A summary of recent legislative reform in New Jersey regarding municipal redevelopment and eminent domain law, as well as a recent decision from the NJ Supreme Court regarding partial takings for beach replenishment projects.

1. November 21, 2013

2. Anthony F. Della Pelle, Esq. , CRE
adellapelle@mckirdyriskin.com
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•Shareholder, McKirdy & Riskin, PA
•Certified Civil Trial Attorney by NJ Supreme Court
• New Jersey Representative, Owners’ Counsel of America
• Member, Counselors of Real Estate®
Practice limited to eminent domain, condemnation, redevelopment and real estate tax appeals
25+ years representing property owners and special counsel to condemning authorities in
eminent domain matters
Author, New Jersey Condemnation Law Blog, www.njcondemnationlaw.com
New Jersey “Super Lawyer” (“Top 100” - 2009-2013; “Top 10” – 2012)
Subcommittee Chair, ABA Section of Litigation – Condemnation, Land Use & Zoning
Committee
Member of Governor Chris Christie’s Transition Team – Authorities Committee (2009)
President, Franklin & Marshall College Alumni Association; Vice President, New Jersey Hall
of Fame Foundation
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3. Dune Replenishment/Partial Takings Update:
Borough of Harvey Cedars v. Karan, __ N.J. __
(July 8, 2013)
 Gallenthin Realty Development v. Borough of
Paulsboro, 191 N.J. 344 (2007)
 Legislative Update: S-2447/A-3615
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4. Harvey Cedars v. Karan – the facts:
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$2M oceanfront home on Long Beach Island
Borough condemns a “dune easement” to allow US Army Corps of
Engineers to construct a 22-foot high dune on the property
Borough offers $300 for easement; contends damages are “ de
minimus”
Owner’s appraiser: loss of views cause $500,000 of damages
Owner moves in limine to bar Borough appraisal which contends that
taking creates “special benefits” via storm protection provided by dune
Evidence excluded by trial court as “general benefit”
Jury awards $375,000 in damages
Trial court ruling affirmed by Appellate Division
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5. Harvey Cedars v. Karan – the setting:
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Supreme Court grants certification before Superstorm Sandy
Superstorm Sandy causes catastrophic property losses
Areas with engineered dunes fare much better than those without
Dune/storm replenishment efforts are renewed in earnest along the
Shore
Public perception and media portrayal paints “holdout” oceanfront
property owners as greedy, selfish, obstructionists
Increasing political pressure mounted at local and State levels,
subjecting owners to ridicule and shame
Amicus curiae status granted to State of New Jersey and other
interest groups
Arguments held May, 2013
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6. Harvey Cedars v. Karan – the decision:
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general-benefits doctrine is “at odds with contemporary principles of
just-compensation jurisprudence”
Jury only permitted to hear “one side” of the story
Could result in a “windfall” to the property owners at public expense
Just compensation in partial taking must be based upon a
consideration of “all relevant, reasonably calculable, and nonconjectural factors that either decrease or increase the value of the
remaining property”
Court recognizes that the loss of view is compensable, but requires
rehearing permitting evidence regarding the impact of the storm
protection benefits upon the value of the property as an offset to
damages
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7. Harvey Cedars v. Karan – the implications:
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Shore communities rejoice!
Will Karan cause the holdouts to change course and donate their
properties?
◦ Mr. and Mrs. Karan settle for $1 – WHY?
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Will Karan cause, or has it caused, the shore communities to
accelerate efforts to obtain easements, voluntarily or via eminent
domain?
What impacts will or may it have on just compensation determinations,
from the condemnor’s offers to the commissioners’ awards and jury
awards that result?
Related issues: loss of access, loss of private beach under public
trust doctrine, ambiguity in description of rights obtained
Funding implications and realities
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8. Harvey Cedars v. Karan – additional implications:
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Does the decision impact the two traditional methods of valuing partial
takings?
◦ Before and After method: value of entire parcel before taking – value of remainder after
taking = just compensation
◦ Per Se method: value of part taken + diminution in value (or damages ) to remainder =
just compensation
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Does the decision impact the duty of the condemnor and the owner to
mitigate damages?
What remains of the “project influence” doctrine? Shield or sword?
What type(s) of evidence will be offered, and what will be deemed
admissible?
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11. Redevelopment takings proliferate
 Redevelopment extends into the suburbs
◦ Princeton, Livingston, South Orange
 Kelo creates a heightened awareness, political
implications
 “Blight” requirement in NJ Constitution
 Inconsistent use by municipalities and of judicial
review
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12. Public Advocate Report (5/06)
 Resolve conflict between “blighted” and “not fully
productive” in subsection (e)
 Other State and Federal Legislation
 Failed legislative reform in New Jersey
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63 acre parcel of vacant land along Mantua Creek,
served by rail, surrounded by industrial uses
Historic use as a dredge spoils site and as a barge
transport facility
Across Delaware River from Philadelphia airport
Owned by Gallenthin family for decades
Rezoned in 1990s to Marine Industrial Business Park
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16. 
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1998 Paulsboro Master Plan identifies Gallenthin property as “idle”,
considers preservation
1999 redevelopment study initiated, focuses on adjacent BP and
Dow/Essex Chemical properties – Gallenthin site NOT included
2000 study amendment to include additional parcels – not
Gallenthin
2002 study includes Gallenthin, identified as “not fully productive”
under criteria (e)
Property included in 2003
Prerogative writs lawsuit commenced in 2003
Trial court dismissed complaint, finding “substantial evidence”
affirmed per curiam by Appellate Division
Certification granted in 2006
Amici join suit
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17. 
Plaintiff’s argument
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Property not blighted
Not rationally part of BP/Down Redevelopment Area
Not necessary to achieve overall redevelopment initiative
No substantial evidence existed to support designation
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Paulsboro argument
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◦ Stagnant and not fully productive conditions = blight
◦ Historic use as a dredge spoils site and as a barge transport
facility
Blighted Areas Clause: Article VII, Section 3, Paragraph 1:
◦ “The clearance, replanning, development or redevelopment of
blighted areas shall be a public purpose and a public use, for
which private property may be taken or acquired.”
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18. 
“Blight”
◦ Impairs growth, withers hopes and ambitions or impedes progress and
prosperity
◦ A slum, breeding ground for crime, disease, and unhealthful living conditions
◦ Legislative history – substandard conditions, unsanitary housing,
deterioration, dilapidation, “a menace”, a social and economic liability
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Review of post-1947 case law
◦ Wilson v. Long Branch (1958) – decadent effect of slums and blight
◦ Levin v. Bridgewater (1971) – stagnation and unproductiveness preventing
proper development
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Less than optimal ≠ Blighted
Requires a decadent effect
“more than a bland recitation of applicable statutory criteria” is required
(e) applies only to property that has become stagnant and unproductive
because of issues of title, diversity of ownership, or other conditions of
the same kind.
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19. 
A delineated area may be determined to be in
need of redevelopment if, after investigation,
notice and hearing ... the governing body of the
municipality by resolution concludes that within
the delineated area any of the following conditions
is found:
N.J.S.A.40A:12A-6

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e. A growing lack or total lack of proper utilization
of areas caused by the condition of the title,
diverse ownership of the real property therein or
other conditions, resulting in a stagnant or not fully
productive condition of land potentially useful and
valuable for contributing to and serving the public
health, safety and welfare.

21. What “other conditions” are we talking about?
 How productive is “fully productive”?
 Does Subsection “e” authorize redevelopment of
occupied areas, in good physical condition,
where taxes are current and assessments are
stable so as to permit higher and better uses
which are “potentially useful and valuable for
contributing to and serving the public health,
safety and welfare.”?
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24. 
Ordinarily, the effect upon value of a proposed
redevelopment project – either up or down must be disregarded in valuation
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Highest and best use issues - zoning
Physical condition of subject
Selection of sales or leases
Adjustments to sales or leases
Income method considerations

25. 62-64 Main St., LLC v. City of
Hackensack (Docket A-19/20-13):
 Certification granted by NJ Supreme Court.
Involves subsections (b) and (d) of the LRHL
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26. The property is valued as if the redevelopment
project never occurred
 Problems caused by passage of time
 Project influence issues are heightened in
redevelopment cases
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27. Redevelopment Plan and Zoning Considerations
 Legal permissibility and reasonable probability
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28. Does the subject fall into disrepair?
 Economic motivations of owners
 Occupancy status
 Rental values of subject
 Status and impacts on approvals
 Conditions in neighborhood
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29. 
The appropriate date of value in the
redevelopment context is presently unsettled.
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Two Statutes and the Constitutional requirement
for just compensation require reconciliation.

30. It is generally assumed that values will decline
after a redevelopment or “blight” designation
and they often do.
 Sometimes values continue to increase.
 What happens in the case of a 1999 designation
and a 2013 condemnation action? Who gets the
benefit of the increased value – the owner or the
redeveloper?
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31.  Just
compensation is the fair market
value of the property as of the date of
the taking, determined by what a
willing buyer and a willing seller
would agree to, neither being under
any compulsion to act.

32. Legislative Update – a
Solution?
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33. 
Introduced in the Assembly on December 13, 2012 and in the
Senate on January 8, 2013.
◦ Assembly Bill: Sponsored by Coutinho (D-29), A.M. Bucco (R-25), Munoz
(R-21) & Co-Sponsored by: Sumter (D-35), Handlin (R-13), Chivukula (D17)
◦ Senate Bill: Sponsored by Van Drew (D-1) and Rice (D-28) & CoSponsored by: Oroho (R-24), A.R. Bucco (R-25), Allen (R-7)
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Amended and released unanimously by Assembly Commerce &
Economic Development Committee: March 7, 2013.
Amended on the floor of the Assembly on April 29, 2013
Passed by the Assembly 78-0-0 on May 20, 2013. Referred to
the Senate.
Released unanimously by Senate Budget and Appropriations
Committee on June 3, 2013.
Passed by the Senate 36-1 on June 20, 2013
Signed into law by Governor Christie on September 9, 2013

34. 
“The resolution authorizing the planning board to undertake a
preliminary investigation shall state whether the
redevelopment area determination shall authorize the
municipality to use all those powers provided by the
Legislature for use in a redevelopment area other than
the use of eminent domain (hereinafter referred to as a "NonCondemnation Redevelopment Area") or whether the
redevelopment area determination shall authorize the
municipality to use all those powers provided by the
Legislature for use in a redevelopment area, including the
power of eminent domain (hereinafter referred to as a
"Condemnation Redevelopment Area")…..”
NJSA 40A:12A-6(a)

35. 
Municipality still has available to it the authority to
determine that the area is a CRA:
“(g) If a municipal governing body has determined an area
to be a Non-Condemnation Redevelopment Area and is
unable to acquire property that is necessary for the
redevelopment project, the municipality may initiate
and follow the process set forth in this section to
determine whether the area or property is a
Condemnation Redevelopment Area . Such
determination shall be based upon the then-existing
conditions and not based upon the condition of the area or
property at the time of the prior Non-Condemnation
Redevelopment Area determination.”
NJSA 40A:12A-6 (b) (5) (g)

36. 
If municipality decides to use the NCRA route:
“…the notice of the hearing shall specifically state that a
redevelopment area determination shall not authorize the
municipality to exercise the power of eminent domain to
acquire any property in the delineated area.”
NJSA 40A:12A-6 (b) (3) (b)

37. “(c) If the resolution assigning the investigation to the
planning board, pursuant to subsection a. of this
section, stated that the redevelopment determination
shall establish a Condemnation Redevelopment Area,
the notice of the hearing shall specifically state that a
redevelopment area determination shall authorize the
municipality to exercise the power of eminent domain to
acquire property in the delineated area.”
NJSA 40A:12A-6 (b) (3) (c)

38. 
Powers are limited if NCRA:
“Acquire, by condemnation, any land or building which
is necessary for the redevelopment project, pursuant
to the provisions of the "Eminent Domain Act of 1971,"
P.L.1971, c.361 (C.20:3-1 et seq.), provided that the
land or building is located within (1) an area that was
determined to be in need of redevelopment prior to the
effective date of P.L. , c. (C. ) (pending before the
Legislature as this bill), or (2) a Condemnation
Redevelopment Area
NJSA 40A:12A-8 (c)

39. 
Another purpose of A3615/S2447 is to incorporate
reference to 2 Judicial Decisions:
“WHEREAS, The "Local Redevelopment and Housing
Law" should appropriately be amended to be consistent
with these judicial holdings and to address some of the
concerns raised with respect to the use of eminent
domain in the implementation of redevelopment
programs;”
NJSA 40A:12A-2

40. WHEREAS, The Appellate Division of the Superior
Court in Harrison Redevelopment Agency v. DeRose,
398 N.J. Super. 361 (App. Div. 2008) addressed a due
process concern with the notice provision under the
Local Redevelopment and Housing Law, in cases where
eminent domain was used long after the property
sought to be acquired was designated as blighted and
property owners were precluded from challenging such
designation in defense of the condemnation of their
properties;
NJSA 40A:12A-2

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“(e) If the governing body resolution assigning the investigation
to the planning board, pursuant to subsection a. of this section,
stated that the redevelopment determination shall establish a
Condemnation Redevelopment Area, the notice of the
determination required pursuant to subparagraph (d) of this
paragraph shall indicate that:
(i) the determination operates as a finding of public purpose
and authorizes the municipality to exercise the power of
eminent domain to acquire property in the redevelopment
area, and
(ii) legal action to challenge the determination must
be commenced within 45 days of receipt of notice and that
failure to do so shall preclude an owner from later raising such
challenge.”
NJSA 40A:12A-6 (b) (5)(e)

42. “(h) A property owner who has received notice pursuant
to this section who does not file a legal challenge
to the redevelopment determination affecting
his or her property within 45 days of receipt of
such notice shall thereafter be barred from filing such a
challenge and, in the case of a Condemnation
Redevelopment Area and upon compliance with the
notice provisions of subparagraph (e) of this paragraph,
shall further be barred from asserting a
challenge to the redevelopment determination
as a defense in any condemnation proceeding
to acquire the property unless the municipality and the
property owner agree otherwise.”
NJSA 40A:12A-6 (b) (5) (h)

43. “WHEREAS, The New Jersey Supreme Court in
Gallenthin Realty Development, Inc. v. Borough of
Paulsboro, 191 N.J. 344 (2007), clarified one of the
criterion for designating redevelopment areas in New
Jersey and emphasized that the use of eminent domain
cannot be justified to acquire property unless it is
blighted, rather than merely not being put to its optimal
use; “
NJSA 40A:12A-2

44. “e. A growing lack or total lack of proper utilization of
areas caused by the condition of the title, diverse
ownership of the real [property] properties therein or
other similar conditions which impede land assemblage or
discourage the undertaking of improvements, resulting in
a stagnant [or] and [not fully productive] unproductive
condition of land potentially useful and valuable for
contributing to and serving the public health, safety and
welfare, which condition is presumed to be having a
negative social or economic impact or otherwise being
detrimental to the safety, health, morals, or welfare of the
surrounding area or the community in general.”
NJSA 40A:12A-5 (e)

45.  “14. a. A delineated area may be determined to be in need of
rehabilitation if the governing body of the municipality determines by
resolution that a program of rehabilitation, as defined in section 3 of
P.L.1992, c.79 (C.40A:12A-3), may be expected to prevent further
deterioration and promote the overall development of the
community; and that there exist in that area any of the following
conditions such that…”

46. 
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(1) a significant portion of structures therein are in a deteriorated or
substandard condition;
(2) more than half of the housing stock in the delineated area is at
least 50 years old;
(3) there is a [continuing] pattern of vacancy, abandonment or
underutilization of properties in the area;
(4) there is a persistent arrearage of property tax payments on
properties in the area;
(5) environmental contamination is discouraging improvements and
investment in properties in the area; or
(6) a majority of the water and sewer infrastructure in the delineated
area is at least 50 years old and is in need of repair or substantial
maintenance”
NJSA 40A:12A-14 (a)

47.  Q&A?
 Thank
you!
Anthony F. DellaPelle, Esq., CRE®
adellapelle@mckirdyriskin.com
www.mckirdyriskin.com
www.njcondemnationlaw.com
www.realestatetaxappealsnj.com
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