Property owners have won a battle in a long simmering dispute in New York over pending real estate tax appeals.  The case was reported in the BuffaloNews.com.  In short, eight property owners with pending tax appeals against the City refused to let the City’s appraiser in their homes in connection with the preparation of the City’s appraisal reports.  The City countered that they could not make a fair assessment of property value without an interior inspection.  The intermediate appellate court agreed with the property owners reasoning that they were entitled to protection under the Fourth Amendment’s guarantee of privacy.

According to the appellate court,  “the city failed to show that its interest in interior inspections outweighed the homeowners’ Fourth Amendment right to privacy, the appellate court ruled.” (BuffaloNews.com).  The question that immediately comes to my mind, if the cases proceed to a trial, do the property owners get to undermine the City’s appraiser’s testimony based on his failure to conduct an interior inspection?

Apparently all the owners just wanted the cases, which have been pending for six years, to get resolved.  But, the City has vowed an appeal to New York’s highest court, so it does not seem like the end is in sight.

 

Yesterday, a United States District Court judge restrained the U.S. Army Corps and NJDEP from any further action towards their joint Little Egg Inlet to Barnegat Inlet Storm Damage Reduction Project pending further hearings to be held in two weeks time.  The City of Margate, which owns the beach west of the State’s public trust area, does not want to be saddled with the DEP/Army Corps dune project, and filed a complaint in federal court alleging that the governmental entities had violated federal and State law when they attempted to “take” part of the municipalities ocean-front property without complying with the Eminent Domain Act.  The federal judge initially agreed and has issued an order temporarily restraining the federal and state agencies from acting in furtherance of the project.

Another hearing has been set for December 17th in the action.

We’ll keep you posted.

Related news coverage of the case:

Press of Atlantic City

Shore News Today

Ocean County Assignment Judge Vincent Grasso dismissed a declaratory judgment action filed by a redeveloper against the Township of Ocean finding that the redeveloper had to exhaust its administrative remedies before coming to the Court for relief.  Alternatively, it appears that the redeveloper was seeking to partially invalidate or revise an ordinance that had been adopted two and half years earlier. Obviously, out of time. See Del Corp. Enterprises I, LLC v. Township of Ocean (Oct. 9, 2014, opinion here)

The redeveloper, Del Corp., was working with the Township in connection with the designation of tract of land as “in need of redevelopment” under the Local Redevelopment & Housing Law (NJSA 40A:12A-1 et seq).  Once designated, the redevelopment plan would call for a residential housing development called the Tradewinds at Waretown consisting of 115  market rate units and 29 affordable units.  The project received site plan approval from the planning board in 2011, subject to the Township enacting an ordinance adopting a redevelopment plan.  Said ordinance was adopted in February of 2012, and provided “[o]f the 144 dwelling units, 115 units are to be for-sale condominium units and 29 units are to be affordable rental units.”  Del Corp did not object to the Ordinance.

Two years later, Del Corp. has contracted to sell the project to a third-party.  However, the third-party will not finalize the transaction with the “for sale” requirement contained in the ordinance.  The third-party wants to be free to sell or rent the market units.  Hence, Del Corp’s declaratory judgment action, which the Court found premature:

“Del Corp’s brief states “[i]f the terms of the ordinance are enforced by the Township and the developer is not permitted to rent out the market rate units, the contract purchaser will terminate the contract.” Because Del Corp has not demonstrated that it has applied to build  apartment units contrary to the Redevelopment Plan and the Township is enforcing the terms of the Ordinance, the court concludes that Del Corp seeks a declaratory judgment here to discern the rights upon facts that are “future, contingent, and uncertain.” (Slip op. at 7).

Even if it were ripe, the Court found that Del Corp had not exhausted its administrative remedies, namely asking the Township to amend the redevelopment plan to exclude the “for sale” requirement.  If aggrieved by the outcome, Del Corp would then be able to seek redress before the Courts.

A California appellate court recently declared its pre-condemnation entry statute unconstitutional. Property Reserve, Inc. v. Dep’t of Water Resources (JCCP No. 4594, March 13, 2014).  While we are not going to recount all the details of the comprehensive opinion here, the State was seeking access to private property pre-condemnation in connection with a proposed tunnel project for delivery of water from the North to the South in order to study the geological and environmental conditions of the properties within the proposed tunnel route.  The State sought court approval of the preliminary entries.

The trial court granted the State preliminary entry for environmental testing on set terms, and denied preliminary entry for geological testing on the grounds that those activities would result in the permanent physical occupation of private property, i.e. a taking of private property which could only be accomplished by commencement of a condemnation action.

With respect to the environmental studies, much like the New Jersey statute which applies to preliminary entry, the California statute allows a potential condemnor to “enter upon property to make photographs, studies, surveys, examinations, tests, soundings, borings, samplings or appraisals or to engage in similar activities reasonably related to acquisition….” Cf. N.J.S.A. 20:3-16.  Unlike the trial court, the California Appellate Court found that the “entry order for environmental activities authorizes a taking of a property interest in the nature of a temporary easement that must be acquired in a condemnation suit” and therefore reversed the Order authorizing preliminary entry.

The appellate court explained its findings by use of a four-part balancing test: 1) The degree to which the invasions are intended; 2) the character of the invasions; 3) the amount of time the invasions will last; and 4) the economic impact of the invasion.  After employing the test, the court concluded, “all the factors weigh in favor of a finding of a temporary taking.  The invasion and its consequences are intended by the State similar to a direct condemnation for a temporary easement.  The invasion is a physical invasion, “a government intrusion of an unusually serious character.” (quoting Loretto v. Teleprompter, 458 U.S. 419 (1982).

In New Jersey, the preliminary entry statute automatically provides the property owner with a right to claim damages if a condemning agency does not commence a condemnation action within two years after the preliminary entry.

It’s extremely likely that the State will seek review from the California Supreme Court.  But in the meantime, think twice next time a condemnor seeks to gain preliminary entry onto your client’s property.

A Kentucky court recently stopped a utility company from utilizing eminent domain to build an underground gas pipeline to transport natural gas liquids through the Commonwealth.  The case, Kentuckians United to Restrain Eminent Domain, Inc. v. Bluegrass Pipeline Company, LLC (Civil Action No. 13-CI-1492),  involved the challenge by plaintiff, a non-profit agency formed for the purpose of protecting Kentucky residents from“the threat of and attempts to exercise eminent domain by entities not in public service to Kentuckians,” to the efforts of the Bluegrass Pipeline Company to use eminent domain powers to construct a new 24-inch gas pipeline, which would transport the liquids from shale reserves in Pennsylvania, West Virginia and Ohio to the Gulf Coast.

Plaintiff’s declaratory judgment action sought a ruling on whether Bluegrass in fact had the power of eminent domain under Kentucky law.  Under Chapter 278 of the Kentucky Revised Statutes (“KRS”), a Public Service Commission is dedicated to regulating utilities, and only regulated entities that adhere to the requirements of the statute are “in public service” and authorized to use eminent domain. The statute provides: “Any corporation or partnership organized for the purpose of … operating oil or gas well or pipeline for transporting or delivering oil or gas, including oil and gas products, in public service, may… condemn the lands and material or the use and occupation of the lands.”

The plaintiff argued that Bluegrass was not in public service, was not regulated by the Public Service Commission and did not serve Kentucky customers or producers because it was an interstate operation.  It further contended that the natural gas liquids that would be transported through the pipeline were neither “oil or gas” nor “oil or gas products” as required by KRS 278.502.

Bluegrass opposed the motion, suggesting that there were genuine issues of material facts in play, and that its products were “oil, gas, or oil and gas products” under KRS 278.502.  It also contended that it was acting “in public service” because, as a common carrier, it would “furnish services to the public, potentially including manufacturers and producers in Kentucky.”

The Circuit Court concluded that Bluegrass lacked the power of eminent domain under Kentucky Law. The court noted that Chapter 278 of the Kentucky laws was enacted to protect consumers “against costly and unnecessary capital construction.”  It found that Bluegrass sought to benefit from the rights conferred on regulated utilities without subjecting itself to the responsibilities, duties, and regulatory oversight imposed by the KRS.

While this decision is not surprising, as it merely affirms that the power of eminent domain should only be wielded sparingly and that the statutory authority empowering condemning agencies to use condemnation powers should be scrutinized carefully, it has gotten the attention of many around the country, as utility companies have been undertaking efforts to increase and upgrade service and those efforts have involved the use of eminent domain in increasing frequency.  Bluegrass is said to be likely to appeal, so this one may be one to watch.

A copy of the Circuit Court’s opinion is available here.

See discussion on the case from our Owners Counsel of America colleagues Robert Thomas, in his Inverse Condemnation Blog, and Michael Rikon, in his Bulldozers at Your Doorstep Blog.

Here is a sampling of some of the media reports on the Bluegrass case:

 

 

 

The latest in a long-running dispute between the U.S. Army Corps of Engineers and lake-front property owners in Michigan, whose beaches have allegedly been washed away because of jetties installed by the Army Corps long ago, is a ruling from the United States Circuit Court of Appeals for the Federal Circuit that the takings’ claims are not barred by the statute of limitations. Banks v United States, Docket 2012-567 (Fed Cir. Jan. 28, 2014).

“Appellants are landowners along approximately four and one-half miles of the eastern shore of Lake Michigan, south of the jetties. This shoreline is eroding naturally, but Appellants allege the jetties block the flow of sand and sediment from the river and the lakeshore north of their properties. Specifically, they argue that the structures interrupt the natural littoral drift within the lake, leading to increased erosion on their properties, amounting to an unlawful taking under the Fifth Amendment.” [slip op. at 3].

Given the fact that the Army Corps’ work constructing harbor jetties on Lake Michigan began in the 1800s, it is no wonder that the United States argues that the property owners’ claims were barred by the statute of limitations.  But, the most recent project began in 1950 and was not completed until 1989, and the affect of that project was not discovered by the property owners until an impact report issued in 1999, which is when this litigation commenced.  The circuit court specifically held that the claims did not accrue until 1999.

That said, in light of the proposed wave of dune replenishment projects scheduled to commence along the Jersey Shore, it will be interesting to see how the Lake Michigan property owners’ claims fare on remand.

We’ll keep you posted.

Taking Underwater Mortgages: Condemned to Failure?

Check out this post from our own Anthony DellaPelle which was just published in the American Bar Associations “In Limine” Blog.  This story comes close to home to us in New Jersey as the cities of Newark and Irvington are currently studying the feasibility of using eminent domain to take underwater mortgages.

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