Eminent Domain and the Corzine Principle

Eminent domain does not work as a device to rebuild our cities. If you are the owner/occupant of a low to moderate income housing unit that is going to be condemned under the Local Redevelopment Housing Law (LRHL), you are in grave danger. Consider the plight of thousands of Camden residents as described in today's Courier Post. Olga Pomar, attorney for South Jersey Legal Services representing low-income Camden residents in lawsuits challenging redevelopment plans, wrote:

"Given skyrocketing housing prices and the shortage of subsidized units, these people are at great risk of becoming homeless or living in overcrowded, unsafe and unaffordable housing....Residents of a redevelopment area have legitimate cause for concern because municipalities enjoy expansive powers under current redevelopment laws, while residents are afforded few rights and guaranteed only meager compensation. Once a redevelopment plan is properly adopted, a municipality can enter into agreements to turn land over to private developers without public bidding and with minimal public oversight. And it can acquire properties within the redevelopment area through eminent domain to effectuate these agreements.
The municipality can take title to a property by eminent domain and evict the resident in less than two months. The municipality must pay an owner only the fair-market value of the property in its current condition. Relocation laws provide that an owner also receive moving costs and an amount up to $15,000 for the purchase of a replacement home, which is usually not enough to purchase another property in the region. Renters who are displaced receive moving costs and up to $4,000 to cover a security deposit and a rent increase for a period up to four years, which covers an increase of about $100 per month.
Relocation laws do not require a municipality to create replacement units or guarantee housing will be available to the displaced household within the municipality.
Local governments often give assurances they will do more than what is legally required, making promises to build adequate affordable replacement housing to ensure residents can remain in their community. The problem is that if these promises fail to materialize, residents have little recourse."

Fighting the right to take is an expensive, lengthy battle. The well-heeled developer behind the municipality will keep funding legal maneuvers. The power of eminent domain doesn't go away. Even if municipalities are passing resolutions saying they are not going to use it, they can't abolish it. Agencies can't abolish it. It's a state-given right. Only the legislature can change it.

But a severe change in the housing market driven by interest rate increases could offer relief. Targeted property owners and their tenants in Bloomfield are in limbo while the township appeals Judge Costello's dismissal of its eminent domain complaint. On Tuesday, Toll Brothers, the partner of the designated developer Forest City Ratner, cut its sales forecast for 2006, CNN reported:

"In a possible sign of trouble for the housing industry, luxury home builder Toll Brothers cut its sales forecast for fiscal 2006 Tuesday, citing delayed openings for new developments and weakened demand in several markets.
Toll Brothers' shares tumbled nearly 14 percent in trading Tuesday and the news pushed down share prices for many large homebuilders as Wall Street, already nervous about the health of the housing sector, was rattled by the news. KB Home fell 5.5 percent and Pulte Homes Inc. lost 8.9 percent."

The Bloomfield projects includes 650 condiminium units slated to be built by Toll Brothers.

A greater hope for relief could come from the legislature. H.R. 4128, passed on November 3, 2005 may help our poorest citizens, but as of this writing, the United States Senate has not acted on its version of the bill "The Property Protection Act of 2005." Download the text of H.R.4128.

Attorneys and legislators reading the proposed legislation gave conflicting interpretations to the effect this act will have in Long Branch as reported in the Atlanticville:
City attorney James Aaron said, "It appears that Long Branch would not be affected in any way....The bill will affect commercial development. Long Branch is working under a redevelopment statute. The bill says nothing about a redevelopment statute."

Institute of Justice senior attorney Dana Berliner said: "Cities would have to choose between economic development or economic funds´┐Ż The House, including large numbers of members from both sides of the aisle, should be applauded for passing the bill, which will help protect American homes and small business owners from the abuse of eminent domain."

Representative Frank Pallone, Jr. (D), who spoke on the floor of the house in support of the bill said, "I believe the Private Property Rights Protection Act is a strong first step in the fight against eminent domain abuse...We have an obligation to protect our citizens as we revitalize our aging neighborhoods. We should not sit idly by and tolerate abuses of eminent domain in the name of economic revitalization."

A plain reading of the house version of this bill shows that Mr. Aaron's interpretation of the bill and its impact on Long Branch are incorrect. The threat of loss of federal funds to municipalities such as Long Branch and Bloomfield is significant. In this day and age of tight budgets at the federal, state, and local levels, loss of federal funds will put a hole in a municipal budget that is impossible to cover through tax increases. Residents are already over-taxed.

Over 30 states are reviewing or planning to review their eminent domain laws during upcoming legislative sessions. Since June 2005, Alabama, Texas, and Delaware enacted laws that tightened the application of eminent domain power in each state. The elections are over; it's time for the residents of New Jersey and other states to call in their chits. New Jersey's gubernatorial race was won by Senator Jon Corzine, who promised to address eminent domain issues in a statement on his blog the Corzine Connection:

"If I am elected Governor, I will ensure that the people of New Jersey are secure, knowing that their home, which they worked and saved to own, belongs to them and may not be unfairly seized by the government. My principle on this issue is a simple one: there should be no takings of homes for economic development except in rare and exceptional circumstances and then only with adequate safeguards to ensure that the process is fair and transparent. To obtain this outcome, I support major reforms of New Jersey's public use and development laws.
While there have been many legitimate and appropriate uses of eminent domain throughout history, we have also seen abuses of this power. We have seen a family lose their home and receive just $14,000, only to see the town quickly sell the property to a developer for $60,000. We have seen so-called redevelopment plans knock down housing that was affordable to long time community residents, only to displace them with luxury condominiums, without giving any thought as to where people with roots in the neighborhood would live. With dozens of New Jersey municipalities focused on redevelopment - we need to act decisively to protect our citizens as we revitalize our aging neighborhoods. A Corzine administration will not tolerate abuse in the name of economic development."

Written By:Richard Chaiken, MAI On November 14, 2005 9:38 AM

It would appear that the real trouble with the use of eminent domain for redevelopment is the failure to provide replacement housing for the poor and replacement for the small mom-and-pop businesses. If this were done we could have gentrification and redevelopment while not driving out the poor and middle class. It's a win-win situation if the redevelopment plans included mixed-use and a mix or range of demographics.