Judge Rules Against Jersey City and Embankment Coalition in Federal Case

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In a dense 31-page ruling made public yesterday, U.S. District Judge Ricardo Urbina says Jersey City, the Embankment Preservation Coalition and the Rails to Trails Conservancy don’t have legal standing in their joint effort to negate Conrail’s sale of the 6th Street Embankment to developer Steve Hyman.

The city and the groups had argued that the 2005 sale should be overturned, since the rail company didn’t properly abandon the sites as specified by federal law. In a 2007 decision, the federal Surface Transportation Board (STB) agreed. But that decision was overturned last year by a federal appeals court, which ruled that the STB didn’t have jurisdiction over the property. The city and the groups then sought a declaration from the D.C. District Court that the Embankment is subject to the STB’s abandonment jurisdiction, a declaration Judge Urbina did not give them.

“The plaintiffs do not explain how the imposition of abandonment conditions or the withholding of STB abandonment approval would help Jersey City acquire the property and develop it for public uses, the municipality’s principal interest in this litigation,” he writes.

Judge Urbina also says the city and the groups failed to show any “imminent injury” to their interests in preserving the elevated rail line, since “there is no indication that the demolition and development of the Embankment will proceed anytime soon,” pointing to the fact that both the Historic Preservation Commission and the Zoning Board of Adjustment have denied Hyman’s applications for permits to develop and/or demolish the site.

The city was also arguing that if the property were under STB jurisdiction, Conrail had deprived it of its right of first refusal under a state law that requires any railroad to offer rail property approved for abandonment by the STB to state and local governments for ninety days before selling it to private entities.

But Judge Urbina wasn’t convinced of Jersey City’s argument in this area either, pointing out the “undisputed” fact that the city was notified of Conrail’s intent to sell the land “but declined to act” on that information.

“In December 2001 and October 2002, Conrail distributed bid solicitation packages to parties they believed to be potentially interested in acquiring the Embankment,” he writes. “The JCRA [Jersey City Redevelopment Agency] was one of the recipients of these bid solicitation packages and transmitted Conrail’s October 2002 request for bids to Jersey City’s Department of Housing, Economic Development and Commerce.”

The October 28, 2002, memo from the JCRA to the city department read: “[A]ttached for your information and perusal is the bid solicitation letter received from Conrail with regard to the above property. Minimum bid price is $3,000,000. I know the JCRA is not interested in bidding on this property. I presume that the City has no interest either at this point but felt you should see the attached.”

Both the JCRA and the city opted to not bid on the property, and it was ultimately sold to Hyman and his wife, who put in the only bid.

Hyman says he is pleased with the federal court’s decision, but he’s hesitant to claim any great victory.

“The pendulum has definitely swung,” he says. “[But] it’s just another turn in a long, twisty road.”

City spokesperson Jennifer Morrill says the administration is “disappointed” by the court’s decision but “not dissuaded.”

The administration “continues to be committed to acquiring the Embankment so that its historic walls can be saved, a greenway similar to the High Line in Manhattan created and a transportation corridor that will take car traffic off our streets maintained,” she says.

Just how that will happen is the next big question, and Urbina’s decision sheds light on what may well be the next step that Jersey City will take: eminent domain.

The City Council has approved using eminent domain powers to condemn the land. But, according to the ruling, the city was waiting for clarity on whether or not the STB had jurisdiction over the property. If it did, then the state eminent domain law would be preempted by the federal agency’s jurisdiction. But since Urbina has ruled that not to be the case, it appears the city may have a clearer path to use eminent domain to acquire the property.

The city sent appraisers out this summer to estimate the “just compensation” due to Hyman in connection with a potential condemnation and acquisition by eminent domain, and the city says it has secured $6.6 million in grants to help pay for the property.

By law, the city would have to offer the highest appraisal in any condemnation proceeding. It’s money that Hyman thinks they don’t have.

“If you want to condemn it, you have to have money,” he says. “And they don’t have the money.”

Attorneys for both sides are undoubtedly still poring over the details of the intricate decision; the city has 30 days to appeal.

Meanwhile, the Zoning Board of Adjustment case is currently being re-heard, as per a court order from Hudson County Superior Court Judge Maurice Gallipoli. The next hearing is scheduled for Thursday, September 30 at 6 pm in City Hall.

Embankment Ruling from D.C. District Court

Jon Whiten

co-founder of the Jersey City Independent; he now works for a public-policy nonprofit in Trenton.

4 Responses
  • Jayson
    Sep 29, 2010

    So who was the rocket scientist in the JCRA who didn’t understand that $3,000,000 was a bargain? And for that price there are a host of individuals who would have bought that much land. Its a clear sweetheart deal from Conrail.

    Jayson Sep 29, 2010
  • Steve Hyman
    Oct 7, 2010

    In answer to Jayson. Barbara Netchert, an otherwise lovely lady, got involved in government and then made a rapid rise in the ranks to the position of Hudson County Clerk. Along the way, she was an employee in JC Division of Development and then executive director of JC Redevelopment Agency in 2006. As director of JCRA, she was the titular boss over Tony Lambiase, the Zoning Official for more than 20 years. Tony had sent me a letter explaining the the Marin and Manila blocks of the 6th Street Embankment were zoned residential. Based on his letter in his capacity, Dean Marchetto designed a residential project for those blocks. Many months after Tony’s letter, I got a follow up letter from Barbara Netchert claiming that Tony was wrong with his explanation of the zoning and that in fact it was “RAILROAD USE ONLY” according to Barbara. I appealed this to the Superior Court and it decided that Barbara was wrong and that in fact Tony was right. The City appealed and I am now waiting for a hearing in the Court of Appeals four years later. it is ludicrous to think that these blocks are for “RAILROAD USE ONLY”. I am reasonably sure that I will be successful in this fight but the cost to me just in time money is shocking. Barbara helped the City cause by stalling my development and helping me miss the market. BTW, in 2002 when Conrail sent Barbara a letter offering her the opportunity to bid on the sale of the 6th Street Embankment. Barbara sent the enclosed note indicating that the JCRA is not interested in bidding. So in various capacities she decided not to bid on purchasing the property and then with a stroke of the pen zoned it into inutility. THANK YOU BARBARA

    Steve Hyman Oct 7, 2010
  • Jon Whiten
    Oct 7, 2010

    @ Jayson,

    the 2002 letter that Mr. Hyman is referring to can be found here:

    http://www.scribd.com/doc/38919573/2002-Jersey-City-Letter-No-interest-in-Buying-Embankment

    Jon Whiten Oct 7, 2010
  • Jayson
    Oct 8, 2010

    @Steve – You can count on the municipality to always do the right thing once all other options are exhausted and it seems like that time is near.

    Like others, I lament the fact that it’s not going to be a park. However, the city fumbled and you picked up the ball. Now the city is fumbling again by squandering a lot of time and money in a lost cause.

    Jayson Oct 8, 2010

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