Victories in New Jersey Give Property Owners Hope

By Alex Reynolds, Castle Coalition Intern

Although New Jersey has seen persistent abuse of eminent domain for decades, there is hope that the tide is turning for property owners in the Garden State.

A recent series of court rulings has tightened the standards used to invoke eminent domain and given New Jersey residents much-needed protection against land-hungry municipalities that have taken advantage of the state’s lax redevelopment laws.

The most significant recent victory came from Harrison, New Jersey, where an appeals court ruled that property owners had failed to receive “fair and adequate” notice to legally challenge the city’s blight designation of several properties within a redevelopment zone.[1]

Anthony DeRose, the property owner in the case, did not receive proper notification that his business’s 1997 inclusion into an area “in need of redevelopment” meant that the city could take his property through condemnation.[2]

In 2004, seven years after the redevelopment zone was established, DeRose discovered “redevelopment” actually meant that the city planned to take his 37-yeard-old business, Tony’s Truck Tire Repair, on Middlesex Street to make way for a mixed-use development project.[3] It did not matter that DeRose ran his successful business at the location for a decade nor that he had renovated the property in 2000. DeRose knew the city-imposed “blight” label was false and planned to persevere through the courts until he was vindicated.

Before DeRose’s case, Harrison had adopted a policy whereby residents were given a 45-day period to challenge a “blight” designation, beginning when the city declared an area “in need of redevelopment.”[4] The policy overlooked the fact that exact properties to be taken by eminent domain might not be determined until years after the redevelopment designation—leaving property owners with little or no legal recourse to challenge the town’s findings.

DeRose and his attorney Richard DeAngelis argued that the current notification system “leaves many property owners in the dark,” saying that it is unreasonable to give residents a timetable without telling them “when the clock has begun ticking.”[5]

Calling New Jersey law in the matter “spotty and incomplete,” the unanimous court ruled that the 45-day period was inadequate and that municipalities have certain “constitutionally essential” obligations to property owners.[6] According to the court, municipalities must notify property owners that their property has been designated for redevelopment and that the designation is lawful. They must also inform the owner of the legal time constraints on challenging the designation. Without this notice, property owners cannot be expected to abide by any 45-day period established by the city.[7]

Despite this victory DeRose’s property remains in limbo. The city condemned it in September, and he has continued his business in spite of the condemnation. DeRose will continue to defend his property now that the case has been sent back to the trial courts.[8]

The Harrison decision sets a much-needed standard for municipalities to abide by when proceeding with development projects that implicate eminent domain. Cities must now provide direct notice to owners about the fate of their properties and provide them with due process to legally challenge the city’s findings.

Princeton attorney William Potter, who represented another Harrison property owner involved in the DeRose decision was happy to see the court hand down the ruling.

“This is a very big day for opponents of eminent domain abuse,” said Potter, “This is a highly important case.” [9]

New Jersey public advocate Ronald Chen also praised the decision, saying that now municipalities are obligated to give residents “clear notice that their property is imperiled.”[10]

Along with the powerful standard of notification put forth in the Harrison decision, New Jersey courts have been siding with property owners in other municipalities.

In Belmar, an appellate court ruled that the city’s “blight” designation for the Belmar Strip Mall was insufficient under New Jersey law. Belmar’s designation relied upon such arbitrary findings as parking issues and inadequate size. [11]

This is the second time in the past year that a court found Belmar’s “blight” standards insufficient.

Relying heavily on the landmark victory in Gallenthin v. Paulsboro, the court found that New Jersey law does not permit the seizure of private property for economic development simply because land is not being used in an “optimal manner.”[12]

According to the court, “the definition of ‘blight’ and ‘area in need of redevelopment’ must be construed narrowly and in harmony with the New Jersey Constitution.”[13]

The decision does not rule out the possibility of redevelopment in Belmar, but it gives New Jersey municipalities warning that vague and misleading standards for “blight” are unacceptable when the taking of private property is on the line.

In response to the ruling, Belmar Mayor Kenneth Pringle is now considering redeveloping the area by forming a voluntary consensus among property owners as an alternative to eminent domain.[14]

Similar to the decision in Belmar, a New Jersey court also dismissed Washington Township’s “blight” designation based on its violation of the “under utilization” standard put forth in Gallenthin.[15]

Although these recent victories show signs of hope and give many property owners the power to challenge municipalities’ unfounded blight designations, there are still indications of “business as usual” eminent domain abuse in New Jersey.

In Atlantic City, Pinnacle Entertainment Inc. is hoping for a “blight” designation on successful businesses that stand in the way of its new casino project.

In Linden, the fate of the Linwood Inn is unknown, as the popular family-owned tavern and eatery struggles to fight their status as part of the “New Wood Avenue&rdq
uo; redevelopment.

And in Long Branch, citizens await their day in court to challenge the city’s decision to use eminent domain to make way for luxury condominiums.

These recent court rulings, along with those from last year, have shifted the state away from its previous redevelopment free for all. New Jersey courts have began to recognize blatant eminent domain abuse and may now have put the momentum for reform on the side of property owners as they struggle to keep what is theirs.

[1] DeRose v. Harrison

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Paul Kloepp, “Truck tire, repair shop owner happy for a day in court,” Jersey Journal, February 26, 2008.

[9] Tom Hester and Maura McDermott, “Legal Ruling Seen as Shield Against Property Seizure,” The Star Ledger, February 26, 2008.

[10] “Ruling a Big Win for Property Owners,” Home News Tribune, March 2, 2008.

[11] BMIA, LLC. V. Belmar

[12] Ibid.

[13] Ibid.

[14] Erik Larsen, “Belmar Redevelopment Dealt A Legal Setback,” Asbury Park Press, February 5, 2008.

[15] Gallenthin v. Paulsboro