New Jersey Eminent Domain Think Tank

The all-day continuing education seminar Eminent Domain in New Jersey was offered on March 28 in East Brunswick by Lorman Education Services. William J. Ward, author of the New Jersey Eminent Domain Law Blog, moderated the faculty, a diverse group of professionals who deal with eminent domain and property issues on a daily basis. The seminar’s perspective focused on issues facing today’s property owners and their advocates. Everything changed after the Kelo case, Ward stated in his opening remarks. “Up to that point,” he reflected, “eminent domain was a specialty area that only the practitioners – maybe a dozen or so attorneys, engineers, and appraisers - were interested in.” Since the Kelo backlash and increased public interest in eminent domain, Ward and many of his colleagues favor the review of New Jersey’s eminent domain and redevelopment laws.

Starting with the trio of cases considered almost a year ago by the Supreme Court of the United States, Seton Hall Law Professor Paula Franzese traced how SCOTUS gave clues through decisions in Lingle and San Remo, how their decisions might effect Kelo. In Kelo, Courts must give a broad deference to a legislative judgment that a carefully considered development plan will serve a public purpose; therefore, a takings exercised pursuant a legislatively determined public purpose will satisfy the Fifth Amendment’s “public use” requirement even if the condemned land will not be open to the public in its entirety.

Attorney Edward McKirdy believes that the Kelo case was a “blockbuster case that makes a quantum leap in the law of eminent domain.” McKirdy said the Court went down a slippery slope with its refusal to draw a bright line that taking property from A to give it to B is prohibited. McKirdy considers the outpouring of interest in eminent domain encouraging. Justice Kennedy asked in the oral argument if the remedy might be to “adjust the measure of compensation, so that the owner – the condemnee – can received some sort of a premium for the redeveloper?” McKirdy wonders if Justice Kennedy had in mind doing away with such compensation-restricting doctrines as project enhancement.

In New Jersey, business loss is non-compensable. McKirdy points out that can only work where the taking is for a new street or park and where business owners can relocate a few blocks away without substantial financial loss. But when the taking is for an area in need of redevelopment, customers as well as the business itself will be extirpated. McKirdy offered these suggestions:
 Abolish the “project enhancement” doctrine
 Business damages should be included in just compensation
 Expense of litigation should be borne by the condemnor
 Compensation for emotion distress that results in being forcibly removed from one’s home.

The public’s reaction to Kelo stimulated many politicians to propose so-called “reform” legislation addressing the eminent domain abuse issue. These myriad bills were addressed by Assemblyman Michael Patrick Carroll (R) Morris, and attorney Harry J. Riskin. Carroll, who proposed a Constitutional amendment himself, was blunt and emphatic: There will be no eminent domain moratorium in New Jersey. Riskin favors a bi-partisan eminent domain revision committee which would look at the eminent Domain Act of 1971, the Relocation Assistance Act, the relocation regulations, most importantly the Local Redevelopment Housing Law.

Attorneys Drew Kapur and James M. Turteltaub spoke about the issues related to valuation of contaminated properties in the context of the 2003 Supreme Court decision in Housing Authority of New Brunswick v. Suydam and recent legislation, passed by both New Jersey Assembly and Senate, giving municipalities the right to take over the clean up of condemned property where the property owner has not commenced the clean up expeditiously. Turteltaub pointed out that this was the only legislation passed in New Jersey addressing condemnation, and it was not a Kelo related issue, nor was it to the benefit of the property owner.

Every condemnation case is about just compensation. Louis Izenberg, MAI and attorney George Kroculick spoke about compensation in the context of the date of valuation, appraisal according to highest and best use, and negotiation. Izenberg would be in favor of fair market value including a “going concern value” or compensation for business losses which are not addressed in either the current law on eminent domain or under the Relocation Assistance regulations. One of the concepts in eminent domain is that the property owner should be made whole, but there are many holes remaining in the compensation equation.

Contesting the right to take the property in redevelopment cases was discussed by attorneys John J. Curley, Michael B. Kates, and William J. Ward, including a review of recent cases: ERECTC v. City of Perth Amboy, Township of North Bergen v. Spylen, 110 Washington Street v. Township of Bloomfield, and Costa Realty et al v. Lodi. The consensus of the panel was that judges throughout the state are taking a harder look at redevelopment acquisitions in light of Kelo especially in regard to the blight issue and conflicts of interest.

Planner Peter Steck gave an overview of the redevelopment process in New Jersey and the evolution of blight as it is defined in the LRHL. He was especially critical of the cursory blight studies undertaken in various municipalities, particularly those that are new to the process. Blight is the underpinning for the finding of an area to be in need of redevelopment, which ultimately results in eminent domain. Steck presented nine reforms proposed by the N.J. Chapter of the American Planning Association:
1. Require a redevelopment element of the municipal master plan.
2. Enhance planning content of redevelopment plans.
3. Provide greater public notice and enhanced public participation
4. Guarantee adequate compensation for property taken.
5. Provide more opportunities for public scrutiny in redeveloper designation.
6. Offer enhanced financial participation to affected property owners.
7. Guarantee enhanced consideration of historic and environmental resources.
8. Provide immediate clarification of “smart growth” criterion.
9. Improve relocation assistance.

Steck said that “New Jersey is having a Robert Moses moment and is in desperate need of a Jane Jacobs.” Jacobs wrote the landmark book, The Death and Life of Great American Cities.

Dr. Mindy Thompson Fullilove, this seminar’s answer to Jane Jacobs, addressed a view of eminent domain that is regularly ignored: What happens to the people and their neighborhoods? Fullilove, a psychiatrist who works in the field of public health and teaches at Columbia University, explained the impact urban renewal had on individuals and their health, the problems created by the loss of whole neighborhoods that provided financial and emotional support to impoverished African Americans. Her book, Root Shock is recommended reading to anyone dealing with eminent domain issues, whether property owner or condemning authority. Fullilove demonstrated how even culture is destroyed: One example she cited was the displacement and eventual disappearance of jazz clubs from urban centers and even jazz itself during the early years of urban renewal.

Traumatic displacement from home, friends and neighborhood causes stress, a grieving process that is prolonged, mental disorders, and even death among the elderly. Fullilove said that we should continue to watch what happens in New Orleans in the aftermath of the hurricane disaster.

Professor Paula Franzese addressed the ethical duties of local government versus the ethical duties of private citizens. “While property owners may want to view property rights in absolute terms – therefore siding with Kantian Ethics – local governments must often be utilitarian, making decisions they believe to grant the most benefits to the maximum number of people,” she said. “At the core of this conflict, is the ultimate question of who has the power to define what is the most beneficial use of property?” William J. Ward discussed conflicts of interest as they apply to the Rules of Professional conduct and government officials in recent cases.

This seminar brought together some of the most experienced writers and practitioners in the field of eminent domain. While they espouse different perspectives on the issues, this diverse group could be Governor Corzine’s answer: An eminent domain think tank to review and make recommendations to both the Governor and the legislature reforming the Eminent Domain Act, the Relocation Assistance Act and it regulations, and the Local Redevelopment Housing Law.

If you missed the seminar, contact Lorman Education for details or see our blog of 01 | 7 | 2006.

Written By:Eileen Ward On April 6, 2006 11:26 AM

What are your recommendations to the legislature on Assembly bill 582, that establishes minimum amounts for eminent domain relocation assistance and additional homeowner payments?

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