New Jersey Supreme Court Considers Tenants' Rights to Notice in Redevelopment Challenge
The New Jersey Supreme Court heard oral arguments this week in a case regarding the rights of commercial tenants to notice under the provisions of New Jersey’s Local Redevelopment and Housing Law. Iron Mountain Information Management, Inc. v. City of Newark (A-100-08). The issue presented to the Court was framed: “When property is targeted for redevelopment pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 to -49, is a commercial tenant with an option to purchase and right of first refusal in its lease agreement entitled to the same notice as the property owner?” The Appellate Division held that long-term lessee Iron Mountain Document Systems, Inc. was not entitled to notice when the building it occupied was taken through eminent domain. Specifically, the Appellate Division found the Legislature had contemplated notice issues for lessees, and lessees were provided adequate due process under the statutory law.
On appeal to the Supreme Court, the tenant Iron Mountain argued that it was entitled to notice under the enhanced notice requirements found necessary in Harrison Redevelopment Agency v DeRose, 398 N.J. Super. 361 (App. Div. 2008), because of their unique status as a tenant with an option to purchase. Read more about the DeRose case, in which the property owners were represented by McKirdy & Riskin’s Richard DeAngelis, Edward McKirdy and Anthony Della Pelle, on our New Jersey Condemnation Law Blog here.
Iron Mountain claimed that its status gave it an ownership right which required notice under the Due Process Clause of the United States’ Constitution, and the statutory notice requirements of the Local Redevelopment and Housing Law (LRHL) should not be strictly construed when it would deny due process under New Jersey case law.
Iron Mountain raised several issues unrelated to the notice question certified by the Court. Iron Mountain claimed its property was not blighted, the City failed to visit the property before designating the property as blighted, and the blight designation would not stand up under the New Jersey Supreme Court’s holding in Gallenthin Realty v. Borough of Paulsboro. Iron Mountain also claimed that the land deals underlying the redevelopment plan were improper because they took property from one private owner to benefit another private owner.
The Court focused on the potential burden to municipalities to provide actual notice to tenants when a single building may have one hundred tenants and, significantly, inquired whether Iron Mountain had filed a copy of its lease with the tax assessor or records office. Multiple justices inquired what Iron Mountain knew about the redevelopment plan, and when they knew it since no formal certifications had been made to any court.
Respondent City of Newark argued that Iron Mountain has never formally certified that it did not have notice of the redevelopment plan hearings or blight designation. Newark then argued that the Appellate Division correctly determined that Iron Mountain was not entitled to notice under the LRHL, and Iron Mountain was only entitled now to compensation for its interests, and not an opportunity to reargue the blight designation.
The Court asked Newark if it knew Iron Mountain was a tenant when the notices were originally sent to property owners in the redevelopment area, and would it not have been easier to provide notice up front than argue all the way to the Supreme Court. Newark affirmed that it knew about Iron Mountain, but argued that notice should be provided as required by statute and not on an ad hoc basis. The Court then advised that it would take the matter under consideration.
The Supreme Court’s opinion is not likely to be released until next year. The full text of the Appellate Division’s opinion in the Iron Mountain case can be found here.
The author wishes to acknowledge the assistance of Cory K. Kestner, Esq., of McKirdy & Riskin, PA, in the preparation of this article.
