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Jersey City Redevelopment Agency v. Bancroft Realty Co.

Decided: December 9, 1971.

JERSEY CITY REDEVELOPMENT AGENCY, A BODY CORPORATE AND POLITIC OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
BANCROFT REALTY CO., INC., A CORPORATION OF THE STATE OF NEW JERSEY, ET AL., DEFENDANT-RESPONDENT



Collester, Mintz and Lynch. The opinion of the court was delivered by Mintz, J.A.D.

Mintz

Plaintiff appeals from that portion of the final judgment following a jury verdict which ordered that the claim of the City of Jersey City for taxes and interest thereon due and owing from 1965 to 1968 shall not be a lien upon the judgment and condemnation award and that the condemnation award be paid to defendant property owner without making such deductions.

Defendant Bancroft Realty Co., Inc., (Bancroft) was the owner of a five-story brick tenement house situate at 185 Ninth Street in Jersey City (city), which it acquired in 1951 or 1952. On February 2, 1960 the city, pursuant to statutory authority, by resolution declared certain property, including defendant's premises, blighted. The blighted area is known as the Henderson Street Urban Renewal Project.

In 1967 the Legislature by L. 1967, c. 217 and c. 218, amended the Blighted Area Act, subsection 21.10 (N.J.S.A. 40:55-21.10), and the Eminent Domain Act, subsection 9 (N.J.S.A. 20:1-9), with respect to compensation to be paid when property is acquired in eminent domain proceedings in connection with the development or redevelopment of a blighted area. Both statutes, as amended, now provide that in such cases "the value of any property sought to be acquired shall be fixed and determined to be no less than the value as of the date of the declaration of blight by the governing body * * *." The constitutionality of these 1967 amendments was adjudicated in Jersey City Redevelopment Agency v. Kugler , 58 N.J. 374 (1971).

The commissioners appointed to appraise Bancroft's property filed their report on April 1, 1969. The respective parties cross-appealed from said award. On December 13, 1969 plaintiff filed its complaint and declaration of taking. A jury trial as to the value of the premises was held in September 1970, resulting in a judgment valuing the premises at $23,500. The jury, in answer to a special interrogatory, found that the ability of the property to produce rental income was substantially impaired in 1965 by the declaration of blight and the delay of plaintiff in taking the property. The trial judge then entered the judgment abating the taxes thereon from 1965 to 1968.

At trial George R. Handler, an attorney and president of Bancroft, testified that as of February 1960 the ten three-room apartments each rented for $50 monthly, and each of the ten two-room apartments for $35 monthly. However, commencing in 1960 and until some time in 1965 the premises deteriorated and new tenants could not be obtained. As an apartment became vacant, it would be vandalized. Finally, in 1965 the building became vacant except for the caretaker. He further testified that there were constant examinations of the premises by plaintiff's agent. He was not present during these visitations and did not know what these representatives said to the tenants, nor was there any

testimony by anyone concerning any statements or representations made by the Agency's representatives to any tenant.

Handler further testified that as a consequence of these visitations, he contacted the Agency representative from time to time commencing in 1961 through the beginning of 1965. Particularly in 1964 he spoke with the head of the Agency, whose name he could not recall, and informed him of his inability to keep the premises rented. He was told "Don't worry, we will get to it." Handler further alluded to newspaper articles in the Jersey Journal indicating that a taking was imminent, but such newspaper articles were not produced. He further testified that all records pertaining to this property were destroyed in 1967, including the income tax returns, and that no effort was made to obtain copies of the pertinent income tax returns prior to trial. He admittedly knew of some tenement houses in the area that remained tenantable through 1968, although the majority of them became blighted.

Plaintiff's real estate experts testified that the deterioration of Bancroft's property was not caused by the declaration of blight, that properties in the Henderson Street area commenced to gradually decline from about 1940. One expert estimated the subject building to be around 90 years old, while the other expert estimated its life at 70 years as of 1960. The extremely modest rentals (assuming their collectibility) for the respective apartments prior to the declaration of blight are compelling proof of declining value.

Bancroft stresses that until the amendments to the cited statutes were enacted in late 1967, it believed it would receive no more for the property than it was worth as of the date of the declaration of taking, and therefore it would have every incentive to maintain the building in good condition and keep it tenanted. However, a contrary view is expressed in Lyons v. Camden , 52 N.J. 89 (1968). There the change effected by L. 1967, c. 217 and c. 218 was not in issue. ...


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