Important N.J.Case Decisions:

Gallenthin vs Paulsboro, June 2007
Outcome: The New Jersey Supreme Court decided Gallenthin v. Paulsboro, which prevents cities from seizing land solely because it is underutilized.  The decision also contains a minimum standard for the “substantial evidence” test, required to designate “blight.” 

DeRose vs Harrison/Amaral vs Harrison, February 2008
Outcome: The court ruled that the 45-day limit to file suit against a municipality's effort to blight property for redevelopment is constitutional only if the owner received notice that the action contemplated by the redevelopment may result in the condemnation of their property.

The court also found that if a property owner withdraws all or part of the funds the municipality sets as the value at time of condemnation, the property owner does not forfeit his/her rights to contest the value nor the blight designation.

Long Branch Homeowners(MTOTSA) vs City of Long Branch
Outcome: A three-judge panel of the New Jersey Appellate Division unanimously reversed the June 2006 decision of Superior Court Judge Lawrence Lawson, which allowed the city of Long Branch, N.J., to condemn a charming seaside neighborhood known as MTOTSA for a luxury condominium development. This is the latest in a series of major decisions from New Jersey courts, including the Supreme Court, recognizing that state law and the New Jersey Constitution place real limits on the power of government to condemn property for private development. 

After explaining how the lower court misapplied the law, the court of appeals found that the city did not provide "substantial evidence" to support its findings of blight. 

"The Court basically told the city that if that's all it has, it can't take these homes," said Scott Bullock, a senior attorney with the Institute for Justice, which represents many of the homeowners along with Peter Wegener of Bathgate, Wegener & Wolf in Lakewood, N.J. "It's too late for the city to manufacture more evidence, so the Court's ruling is a fatal blow to the city. We are confident the owners will prevail on remand." The owners will also have the opportunity to show that changing the plan to use eminent domain was illegal. 

This ruling builds on, and reinforces, last summer's landmark New Jersey Supreme Court decision in Gallenthin Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007), in which the state's high court held that the government cannot declare an area "blighted" and seize property simply because the government wants to engage in economic development. 

The entire three-judge panel joined in the decision and wrote, "We agree with appellants that, in light of the principles laid down in Gallenthin, the City did not find actual blight under any subsection of N.J.S.A. 40A:12A-5, that the record lacked substantial evidence that could have supported the New Jersey Constitution's standard for finding blight, and that the absence of substantial evidence of blight compels reversal." 

The next step in the case will take place in the trial court, where Judge Lawson will hold a hearing. Under today's ruling, unless the city can produce a secret file containing substantial evidence of blight in the neighborhood, its efforts to bulldoze modest homes for a private developer must fail.

"This victory for the Long Branch homeowners is a victory for property owners across the Garden State, sending a clear message that abusers of eminent domain will be held accountable," said Bullock. 

Lori Vendetti, a longtime MTOTSA homeowner and a leader in the fight to save the neighborhood, said, "This obviously shows that something wasn't done right. It's vindication." Long Branch's MTOTSA neighborhood is an acronym for the streets Marine Terrace, Ocean Terrace and Seaview Avenue. 

"New Jersey courts understand that 'blight' and 'redevelopment' are often merely smokescreens for taking valuable property from people of modest means and giving it to rich and powerful developers," said Jeff Rowes, a staff attorney with the Institute for Justice. He added, "Our long-awaited trial will expose the City's eminent domain abuse as the sham it is."

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Wins for Property Rights in NJ:

Linwood Inn in Linden removed from redevelopment list 
September 22, 2008 
STAFF REPORT 
John Neshimka feels the imaginary chains around his South Wood Avenue business have finally been unlocked. 

That's due to City Council action on Tuesday, Sept. 16, which removed the Linwood Inn at 19 S. Wood Ave., which Neshimka and his wife own, from designation within the city's South Wood Avenue Redevelopment Area. The measure, which spared the historic building from possible condemnation and demolition, was unanimously approved by the council members.

"It's over, thank God.," John Neshimka said Tuesday after the meeting. "It's a big relief. It's been a long time. It's like the chains are taken off." 

Both he and his wife, Lori Neshimka, noted they have been fighting the city and the Union County Improvement Authority since before their children, Bobbie, 5 and Jenna, 3, were born. 

Mayor Richard Gerbounka said the city was able to remove the inn from the redevelopment designation after a recent court ruling terminated the city's contract with Verge Properties to redevelop the South Wood Avenue area. The ruling allows the city to rethink which properties will be included in the redevelopment plan. 

He said it would have been too expensive for the city to acquire the inn property and relocate the boarders and tenants living above the first-floor restaurant. 

"From an economic standpoint it was not feasible," said Gerbounka, who estimated the cost would have been about $1.2 million. Gerbounka said he knows the ruling and the council's actions have taken a lot of weight off the Neshimkas' shoulders. 

"We appreciate the action taken tonight by the City Council, Council President Robert Bunk and Mayor Richard Gerbounka. Their passing of a resolution removing the Linwood Inn from the South Wood Avenue Redevelopment Area finally undid the wrongful labeling of the Linwood Inn as "neglected property in need of redevelopment," the couple said in a written statement in which they thanked Beatrice Bernzott, the Tremley Point Alliance, the Linden Historical Society, their attorney Peter Dickson, friends and neighbors for their help. 

"We now look forward to the renaissance of Wood Avenue, which is historically the heart of Linden. We don't know what the future holds but we have paved the way for the Linwood Inn to stay, and be surrounded by the new "transit village," they said. 

The Linwood Inn, which dates back to 1882, houses a restaurant on the first floor, a boarding house on the second floor and apartments on the third floor. The building also houses the Linden Historical Society's displays of artifacts, memorabilia, and photographs. 

Several years ago the Planning Board designated the inn as part of an "area in need of redevelopment" within the four-block South Wood Avenue Redevelopment Project Area. The designation allows the city to acquire properties through condemnation, if the owners refuse to sell. 

With upgrades such as brick face, vinyl siding and more than $500,000 worth of improvements, the couple said their building did not resemble the deteriorating structures in the area. Nonetheless, their building was included in the redevelopment project area because its location, at the intersection of Wood and Linden avenues. The site intersected with a planned Transit Village ‹ a planned development of housing, retail and commercial uses based around the Linden Train Station. 

The couple said one of the key reason the redevelopment designation was dropped was because they were never properly information of the inn's inclusion in the redevelopment area. Instead the inn's previous owner was notified. 

Both the couple and their attorney have always maintained that the building should not have been classified as a property in need of redevelopment because it was not substandard, functionally obsolete and did not exert an adverse influence on the area. 

Gerbounka said the city plans to proceed with redevelopment but at a slower pace and on a more piecemeal basis. The city plans to seek mixed use development proposals in December for the vacant tract on South Wood Avenue, across from the Linwood Inn, before proceeding with redevelopment of other tracts in the area. 

"We want to try to work with the property owners," said Gerbounka adding the city will only look to exercise eminent domain if necessary.

Judge orders halt to Harrison work

HARRISON - Redevelopment work in downtown Harrison was at a standstill today after a Superior Court judge issued an order halting the project.

The work cannot resume until it is clear whether the Harrison Redevelopment Agency had the right to condemn properties there, Judge Maurice Gallipoli ruled in Jersey City.

Gallipoli's stop-work order affects properties near the Harrison PATH train station, where Steve Adler owned parking lots and industrial buildings, said Anthony Della Pelle, Adler's attorney.

The redevelopers are spending $15 million to clean up contamination at Adler's properties, said Paul Fernicola, an attorney for Harrison Commons, which is building nearly 500 residences north of the PATH station.

Adler and three other landowners have been fighting Harrison's condemnation of their properties, saying the town did not give them enough warning that their land could be seized.

In February, a state appeals court ruled in the property owners' favor and sent the case back to the lower court. Gallipoli, who ruled in favor of the town more than a year ago, has scheduled another hearing in May, Della Pelle said. A new trial could begin after that, he said.

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A Superior Court judge in Essex County has dealt a major blow to a plan to build 2,000 condominiums in downtown Newark, saying the city failed to prove the area in question is deteriorating and in need of redevelopment.

The 71-page decision, issued yesterday, cites the watershed state Supreme Court decision, Gallenthin Realty Development Inc. vs. Borough of Paulsboro, handed down earlier this year that limits the government's power to seize land.

In the Newark case, Judge Marie P. Simonelli said the city cannot designate the 14-acre Mulberry Street area "blighted" simply because the property could be used for better purposes. Property owners fought the designation, saying the area was still thriving and that they did not want their land to be seized through eminent domain.

"The court finds that the city declared the entire Mulberry Street area as an area in need of redevelopment solely because it is not properly utilized and fully productive," Simonelli said in her decision. "Under the Gallenthin holding, this declaration does not meet the constitutional requirement of blight and must be invalidated and set aside."

The decision puts the future of the condo project in jeopardy, though all parties involved disagreed on whether the project is dead or viable in an amended form. The Mulberry Street condo project, which was to be developed by the Newark Redevelopment Corp., is slated for a prime tract one block from the Prudential Center arena, scheduled to open in October.

Stefan Pryor, the deputy mayor in charge of economic development, said the Booker administration is analyzing the judge's decision and refused to say whether it will appeal.

"The outcome of the case will not affect the arena project," he said.

John Buonocore, the attorney representing the plaintiffs, declared the condo project dead.

"We are delighted that the court saw through this pre-arranged land grab on behalf of politically favored developers," Buonocore said. "The ruling sends a message to politicians across the state that the courts will not sustain economic development takings under the guise of the redevelopment laws."

Bruce J. Wishnia, one of the principals of Newark Redevelopment Corp., said the decision is a sad day for the city and the state. He said he is not sure what this means for the overall project.

"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."

The Mulberry decision comes at a time when land and redevelopment issues are under intense public scrutiny in a city that has struggled for decades to rebuild itself.

One week ago, Sharpe James, who served as mayor for two decades, was indicted on charges he steered lucrative land deals to companion Tamika Riley. The property owners in the Mulberry case have long alleged political contributions from the developers swayed council members to vote in favor of declaring the area in need of redevelopment.

The judge concluded her opinion with a tart reference to James' criminal charges.

"This evidence certainly provides cause to question the results and validity of the redevelopment investigation," she said. "However, the court mentions it for historical purposes only and makes no determination of the merits of plaintiff's corruption claim. It appears that such a determination may be made in the recently initiated criminal proceedings involving former Mayor James."

The Mulberry Street Redevelopment project made its debut five years ago during James' administration. In November 2002, Wishnia and his partner, Emile Farina, a former aide to then Councilwoman Bessie Walker, pitched the idea to Nathan Allen, director of the city's Department of Economic and Housing Development.

Plans called for the Newark Redevelopment Corp. to negotiate with property owners for their land. If negotiations failed, the developers planned to ask the city to use its condemnation powers to seize those properties.

According to Simonelli's ruling, there is no evidence any negotiations took place.

Instead, she said, the city pursued an investigation into declaring the area in need of redevelopment, paving the way for condemnation.

In her decision, Simonelli leveled stinging criticism at the snug relationship between developers and officials in the city. Attorneys, relatives and consultants affiliated with Wishnia and Farina donated an additional $53,325 to some council members when they were making critical decisions about the project, according to the plaintiffs.

"There is evidence in the present case that the Mulberry Street Redevelopment project and NRC's role as its developer was "a done deal," a fait accompli, before the required statutory redevelopment process began," Simonelli said.

City-hired planner David Roberts issued a report in April 2004 declaring the area in need of redevelopment because the parking lots, storage yards and businesses in the area "consumes land that could otherwise be available for much more productive uses."

But Simonelli faulted Roberts' report, saying it lacked empirical evidence to support his conclusions.

On Oct. 14, 2004, the planning board passed a resolution recommending the city declare the Mulberry Street area in need of redevelopment. The city council agreed and on Nov. 3, 2004, it passed a resolution declaring the area in need of redevelopment.

Katie Wang may be reached at kwang@starledger.com or (973) 392-1504.

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Lodi trailer park residents rejoice Wednesday, July 18, 2007 By SUZANNE TRAVERS HERALD NEWS LODI -- Ceding victory to residents and owners of two trailer parks in a five-year legal battle over eminent domain, the Borough Council has dropped its attempt to seize the privately owned property. The council voted unanimously Monday night to forgo an appeal of a lower court decision that found the borough had no grounds to seize about 20 acres at the trailer parks. Borough officials had argued the area along heavily traveled Route 46 was blighted and that allowing a private developer to redevelop the sites was in the public interest because it would boost tax revenues. But members of the newly installed five-member council, which took office July 1, said they decided to withdraw the appeal after concluding the borough would lose the court fight. "It's a no-win situation and we put these people through hell," said Mayor Karen Viscana, who succeeded Gary Paparozzi. "We didn't want to waste any more money." Viscana, who had voted in favor of the land seizure as a member of the Planning Board and later on the council, said she had been advised the council "would look foolish if we didn't continue" with the eminent domain appeal, but that new borough attorney Scott Sproveiro indicated the trailer park owners and residents were likely to win the case. More than 200 residents live at Brown's Trailer Park and Costa Trailer Court. Members of Save Our Homes, a tenants' rights group they formed to fight the borough's contention that the area was "in need of redevelopment," rejoiced on Tuesday at the council's decision not to appeal. "We're all thrilled," said Mildred Samuels, 80, who lives at Costa Trailer Court. "We're having a fundraiser September 16 to pay our lawyers. Now it's going to be a celebration." "I believe that a lot of people in town found this repugnant on a lot of levels," said Kendall Kardt, president of Save Our Homes. "They felt threatened themselves by the idea that eminent domain could be used to put people out of their homes." Robert Bonanno, owner of Brown's Trailer Park, said he hoped the council's action will put trailer park residents' minds "at ease." "We felt we were going to come out winners, but I'm glad the new council and mayor have changed the direction. We appreciate it very much," he said. In October 2005, a state Superior Court judge ruled the borough had not provided sufficient evidence that the trailer parks were in a condition meeting the definition of blight. The borough then appealed that decision, and the case was heard in Hackensack before the state Appellate Division of state Superior Court in January. Paparozzi, who lost in the May elections, said he believed the current council bowed to public pressure in voting to withdraw the appeal. Paparozzi aid he stands by the borough's earlier contention that the trailer parks are blighted sites requiring redevelopment. In a 2005 case heard by the U.S. Supreme Court in Kelo vs. New London, Conn., which concerned the use of eminent domain to transfer land from one private owner to another for economic development, the court determined in a 5-4 decision that the benefits a community received from economic growth qualified redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment. Nevertheless, the court's decision has been roundly criticized by public officials and property owners, as a violation of property rights and as a misinterpretation of the Fifth Amendment The Lodi case, and an eminent domain case in Long Branch, have garnered attention statewide as examples in which local governments have attempted to seize private land for private redevelopment rather than for public use, such as a highway. Last month, the state Supreme Court ruled that local governments can use eminent domain to seize only lands that are "blighted" after the town of Paulsboro attempted to acquire a 63-acre tract for redevelopment through eminent domain by arguing the land was underused.

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NJ SUPREME COURT GIVES EMINENT DOMAIN ABUSE FIGHTERS A BIG VICTORY
Below is a Press Release from the Institute for Justice issued June 13, 2007

New Jersey Supreme Court Limits Bogus Blight Designations

Arlington, Va.-Today, the New Jersey Supreme Court unanimously struck down an attempt by the Borough of Paulsboro to "blight" a vacant piece of property, holding that the fact that a piece of land is "not fully productive" cannot be used as a basis for including the property in a redevelopment area.

"This decision is very important for the hundreds of property owners in New Jersey fighting to save their homes and small businesses from eminent domain abuse," said Scott Bullock, an Institute for Justice senior attorney who argued the Kelo v. City of New London case before the U.S. Supreme Court in 2005 and who is representing homeowners in Long Branch, N.J., in an eminent domain case currently before New Jersey’s appellate court. "The Court made it absolutely clear that the judiciary must play a vital role in reviewing bogus blight declarations by tax-hungry municipalities throughout the state." The Institute filed an amicus curiae brief in the Gallenthin v. Borough of Paulsboro case on the side of the property owner.

In its opinion, the Court warned of the danger of open-ended blight designations used by the Borough in this case and by many other municipalities throughout New Jersey: "Under [the Borough’s] approach, any property that is operated in a less than optimal manner is arguably ‘blighted.’ If such an all-encompassing definition of ‘blight’ were adopted, most property in the State would be eligible for redevelopment."

The opinion also contains some very helpful language to the homeowners fighting the condemnation of their properties in Long Branch. In discussing the level of proof needed by governments in redevelopment cases, the Court declared: "[A] municipality must establish a record that contains more than a bland recitation of applicable statutory criteria and a declaration that those criteria are met. Because a redevelopment designation carries serious implications for property owners, the net opinion of an expert is simply too slender a reed on which to rest that determination."

"In declaring a perfectly fine neighborhood ‘blighted,’ the City of Long Branch relied on the very type of bland, conclusory evidence that the Supreme Court in this case declares inadequate," said Jeff Rowes, an Institute for Justice staff attorney who authored the Institute’s amicus brief in the Gallenthin case and who represents the Long Branch homeowners. "The Court’s decision definitely strengthens our argument that Long Branch violated New Jersey law in taking the homes of long-time residents."

"The New Jersey Supreme Court joins other state high courts, including Ohio, Oklahoma, Rhode Island, Maryland, and Missouri, in starting to cut back on the abuse of eminent domain and redevelopment powers by local municpalities," said Dana Berliner, an IJ senior attorney who argued the case at the Ohio Supreme Court. In the wake of the Kelo decision, many state supreme courts are visiting these issues for the first time in decades and increasing judicial oversight of eminent domain.

Institute for Justice

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Cramer Hill Plan Won't take Houses
By JIM WALSH  Courier-Post Staff