Revel, Atlantic City

Just weeks after the Appellate Division issued a precedential decision denying eminent domain seizure for a redevelopment project of indefinite timing, it has done so again, this time in connection with a property sitting near the structure once known as the Revel in Atlantic City.

The Feb. 15 decision in Casino Reinvestment Development Authority v. Birnbaum affirms an August 2016 decision by Atlantic County Assignment Judge Julio Mendez that dismissed a condemnation action lodged in early 2014 against property owners Charles and Lucinda Birnbaum by the state Casino Reinvestment Development Authority.

The decision follows a ruling by a different panel of the Appellate Division from Jan. 7 in Borough of Glassboro v. Grossman. There the court ruled that a municipality or redeveloper whose condemnation of property in a redevelopment zone is challenged must articulate a definitive need that goes beyond the mere “stockpiling” of real estate.

“We conclude here as we did in Glassboro that the proposed stockpiling of land for future redevelopment does not suffice to establish a taking is reasonably necessary,” Appellate Division Judge Ellen Koblitz wrote in the Birnbaum decision, joined by Judges Mitchel Ostrer and Heidi Willis Currier.

“As we concluded in Glassboro when analyzing the term 'necessary' in the [Local Redevelopment and Housing Law], the language of necessity means 'reasonably necessary,'” the panel ruled. “Similarly, 'whether for immediate use' must be interpreted to imply a limitation of reasonably foreseeable future use rather than limitless future use. A number of out-of-state cases support this view.”

“Unlike the municipality in Glassboro … the CRDA has statutory authority to determine when a project is 'necessary,'” she wrote. “The CRDA does not have unfettered discretion in defining what is 'necessary,' however, because its actions are subject to review on the basis of manifest abuse of power.”

And that authority “is bound by evidence that a proposed redevelopment will occur in the foreseeable future,” Koblitz added.

The Birnbaum home, first purchased by the family in 1969, would come to be in a CRDA redevelopment zone set up in 2012 in connection with the new Revel casino nearby. The authority sought to buy the property, a three-story residence whose first floor currently is used as Charles Birnbaum's piano studio, for $238,500 in 2013. The Birnbaums declined, according to the court.

The CRDA lodged a condemnation action in February 2014. Mendez initially allowed the condemnation action to move forward, but later reconsidered because of several factors, including Revel's 2014 bankruptcy filing and pending statutory changes to the CRDA's funding. The ruling on appeal came in August 2016, when Mendez denied the condemnation application because of the uncertainty of the redevelopment project and because the CRDA “is not empowered to condemn a property only to have it sit idly, potentially for years on end, as they wait for [the] right project to present itself.” The judge pointed to other properties seized by the CRDA that had yet to be developed, and the overall downturn in Atlantic City's economy and in the Birnbaums' now-desolate neighborhood, according to the Appellate Division.

The authority argued on appeal that Mendez went too far in requiring that it demonstrate a redevelopment plan that could be executed in a “reasonable” amount of time.

The Appellate Division panel disagreed, holding that although the CRDA has statutory authority to determine what is necessary, the necessity still must be reasonable.

“Judge Mendez was presented only with a 'conceptual plan,'” Koblitz wrote.

With Revel shuttered in late 2014, “at the time of the judge's decision in 2016, the intended partner of the Project and its primary funding source had ceased to exist,” the court said, adding that, also between 2014 and 2016, “statutory changes altered the financing of the CRDA, and reduced or eliminated key funding sources the CRDA relied on to 'incentivize' private investors to commit to the redevelopment.”

“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,” Koblitz wrote.

Robert McNamara of the Virginia-based Institute for Justice, counsel to the Birnbaums, said in a phone interview that the courts in Glassboro and this case are “emphatically asserting their own role in the process” and “imposing some guardrails to impede the kind of land speculation that was going on in this case.”

He added, “What you see here is the court articulating an actual standard of necessity, regardless of the statute.”

The CRDA was represented by Stuart Lederman of Riker Danzig Scherer Hyland & Perretti in Morristown, who couldn't be reached for comment.