NJ Eminent Domain Reform Year Three
Tomorrow May 5 at 10 a.m., the Senate Community and Urban Affairs Committee will take up S-757, the latest version of eminent domain reform, sponsored by Senator Ronald Rice. To read the most recent amendments, download bill S-757. The meeting will take place in Committee Room 7 on the second floor of State House Annex, Trenton, New Jersey.
Rice is desperate for a second to move the bill, and committee affirmation, so that the bill can be put before the full Senate for action. This belies a critical question: How will this bill be reconciled with other pending bills - A1492, S559, and S1020, by Assemblyman Burzichelli, Senators Sweeney and Weinberg respectively – which also propose reform to the current version of the New Jersey Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq. Burzichelli’s bill passed the assembly in June 2006, ironically on the same day that Judge Lawrence Lawson issued his decision in the MTOTSA cases - City of Long Branch v. Brower and Anzalone.
Once again, the forces of eminent domain reform have been summoned to Trenton to testify and demonstrate for change. We expect the League of Municipalities to reiterate what they have said before: The courts have clarified the existing law in the Gallenthin and DeRose cases regarding the requisite substantial evidence required for blight determination and all-important notice provisions to affected property owners. Simply put, their position will be that the recent case law is all that needs to be memorialized in the statutes. We have yet to hear from Senate President Codey or Governor Corzine regarding the progress of eminent domain reform.
Bill S-757 proposes changes to 3 statutes: The Local Redevelopment Housing Law (LRHL), N.J. S.A. 40A:12-1 et seq.;the Eminent Domain Act of 1971, N.J.S.A. 20:3-1 et seq.; and the Relocation Assistance Act, N.J.S.A. 20:4-1 et seq.
A major change proposed to the Eminent Domain Act 20:3-6, regards precomplaint disclosure to the property owner. Right now, the property owner receives written notice of the appraisal and a written offer letter accompanied by a copy of the appraisal prepared on behalf of the condemning authority. One proposed change is that, in the event of an acquisition under the LRHL, the offer cannot be less than the bona fide mortgages on the property. This change comes too late for Thomas Orlando of Asbury Park. The proposed change also gives the condemnee 45-70 days to consider the offer, or to seek clarification of the offer. The bill also gives the right to the condemnee to provide to relevant information to the condemnor, redeveloper, or their representative regarding the particulars of the property in question.
Although the New Jersey Constitution Article VIII, Section 3, Paragraph 1 authorizes condemnation for any property located within the “blighted area” (i.e., area in need of redevelopment); the new bill seeks to create a newly defined term, “condemnation redevelopment area.” This will undoubtedly create confusion and may not pass constitutional review, since the Constitution authorizes condemnation for any property declared to be blighted.
The notice provisions suggested to be sent to the property owners would be equally confusing. (See pages 15 and 19 of S-757.) One notice provision says that your property is in an area in need of redevelopment and your property will not be taken for redevelopment purposes (p.15) and the other notice says that your property is in an area in need of redevelopment and you will be taken for redevelopment purposes (p.19). These two notice provisions, if adopted, will undoubtedly open the door for more litigation because they create two distinct classes of blighted property within the same redevelopment area, presumably based on the results of a redevelopment study submitted and approved by the planning board, mayor and council. How will the municipality determine whose property is taken and whose is not? What prevents political corruption or favoritism from influencing this decision?
Another significant change provides that the designation of an area in need of redevelopment shall lapse after 7 years following the adoption of the resolution if the municipality has not developed a redevelopment plan for the redevelopment area and made substantial progress on implementing the plan. For purposes of this new subsection, a bona fide agreement for project financing shall consitutute commencement of a project or substantial progress on implementing the plan.
(See page 18).
This proposed change will precipitate arguments on what constitutes bona fide financing and what constitututes substantial progress on implementation. There have been many examples: Asbury Park is one of the most egregious, where projects have been started and abandoned, developers gained financial backing and then declared bankruptcy, and layers of developer’s blight piled on top of blight. A better solution to this problem would require that the blight declaration be rescinded after 7 years if the condemning authority and developer have not adopted a plan, commenced construction, and demonstrated the financial resources and ability necessary to complete the project in the statutory time frame.
This bill also creates a new criteria for blight: contamination. This provision would replace the undefinable “smart growth” criteria "h"in the LRHL. The new criteria "i" would be defined as “property, either improved or unimproved that has remained vacant or substantially underutilized for at least 24 consecutive months because of environmental contamination.” One property that comes to mind that fits this description would be the National Lead site in Sayreville, which has been the subject of continous litigation for at least seven years. National Lead is undertaking its own cleanup of the site and has fought to maintain its control of the cleanup. This is in opposition to the municipality taking over, where the cleanup costs would expand exponentially once the politically favored consultants become involved. The legislation that makes this criteria possible was passed in the lame duck session of the Legislature in January 2006 (A - 4588 and S-2851). It was one of the few eminent domain reforms adopted into New Jersey law since the Kelo decision.
Stay tuned for the next revision.