As reported by WatchDog.org, the Missouri Supreme Court recently rejected the Southeast Missouri Port Authority’s attempt to use eminent domain to take private property for use in connection with interstate transmission of North Dakota crude oil. (A copy of the opinion is here).  The government intended to take undeveloped Mississippi River water-front property from Velma Jackson and Alicia Seabaugh, and then lease it to a private company who intended to construct a tank farm on the property.

Missouri, along with many other States, revised its eminent domain laws after the infamous City of New London v. Suzette Kelo case (see one of our blogs on that story here) to limit the use of eminent domain for “economic development.”  The Missouri Supreme Court found that the proposed taking was prohibited by the new post-Kelo legislation barring takings for “solely economic development purposes.”

Certainly a win for property rights advocates!

 

Yesterday, the New Jersey State Assembly unanimously approved legislation that codifies important redevelopment case-law, and provides municipalities with an option to undertake local redevelopment projects without using eminent domain.   The bill, A-3615, sponsored by Assemblymen Coutinho, Bucco and Munoz, has a Senate companion, S-2447, and shares some of the provisions which had been included in earlier legislative efforts that failed to pass two years ago.

A-3615 codifies Gallenthin Realty Development Inc. v. Paulsboro, 191 N.J. 344 (2007), in which the New Jersey Supreme Court scrutinized the then-common use of municipalities in New Jersey of a standard in the Local Redevelopment and Housing Law, N.J.SA. 40A:12A-5(e) — a “stagnant or not fully productive condition”  to justify that an area was blighted, or “in need of redevelopment”.   The legislation also codifies Harrison Redevelopment Agency v. DeRose, 398 N.J. Super. 361 (App. Div. 2008), in which an appeals court held adequate written notice of condemnation for redevelopment needs to be provided during the redevelopment planning process.

The other significant provision in this legislation  is that local governments will be given an option as to whether they will be empowered to use eminent domain to acquire properties in redevelopment areas.  If signed into law, this bill could help to spur redevelopment in certain areas without having to threaten the property rights of the existing owners.

The New Jersey Law Journal reported on the bill today in this article.  We also covered some earlier committee activity on this bill in this NJ Condemnation Law blog post.

Stay tuned for more on this legislative development.

McKirdy & Riskin’s Rich DeAngelis, Ed McKirdy and Tony DellaPelle served as counsel to the property owners in the DeRose case referenced above.   In addition, DellaPelle serves on the Redevelopment Committee of the New Jersey Builders’ Association, which was a proponent of the current legislation.

Last week, the New Jersey Supreme Court denied a petition for certification filed by the Diocese of Camden in behalf of St Mary’s Cemetery in Bellmawr.  As reported by the Republic.com, in 2010, the New Jersey Department of Transportation acquired by exercise of eminent domain a six acre parcel owned by the church for its Route 295 Direct Connection Project.  The part taken did not include any grave sites, but the Diocese claimed that several of the interred may need to be relocated because the roadway project “might disturb the tranquility” of some sites.   The church has operated the cemetery site for 50 years.

The State had offered $1.9 million for the acquisition, but the church argued that the land was worth more than ten times that amount when taking into consideration the relocation costs (which apparently were not included in the offer amount). See Courier Post Online story.  Therefore the church challenged the NJDOT’s right to take, which was initially affirmed by the Appellate Division in October of 2012.

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Photo Courtesy –   CHRIS LaCHALL/COURIER-POST.

Absent making application for certiorari to the United States Supreme Court, the case will proceed to a valuation proceeding where the property owner will have an opportunity to present its theories to a panel of Condemnation Commissioners and then to a Camden County Jury.  The second part of the process is designed to protect the property owners constitutional right to just compensation.

We’ll keep you posted.

 

This just in – Mantoloking has decided to use eminent domain to acquire private property for the purported public use of dune replenishment. See articles from  CBS News and NJ.com.  McKirdy & Riskin’s Tony DellaPelle was interviewed and quoted in the CBS news video about the constitutional issues raised by attempting to require that oceanfront property owners donate their property in order to provide storm protection benefits to the public at large.

ImagePhoto courtesy Andrew Mills/Star Ledger.

You may remember when we blogged about the proposed easement that the town asked all of its beachfront residents to sign back in February.  Well, apparently not everyone was keen on donating their private property for beach/dune replenishment.

We’ll keep you posted.

As you know from our December 2012 blog, the United States Supreme Court found that an Army Corps flooding program, which damaged a hardwood forest managed by the Arkansas Game & Fish Commission, may constitute a taking of private property.  Therefore, the Court upheld the property owner’s inverse condemnation claim, reversed the Fifth Court’s decision and remanded the matter to the Federal Court of Claims to adjudicate constitutional “just compensation.”

The parties have now submitted their briefs on remand.  Our Owners’ Counsel colleague, Robert H. Thomas, Esq. has them available on his blog. Click here for the property owner’s brief, and here for the government’s brief.   The government argues that it “did not take a flowage easement” and “at most, there was a modest, unforeseeable, and incremental increase in flooding.” (Db1).  The property owner argues that the Corp’s induced flooding resulted in “catastrophic mortality” of several different tree species. (Pb8).

We’ll keep you posted.

 

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Photo courtesy of Associated Press

Owners of property along the Jersey shore continue to be battered, this time by their own elected officials.  The New Jersey Senate recently introduced S-2618, which provides:

“Just compensation for an easement over a portion of beachfront property condemned for the purpose of dune construction or beach replenishment shall include consideration of the increase in value to the entire property due to the added safety and property protection provided by the dune or replenished beach. Any additional rights of the public to access property held in the public trust arising as a result of the easement, or the dune construction or beach replenishment, shall not be considered to cause a diminution in the value of the entire property.”

The State Assembly has a companion bill mirroring the above - A-3896 - introduced on March 7, 2013.  Similar legislation has also been introduced in the State Senate and Assembly by other legislators, S-2599 and A-3889.  These bills are awaiting legislative committee review.

So we all understand the jumping off point, “just compensation” is a constitutional term and is found in the New Jersey Constitution (N.J. Const. Art. 1, Par. 20) and the U.S. Constitution (5th Amend.)  The text of the New Jersey Constitution reads: “Private Property shall not be taken for public use without just compensation.”

Every court in the history of the United States has interpreted the Fifth Amendment as limiting government’s authority to take private property.  Within the clause there are two limitations expressed.

First, the taking must be for a “public use.”  Second, government must pay “just compensation”.

While most, if not all, may agree that government taking of private property in order to replenish New Jersey beaches damaged by Superstorm Sandy would satisfy the “public use” criteria of the Constitution, legislation like the bills mentioned above that attempt to legislatively satisfy the “just compensation” part of the analysis appears to be constitutionally infirm for several reasons.

First, it would violate the fundamental concept that the just compensation is to be determined by judicial processes, not by legislative mandate.  United States v. Cors, 337 U.S. 325 (1949);   Monongahela Navigation Co. v. United States, 148 U. S. 312  (1893).   In other words, “there is no precise and inflexible rule for the assessment of just compensation.” State v. Gallant, 42 N.J. 583 (1963).

Second, the proposed legislation might allow government to acquire private property “without just compensation” in violation of the Constitution.  If a statute mandates a particular valuation rule which fails to afford “just compensation”, it is contrary to the constitutional mandate.

Third,  the proposed statute seeks to preemptively decide the issues pending before the New Jersey Supreme Court is a case known as Borough of Harvey Cedars v. Karan, 425 N.J. Super. 155 (App. Div. 2012).  The issue in Karan is whether the decision of an Ocean County jury to award a property owner “just compensation” for the taking of their private property should be affirmed.  The government has appealed the award of just compensation arguing that the property owners should not receive more than $1 dollar for the taking of their private beachfront property because the government put a public dune on the part taken that benefits the entire beach-going public, as well as the inland residences and businesses occupying the barrier island.  The trial court and the Appellate Division rejected the government’s argument, and the Supreme Court decided to take the case before Superstorm Sandy struck.

Finally, any legislation which seeks to treat some people or classes of people differently than others may itself violate the Equal Protection Clause contained in the 14th Amendment to the U.S. Constitution.

Now, in the aftermath of a devastating natural disaster, government seeks to remedy the devastation – that it alone could have prevented – by making private property owners the scapegoat.

But the property owners are not to blame. Let’s not forget that the Army Corps warned of these very dangers decades ago, and government failed to prepare use for the coming storms.  Let’s not let government attempt to foist its responsibility on the narrow shoulders of a small group of property owners.

For more on these issues, see our prior blog postings:

In the Wake of a Superstorm the Debate Continues – Who Should Pay for the Dunes?

Rebuilding After Sandy: Government Assistance at Odds With Private Property Rights

Related articles

On February 5, 2012, the Appellate Division published its decision in a condemnation case captioned Borough of Merchantville v. Malik & Son, LLC (full text here).  The property was acquired by the municipality in connection with an earlier “in need of redevelopment” designation.  In short, the Appellate Court affirmed a trial court’s rejection of a “right to take” challenge based on an alleged failure to engage in bona fide negotiations.  The court also held that a condemnor had no duty to engage in bona fide negotiations with the “assignee of a mortgagee.”

Regarding the mortgagee’s assignee, the appellate court published its decision despite its comment that the trial court’s decision was based on “established principles” of case-law and the language of the act.  Section 6 requires a condemnor to negotiate with the person or entity “holding the title of record to the property being condemned.”  The trial court’s decision was therefore consistent with the express terms of the statute as interpreted by existing cases. City of Atlantic City v. Cynwyd Investments, 148 N.J. 55 (1997); and Town of Kearney v. Discount City, 205 N.J. 386 (2011).   Again, even though the case was published, it would appear that the holding is based on a clear reading of the statute and existing case-law.

Regarding the appellate court’s affirmance on the bona fide negotiations claim – it too was based on existing case-law.  The property owner rejected the offer in writing but failed to include any substantive basis or facts that would require the condemnor to reconsider the bona fides of its offer.  For instance, the property owner did not tell the condemnor about the two prior offers to purchase ($1,850,000 and $1,250,000), or the amount of the existing liens on the property.  Simply stated, a mere rejection of the offer without more cannot form the basis of a later bona fide negotiations defense.

Photo courtesy of wirednewyork.com

Photo courtesy of wirednewyork.com

The Borough of Mantoloking is one of several beachfront municipalities that has asked owners of beach-front property to donate their private property to the municipality.  A copy of the most recent form of dedication agreement (identified as an easement) is available on the Borough’s website here.  The Borough is attempting to force property owners to turn-over their private property for the public good, without payment of compensation.   The guilt trip being laid on the property owners is that the Borough will not be able to participate in an Army Corps of Engineers dune replenishment program without the easements in hand.  The sign-off on the website – ” Thank you all for your patience with this process.  We will do all that we can to make this project happen once we have the easements in hand.  The very existence of our community depends on it.”   This last statement underscores the public necessity of the easements, and underscores why the Constitution demands just compensation – the purpose of the taking is to benefit the general public at large.  A private citizen cannot be forced to pay for a public improvement project by forced donation of private property.  It’s no different from exacting a cash payment from only the beachfront property owners in order to benefit the entire community.

Toms River is another municipality that is seeking to exact private property without just compensation.  As reported by the Toms River Patch, legal counsel for that municipality suggests that the town is without the lawful authority to rebuild the dunes without beachfront property owners’ donating their property.  If dune replenishment is a public use, the municipality is reposed with the lawful authority from the ultimate source of law – the New Jersey Constitution.  But, again, the municipality wants to lay the blame on the property owner.

Notably, the Army Corps Report referenced in the Mantoloking easement was issued 10 years ago!  It is only now, post-Superstorm Sandy devastation, that they believe they have the political sway to engage in such unconstitutional conduct.   Why didn’t they implement the program ten years ago?  The cost to replenish the dunes is only a fraction of the cost of repairing the damage caused by Sandy.

I’m sure many of our readers do not own property along the shore-line or live on the beachfront (yours truly does not).  Yet, if we permit government to take that first step down the slippery slope of unconstitutional conduct, we have only ourselves to blame when we’re looking down the wrong end of the barrel of some other heavy-handed government conduct.

And, in the end, we, the taxpayers of the United States of America, have already paid the bill to restore the beaches the tune of $51 billion dollars ($4 billion of which has been allocated to the Army Corps to rebuild the beaches).   Notably, over the past 50 years, the total expenditure of beach replenishment in New Jersey has been about $1 billion.  Let’s insist that government spend that money wisely and do the rebuilding job right the first time.   Why should the beachfront owners have to pay for this benefit twice?

For more background on these issues, check out our earlier blog posts:

NJ Beach Replenishment Saga Continues, This Time in Sea Bright

NJ Beach Replenishment Town Seeks End Around in Federal Court

Harvey Cedars Complaining About Payments to Property Owners For Beachfront Takings

 

The following quote is attributed to President Ronald Reagan:

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One example of government assistance post-Hurricane Sandy was the removal of an entire house because it was allegedly in the right of way:

Ortley Beach home removed

Well, photographic and video evidence proved that the house was not in the right-of-way, but the State removed and demolished it anyway.

Another example, a local government unit in LBI decided that sand removed from the right-of-way was best deposited on a private property owner’s front yard.  It cost the small homeowner thousands of dollars to remove the sand from his front yard and then the government refused to reimburse the property owner for his removal costs.

Finally, a clear example of government failure can be found in its dune replenishment policy.  In 1999, thirteen years before Sandy struck, the United States Army Corps of Engineers came up with a plan to protect all private property owners from a tidal surge.  That plan was not fully implemented before October 29, 2012.  Part of the problem is that plan implementation was left up to local government, and various local government agencies had varied levels of interest, participation, and results with the plan.

Now, those local politicians are looking for a scapegoat.  Private citizens who happen to own beachfront property are in the cross-hairs.  The politicians have cried foul because of the property owner’s refusal to give-up their private property for the public good and the news agencies have trumpeted the cries almost on a daily basis:

NJ.com today – Tom’s River Homeowners Slow to Give Up Land Needed to Rebuild Protective Dunes;

NJ.com Dec. 2, 2012 – N.J. Shore Towns Near Showdown With Dune-Building Foes.

In mid-December, the Town of Mantoloking wrote to all beach-front property owner demanding that they donate their property by signing an easement before year’s end  (Merry Christmas!).  This practice has been followed by other municipalities in Monmouth and Ocean Counties, as they rush to build and replenish sand dunes before the next big storm hits.

Two of the most fundamental rights found in the bundle of rights known as “property” are the right to “exclusive possession” and the “right to security” defined as “immunity from expropriation.” (“Expropriation” is a synonym for “eminent domain”). See Denise R Johnson, Reflections on the Bundle of Rights, Vermont Law Review (2007).  Neither of those rights would be honored if the public forced private property owners to donate their property for the public good, i.e. without payment of just compensation.

Ms. Johnson’s article references Lucas v. South Carolina Coast Commission, 505 U.S. 1003 (1992).   That case examined the effect of the State’s adoption of  the Beachfront Management Act in 1988.  The South Carolina legislation created the Coastal Commission to manage its shoreline due to the regularity of hurricane strikes along its barrier islands and shoreline.  The Commission determined that Mr. Lucas, a beachfront property owner, would not be able to build a residence upon his land.  Lucas sued the Commission, and won at the trial level – a jury awarded $1.2 million for the taking, but he ultimately lost in State Court.  The United States Supreme Court reversed, holding “when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good… he has suffered a taking.”

Perhaps our State should look at South Carolina’s Beachfront Management Act as a guide on how to rebuild after Sandy.  Regardless of whether a State or regional commission is created in New Jersey to manage coastal development, a serious, informed analysis of the issues and possible solutions must be undertaken on a statewide level, rather than continuing a piecemeal, hodgepodge and hurried set of “band-aid” responses.

We questioned the wisdom of the continuing these past practices which have proven problematic at best in our recent Op-Ed in the Asbury Park Press (“Don’t Vilify the Greedy“).  While legislators have recently suggested various “solutions”, unfortunately the pressures of getting the Jersey Shore “ready” for this coming summer is apparently standing in the way of a better, sustainable plan for coastal development which Sandy has given us an opportunity to create.

The debate continues – Can government force private property owners to donate their private property for strengthening a dune system for the benefit the general public when the next superstorm hits?  Not in the U. S. of A.

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Photo courtesy http://www.myfoxphoenix.com

A recent National Public Radio program discussed the topic and interviewed property owners and government officials.  Governor Christie appeared to blame the property owners:  “We had municipalities who were offered this assistance and residents refused to sign the easement because they didn’t want it to block their view. Well, they don’t have to worry about that now. They got no house.”

But despite this attempt to lay blame, a property owners’ refusal to consent cannot stop a bona fide public use, such as the dune project designed by the Army Corps of Engineers.

Essentially, the government’s position is two-fold.  First, it suggests that dune replenishment projects were delayed because some beachfront owners did not consent to the government’s effort to create or increase dunes on those owners’ properties.  But that position is without merit, since the government has always had the right to take those property interests by eminent domain. New Jersey is a “quick take” State and the government could obtain ownership and possession of the property it needs on an accelerated basis.  So any owner’s refusal has no legal bearing on whether the dunes could have been created before Sandy.

Second, the government contends that it would have been cost prohibitive to strengthen the dune system without beach-front property owners donating their private property for the public good.  (Sounds more communistic than democratic).  However, before the storm, the estimated cost to strengthen the dunes was $118 million.  After the storm, the estimated cost of the damage:

  • Insured Losses: $10 – 20 Billion
  • Total Economic Damage: $30 – 50 Billion

Certainly, $118,000,000 is less than $50,000,000,000.

According to the Army Corps and the State, at least some of the damage would have been avoided had the dunes been strengthened (and not all of the estimated damages arise from damages to beach-front properties).  The question is – how can government not do everything within its power to prevent the disaster from happening again?

In the end requiring owners to donate their property would be contrary to the New Jersey Constitution and the United States Constitution:  “Private property shall not be taken for public use without just compensation.” (NJ Const. Art. I, Par. 20).

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Picture courtesy http://www.osb.org/gen/monte.html

Cut down, we shall grow back stronger.

Imagine, for a moment, that the government took part of someone’s private property to create a public road.  In that situation, would anyone disagree that the affected property owner would be entitled to just compensation for the taking of a part of his or her property?  In this dune replenishment saga, the same issues exist – the government is building the dunes on private property, taking part of the private property, to benefit all property owners.  Why should the private property owners NOT be entitled to just compensation?   The public benefits as a whole, so the public should be required to bear the cost, not just the affected owners.

This one promises to stick around for a while, so we’ll be monitoring it as it unfolds.

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