Private property | New Jersey Condemnation Law

November 9, 2012

Hurricane Sandy and the Dune Replenishment Dilemna

Posted by Joseph Grather under In the news | Tags: Beach replenishment, Condemnation, Dunes, Eminent Domain, Hurricane Sandy, LBI, Long Beach Island, Private property, Property Rights |
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Along with the destruction of thousands of homes and the devastation of the State’s power-grid (yours truly remains without power 12 days later) Hurricane Sandy’s super-storm surge has brought to the collective conscience the long running debate about who should pay for a public improvement project.

Those following our blog will recall that the Army Corps of Engineers designed a beach-dune system that would protect New Jersey’s coastline property from tidal surges, like Sandy. The good news – the Army Corps’ plan worked! (See NJ.com article by Seth Augenstein surveying damaged areas that were not protected by dunes.)

The bad news – the Army Corp plan was not implemented along the entire coastline.

The following picture from NJ.com identifies the portions that were completed when Sandy struck:

Those on the side of government, particularly on Long Beach Island, have suggested that the program was not implemented because property owners refused consent to permit erection of a twenty-two foot high dune on their property. Yet, government does not need a property owner’s consent to implement a public project. Government has the power of eminent domain to prevent the exact situation where property owners refuse to donate their private property to the public good. New Jersey is a “quick take” State, which means that the government agency using eminent domain powers is authorized to “take” the property in question at the earliest stages of the proceedings, even if it takes months or years after the taking occurs for the affected property owners to receive “just compensation” for the taking.

The only relevant limitation on the government’s authority to implement the Army Corps’ dune program is the payment of “just compensation” as mandated by the New Jersey Constitution. In New Jersey, a jury decides how much is just. Not the government. Not the property owner.

After the storm, government is foisting the blame on the property owners because of their refusal to consent, but again, consent is not an issue when implementing a public improvement project. If the government wished or wishes to use eminent domain to acquire private property rights and to implement dune replenishment projects, it has the power to do so, without any legitimate worries about delay.

Our thoughts and prayers go out to the property owners whose homes and personal property were taken by Hurricane Sandy. So long as it is utilized properly, there is no doubt that government has the awesome power to take private property along the ocean-front to protect those further inland. But, even in the aftermath of this Statewide disaster we cannot forget “that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.” Pennsylvania Coal v. Mahon (Holmes, J.).

We’ll keep you posted – stay safe and warm.

More background on the debate:

http://njcondemnationlaw.com/2012/05/08/lbi-town-forum-shopping-to-avoid-paying-just-compensation/

http://njcondemnationlaw.com/2012/10/02/1386/

http://njcondemnationlaw.com/2012/08/14/new-jersey-beach-replenishment-town-seeks-end-around-in-federal-court/

Beach Repairs After Sandy May Cost $8 Million a Mile (bloomberg.com)
N.J. sand dunes protected Shore towns from Hurricane Sandy’s wrath (nj.com)
From Sandy, coastal towns learn ‘dune’ diligence lesson. Is it enough? (beachchairscientist.wordpress.com)
Battered New Jersey agonizes over whether to rebuild shore. (nytimes.com)
N.J. turns to rebuilding from Sandy’s wrath (cbsnews.com)
Out in the Cold: New Jersey Attorneys Console & Hollawell See Homeowner Vulnerabilities as Hurricane Sandy Claims Begin (prweb.com)

October 29, 2012

Morristown Morris Street Redevelopment Moving Along

Posted by Joseph Grather under In the news, Legislative Developments | Tags: Eminent Domain, Morristown, Private property, Redevelopment |
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After a relatively long hiatus, it appears that the Morris Street Redevelopment Plan is on the road towards adoption. As recently reported in the Morristown Patch, the Council introduced an Ordinance to adopt the plan at its October 11, 2012 meeting, and it should be on the Morristown Redevelopment Agency Agenda for November 11, 2012.

As set forth in the Redevelopment Plan: ”The Redevelopment Area is comprised of three large parcels (Block 3701, Lots 10, 11, and 14) that abut the New Jersey Transit right-of-way along with three smaller out parcels that front along Morris Street (Block 3701, Lots 12, 13, 15, and 18 as well as Lot 18 in Block 3702). Although Lots 16, 17 and 19 in Block 3701 were originally studied for inclusion in the Redevelopment Area, the Town Council ultimately decided not to include those parcels in the Redevelopment Area.”

The redevelopment plan also authorizes the Town to exercise the “power of eminent domain to acquire properties for the purpose of redevelopment. It may be necessary for the Town to exercise its power of eminent domain on behalf of a redeveloper or redevelopers. Accordingly, the Town is hereby authorized to acquire any or all of the real property located within the Plan Area and all interest therein by contribution, gift, grant, bequest, purchase, exchange, condemnation, or otherwise, as it may deem necessary or proper for the purpose of implementing this Redevelopment Plan.”

Morristown has completed several successful redevelopment programs including the former Epstein’s property, and appears to be about to start working on a portion of the Speedwell Avenue Redevelopment Plan. We’ve posted on these topics previously.

Morristown’s Speedwell Ave Redevelopment Nears Approval

Speedwell Avenue Plan Approved

We’ll keep you posted.

October 24, 2012

Mount Holly Residents Praying for Supreme Relief

Posted by Joseph Grather under In the news | Tags: Condemnation, Eminent Domain, My Holly Gardens, Private property, Redevelopment |
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NJ.com reports that the Mount Holly Gardens Citizens in Action has asked the U.S. Supreme Court to hear their case that claims municipal redevelopment activity has resulted in discrimination in violation of the federal Fair Housing Act.

Statistically, its unlikely that the nation’s high Court will take the case, but the residents remaining at the Gardens deserve some relief. As is clear from the below image, the town has overstepped the boundaries of civil conduct. The town raised parts of row-houses and just slapped tar paper on the exposed remainder.

Photo courtesy: Andrews Mills/The Star Ledger

The compelling argument is that the majority of the residents of Mt Holly Gardens are minorities. Thus, the municipal redevelopment process has had a disparate impact on a discrete insular minority – depriving them of their homes.

Hopefully, the high Court will answer the Citizens’ prayers. The odds of having a petition for certiorari granted by the U.S. Supreme Court are very low, and the Court ordinarily only takes cases where some paramount public interest is at stake that may affect the interests of other U.S. citizens.

We’ll keep you posted.

Our blog roll on the topic:

http://njcondemnationlaw.com/2011/09/15/mt-holly-gardens-residents-live-to-fight-another-day/

http://njcondemnationlaw.com/2011/05/17/mt-holly-gardens-stay-pending-appeal-continues/

http://njcondemnationlaw.com/2011/06/01/mt-holly-gardens-project-on-hannity-show/

http://njcondemnationlaw.com/2011/03/17/federal-appeals-court-halts-mt-holly-gardens-redevelopment-project/

http://njcondemnationlaw.com/2011/01/05/mt-holly-gardens-project-survives-discrimination-claim/

October 17, 2012

No “Temporary Taking” of Private Property in Long Branch

Posted by Joseph Grather under Court Decisions | Tags: Asbury Park, Condemnation, Eminent Domain, Inverse Condemnation, Private property, Property Rights, Temporary Takings |
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On October 11, 2012, the Appellate Division issued an opinion affirming dismissal of a property owner’s temporary taking claim. Hoagland v. City of Long Branch (A-0358-11T2; A-1583-11T2). Absent successful petition for certification, so ends another chapter in Long Branch’s long history of redevelopment.

Before getting to the opinion, it must be noted that the only private property along New Jersey’s beautiful Atlantic coast-line that did not appreciate over the past six decades were those areas clouded by government redevelopment efforts. Those efforts by the way, allowed private redevelopers to grab at least half of Asbury Park’s shoreline during the real estate boom of the early to mid 2000′s, the City’s redevelopers ran out of money when the market dried-up. So, what happened to the owners whose property was blighted and clouded by condemnation more than a decade? They got their property “back.” No harm no foul? I guess in New Jersey its, ‘no blood, no foul.’

The redevelopers were allowed to abandon these takings in 2008, and the property owners could either walk away with their expenses paid, or file new temporary takings claims. The Hoagland case explains why the latter alternative was the road that should not have been taken.

The property owners argued that the filing of a complaint lis pendens effected a taking of their property. The trial court disagreed, as did the appellate court. (Slip op. at 7). In most simple terms, since the City never filed a “Declaration of Taking” and paid the property owners’ expenses after it abandoned the takings, the property owners were not entitled to relief.

In order to prove a taking of private property, one must show that some action by an entity with the power of eminent domain substantially destroyed the beneficial use of the property. The property owners contended that “their properties lost value and they were unable to sell or develop their properties until the condemnation actions were abandoned. As the trial court found however, there is no factual support for these claims in the record.” (Slip op. at 13).

A sampling of the redevelopment history is seen from our prior blogs:

Greetings from Asbury Park

Asbury Park Heads to Arbitration

Asbury Park Settlement Rejected

Asbury Park Asks Judge to Cancel Redevelopment K

Asbury Park Redeveloper’s Claim Against City Revived (2009)

Five Points urban redevelopment plan invokes emotional testimony (denverpost.com)

October 15, 2012

NJ Appellate Court Affirms Right to Condemn

Posted by Joseph Grather under Court Decisions | Tags: Condemnation, DOT, Eminent Domain, Private property, Property Rights |
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Yesterday, the appellate division affirmed a trial court decision that rejected a property owner’s request to dismiss a condemnation action on the grounds that the State failed to engage in bona fide negotiations. State, DOT v. St. Mary’s Church (Docket A-5448-10T1). The property owner argued that dismissal was warranted because the State failed to follow the correct pre-complaint procedures required for an entity to exercise eminent domain; i.e. produce a copy of an “addendum memo” authored by its appraiser when it made its offer, and for DOT’s failure to produce an internal “review appraisal. The “addendum memo” was ultimately disclosed to the property owner, but the State refused to disclose the internal “review appraisal.” After positing the issue as: ”Does the failure to provide the addendum memo in the first instance require this court to dismiss the complaint… ?” The trial court found that it did not, and denied the property owner’s challenge.

The Appellate Division affirmed, and its reasoning is set forth in the following paragraph:

“In this case, Judge Millenky concluded that Black’s review appraisal was part of a deliberative process employed by the State to confirm the validity of the original appraiser’s report. The review appraisal added no new information that the State in turn used to “calculate[e] the amount if would offer” to St. Mary’s. Ibid. Indeed, the original appraiser’s report fully set forth the method utilized in making the pre-litigation offer and incorporated comments and suggestions made by Black before it was served upon St. Mary’s. Additionally, St. Mary’s had another report which, utilizing a different method of calculation, set the fair value of the taking at a far greater amount. Together, these two appraisals were sufficient to “permit a reasonable, average property owner to conduct informed and intelligent negotiations.” Carroll, supra, 123 N.J. at 321. Judge Millenky held that the review appraisal was not subject to pre-litigation disclosure, and the failure by the State to serve it before filing the complaint was not a failure to engage in pre-litigation “bona fide negotiations.” N.J.S.A. 20:3-6. [Slip op. at 14].

These types of cases are highly fact sensitive, and the merits of each such case should be weighed closely before investing the substantial time and expense needed to mount a challenge to a condemnor’s right to take.

September 28, 2012

Texas Court: Canadian Oil Company Can Use Eminent Domain in Texas

Posted by Cory K. Kestner under Court Decisions, In the news | Tags: Anthony Della Pelle, Condemnation, Eminent Domain, Keystone Pipeline, McKirdy & Riskin, Private property, Property Rights, Public utility, TransCanada |
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Following a recent Texas Supreme Court decision that limited the ability of pipeline owners to condemn property under certain circumstances, a group of property owners in Texas lost their fight to keep a Canadian oil company, TransCanada Keystone Pipeline, from taking their property as part of a 4,000 mile pipeline project. The landowners are fighting to keep TransCanada from immediately entering their properties and starting construction before lawyers and lawmakers have explored what the ruling means.

TransCanada argued that it has the right under an 1899 Texas statute to start construction without obtaining writs of possession through condemnation proceedings, but the company filed the appropriate paperwork and posted the required bonds instead to prevent a landowner from blocking access to the property. However, the judge scheduled a hearing to consider whether TransCanada properly posted bonds for damage to properties if it ultimately loses the right to the land in later legal proceedings. Additionally, the judge will determine if Keystone must send out new legal notices to property owners not included in previous value-setting.

This firm first discussed this project over a year ago on Fox News Channel, where McKirdy & Riskin’s Anthony Della Pelle provided commentary – watch the video here. Since that time, the project has received considerable attention in the media and has involved debate in political, legal and environmental forums.

For more on this story, please see the following blog posts and news articles:

Keystone Pipeline Project Chugging Along – New Jersey Condemnation Law

Pipeline Protests Reach the White House – New Jersey Condemnation Law

Can a foreign corporation use eminent domain on U.S. Land? – New Jersey Condemnation Law

Judge: Keystone can use eminent domain for pipeline – Amarillo Globe-News

TransCanada Faces Texas Landowners in Court Over Pipeline – Bloomberg BusinessWeek

Landowner plans to appeal eminent-doman ruling on Keystone XL pipeline – Star-Telegram

September 27, 2012

Supreme Court Limits Right to Pursue Polluters

Posted by Joseph Grather under Court Decisions, In the news | Tags: clean-up, contamination, environmental contamination, ground-water, Private property, Property Rights, Redevelopment |
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Yesterday, the New Jersey Supreme Court affirmed a decision from the lower courts that had dismissed an action brought by the New Jersey Dep’t of Environmental Protection against a property owner for an alleged spill. NJDEP v. Dimant (A-2-11, September 26, 2012). A link to the full text of the opinion is here.

This decision is potentially significant in the real estate and environmental communities. In sum, the Supreme Court held unanimously that the NJDEP failed to establish a sufficient causal link between the alleged polluter of contaminated property and the contamination, but it also wrote to “clarify that the Spill Act does not require proof of the common law standard of proximate-cause causation of specific environmental damage as a precondition to relief under the Act.” (at 5).

The trial court made detailed findings of fact regarding DEP’s failure to establish a connection between the former owner and operator of a dry-cleaning business and the alleged groundwater contamination of the adjacent Bound Brook. The Supreme Court agreed with the lower court’s opinion that there has to be some nexus that “ties the discharger to the discharge that is alleged to be the, or a, culprit in the environmental contamination in issue.”

DEP’s wide net may have just gotten a little smaller. This decision may make it more difficult for the State to obtain contribution for environmental remediation costs of polluted properties. According to an article in the New Jersey Spotlight, this case may mark a weakening of the government’s power to force cleanups of contaminated properties, and while the case only involved a small business, it was closely watched by the business community at large, with several industry trade associations joining the case as friends of the Court.

Environmentalists were obviously disappointed in this ruling, and it will be interesting to see how it may affect the commercial real estate and redevelopment landscape in New Jersey in the years to come.

August 14, 2012

New Jersey Beach Replenishment Town Seeks End Around In Federal Court

Posted by Joseph Grather under In the news | Tags: Condemnation, just compensation, Private property, Property Rights |
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In follow-up to our blog posting of May 8, 2012 (LBI Town Forum Shopping to Avoid Paying Just Compensation?):

Long Beach Township is continuing in its attempts to adjudicate their beach-front property acquisitions into federal court. According to a recent report from APP.com, the township seeks to adjudicate the takings cases in federal court because “federal courts recognize special benefits such as work related to the beach improvements when issuing their awards while state courts do not.”

In plain english, Long Beach Township hopes that the federal courts will deny property owners in Long Beach Township just compensation by ruling that the beach replenishment project creates a “special benefit” to an individual property owner thereby precluding the property owner for being paid just compensation for the reduction in value of its property caused by the taking. However, the project is designed to benefit the entire beach-going public, thus by its very purpose one that provides a “general benefit” and thereby no denial of just compensation to the individual property owner whose property is taken by government for the public good.

That is exactly what the State Superior Court found in the Karan case in neighboring Harvey Cedars. However, the New Jersey Supreme Court agreed to hear that case. We’ll keep you posted on the outcome of that case.

Photo courtesy APP.com (Tim McCarthy/Staff Photographer).

Long Beach Township asked for NJDEP to advise whether it would object to the Township proceeding through the federal courts. NJDEP wrote to Long Beach, stating: “If you proceed in this manner, the state recommends that the USACE (U.S. Army Corps of Engineers) initially condemn only one property.” According to the APP, Long Beach Township Mayor Mancini “is happy [DEP] finally approved it.”

We’ll see if the federal court agrees to second-guess the State Courts in these matters.

July 17, 2012

Widespread Disagreement on Plan to use Eminent Domain to Acquire Mortgages

Posted by Cory K. Kestner under In the news | Tags: Condemnation, Eminent Domain, Mortgages, Private property, Property Rights |
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Time Magazine recently covered a controversial plan proposed by Mortgage Resolution Partners to acquire distressed mortgages using the government’s eminent domain power. The article highlighted some of the concerns raised in a post on this blog (here), as well as in other local and national media outlets.

Specifically, mortgage holders will not likely accept the value offered by the condemning agency, and this can lead to a lengthy and expensive legal battle. The legal battles could be especially difficult if Robert Kuttner’s blog on The Huffington Post is correct that Mortgage Resolution Partners only wants to acquire performing mortgages (mortgages where payments are current). Similarly, a story in the San Francisco Chronicle notes that bond investors and private capital may abandon areas that adopt this proposed solution. This could cause decreased access to capital by borrowers, and higher interest rates.

The plan has received a mixed response from politicians as well. Although several academics and Mortgage Resolution Partners support the plan, a Wall Street Journal article notes that the White House rejected the idea when it was presented by a group of congressional Democrats two years ago. Instead, the President has suggested his own plan to help property owners who own homes with underwater mortgages.

We’ll continue to watch this one, but for more on this story in the interim, please see the following news articles and opinion pieces:

What’s With All the Chatter About Eminent Domain Takings of Underwater Mortgages? – Gideon’s Trumpet

Should Eminent Domain Be Used to Save Underwater Homes? – Time Magazine

An Eminently Bad Idea – Huffington Post

Bondholders See Eminent Domain as Latest State Attack: Mortgages – San Francisco Gate

White House Skeptical of Plan to Seize Mortgages by Eminent Domain – Wall Street Journal

New San Bernardino County agency created to fight foreclosures holds first meeting, attracts criticism – Redlands Daily Facts

More Nonsense on the Home Mortgage Front: Don’t Let Municipal Governments Condemn Mortgages at Bargain Rates – Point of Law

Can Eminent Domain Save the Housing Market? (fool.com)
Businesses, Investors Protest Eminent Domain in Virginia and California (thenewamerican.com)
Using Eminent Domain for Underwater Mortgages Is a Bad Idea (washingtonmonthly.com)
Calif. Cities Eye Plan to Seize Mortgages (abcnews.go.com)
Rep. Brad Miller on Using Eminent Domain to Reset the Housing Market (news.firedoglake.com)

June 20, 2012

Should Governments Use Eminent Domain to Acquire Underwater Mortgages?

Posted by Cory K. Kestner under In the news | Tags: Condemnation, Eminent Domain, Institutional investor, Private property, Property Rights, Real Estate Valuation, Subprime mortgage crisis |
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In an unprecedented move, a group of venture capitalists out of San Francisco hopes to convince county and local officials in California to use the power of eminent domain to seize control of private residential mortgage-backed securities with the intent of cutting the principal balances of negative-equity borrowers.

As proposed, Mortgage Resolution Partners would work with local governments to find institutional investors willing to provide tens of billions of dollars to finance the condemnation process to avoid using taxpayer dollars to acquire millions of distressed mortgages. The local government would take title to the loans, without taking title to the actual home, and pay the original mortgage owner the fair value with the money provided by institutional investors. Mortgage Resolution Partners would then allegedly work to restructure the loans to reduce homeowners’ monthly mortgage payments, while selling the restructured loans to hedge funds, pension funds and other institutional investors with the proceeds paying back the outside financiers. Additionally, Mortgage Resolution Partners would collect a fee on each restructured loan.

In New Jersey, the courts have broadly interpreted the language of the Local Redevelopment & Housing Law (LRHL) and Eminent Domain Act of 1971 that defines “property.” Citing Harrison Redev. Agency v. DeRose, 398 N.J. Super. 361, 409-11 (App. Div. 2008)*, the New Jersey Supreme Court determined that “the language the Legislature used to define ‘real property’ and ‘property’ in the LRHL and the Eminent Domain Act cross-reference each other and require cognate interpretations.” Town of Kearny v. Discount City of Old Bridge, Inc., 205 N.J. 386, 405 (2011). The LRHL defines “real property” as: “all lands, including improvements and fixtures thereon, and property of any nature appurtenant thereto or used in connection therewith, and every estate, interest and right, legal or equitable, therein, including terms for years and liens by way of judgment, mortgage or otherwise, and indebtedness secured by such liens,” N.J.S.A. 40A:12A-3, while the Eminent Domain Act defines “property” as “land, or any interest in land . . . .” N.J.S.A. 20:3-2(d). The express mention of a mortgage, in addition to the catch-all “any interest in land” could potentially provide a government entity with support to condemn a mortgage interest.

Even if the concept of using eminent domain to “take” mortgage interests was accepted by New Jersey’s courts, there could still be an argument over the “fair market value” of the mortgage. Fair market value in New Jersey has been determined as the price a willing and able buyer would pay to a willing seller. The “property” owner, the holder of the mortgage, would likely argue that mortgage should be valued based on the existing obligation of the mortgagee to pay the agreed upon principal and interest. The condemning agency would likely argue a value based on the current reduced value of the land secured by the mortgage. In New Jersey, the question of value would be decided by a judge and jury.

This will be an interesting one to watch.

For more on this story, please see the following news articles and opinion pieces:

Investors tout ‘condemnation’ for housing fix

A solution for underwater mortgages: Eminent domain

RPTInvestors tout controversial ‘condemnation’ for housing fix

Investors With Ties To Buffett, Soros, Obama Plan Mortgage Eminent Domain Grab

Eminent domain is floated for mortgages

SAN BERNARDINO COUNTY: Controversial mortgage fix considered

County Studies Eminent Domain to Address Mortgage Crisis

*The property owners in DeRose were represented by McKirdy & Riskin’s Richard DeAngelis, Edward McKirdy and Anthony Della Pelle.