The Aftermath of Kelo – Pfizer Leaving New London

From the Wall Street Journal

November 11, 2009, Page A20

“The Supreme Court’s 2005 decision in Kelo v. City of New London stands as one of the worst in recent years, handing local governments carte blanche to seize private property in the name of economic development. Now, four years after that decision gave Susette Kelo’s land to private developers for a project including a hotel and offices intended to enhance Pfizer Inc.’s nearby corporate facility, the pharmaceutical giant has announced it will close its research and development headquarters in New London, Connecticut.

The aftermath of Kelo is the latest example of the futility of using eminent domain as corporate welfare…”

Read more from the Wall Street  Journal article here

Further information is available from the Institue for Justice website here

 

Asbuy Park Redeveloper’s Claim Against City Revived

A redeveloper’s claim against the City of Asbury Park was remanded to trial by a recent New Jersey appellate court decision.  Asbury Shores, Inc. v. City of Asbury Park, Docket No. A-2158-08T1 (November 10, 2009) (unpublished).

Plaintiff Asbury Shores is the designated redeveloper for the Springwood Avenue Redevelopment Area in Asbury Park.  Asbury Shores sought the City’s consent to assignment of its redevelopment contract with the City to a third party developer (Somerset Development, LLC).  The City refused to consent, and Asbury Shores filed suit.  The trial court ruled in favor of the City, finding that the City could withhold its consent to assignment of a redeveloper’s agreement “for whatever reason it deems worthy.”  Somerset Development appealed, and the appellate division reversed. 

 The appellate court ruled that the “law implies a covenant of good faith and fair dealing which would preclude the City from unreasonably withholding consent” to the assignment of the redevelopment agreement.  The case was remanded to the trial court for adjudication of whether the City’s refusal to consent was reasonable.

Read more about this case in the Asbury Park Press here

 

Pfizer abandons site of infamous Kelo eminent domain taking | Washington Examiner

Pfizer abandons site of infamous Kelo eminent domain taking | Washington Examiner.

 

Tenants’ Rights Scrutinized in Kearny Redevelopment Taking

A New Jersey appellate court recently analyzed the rights of a tenant who challenged a town’s right to use eminent domain to extinguish its leasehold interest in a municipal redevelopment project.  Town of Kearny v. Discount City of Old Bridge, et als, Docket No. A-6220-07T3. 

In this case, two commercial tenants appealed from trial court rulings upholding the Town of Kearny’s right to condemn and terminating their leaseholds.    The tenants occupied their properties under leases entered into with the same landlord in 1994 and 1995.  They were located in a riverfront area designated by Kearny as the “Passaic Avenue Redevelopment Area” in 2001.  In 2007, the tenants’ landlord was designated by Kearny as the redeveloper for the project under New Jersey’s Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-8.  Under the Redeveloper Agreement, Kearny agreed to use its eminent domain powers to acquire property needed to advance and complete the redevelopment project.  While the landlord/redeveloper was required to attempt to terminate the leases through negotiation, the Redeveloper Agreement provided that the redeveloper could request that Kearny take the leaseholds by eminent domain, which occurred in 2008.

The tenants opposed the condemnation, claiming that it could not proceed because the Town had not negotiated with them before instituting suit, and that notice of the planned redevelopment activities was not provided.  They also asserted that the landlord/redeveloper’s construction plans were not consistent with the uses specified in the Town’s redevelopment plan.   These arguments were rejected by the trial judge, who upheld Kearny’s exercise of eminent domain.

The appellate panel held:  (1) under New Jersey’s Local Redevelopment and Housing Law (“LRHL”), a municipality has the authority to condemn a tenant’s leasehold interest separate from the landlord’s fee simple interest; (2) there was no separate obligation of the condemning agency to negotiate because the landlord/redeveloper’s attempt to negotiate the termination of the tenant’s leasehold before the town filed the condemnation complaint was sufficient to meet the negotiation obligation under the Eminent Domain Act, N.J.S.A. 20:3-6; and (3) a tenant has no right to individual notice of a proposed blight designation as the LRHL only requires notice to property owners.   However, the court also held that the matter should be remanded in order to determine whether the landlord/redeveloper’s proposed project is consistent with the redevelopment plan, and also whether the leases’ condemnation clause precludes the tenants’ right to just compensation where the landlord/redeveloper’s property interest was not being condemned.

A copy of the appellate court’s slip opinion is available here.

 

Atlantic Yards Arguments Made to Court of Appeals

The New York Court of Appeals is hearing arguments today about the Atlantic Yards project, where challenges to the right to condemn were filed by several owners and interest groups.  Lower courts upheld the condemning agency’s right to condemn.  If the project proceeds, it would result in the development of a large mixed use project which would include a professional sports arena to be used as the new home of New Jersey Nets basketball team.

Read more from the Wall Street Journal here.

 

Kelo Update: Eminent Domain in New London — Poetic Justice or Sour Economy?

 

What is happening in New London, Connecticut now, more than four years after the United States Supreme Court’s opinion in the Kelo v. New London matter?

Source: Associated Press

“There are a few signs of life: Feral cats glare at visitors from a miniature jungle of Queen Anne’s lace, thistle and goldenrod. Gulls swoop between the lot’s towering trees and the adjacent sewage treatment plant.

But what of the promised building boom that was supposed to come wrapped and ribboned with up to 3,169 new jobs and $1.2 million a year in tax revenues? They are noticeably missing.

Proponents of the ambitious plan blame the sour economy. Opponents call it a “poetic justice.”

Read more from the Associated Press here.

 

Gloucester County Officials Consider Eminent Domain

Candidates for Gloucester County Freeholder were recently interviewed and asked about their opinions regarding the use of eminent domain.  Read their answers in a recent Gloucester County Times article here.

 

Eatontown Adopts Ordinance Limiting Eminent Domain — Critics Question Its Effectiveness

The Borough of Eatontown has adopted an ordinance limiting its eminent domain powers, but the ordinance is subject to criticism by both borough residents and Mayor Gerald Tarantolo, who say the measure does not do enough to protect property owners.   The ordinance, which was passed by a unamimous vote at the Borough Council’s Sept. 9 meeting, restricts the Boruogh’s ability to use its power of eminent domain to take a private, occupied residence for the financial gain of a third party.  However, while borough residents approved the intent behind the ordinance, some are worried that the wording is insufficient to  protect homeowners.

Read more about the newly-adopted Eatontown ordinance in a recent article from the Atlanticville newspaper here.

 

Eminent-domain reform / When will it pass? – pressofAtlanticCity.com : Press Editorials

Eminent-domain reform / When will it pass? – pressofAtlanticCity.com : Press Editorials

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Long Branch Settlement Spares Homeowners

The City of Long Branch has approved a settlement with several homeowners which dismisses the eminent domain actions the City had instituted against them in 2005.  Under the settlement, the property owners, all of whom own homes in the MTOTSA (Marine Terrace, Ocean Terrace, Seaview Avenue) section of the Beachfront North area of Long Branch,  will also be entitled to receive certain tax abatements to spur reinvestment in their properties and will receive a portion of their attorneys’ fees from the City. 

Read more about the settlement on the website for the Institute for Justice, the Washington D.C. based non-profit agency which represented the MTOTSA group along with their local attorneys.

The MTOTSA area is located along the northern boundary of the massive Oceanfront Broadway Redevelopment Area, which was designated as an “area in need of redevelopment” by the City of Long Branch in the mid-1990s.  The area includes the Beachfront  North section where the MTOTSA properties are located.  Redevelopment efforts, including eminent domain acquisitions by the City of Long Branch and its designated redevelopers, commenced in 2000 and private redevelopment occurred in the Pier Village and Beachfront North sections of the redevelopment area after dozens of properties were taken, resulting in private gain.   The MTOTSA area had been slated for a future phase of redevelopment within the Beachfront North section, but market changes caused the private redevelopment interest to cool, paving the way for the potential settlement.

In 2006, the trial court had ruled summarily in favor of taking the MTOTSA properties, but the owners appealed and, in 2008, a three-judge appellate panel reversed and remanded the cases for a full hearing on the owners’ objection to the taking, based upon a 2007 ruling that had been issued by the New Jersey Supreme Court in Gallenthin Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (which tightened the criteria for redevelopment designations), as well as a 2008 New Jersey Appellate Division holding in Harrison Redevelopment Agency v. DeRose, 398 N.J. Super. 361 (which extended the time limitation on challenging redevelopment designations and created more stringent notice requirements).

After the MTOTSA cases were remanded, the parties began discussing potential settlement and the recent agreements were made before the trial court conducted its rehearing.

While 43 states have reformed their eminent domain laws in the wake of the U.S. Supreme Court’s decision in Kelo v. City of New London, the New Jersey Legislature has not adopted any legislative reform, and the New Jersey courts have increasingly scrutinized eminent domain abuse, especially in redevelopment matters.

Significantly, these settlements only apply to the MTOTSA owners and property owners in other sections of the Oceanfront Broadway Redevelopment Area are not insulated from eminent domain acquisitions of their properties.  Condemnation cases are currently pending for the taking of properties in the Beachfront North and Broadway Gateway sections of the redevelopment area.  In addition, Long Branch Mayor Adam Schneider has indicated that eminent domain powers still exist, that those powers may be used for the taking of commercial properties, and the Long Branch City Counsel has so far refused to remove eminent domain power from the Beachfront South section of the redevelopment area.

Read more about the status of the Long Branch redevelopment project in a recent Associated Press article in Business Week magazine here or in an Asbury Park Press article  here.