NEWARK-The Supreme Court recently came out with a ruling onIron Mountain Information Management Inc. v. The City ofNewark, which impacts whether or not commercial tenants areentitled to notice of a proposed blight designation under theprovisions of New Jerseys’ Local Redevelopment Housing law. Theissue before the New Jersey Supreme Court was whether a long-termcommercial tenant, with a limited right of first refusal, isentitled to the same notice as the property owner when the propertyis subject to a potential blight designation.

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On May 19, 2010, the Supreme Court held that the legislatureintended to limit the right to actual notice of blight designationto owners of record and those whose names are listed on the taxassessor's records, and Iron Mountain was not deprived of any dueprocess protections afforded by the New Jersey or US Constitution.This raises some interesting points for commercial tenants in thestate, says John S. Stolz, partner of Lowenstein Sandler’s realestate practice group.

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But first, some background. In 2004, the Newark MunicipalCouncil adopted a resolution authorizing the Planning Board toinvestigate whether a group of properties, including the buildingin which Iron Mountain is a tenant, qualified as blighted, Stolzrelates. “Following the publication of a notice of hearing andservice of the notice on the building owner, the Planning Boardheld a public hearing and concluded that the property met theapplicable criteria for a blight designation,” he tellsGlobeSt.com. “A resolution was adopted designating the blightedarea and directing that a redevelopment plan be drafted. ThePlanning Board held another public hearing to consider theredevelopment plan and adopted resolutions approving thedevelopment plan and appointing the housing authority to serve asthe redevelopment agency.”

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Iron Mountain challenged both the initial blight designation andthe subsequent approval of the redevelopment plan, arguing that itsstatus as a long-term commercial tenant amounted to a protectedproperty interest in the property that entitled it to the samenotices that the LRHL affords to the property owner.

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But the Supreme Court disagreed and sided with the AppellateDivision's reasoning that the legislature intended, in the blightdesignation context, to limit the right to actual notice to ownersof record and those whose names are listed on the tax assessor'srecords. “The Appellate Division also concluded that there were nodue process violations because commercial tenants do not have aninterest entitled to individualized recognition and protection atthe earlier blight designation stage, the condemnation stageaffords the tenant a comprehensive and complete forum for thevindication of its rights,” says Stolz, “and the administrativeburdens of requiring individual notice at the earlier blightdesignation state are enormous.”

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Consequently, commercial tenants are not entitled to notice of apotential blight designation pursuant to the LRHL and may have norights 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 taxrole or simply doing some legwork and looking into whether theproperty they are in has been designated as blighted.

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