings and several parking lots. There are 166 lots, all but seven are owned by private businesses or individuals.

The area is located approximately one block east of the Newark Arena project presently under construction on Broad Street. The court devoted approximately 60-pages of the decision to a detailed, parcel by parcel analysis of the properties and concluded, after reviewing the reports and testimony of the respective planning experts, David Roberts of Schoor DePalma on behalf of the City and Peter Steck on behalf of the property owners, that the city had not provided substantial credible evidence of blight as required by the LRHL. The court relied heavily on the recent NJSC opinion in Gallenthin Realty v. Borough of Paulsboro (see Mulberry Street Area Property Owner's Group v. City of Newark excerpt at page 59-60.)

The court agrees that the City should be entitled to utilize the tools of redevelopment to allow it to once again take its place as the State’s most important and prominent City. However, it cannot do so in the manner in which it has done here. A unanimous New Jersey Supreme Court recently held in Gallenthin Realty Development, Inc. v. Borough of Paulsboro, __N.J.__(2007), that the constitutional requirement of blight is not met where the sole basis for the redevelopment is that the property is “not fully productive.” Slip Op. at 3. The Supreme Court carved out no exceptions to this holding. Thus, regardless of whether the property is located in a small municipality, such as Paulsboro, or a large municipality, such as Newark, whether it is vacant or unimproved or a parking lot, gravel lot or storage yard, a municipality cannot take property for redevelopment solely under N.J.S. A. 40A:12A- 5(e) merely because it believes that the land is not fully productive and can be use for something more beneficial to the general welfare. Slip Op. at 29. … (page 59-60)

The court finds, therefore, that the City declared the entire Mulberry Street Area as an area in need of redevelopment solely under N.J.S. A. 40A:12A- 5(e) because it is not property utilized and fully productive. Under the Gallenthin holding, this declaration does not meet the constitutional requirement of blight and must be invalidated and set aside. (page 61)

While there is nothing novel about the opinion itself, the ruling is significant because it delivers another blow to municipalities seeking to blight properties without providing substantial credible evidence. This was also the case in the recent unreported Appellate decision in Belmar. And Lodi didn’t wait to find out the court’s decision regarding its appeal; instead, the Council voted to withdraw its appeal. The trial court decision, which rejected Lodi’s blight designation of the trailer parks, remains. Recent events suggest that cases in the pipeline will be subjected to intense scrutiny as the courts make a case-by-case evaluation of the evidence of blight. (see p. 68)

The evidence also shows that the majority of the residential, mixed-use, commercial and industrial buildings are not deteriorated, dilapidated, abandoned or obviously beyond restoration. Rather, they are structurally sound, fully occupied, properly utilized, well-maintained and in good to fair condition or undergoing renovations or rehabilitation. Mr. Roberts even admitted that many of them are not in need of redevelopment under any statutory criteria. There is no evidence of any tax liens or foreclosures, illegal nonconforming uses, title problems, code violations or criminal complaints.

Based upon the foregoing, the court finds that the City’s declaration of the Mulberry Street Area as an area in need of redevelopment under N.J.S. A. 40A:12A- 5(e) is not supported by substantial evidence.

Newark Redevelopment Corporation, the developer, voiced its concerns in a statement by one of its principals, Bruce Wishnia, who was quoted in today's Star Ledger:

"If the Mulberry Street area is not in need of redevelopment, then the court needs to tell us what kind of area would be," Wishnia said. "If this decision if not reversed, it will effectively shut the door on urban redevelopment in our state." 

Judge Simonelli also noted at pages 69-71 that there were allegations by the plaintiffs of impermissible favoritism given to politically-connected developers, although there is no determination of the merits of the corruption claim. The court noted that former Mayor Sharpe James was recently indicted by the U.S. Attorney’s office for, among other things, alleged improprieties surrounding the sale of city owned property.  Download the pdf of the indictment.