ATLANTIC CITY, N.J. (CN) - A man whose property is now in limbo because of the bankruptcy of the Revel casino urged a judge Tuesday to have state authorities butt out.
Since New Jersey law requires state casinos to contribute a portion of their revenue on local improvement projects, the Casino Reinvestment Development Authority (CRDA) had targeted a large swath of nearby property to support the environment around the $2.4 billion Revel casino.
The Revel went bankrupt soon after its 2012 opening, however, selling at auction last month for $110 million, and further compounding trouble for Atlantic City's gambling industry amid new competition by neighboring states like Pennsylvania and Delaware.
Charles Birnbaum, a 67-year-old resident of nearby Hammonton, owns one of the properties that the CRDA had targeted for its Revel project.
His parents acquired the building in 1969, and Birnbaum runs a piano-tuning business on the bottom floor while renting out the two upper levels.
Claiming that he was offered $240,000 for the house under eminent domain, Birnbaum said the Revel's closure means the CRDA no longer has any specific use for his land.
Storing the property in a land bank for an unspecified future purpose would allegedly make the acquisition illegal, and Birnbaum wants to stay.
"Every time I'm at the property, I'm lost in all the vacant land," Birnbaum said after the hearing on his challenge Tuedsay. "I don't think I'm in anyone's way whatsoever."
Stuart Lederman, the attorney for the CRDA, argued that the landmark 2005 Supreme Court holding in Kelo v. New London entitles the government to acquire land through eminent domain for economic development purposes other than those created by traditional uses of eminent domain like public infrastructure.
Lederman said that the purpose of the project was "to support tourism."
But Birnbaum's attorney, Robert McNamara of the Institute of Justice, argued that the federal law of Kelo didn't even need to be reached before running into significant problems with New Jersey's own rules on eminent domain.
The New Jersey Supreme Court had already held against such nonspecific takings in the 2007 case Gallenthin Realty Development Co. v. Borough of Paulsboro, McNamara said. In that case, the court held that Paulsboro could not take land for generalized economic-development purposes unless the land was deemed blighted by the state.
New Jersey has made no such finding with regard to the land around Birnbaum's property, McNamara added.
"Courts all across the country uniformly reject this type of taking," he said.
Lederman scoffed that this reasoning would prevent New Jersey "from taking any property for any project."
Claiming that the CRDA had not targeted other ample vacant land held by private owners, McNamara said the authority abused its discretion in singling out Birnbaum's house.
"The CRDA did not bid on the vacant land sold at bankruptcy auction" surrounding Birnbaum's house, McNamara said.
The court reserved judgment on the claim by Birnbaum's attorney that the CRDA needs a plan, rather than a "blue-sky taking to build something at some point," for eminent domain.
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