NEWARK-The Supreme Court recently came out with a ruling on Iron Mountain Information Management Inc. v. The City of Newark, which impacts whether or not commercial tenants are entitled to notice of a proposed blight designation under the provisions of New Jerseys’ Local Redevelopment Housing law. The issue before the New Jersey Supreme Court was whether a long-term commercial tenant, with a limited right of first refusal, is entitled to the same notice as the property owner when the property is subject to a potential blight designation.
On May 19, 2010, the Supreme Court held that the legislature intended to limit the right to actual notice of blight designation to owners of record and those whose names are listed on the tax assessor's records, and Iron Mountain was not deprived of any due process protections afforded by the New Jersey or US Constitution. This raises some interesting points for commercial tenants in the state, says John S. Stolz, partner of Lowenstein Sandler’s real estate practice group.
But first, some background. In 2004, the Newark Municipal Council adopted a resolution authorizing the Planning Board to investigate whether a group of properties, including the building in which Iron Mountain is a tenant, qualified as blighted, Stolz relates. “Following the publication of a notice of hearing and service of the notice on the building owner, the Planning Board held a public hearing and concluded that the property met the applicable criteria for a blight designation,” he tells GlobeSt.com. “A resolution was adopted designating the blighted area and directing that a redevelopment plan be drafted. The Planning Board held another public hearing to consider the redevelopment plan and adopted resolutions approving the development plan and appointing the housing authority to serve as the redevelopment agency.”
Iron Mountain challenged both the initial blight designation and the subsequent approval of the redevelopment plan, arguing that its status as a long-term commercial tenant amounted to a protected property interest in the property that entitled it to the same notices that the LRHL affords to the property owner.
But the Supreme Court disagreed and sided with the Appellate Division's reasoning that the legislature intended, in the blight designation context, to limit the right to actual notice to owners of record and those whose names are listed on the tax assessor's records. “The Appellate Division also concluded that there were no due process violations because commercial tenants do not have an interest entitled to individualized recognition and protection at the earlier blight designation stage, the condemnation stage affords the tenant a comprehensive and complete forum for the vindication of its rights,” says Stolz, “and the administrative burdens of requiring individual notice at the earlier blight designation state are enormous.”
Consequently, commercial tenants are not entitled to notice of a potential blight designation pursuant to the LRHL and may have no rights or remedies until there is a condemnation proceeding. “Tenants are basically left in the dark,” Stolz tells GlobeSt.com, but he adds that they do have the option of getting onto the tax role or simply doing some legwork and looking into whether the property they are in has been designated as blighted.
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