NJ court: Government agency can’t ‘bank’ property for unspecified potential future redevelopment

The Oriental Avenue property in Atlantic City that was owned by the Birnbaums and condemned by the state to use for future redevelopment.

The New Jersey Appellate Division has issued a ruling preventing the state’s Casino Reinvestment Development Authority from seizing a home in a low-income section of Atlantic City near the Absecon Lighthouse for an unspecified future redevelopment.

Today the court affirmed an Atlantic County Superior Court judge’s ruling that the condemnation of a residential property next to the casino was an abuse of power because the Casino Reinvestment Development Authority did not provide reasonable assurances that the proposed redevelopment if the property would come to fruition in the foreseeable future.

The redevelopment authority condemned the three-story residential property in Atlantic City owned by residents Charles and Lucinda Birnbaum. The authority argued the condemnation was necessary in order to promote tourism in Atlantic City. The property is located in the Atlantic City Tourism District within the boundaries of the South Inlet Mixed Use Development Project. The redevelopment authority proposed private, economic redevelopment, including the construction of tourism-focused residential, retail, and commercial uses in the area. The Birnbaum property was one of the last buildings left on its block. The land across the street has been vacant for the past 15 to 18 years.

In 2013, the redevelopment authority attempted to acquire the Birnbaum property through negotiations, offering the couple $238,500. The Birnbaums disputed the agency’s authority to take their property. The authority had no specific redevelopment plans under consideration for the project at the time, had not issued a request for proposals to prospective developers, and a developer had not committed to redeveloping within the South Inlet Mixed Use Development Project area. Yet the redevelopment authority maintained it had a right to “bank” the property for redevelopment at some unspecified time in the future. On redevelopment authority maps, the Birnbaum property is located in a “land bank area” slated for “future development.”

The agency filed a lawsuit in 2014 to condemn the property, exercising the agency’s power of eminent domain. The Birnbaums provided the court with documents that raised questions about whether a firm redevelopment plan existed. One of the major players in the tourism district, Revel Casinos, had filed for bankruptcy. Then in November of 2014, the Governor’s Advisory Commission on New Jersey Gaming, Sports, and Entertainment issued a report proposing major changes to the Atlantic City Tourism District and to the Casino Reinvestment Development Authority’s funding and authority. The report recommended: redirecting and reallocating certain funds away from the authority in order to meet the city’s pressing needs; funding a new nonprofit development company called the Atlantic City Development Corp. with a mission that would include serving as a land bank, acquiring blighted properties and demolishing existing structures, as well as planning, financing, and developing mixed-use redevelopment projects; having the authority assume responsibility for zoning, planning, and code enforcement in Atlantic City; concentrating revitalization efforts into five key areas of Atlantic City that did not appear to include the Birnbaum property; and expanding the tourism district to include the entire city of Atlantic City.

The Casino Reinvestment Development Authority argued that any uncertainties about whether or when the project would proceed were irrelevant because under state statute, the agency is permitted to acquire property “whether for immediate use” or not. Lawyers for the agency argued it was statutorily entitled to bank land for future use.

The original judge in the case said a valid public purpose existed for taking the Birnbaum property, and that the authority had provided sufficient specificity regarding the proposed use for the Birnbaum property through its Tourism District Master Plan and description of the project. But he also found that “there must be a reasonable assurance that the proposed plans will be implemented” and said the state legislature did not intend for — and the constitution does not permit — property to be acquired and to “remain idle indefinitely, without a reasonable assurance that the proposed plan
to justify the taking will be implemented.” The Appellate Division judges agreed with the superior court judge today.

“Under these highly unusual circumstances, it was reasonable for the judge
to question whether the project would proceed in the foreseeable future when determining whether the proposed condemnation constituted a manifest abuse of the CRDA’s condemnation authority,” reads the court’s opinion. “The project had stalled. Judge Mendez found that with the Revel Casino closed, Atlantic City experiencing an unprecedented financial downturn, the Birnbaums’ neighborhood being particularly hard hit, and the CRDA losing significant funding, the CRDA was attempting to ‘bank land in hopes that it will be used in a future undefined project.’ Approval of the condemnation could well leave the Birnbaum property vacant for an indefinite period of time, as the CRDA ‘waits for the right project to present itself.'”

The Fair Share Housing Center filed a friend of the court brief in the case on behalf of low-income communities.

“We are pleased that the court today rejected a speculative scheme by a government agency that would have reduced the supply of affordable housing in one of our state’s poorest cities,’ Fair Share Housing Associate Director Adam Gordon said. “Eminent domain should not be used to displace working families and other low-income communities as part of a wholly speculative development scheme with no demonstrated public benefit.”

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