PUBLIC USE
Detailed Factual Findings on Public Benefit are Required
In re Gen. Mun. Auth. of City of Nanticoke involved a private benefit challenge to a proposed taking allegedly for construction of affordable elderly housing.1 In consolidated cases, the trial court overruled both a facial challenge to the state Municipality Authority Act (MCA) and case-specific challenges that the actual nature of the taking was for more than an incidental private benefit.
On appeal, dismissal of the facial challenge was upheld on grounds that the language of the MCA violated neither the federal baseline reiterated in Kelo v. City of New London2 nor Pennsylvania’s common law. The case was remanded for further proceedings to determine whether the taking would result in more than an incidental private benefit. To inform proceedings on remand, the appeals court provided an explication of the different public use tests under state common law and the more protective, post-Kelo, Private Property Rights Protection Act (PPRPA).3 Noting the legislative intent to curb “abuse of the eminent domain power,” the court explained that the PPRPA prohibits taking property “to use it for private enterprise,” which is a more protective standard than the common law test, “solely for private enterprise.”4
Join us in San Diego, CA, in 2025 for ALI CLE’s upcoming program, Eminent Domain and Land Valuation Litigation 2025. Attend in-person or live via webcast on January 30-February 1, 2025. Learn more about the program and stay in touch for program updates here!
Against this backdrop, the court identified gaps in the factual record and questions about how the development authority intended to use the properties and to whom the primary benefits would inure.5 The court concluded that the record was not sufficiently clear regarding: (i) what the referenced entities were and what role they would play in the project; (ii) the magnitude of the benefits to named entities and the unnamed “equity investor”; and (iii) the existence of public need for the alleged benefits and the actual benefits that would flow toward those needs.6 On remand, the trial court was directed to conduct a de novo hearing on these delineated factual issues.
Ability to Reconvey Taking to Private Developers Does Not Negate the Original Public Use
In Penney Prop. Sub Holdings LLC v. Town of Amherst, the owner of 2.3 acres of land that was leased and operating as a JC Penney department store unsuccessfully sought to annul a condemnation determination to take 62 acres of land predominantly comprised of a mall.7 The court denied a lack of notice challenge despite the fact that two of the three required means of notice of the public hearing failed (certified mail notice was never delivered and the secretary of state did not send alternate notice until after the hearing). The court ruled that notice by publication alone sufficed because the town was not informed before the hearing that the means of individual notice had failed.
The court rejected the owner’s other public use challenges finding sufficient evidence that the targeted property was within an “[a]rea of economic underdevelopment and stagnation” and that the possibility of re-transfer to private entities did not negate the instant public purpose of acquiring land within a stagnant area.8
No Strict Construction of “Commercial” Use to Exclude Parking Predominantly for Healthcare Providers
In Bowers Dev., LLC v. Oneida Cnty. Indus. Dev. Agency, the Court of Appeals of New York reversed the appellate division’s denial of a redevelopment taking, holding that an industrial redevelopment agency could condemn land at the request of an adjacent landowner to provide parking for the adjacent landowner’s planned development of a medical office building.9 The owner of the targeted parcel and the developer who had contracted to purchase it from the owner co-petitioned to annul the condemnation determination, and the appellate division granted the petition. In reversing, the court held that the envisioned parking for medical office tenants, retail tenants, and night usage for the public sufficiently met the “commercial use” criteria of the agency’s statutory authority.10 The challenger’s argument that the parking would be for health-care, not commercial, purposes failed because of the overall commercial nature of the building to provide office space to rent-paying tenants.
Interested in learning more? Check out ALI CLE’s Eminent Domain and Land Valuation Litigation 2024, on-demand now!
Taking Upheld Even Though Proposed Project Deviated from Plan
Niagara Falls Redevelopment, LLC v. City of Niagara Falls involved a multi-faceted challenge by landowner/developer to a redevelopment taking by Niagara Falls.11 The developer argued that the city had not established how it would pay for its proposed project, the city had failed to conduct a market study as required by its own Comprehensive Plan, and that the plan also set forth predetermined public use for the subject parcel that would involve Redevelopment LLC. Never mind all that, said the court. It reasoned that these considerations were outside of the court’s limited review under the redevelopment statute and that, in any event, the plan provisions could not bind future councils. The court also went on to reject contentions that the take parcel was not described with adequate specificity (it had only been described by tax parcel and street address) and that the city had not timely issued its written synopsis of its determination, finding that the one-day tardiness was harmless.
Bald Conclusions Do Not Satisfy Necessary Blight Findings
In Twp. of Cinnaminson v. Cove House LLC, an appellate division reversed a trial judge’s approval of condemnation for “blight” where the Township of Cinnaminson (Township) presented a 2013 expert report and some testimony about the current condition of old residences it wished to redevelop upon which the trial judge found the Township had satisfied what he viewed as a low evidentiary burden.12 The trial judge found the evidence presented satisfied one statutory blight criteria:
Areas with buildings or improvements which, by reason of dilapidation, obsolescence, overcrowding, faulty arrangement or design, lack of ventilation, light and sanitary facilities, excessive land coverage, deleterious land use or obsolete layout, or any combination of these or other factors, are detrimental to the safety, health, morals, or welfare of the community.13
In granting the taking, the trial judge noted some evidence in the record to support the Township’s findings which he was constrained to second-guess, stating:
So [the Township does not] need that much to connect the dots. I mean the standard is if there’s evidence in the record and there is evidence in the record, I’m not supposed to second-guess the judgment of the Township in that regard. There’s some evidence in the record that an expert testified, who has expertise, appropriate expertise in this area, and testified as to obsolescence and that the obsolescence was detrimental.14
The problem with this, however, was the conclusory nature of the expert report, the Township’s findings, and the trial court’s acceptance of them. In reversing, the Appellate Division sternly reminded that “a standard that requires ‘substantial evidence’ does not bespeak ‘a relatively low evidentiary threshold.’”15 Relying on the decision of the New Jersey Supreme Court in Malanga v. Twp. of W. Orange, issued just months before, the Appellate Division noted the blight statute “‘does not ask whether property could potentially be more useful or valuable; it requires proof of a current problem, such as ‘dilapidation,’ ‘obsolescence,’ or ‘overcrowding,’’” and further that it does “not presume harm; it requires a showing of actual detriment.”16 To illustrate the inadequacies of the Township’s evidence, the Appellate Division elaborated:
[The expert] proclaimed in her report the property’s “land use [was] deleterious and obsolete and the design [was] faulty” and its driveways were “inadequate” and “detrimental” to the community. But she did not identify what, if any, underlying characteristics of the property had led her to reach those conclusions and did not give any detail to support those blanket statements. She asserted the buildings needed to be “upgraded” and that the property needed “site improvements,” but she did not specify what upgrades or improvements were needed. And those details are critically important in making and reviewing a redevelopment determination.17
Interestingly, Malanga involved a successful citizen challenge to a municipal determination that its own public library was blighted, which allowed the Township of West Orange to sell the land to a preferred developer instead of selling it under competitive bidding laws. In reversing lower courts that had validated this action (and proceeding with the case despite the pendency of a sale contract to a redeveloper), the New Jersey Supreme Court held that the Township of West Orange had not demonstrated the necessary requirements under the blight.18 The court held that the record lacked evidence that: (i) the library suffered from “obsolescence” even though it lacked modern infrastructure and could function better: and (ii) the library’s condition was detrimental to the public welfare.19
CLICK HERE to read the full article, which was originally published in ALI CLE’s The Practical Real Estate Lawyer.
To find our more about ALI CLE’s in-person courses or webcasts, or to check out on-demand CLE, click here.