PROPOSED CHANGES TO N.J. EMINENT DOMAIN ACT OF 1971: Assembly Bill 4089 and Senate Bill 2621 After Suydam Decision

The price of democracy is vigilance.” – Senator Bob Smith (D) Middlesex, Chairman of the N.J. State Senate Committee on the Environment

Assembly Bill No. 4089 was referred to the Assembly Housing and Local Government Committee on Monday June 13, 2005. The bill was first introduced on May 12, 2005 and referred to the Assembly Environment and Solid Waste Committee. The bill requires that contamination be considered in property valuation in condemnation proceeding and requires remediation be performed by the condemnor.
The stated purpose of the bill, and its companion N.J. Senate Bill No. S2621, is to overturn the New Jersey Supreme Court decision in Housing Authority of New Brunswick v. Suydam Investors, 177 N.J.2 (2003) and revise New Jersey's Eminent Domain Act of 1971.

A remarkable assembly occurred in Trenton in opposition to this bill: McKirdy & Riskin, Carlin & Ward, Bathgate & Weggener, Archer, Greiner & Reed, senior state Deputy Attorney General Kevin Rittenberry, and Deputy Attorney General Dale Lessne, all appeared and testified in opposition to this bill. These firms and the deputies Attorneys General represented all spectra of the condemnation bar, both condemnor and condemnee. Monday's hearing concluded with the bill reported out of the Assembly Committee with amendments, and referred to the Assembly Housing and Local Government Committee without recommendation. Listen to the Committee on Environment and Toxic Waste Hearing of June 13, 2005.

It was readily evident that the Middlesex County Democratic machine is pushing the bill as an answer to Middlesex County’s difficulties with the Suydam case as applied to National Lead v. SERA and the decisions of Judge Longhi in the Superior Court; Judges Skillman, Parillo and Grall in the Appellate Division; and the Hon. Neil H. Shuster, Presiding Judge of the Chancery Division. This case which involves $30M in public funds is the apparent genesis for the bill. Download the Appellate Decision in National Lead v. SERA.

However, the legislative changes are really directed at redevelopment projects and unscrupulous redevelopers acting in concert with acquiring agencies. If passed, Suydam would be eviscerated; and a long standing public policy, developed by the bar and approved by the Supreme Court for dealing with environmental issues in the context of condemnation cases, will be abrogated. As President Bush the elder would say, “This must not stand.”

The current state of affairs in redevelopment projects undertaken pursuant to the LRHL [Local Redevelopment Housing Law] gives municipalities virtual carte blanche to acquire and redevelop real estate in conjunction with the developers, who are paying for the projects. While the concept behind the LRHL is good, and public benefit is the objective, the potential for misuse is present. If the municipality/developer is given the additional leverage of deducting environmental contamination from the fair market value of the property before the offer is made, the property owner’s worst nightmare will become reality. Properties will be acquired for a fraction of their value because unscrupulous developers will obtain greatly inflated estimates of the cost of clean up.

Assembly Bill No. 4089 was voted out of committee ”without recommendation” and referred to the Housing and Local Government Committee for further review. This was a coward’s answer to voting this legislation down from the moment of inception. Only Assemblyman Rooney (R) Bergen spoke out forcefully against this bill. Assemblyman Wisniewski, the sponsor, did not even speak in favor of the legislation he introduced. Apparently, he did not want to face the opposition.

Yesterday, the Senate's companion Bill No. 2621 was similarly held for further review without vote on the recommendation its sponsor, Senator Bob Smith (D), District 17 (Middlesex and Somerset Counties). Senator Smith is apparently seeking amendments to the bill which somehow could satisfy the opponents. We don’t think this will happen. One proposed amendment to the bill, which exempts the state of New Jersey and other state agencies from the provisions of the bill, would effectively create a two-tier system for determining just compensation – one for the state and one for other redevelopment agencies. This is blatantly unconstitutional, a violation of due process and equal protection. Redevelopment agencies would be deducting environmental costs for fair market value before making the offer to the property owners. State agencies (e.g., NJDoT, NJSCC, NJDEP) would be using the current system, which values the property as if remediated and deposits the full amount of compensation with environmental clean up costs reserved in the deposit for further determination in a separate proceeding if necessary. This is the precise procedure that the N.J. Supreme Court established in Suydam.

The proposed change by Senator Bob Smith, Chair of the Environmental Commitee would read:

d. The provisions if this section shall not apply to any condemnation action in which the State, or any State department, agency, corporation, authority, bureau, board, commission or instrumentality is the condemnor.

This amendment was the Senate’s answer to the opposition proffered before the Assembly by the Attorney General’s office. The amendment may eliminate their problem, but it certainly does not solve our problem, or the problem of the vast majority of property owners effected by redevelopment projects. This bill is a moving target, and we expect further amendments that try to address issues raised by the bill’s opponents. As Yogi Berra said, “It ain’t over till it's over.” And in accordance with the admonition by Senator Smith, we will remain vigilant.