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South Amboy Redevelopment Agency v. Heffron

A-5859-02T1 (N.J. Super. App. Div. 2004) (Unpublished)

EMINENT DOMAIN—It is not bad faith for a condemning agency to withhold, from the property owner, a copy of an initial appraisal it obtained to determine financial feasibility, if it furnishes the owner with a later appraisal that did not depend on the earlier one.

A public agency was created pursuant to the Local Redevelopment and Housing Law (Law) to act as the redevelopment agency for a municipality. The Law vested it with the authority to exercise the power of eminent domain. The municipality adopted a redevelopment plan. A particular property was located within the area planned for redevelopment. The redevelopment agency’s appraiser inspected the property in August 2002, and submitted an appraisal in September. The appraisal opined that the property had a market value of $27,000. The agency then requested that its appraiser reinspect the property and submit a formal report. The site was inspected and a new appraisal, for the same value, was issued in October 2002. The agency then offered that sum to the property owner. Instead of attaching the October appraisal to the offer letter, the company accidentally attached the earlier appraisal. The owner made a counteroffer of $85,000. Negotiations ensued, but no agreement was reached.

The agency filed a condemnation complaint. At a summary hearing, the agency contended that the earlier appraisal had been obtained for informational purposes only, and that the later appraisal had been obtained once it had decided to acquire the property. The owner contended that he should have had the opportunity to meet with the appraiser prior to the issuance of the first appraisal and that his meeting with the appraiser in connection with the second appraisal inspection was a “phony meeting.” The lower court concluded that the redevelopment agency had the authority to exercise its power of eminent domain and that condemnation commissioners could hear the dispute over the value of the property.

On appeal, the owner first argued that the agency violated N.J.S.A. 20:3-6 by failing to provide him with an opportunity to accompany the appraiser during the first inspection and by failing to provide him with all the appraisals used for the purpose of making its offer. The cited statute requires that property owners be given an opportunity to accompany appraisers during property inspections. The Appellate Division held that the owner had failed to establish the agency’s bad faith. The owner accompanied the appraiser on his second inspection before the agency made its written offer to the owner. According to the Court, it was irrelevant that the appraiser drove by or visited the property beforehand or that it had provided the agency with an initial appraisal. There is no statutory prohibition against a condemnor obtaining an initial appraisal to determine whether it is financially beneficial to pursue acquisition of property for a public purpose.

The appraiser furnished an affidavit to the effect that he had considered the information provided by the owner, but found it to be irrelevant to his analysis. The Court held that if an owner is not satisfied with the value set by condemnation commissioners, the owner is entitled to have a jury trial.

The Court found no prejudice to the owner because both appraisals contained the same analysis, reached the same conclusion, and the owner was in fact provided a copy of the original appraisal when he was served with the pleadings.

It also disagreed with the owner’s contention that the agency had not engaged in good faith negotiations as required by N.J.S.A. 20:3-6. Several letters were exchanged . There were meetings to discuss the initial offer made by the agency. There were additional offers and counteroffers. Although the opposing offers were far apart, this was not a basis to conclude that negotiations were not in good faith. The law recognizes that bona fide negotiations may not produce an agreement as to value.

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