In a state already notorious for widespread eminent domain abuse, Long Branch, N.J., is distinguishing itself as the worst of the worst. The City is trying to seize beautiful beachfront homes in a middle-class neighborhood called MTOTSA (an acronym for the streets Marine Terrace, Ocean Terrace and Seaview Avenue), so it can hand them over to private developers who plan to make tens of millions of dollars building upscale condos for the wealthy.
Traditionally, eminent domain has been understood as the power of government to take private property for a public use, like a road or public school. In recent years, however, local governments, like Long Branch, have been using eminent domain to take property from private parties like the MTOTSA homeowners to give it to other private parties like, in this case, the Applied Companies and its partner, Matzel & Mumford (a subsidiary of K. Hovnanian, one of the largest property developers in the country).
The City of Long Branch tries to justify its land-grab by claiming that it is curing urban “blight.” The only problem, however, is that the MTOTSA neighborhood is not, nor has it ever been, blighted. As recently as 2001, Mayor Adam Schneider publicly said “if the whole area looked like [MTOTSA], we would not be doing [redevelopment].” 1
The bottom line is that condemning MTOTSA has nothing to do with eliminating genuine blight and everything to do with the political and financial ambitions of those who stand to gain from destroying a beautiful neighborhood. The City of Long Branch is trying to use government force to replace modest homes with fancier ones, and working-class families and retirees with wealthier people from Manhattan and elsewhere.
The MTOTSA homeowners recently suffered a setback when the Monmouth County Court denied them the opportunity merely to present evidence that condemning their neighborhood violates the law 2
On August 30, 2006, the Arlington, Va.-based Institute for Justice joined the MTOTSA homeowners and their attorney, Peter Wegener of Bathgate, Wegener & Wolf in Lakewood, N.J., to appeal this decision. The Institute will ask the Appellate Division of the New Jersey Superior Court to declare the condemnations unlawful. History of Long Branch
When President Garfield was shot in 1881, he was whisked to Long Branch, his favorite seashore resort, to convalesce. His affection for Long Branch was shared by six other presidents: Grant, Arthur, Harrison, Hayes, McKinley, Theodore Roosevelt and Wilson. American luminaries like writer Robert Louis Stevenson, cowboy “Buffalo Bill” Cody, artist Winslow Homer, and the Astors, among other industrial magnates, also made Long Branch their summer retreat.
But when casino gambling was outlawed in the early 1920s, Long Branch lost its allure as a seaside playground for the rich and famous. The City soon became just another shore town tourists visited between Memorial Day and Labor Day.
This second incarnation, as a regional tourist destination, all but came to an end in the summer of 1987 when the pier, some amusement park rides, and a water park were destroyed in a fire. Though the summer still brought tourists to town, the loss of the pier precipitated a drastic decline in the waterfront. Remnants of the shuttered water park became infested with pests and the southern waterfront landscape deteriorated. Punctuating the city’s decline, a series of storms over the years eroded much of the beach, leaving the ocean lapping up against a dilapidated boardwalk. MTOTSA and Its Residents
In contrast to this bleak picture is the charming and well-kept little neighborhood at the north end of the beach now known as MTOTSA. Bordering on Seven Presidents Park, MTOTSA is a collection of architecturally unique cottages and bungalows, some dating to the World War II era. Many of the homes have been in the same families for generations. Today, as throughout its colorful history, the neighborhood is a melting pot, home to both young children and retirees in their 90s.
Despite claims from the City, MTOTSA is not, nor has it ever been, “blighted.” This commonsense conclusion, which is obvious to anyone who visits the neighborhood, is reflected in Long Branch’s own study. 3
In 1995, in an effort to gather incriminating evidence of “blight,” Long Branch secretly had a local firefighter with no qualifications as a building inspector survey MTOTSA through the windshield of his car. Despite using superficial criteria—marking homes down for trivial problems like cracks in masonry—the City’s own employee only classified three of 38 residences, or 7.8 percent, as being in “poor” condition. 4
As has been the case in so many other neighborhoods nationwide that are threatened with eminent domain, MTOTSA homeowners are reluctant to invest in their property, fearing that any money they put into their homes will be lost if they are condemned. 5
In addition, the City actually interferes when residents do want to fix up their homes. In 2000, for example, homeowner Denise Hoagland sought a building permit to raise her roof. 6
The City initially denied the application, but, after she pressed them, City officials agreed to grant the permit but only if she signed a waiver promising not to seek compensation for the cost of her renovations if her home were eventually condemned. There have also been credible allegations that Long Branch has neglected routine street maintenance. 7
By placing the neighborhood in limbo and then interfering with its upkeep, the City is seeking to manufacture the urban decay it is supposedly trying to remedy.
Perhaps most disheartening to the homeowners has been the City’s insincerity. Even though it promised the MTOTSA neighborhood to developers in early 2000, Long Branch continued to tell the homeowners that it was always possible to save their neighborhood. In late February 2004, for example, just days before Applied and Matzel & Mumford submitted their plans for MTOTSA, Mayor Adam Schneider said, “We offer to work with you to see if there is a plan to help save your neighborhood.” 8
In a detailed proposal from May 16, 2004, 9
the MTOTSA homeowners took the Mayor up on his offer, promising to cooperate with the City and help with neighborhood improvements. Rather than work with the homeowners, however, the City dismissed them in a June 15, 2004 response, absurdly treating their good-faith proposal as an application for formal “developer status” and informing them that their application failed to specify, for example, how the homeowners were going to finance “infrastructure improvements.” To save their homes, in other words, Long Branch expects 93-year-old Al Viviano and his few dozen neighbors to spend hundreds of thousands of dollars on consultants and specialized urban redevelopment plans. The City’s response underscores the obvious: as far as Long Branch is concerned, the problem with MTOTSA is not blight; it is that it has 93-year-old retirees, not rich and trendy professionals. 10
The following are just a few of the homeowners the Institute for Justice represents.
The LaRosa Family
In September 1943, Joseph Torrisi, a young airman in the Army Air Corps, came home on leave from Europe and fell in love with a little house at 78 Ocean Terrace. He asked his father to buy that house so the whole family, including his kid sister Rose, could be together in a beautiful home after the war. Sadly, Joseph perished in the skies over France when his plane went down in fierce combat. Less than a year later, his stricken father bought 78 Ocean Terrace as a tribute to his son’s heroism and his dream for the family.
More than 60 years later, Joseph’s sister Rose, now a 79-year-old widow, still lives at 78 Ocean Terrace and her grandchildren continue to spend summers there. In 2004, her grandson Fred Williams wrote President Bush pleading for help in saving his grandmother’s home. 11
Speaking to a reporter, Rose said, “My kids are brokenhearted. They grew up here. My son was born on that bed. My whole life is thinking about it. All my life is here.” 12
Rose said, “I already gave my brother to my country; now they want to take my home away from me.” 13
The Vendetti Family
Married for 57 years, Carmen and Josephine Vendetti built their MTOTSA home in 1960 as a summer residence for themselves and their three children. As they had been planning for 29 years, they retired there in 1989—Carmen from 45 years as a truck driver and Josephine from a career as a school secretary. The home is especially important to the Vendettis because they cherish the memories of the time they spent there with their children. Having lost both sons in separate tragedies, the bungalow has now become a continuing reminder of their presence in the Vendettis’ lives. Josephine said, “This home means everything to me. It is my happiness.” 14
This sentiment is shared by their daughter, Lori, who also lives in MTOTSA, right across the street from her parents. Among the MTOTSA neighborhood’s many tireless activists, Lori did something radical last summer: she painted her house. While this may not seem like much, in MTOTSA, it is a vivid act of defiance, sending Long Branch an unmistakable message that her family is not going anywhere.
The Hoagland Family
Denise Hoagland shares her gorgeous MTOTSA home with her three children and husband, Lee. Like her neighbors, she is mystified by the fact that Long Branch thinks it can simply take her home and give it to someone else for their private use. Referring to her brother who had been stationed in Iraq, she said, “Here I have a brother fighting for the rights of other people, and his sister’s rights are being taken from her.” 15
A 12-year resident of MTOTSA, Denise gave birth to her youngest child at home. Lee, a carpenter by trade, added a beautiful wrap-around deck to the home. Residents used this deck as a stage during a rally on October 15, 2005, against the abuse of eminent domain along the Long Branch beachfront.
The Redevelopment Plan
Rather than confine eminent domain to actual blight on the burned-out pier, Long Branch did what so many local governments do: use blight in one area as an excuse for taking normal homes in a desirable neighborhood somewhere else.
The story of Long Branch’s decision to destroy the MTOTSA neighborhood for luxury condos begins in February 1994 when a public/private partnership called Long Branch Tomorrow was formed. 16
The purpose of Long Branch Tomorrow was to “transform” the city. Unfortunately for MTOTSA, transforming the city has turned out to mean throwing families out of the homes they rightfully own so private developers can cash in.
To fulfill its mandate, Long Branch Tomorrow retained a high-profile consulting firm, Thompson Wood, Inc. of Cambridge, Mass., to devise a comprehensive master plan for the City. 17
In 1995, Thompson Wood, in conjunction with a New Jersey consulting firm called the Atlantic Group, unveiled their vision for the future. Notably, the master plan repeatedly rejected “sweeping reform” and in fact recommended preserving MTOTSA, which it considered to be a healthy and vibrant part of Long Branch. 18
On August 8, 1995, the Long Branch City Council passed Resolution 271-95, authorizing the City Planning Board to determine whether the parts of Long Branch identified in its new master plan should be designated an “area in need of redevelopment” under New Jersey’s redevelopment law. 19
Bizarrely, even though the master plan recommended preserving MTOTSA, Long Branch still sent its undercover firefighter into the neighborhood to drum up evidence of “blight,” though, as mentioned earlier, he came up pretty much empty-handed.
Despite the absence of anything resembling genuine blight and ample evidence of nice, well-maintained homes, the Planning Board nevertheless included the MTOTSA neighborhood in a resolution on January 23, 1996, declaring vast swaths of Long Branch to be “in need of redevelopment.” 20
Then, on May 14, 1996, the City of Long Branch adopted the redevelopment plan drafted by the Planning Board, painting a huge bulls-eye on MTOTSA. 21
Even though it included the MTOTSA neighborhood in the area designated as being “in need of redevelopment,” Long Branch seemed initially to adopt the perspective of its own master plan, which emphasized the preservation of healthy neighborhoods like MTOTSA. For example, one of the “general redevelopment objectives” of Long Branch’s redevelopment plan is to “conserve sound, well-maintained single-family housing to the extent possible, and encourage residential development through infill.” 22
By “infill,” the plan means that normal homes are supposed to be preserved and incorporated into the redevelopment. The commitment to infill was in fact reflected in architectural concept drawings, which specifically portrayed a preserved MTOTSA neighborhood alongside new development. 23
As late as summer 2001, the Mayor of Long Branch, Adam Schneider, was still publicly stating that the MTOTSA neighborhood was in good condition, emphasizing that “if the whole area looked like [MTOTSA], we would not be doing [redevelopment].” 24
MTOTSA Versus Goliath
Even though the City’s master plan preserved MTOTSA and even though Long Branch committed itself to an “infill” approach in its redevelopment plan, the City gave the MTOTSA neighborhood to the Applied Companies when it was awarded the redevelopment contract in February 2000.
A chilling aspect of the redevelopment contract and its amendments is that they transfer the power of eminent domain—something that courts at all levels agree is a fundamental power of government, not private parties—to the developers. 25
Under the terms of the agreement, for example, the developer has the authority to “instruct” the City to use eminent domain when the developer, in its discretion, decides to end negotiations with a homeowner. For its part, the City has no authority under the contract to use eminent domain without the express consent of the developer. Long Branch, in other words, has put the awesome power of eminent domain at the disposal of a private corporation to be used for its own private profit.
In 2001, Applied decided to team up with other big developers, realizing that the scope of this project necessitated bringing in heavy-hitting partners with more resources. Applied eventually signed up Matzel & Mumford, a subsidiary of K. Hovnanian, one of the largest property developers in the nation. Thus the MTOTSA homeowners—people like 79-year-old Rose LaRosa—find themselves in a showdown not only with City Hall, but also with huge developers that have a fortune at stake.
Just how big is this fortune? The developers finally submitted their plans for MTOTSA in February 2004, calling for 150 condos and townhouses to be sold for between $500,000 and more than $1,000,000. The plan was amended in September 2005, when the developers increased the number of units to 185. 26
The private developers, in other words, expect to yield a revenue stream of between $130 million and $185 million from the condemnation of MTOTSA. In exchange for this windfall, they have promised to do things like improve the sidewalks and build a 10,000 square foot public pavilion. No matter how one does the math, it is obvious that the private developers are the real winners and the public benefits only incidentally.
Never Any Blight in MTOTSA and Now No Blight Anywhere
The remarkable thing about this case is that Long Branch continues to invoke blight along the beachfront to justify destroying MTOTSA even though there is no blight whatsoever along the beachfront.
Applied and its partners have already redeveloped everything south of MTOTSA, replacing any previously vacant or blighted property with Pier Village and the Beachfront North Phase I condominiums. North of MTOTSA is the picturesque Seven Presidents Park. To the west is Ocean Boulevard. And to the east is the Atlantic Ocean. Whatever blight that may have existed along the beach is long gone. 27
The fact that there is not any blight along the ocean establishes that this case is not about blight. Instead, it is about using eminent domain to displace people of modest economic means so private corporations can make millions building cookie-cutter condos for the wealthy.
Loss in the Trial Court
After being served with condemnation papers in late 2005 and early 2006, the homeowners and their attorney, Peter Wegener, went to court to defend MTOTSA. Unfortunately, they were not successful. On June 22, 2006, the Monmouth County Court ruled that the homeowners are not even entitled to present evidence in defense of their homes, much less that the condemnations are unlawful. 28
This gave the City and its developer partners the green light to warm up the bulldozers. The Appeal
On August 30, 2006, the Institute for Justice officially joined the MTOTSA homeowners as their attorney along with Peter Wegener to appeal the decision of the Monmouth County Court to the Appellate Division of the New Jersey Superior Court. The Institute for Justice is the nation’s leading law firm on the issue of eminent domain abuse. In the 1990s, IJ successfully defended Atlantic City homeowner Vera Coking when Donald Trump had convinced a State agency to take her home so he could use the land for private limousine parking for his casino. In 2005, the Institute for Justice argued the Kelo v. City of New London eminent domain case before the U.S. Supreme Court, and continues to try to roll back that decision in courts and state legislatures nationwide. In 2006, the Institute for Justice won the Ohio eminent domain case of Horney v. City of Norwood, the first state supreme court case to be argued and decided post-Kelo, which unanimously restored significant and commonsense restrictions on government’s power on eminent domain.
Defending the MTOTSA homeowners is part of the Institute for Justice’s commitment to strategic litigation that will help restore judicial protection for private property rights. The U.S. and every state constitution include property rights because they are the foundation of our independence as responsible citizens. Indeed, for most Americans, ownership of a home or business is the cornerstone of their efforts to provide for their families and realize their dreams. Thus the wrongful use of eminent domain to transfer property from one private owner to another does not simply destroy a home or business. It very often destroys a life, one patiently built through years of hard work. The Institute is especially concerned about how private-to-private transfers, as in the case of the MTOTSA homeowners, almost always target people of relatively limited economic means and almost always benefit people of considerable economic means.
The Institute will challenge the condemnations with several constitutional and statutory arguments: The U.S. and N.J. Constitutions only permit condemnations for a “public use.” 29
This limitation on eminent domain is violated when the government condemns non-blighted homes in a non-blighted area in order to give them to private developers so they can build new homes for someone else. 30
The redevelopment contracts in this case render the condemnations unconstitutional because the contracts give the private developers exclusive control over Long Branch’s power of eminent domain. Eminent domain, however, is a power of government that cannot be sold or “rented out” to the highest bidder. 31
Condemning the MTOTSA neighborhood is unnecessary because it is not blighted and destroying it is not necessary to eradicate blight anywhere else. The only reason the City of Long Branch is condemning MTOTSA is so the private developers can have more prime oceanfront real estate. Finally, there is no “substantial evidence,” as required by New Jersey law, that the MTOTSA neighborhood is, or has ever been, “in need of redevelopment.”
In addition to working with the Institute for Justice on the substantial evidence issue, Peter Wegener of Bathgate, Wegener & Wolf in Lakewood, N.J., will also argue that the condemnations are illegal under New Jersey law because (1) the City failed to engage in bona fide negotiations with the homeowners, and (2) the redevelopment process was tainted by the fact that at least two senior city attorneys, who were retained to advise the City of Long Branch on these condemnations, apparently had a personal financial stake in seeing that the condemnations occur.
Eminent Domain: An Overview
Eminent domain is the power of government to take away a person’s home, farm or business. It has been called the “despotic” power, 32
and in colonial times when English law prevailed, there were no limits on the monarch’s power to seize property.
Recognizing its potential for abuse, James Madison wrote an important constraint on eminent domain into the Fifth Amendment to the U.S. Constitution, which provides that private property shall not be “taken for public use without just compensation.” 33
This language constrains eminent domain in two ways. First, the government can only take property for a genuine public use. Second, if the government takes property for a public use, it must pay just compensation. Most state constitutions, including New Jersey’s, contain Madison’s language. 34
The “public use” limitation on eminent domain is particularly important. It prevents the government from taking someone’s home or business simply to give it to someone else with more political influence for his or her own private use. Thus, traditionally, the power of eminent domain was invoked only when the government needed land to build a public necessity, like a drainage system or a road.
Gradually, however, the traditional and principled constraints on eminent domain have been dismantled with tragic results. Now, local governments, like the City of Long Branch, regularly seek to take their citizens’ homes and simply give them to powerful, politically connected developers that use the land for their own private profit. 35
As in this case, the private developers typically cover the local governments’ costs for using eminent domain. 36
Cities like Long Branch in effect “rent out” this fundamental government power to the highest bidder.
This state of affairs is possible only because courts have slowly abdicated their essential duty of enforcing constitutional limitations on eminent domain. The demise of the U.S. Constitution’s “public use” clause began with the U.S. Supreme Court’s 1954 decision in Berman v. Parker in which Washington, D.C., used eminent domain to renew what were in those days called “slums.” 37
Rather than rule narrowly that the City could condemn decrepit tenements that presented a genuine threat to public health, the Supreme Court instead decided that the constitutional term “public use,” which had a specific historical definition, actually means “public purpose.” Worse yet, the Supreme Court also decided that legislatures, such as the very city councils who wield this government power, rather than courts, get to decide what amounts to a “public purpose.” Thus, a vital constitutional check on government power was lost.
The Berman decision put the fox in charge of the henhouse. No longer constrained by a meaningful “public use” clause, local governments dramatically ratcheted up their use of eminent domain, transferring vast tracts of private property to private corporations. The most notorious abuse of eminent domain occurred in Detroit in the 1970s in which the City seized its last racially integrated neighborhood—which no one claimed was blighted—and turned it over to General Motors in the hope that “public benefits” would flow from higher taxes and more jobs. The Michigan Supreme Court permitted this outrage, deciding that a speculative “public benefit” was enough to satisfy the “public use” requirement of the Michigan Constitution. 38
As is most often the case with these sorts of enterprises, the project never lived up to its billing, providing far fewer jobs and taxes than expected. 39
Kelo v. City of New London
The demise of the “public use” clause in the U.S. Constitution culminated in the 2005 ruling in Kelo v. City of New London, justly one of the most reviled decisions in U.S. Supreme Court history. 40
In Kelo, the City of New London, Conn., decided to seize non-blighted homes and turn them over to another private party in the hope that the new owners would use the land in a way that would create jobs and pay higher taxes. The U.S. Supreme Court approved, ruling that even a remote hope of “public benefits,” whether those benefits are proved to be likely or not, justifies taking someone’s home and turning it over to another private party for that party’s private profit. Under Kelo, a City can measure its citizens’ worth in how much they pay in taxes, meaning that a family can be uprooted, cast aside, and its home destroyed if someone richer comes along who can be taxed more heavily. And so, just as “public use” was blurred to mean “public purpose” in Berman, in Kelo, “public purpose” was further blurred into “public benefit.” And with each of these steps, the fundamental right to own property, which was so important to the Founders and has been essential to our liberty and prosperity, was undermined.
In her pointed dissent, Justice O’Connor explained the grave implications of what the majority had done: “Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.” In an apt description of Long Branch’s use of eminent domain against the MTOTSA homeowners, Justice O’Connor also warned:
Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more.
It is no coincidence that the MTOTSA homeowners are working-class citizens and retirees while their adversaries include K. Hovnanian, one of the largest property developers in the nation.
The Kelo decision provoked a nationwide backlash. Opinion polls consistently show that more than 80 percent of Americans disapprove of using eminent domain to transfer property from one private party to another for so-called “economic development.” 41
This public outrage has led to bipartisan legislative reform at all levels of government. At the federal level, for example, a House bill co-sponsored by liberal Democrats Maxine Waters and John Conyers along with conservative Republican James Sensenbrenner overwhelmingly passed by a 376-38 margin. 42
In just the past year since the Kelo ruling, 30 state legislatures have passed eminent domain reform including Florida, 43
New Hampshire 46
and Pennsylvania. 47
Legislatures in six states are sending constitutional amendments to voters. 48
Scores of local governments have enacted their own protections. Finally, at least half-a-dozen citizens’ committees are working to get initiatives on their State ballots that would amend their State constitutions to restore traditional “public use” limitations on the power of eminent domain. 49
These legislative efforts should not, however, be construed as the primary remedy for eminent domain abuse. The framers of the U.S. and N.J. Constitutions included robust property protection among our fundamental rights because they understood that some things are too important to be left to the whims or plans of local government. Just as the government—even a popular one—is not allowed to burn your books or arrest you without a warrant, so too should the government not be able to seize your home and simply give it to someone else. The home, as Abraham Lincoln said, is the “fruit of labor,” meaning that it is the repository of your efforts, symbolic of your dreams, and where you find solace from the turmoil of the world.
What Kelo Means for the MTOTSA Homeowners
The question before the U.S. Supreme Court in Kelo was whether the promise of jobs and higher taxes justifies the use of eminent domain. In Long Branch, on the other hand, the City has always maintained that it is exercising eminent domain to cure blight. For example, Mayor Adam Schneider, trying to distance Long Branch last summer from the popular backlash against Kelo, insisted that “what we’ve been doing here is the removal of urban decay.” 50
That statement notwithstanding, the City of Long Branch is preparing to fall back on a Kelo rationale if the court rejects its bogus blight argument. 51
Even if it does, however, there are still relevant differences between this case and Kelo. The most important of these is that Kelo was about the public use clause of the U.S. Constitution, not its counterpart in the N.J. Constitution. The N.J. Supreme Court has never ruled on a Kelo-style theory. In his majority opinion in Kelo, Justice Stevens noted that states are free to protect homeowners to a greater extent than the U.S. Constitution. The Institute for Justice will argue that the N.J. Constitution protects property rights more broadly than its federal counterpart. On July 26, 2006, the Ohio Supreme Court, in another Institute for Justice case, unanimously rejected the Kelo approach, holding that the Ohio Constitution does not permit the use of eminent domain for economic development. 52
The Institute for Justice intends to persuade the New Jersey Supreme Court to follow the courageous example of its Ohio counterpart.
Across the nation, local governments label thriving neighborhoods as “blighted” to justify transferring valuable property to private developers. If the non-blighted MTOTSA neighborhood—located in a non-blighted area—can be condemned in the name of urban renewal, then so can any other ordinary neighborhood anywhere. This case is about ensuring that overreaching governments and their backers in the property development industry are made to respect the clear limitations on eminent domain found in the N.J. and U.S. Constitutions. Litigation Team
This case will be litigated jointly by the Institute for Justice and Bathgate, Wegener & Wolf of Lakewood, N.J. Scott Bullock will be lead attorney for the Institute. Bullock has litigated a number of eminent domain cases, including representing the homeowners in Kelo v. City of New London. Assisting him will be staff attorney Jeff Rowes, whose practice focuses on property rights and economic liberty.
For more information, contact:
John E. Kramer, Vice President for Communications
Lisa Knepper, Director of Communications
Institute for Justice
901 North Glebe Road, Suite 900
Arlington VA 22203-1854
Phone: (703) 682-9320
Home: (703) 527-8730