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Casino Reinvestment Development Authority v. Birnbaum

Superior Court of New Jersey, Appellate Division

February 15, 2019

CASINO REINVESTMENT DEVELOPMENT AUTHORITY, a public corporate body of the State of New Jersey, Plaintiff-Appellant/Cross-Respondent,
v.
CHARLES BIRNBAUM and LUCINDA BIRNBAUM, Defendants-Respondents/Cross-Appellants, and LOUIS TAYLOR DAVIS, GERALD GITTENS, THE ATLANTIC CITY MUNICIPAL UTILITIES AUTHORITY, THE ATLANTIC CITY SEWERAGE CO., and THE CITY OF ATLANTIC CITY, Defendants.

          Argued October 24, 2018

          On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-0589-14.

          Stuart M. Lederman argued the cause for appellant/cross-respondent (Riker Danzig Scherer Hyland & Perretti LLP, attorneys; Stuart M. Lederman, of counsel; Rudy S. Randazzo, Kellen Murphy, and Katherine Nunziata, on the brief).

          Robert J. McNamara (Institute for Justice) of the Virginia bar, admitted pro hac vice, argued the cause for respondents/cross-appellants (Potter and Dickson, Robert J. McNamara and Daniel L. Alban (Institute for Justice) of the Virginia bar, admitted pro hac vice, attorneys; Peter D. Dickson, on the brief).

          Adam M. Gordon, attorney for amicus curiae Fair Share Housing Center.

          Mark Miller, attorney for amicus curiae Pacific Legal Foundation.

          Before Judges Koblitz, Ostrer and Currier.

          OPINION

          KOBLITZ, P.J.A.D.

         Plaintiff Casino Reinvestment Development Authority (CRDA) appeals from the August 5, 2016 dismissal of its complaint for condemnation of a residential property in the city of Atlantic City owned by defendants Charles and Lucinda Birnbaum. The CRDA sought to condemn the Birnbaum property in furtherance of its mandate to promote tourism in Atlantic City. The property is located in the Atlantic City Tourism District, within the boundaries of the CRDA's South Inlet Mixed Use Development Project (Project), where the CRDA proposes private, economic redevelopment, including the construction of tourism-focused residential, retail, and commercial uses.

         At the time of the decision under review, the CRDA had no specific redevelopment plans under consideration for the Project; it had not issued a request for proposals (RFP) to prospective developers, and no developer had committed to redeveloping within the Project area. Nevertheless, the CRDA maintains it had a right to "bank" the Birnbaum property for redevelopment at some unspecified time in the future. Atlantic County Assignment Judge Julio Mendez dismissed the condemnation complaint as a manifest abuse of power because the CRDA did not provide reasonable assurances that the proposed redevelopment would come to fruition in the foreseeable future. The CRDA appeals from that judgment. We affirm.

         The Birnbaums cross-appeal from an earlier, November 17, 2014 determination that the condemnation was for a sufficiently specific public use and the Birnbaum property was reasonably included in the Project area. At that time the judge also held that the CRDA was taking the property to promote tourism and therefore was not required to comply with the Blighted Areas Clause of the New Jersey Constitution, N.J. Const. art. VIII, § 3, ¶ 1. But, Judge Mendez found, in any event, the taking did comply with those requirements. We need not reach the cross-appeal.

         I. Legal Framework

         In 1976, a constitutional amendment authorized casino gambling in Atlantic City. N.J. Const. art. IV, § 7, ¶ 2(D). Eight years later, the Legislature created the CRDA, in, but not of, the Department of the Treasury. N.J.S.A. 5:12-153. See In re Plan for Abolition of Council on Affordable Hous., 214 N.J. 444, 448 (2013) (explaining significance of "in, but not of" designation). The statutory purposes of the agency are set forth at N.J.S.A. 5:12-160, and include "directly facilitat[ing] the redevelopment of existing blighted areas," N.J.S.A. 5:12-160(a), and "encourag[ing] investment in, or financing of, projects which are made as part of a comprehensive plan to improve blighted or redevelopment areas . . . ." N.J.S.A. 5:12-160(k).

         New Jersey courts have recognized that "[t]he general purpose of the [CRDA] is to manage the proceeds received under N.J.S.A. 5:12-144.1 and 5:12-162 and to direct the rehabilitation of blighted areas of Atlantic City." In re Casino Licensee, 224 N.J.Super. 316, 323 (App. Div. 1988) (citing N.J.S.A. 5:12-160 and 5:12-161); see also Barbara Nash Westcott, Note, Dealing a Fair Hand to Atlantic City Property Owners, 31 Rutgers L.J. 913, 921-23 (Spring2000) (describing CRDA's funding sources). The CRDA is a "financing and investment agency" that facilitates redevelopment projects, but does not act as a developer or operator. CRDA v. City of Atl. City, 18 N.J. Tax 463, 476-77 (1999).

         As set forth in N.J.S.A. 5:12-160, the purposes of the CRDA include:

k. to encourage investment in, or financing of, projects which are made as part of a comprehensive plan to improve blighted or redevelopment areas or are targeted to benefit low through middle income residents of the jurisdiction or region in which the investments are to be made . . . .

         [(emphasis added).]

         The CRDA was granted the power "[t]o exercise the right of eminent domain" in Atlantic City. N.J.S.A. 5:12-161(p). N.J.S.A. 5:12-182 states in pertinent part:

a. The Legislature finds and declares that the achievement of the beneficial purposes of this 1984 amendatory and supplementary act requires the granting to the [CRDA] of the right of condemnation and the exercise by it of the right of eminent domain in the city of Atlantic City because special problems may arise or exist in that city concerning the necessity for the acquisition of the property for projects for the public good under this 1984 amendatory and supplementary act, including inflated land values resulting from speculation and intentional obstruction of a landowner or speculator to the acquisition of needed property in order to exact an unreasonable and prohibitive purchase price.
b. In the event the [CRDA] finds it is necessary to complete a project in the city of Atlantic City, the authority may acquire any real property in the city, whether a fee simple absolute or lesser interest and whether for immediate use, that the authority may find and determine is required for public use, and upon such a determination, the property shall be deemed to be required for a public use until otherwise determined by the authority; and with the exceptions hereinafter specifically noted, the determination shall not be affected by the fact that such property has theretofore been taken for, or is then devoted to, a public use, but the public use in the hands or under the control of the authority shall be deemed superior to the public use in the hands or under the control of any other person, association or corporation.
c. If the [CRDA] is unable to agree with the owner or owners thereof upon terms for the acquisition of any such real property in the city for any reason whatsoever, then the authority may acquire, and is hereby authorized to acquire, after consultation with the appropriate agency of the city by way of notification 30 days prior to the filing of condemnation proceedings, such property, whether a fee simple absolute or lesser interest, by condemnation or the exercise of the right of eminent domain pursuant to the provisions of the "Eminent Domain Act of 1971," . . . and the "Relocation Assistance Act," . . . .

[(emphases added).]

         At the same time, under N.J.S.A. 5:12-220(f), Atlantic City was prohibited from "designat[ing] the tourism district or any portion thereof as an area in need of redevelopment or an area in need of rehabilitation, or adopt[ing] a redevelopment plan for any property within the tourism district pursuant to the 'Local Redevelopment and Housing Law' . . . (N.J.S.A. 40A:12A-1 to -73 [LRHL]) without the consent of the [CRDA]."

         The 2001 CRDA Urban Revitalization Act, N.J.S.A. 5:12-173.9 to - 173.20, established an "incentive program," administered by the CRDA, "to facilitate the development of entertainment-retail districts for the city of Atlantic City . . . ." N.J.S.A. 5:12-173.12(a). Ten years later, the Legislature adopted the Atlantic City Tourism District Act (Tourism Act), N.J.S.A. 5:12-218 to -233, which gave the CRDA power "to establish and exercise authority over the Atlantic City Tourism District. . . ." N.J.S.A. 5:12-160(m) and 5:12-161(q). The CRDA also was required to develop a Tourism District Master Plan. N.J.S.A.5:12-219(e).[1]

         II. Relevant CRDA Resolutions

         In 2011, pursuant to the Tourism Act of the same year, the CRDA created the Tourism District in Atlantic City.[2] Thereafter, in February 2012, by Resolutions 12-14 and 12-23, the CRDA adopted a Tourism District Master Plan, which called for redevelopment of several areas of the city, including the Inlet District.[3]

         In May 2012, the CRDA issued Resolution 12-68, which preliminarily determined that the Project was of the type and character eligible for approval under N.J.S.A. 5:12-173, [4] and authorized further action including holding a public hearing. The CRDA described the Project as being "constructed in phases that complement the new Revel Casino and assist with the demands created by the resort."

         The CRDA also stated that "[p]rior to implementation of the project," certain privately owned properties would have to be acquired, and addressed funding for the Project, stating:

Prior to implementation of the project, land acquisition of sixty two (62) low rise units, and certain privately owned adjoining parcels including vacant and improved properties on Blocks 68, 70, and 72, acquisition of certain properties within Blocks 128 through 131, relocation, demolition and site remediation must take place. The estimated real estate costs . . . are . . . up to $25 million. . . . Upon completion of acquisition and relocation, the CRDA staff will work with potential partners to develop the land for restaurant, residential and retail use. The source of funds will be the CRDA's Tourism District and ...

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