Property Rights Still at Risk in Hoboken

By Andrew Koehlinger

Eminent domain recently received a welcome setback in Hoboken. The city council, at the behest of Mayor Dawn Zimmer, recently voted to rescind an amendment designating the southwest zoning district as “in need of redevelopment,” and asked the planning board to consider declaring the area “in need of rehabilitation.” Mayor Zimmer’s change of heart is commendable, but ultimately, the rights of property owners to control the use of their properties may still not be safe if she continues to pursue a rehabilitation designation.

The southwest zoning district is located in a prime location at the entrance to Hoboken and covers 17 acres and 35 properties, including Frayed Knot, which was recently featured on HGTV’s Home by Navogratz. The city council indicated that they want to redevelop the area, but their actual plans and the process remain unclear.

Dennis Shah is a business owner in the targeted area. He owns Studio Printworks, a company that hand prints beautiful and unique wallpaper designs. Dennis’ father began the company almost thirty years ago and today it employs dozens of employees, many of whom are artisans and whose parents also worked for the company. Studio Printworks is considered one of the most prominent companies in the world in its industry, having designed and crafted wallpaper for the White House and high-end clientele. Their creations have been featured in museums and art galleries, and garnered awards from most major design magazines.

Over the years, Dennis maintained the company’s location in the city of Hoboken and has plans to expand his property and business. To do so, Dennis vetted and recruited numerous architects before choosing a world renowned architectural firm. Together they envisioned a place complete with residential high rises, an art space, retail shops, and outdoor common areas. But the city seems to have other plans.

In early 2006, the city charged the planning board with undertaking a study to determine whether or not the Southwest Area was “an area in need of redevelopment.” After reviewing their findings later that year, the city decided to zone the area as a redevelopment area.

Under New Jersey’s Constitution, such a determination allows the city government to then seize private property through eminent domain for “redevelopment”, which in New Jersey has always meant private development. Article 8, section 3 of the New Jersey Constitution stipulates that redeveloping “blighted” areas constitutes a “public use”—a serious deviation from the Founder’s intention that eminent domain be used for real public uses, like roads and schools..

New Jersey’s legislature further defined “blighted” in the Local Redevelopment and Housing Law (LRHL), outlining seven criteria for determining if an area is blighted (only one of which must be met). Cities can declare property “in need of redevelopment” because it is dilapidated, obsolescent, vacant land “not likely to be developed through the instrumentality of private capital,” or there is a growing or total lack of property utilization of the area.

As Dennis knows far too well, these standards and designations are often subjective and arbitrary, creating uncertainty. He notes that, “we do not know what [the city government] is going to do — we can only guess at what they are going to do.”

The recent decision by the Hoboken City Council gives hope to Dennis and other business owners in the area, but they now face a rehabilitation designation. Rehabilitation is similar to redevelopment, except that it does not authorize the use of eminent domain. On its face, rehabilitation appears to be harmless, but the experience of another business in town tells a different story.

Neumann Leathers is a 17-building complex owned by a group of private owners who recently wanted to develop it into what some envisioned would be the “crown jewel of Hoboken.” But at that time, the complex housed artists who opposed the redevelopment.

In April 2011, Mayor Dawn Zimmer directed the city council and planning board to consider designating Neumann Leathers as “in need of rehabilitation” because of the dilapidated state of the sewer and water infrastructure beneath the complex—over which the property owners have no control. But her public statements indicate she never wanted to condemn the building, but instead wanted to prevent the owners from selling or redeveloping the building, thereby protecting the tenants and their low rates.

One can reasonably assume that that if the city council used “rehabilitation” for such subjective and arbitrary ends with Neumann Leathers, it can do the same with other businesses in Hoboken, including Dennis’ Studio Printworks. Hoboken officials would be wise to take a better approach to developing the Southwest Area.

All Dennis wants is to be able to stop spending money fighting the city to protect the property he rightfully owns, and instead focus on growing his company, which remarkably he has been able to do despite the city’s threatening actions.

Especially in these still-difficult times, Hoboken should welcome and encourage entrepreneurs like Dennis, instead of trying to take or control his business.

The city government has taken a good first step by stopping redevelopment efforts. Moving forward, they should assure property owners that their investments are safe, and work with them to make Hoboken a better place for all.