Eminent Domain in Asbury Park: An offer you can refuse — New Jersey Eminent Domain Blog, 1/30/06

By Bill Ward

The dictionary defines goniff as a Yiddish word for a “thief.” Having received an offer for their property from Asbury Partners LLC, the designated developer for the Asbury Park beachfront, Thomas and Donna Orlando now know the meaning of that term.

The Orlandos purchased a fully renovated three-family house located two blocks from the beach for $575,000 in September 2004. In December 2005, the Orlandos received the offer and appraisal from Asbury Partners in the amount of $330,000, premised on the appraisal of Donald Moliver. This offer is significantly less than the first mortgage on the property.

Under normal circumstances, we would expect Mr. Moliver and Asbury Partners would consider the sale of the subject property and the fact that the beachfront real estate has increased since 2004, not only in Asbury Park but in New Jersey in general. Therefore, a reasonable starting point would be at least ten percent over the purchase price or approximately $630,000.

Under normal circumstances, a homeowner would not need a lawyer in an eminent domain action of this sort, because a recent arms-length sale of the subject property is the best evidence of value. But this transaction, like others we’ve seen in Long Branch and Asbury Park, is driven by greed. The developers are dictating the terms, and their objective is to buy the property as cheaply as possible. The municipality is complicit in this arrangement as they will institute eminent domain proceedings to acquire the owner’s site, absent an agreement with the owner. This scenario, while outrageous, is by no means unusual where the unholy alliance is at work., i.e. developers and compliant politicians.

The settled rule in New Jersey and other states is that any increase or decrease of the market value of the property acquired or caused by the project of the condemning authority should be factored out of the market value determination. See the following cases:

  • Jersey City Redevlopment Agency v. Kugler, 58 N.J. 374, 379 (1971);
  • Housing Authority, Atlantic City v. Atlantic City Expo., 62 N.J. 322 (1973);
  • Jersey City Redevlopment Agency v. Mack Properties Co. No. 3, 280 N.J. Super. 553, 568-69 (App. Div. 1995);
  • State, Dept. of Environmental Protection v. S. Nalbone Trucking Co., Inc., 128 N.J. Super. 370, 377 (App. Div. 1974);
  • United States v. Miller, 317 U.S. 369, 375, 87 L.Ed. 251, 63 S. Ct. 276 (1943).

The Moliver appraisal perverts this rule by claiming that all market increases are attributable to projects of the City of Asbury Park and Asbury Partners LLC. This position is unsupported by the reality of prior abortive redevelopment efforts undertaken by Asbury Park. The entire beachfront has been blighted since January 1984. The initial redevelopment efforts by Carabetta and Vaccaro were stopped as a result of Carabetta’s bankruptcy in 1992.

Asbury Partners LLC, using money from M.D. Sass Company, purchased Carabetta’s rights in the bankruptcy proceeding and paid the City of Asbury Park $6.5M for tax liens on the properties. These funds were desperately needed by the City of Asbury Park to stave off its own pending insolvency. For these payments Asbury Partners took over Carabetta’s project and developed a new plan. Carabetta, it should be noted, never completed anything. He left a rusting structural steel monument at Ocean Avenue and Second Street for the last fifteen years. Asbury Partners LLC also have not completed anything, although they have grandiose plans. Where then is the enhancement to the real estate market which they claim in Moliver’s appraisal to be attributed to their project?

It’s not there. Rather, value in the market in Monmouth County in general and in beachfront properties in particular have dramatically increased in the last ten years. Properties like Mr. Orlando’s – two to three blocks from the beach - are difficult to find. The Orlando’s property is in a quiet residential area, adjoining second Avenue and the lake. This property is valuable because of its location. Asbury Partners LLC, and their “project” such as it is, have had little impact, yet they use the “scope of the project" rule to argue Orlando’s property is worth $330,000 as of December 2005. This is $245,000 less than the Orlandos paid for the property in 2004.

Last week, the Appellate Division in the case of DM Asbury Realty LLC et al v. The City of Asbury Park and Asbury Partners LLC unanimously, in a 65-page opinion issued by Judges Conley, Weissbard, and Winkelstein, decided that the property owners numerous issues raised on appeal were without merit. The opinion affirms an earlier unreported opinion by Judge Lawson, A.J.S.C. Monmouth County, who similarly dismissed all of the arguments raised by the property owners. The appellate panel concluded that the law division judge properly granted summary judgment on each of the plaintiff’s claims. Download the opinion.

The issues raised included:

  1. Whether the plan’s failure to permit property owners to develop their own properties, except with the approval of the designated developer constituted a taking
  2. Whether the City improperly ceded its legislative authority to the designated developer, a private entity;
  3. Whether the plan placed an illegal 30-year moratorium on private development within the redevelopment area
  4. Whether the manner in which the properties were chosen for redevelopment violated plaintiffs equal protection rights
  5. Whether the City had improper motives for including certain properties in the plan
  6. Whether the City’s reliance on an unlicensed planner rendered the passage of the ordinance invalid and
  7. Whether plaintiffs were denied adequate discovery.

Unless this case is granted certification by the New Jersey Supreme Court, which is unlikely, the municipality and the developer are now free to prepare their appraisals and make acquisition offers to the affected property owners. In all likelihood, if Moliver has been hired to do all the appraisals for the Asbury Park beachfront project, a skewed approach to market value will be evident to all property owners once they receive their offers. But unlike an offer from the Godfather, this is an offer you can refuse.

New Jersey Eminent Domain Blog: www.njeminentdomain.com