New Jersey Eminent Domain Law Blog

Mark Twain said, “There are two things you should never watch being made: sausage and legislation.” Heeding that advice, I saved myself a trip to Trenton and listened to yesterday’s Senate Community and Urban Affairs Committee hearing on eminent domain reform on my computer. Twain’s admonition should offer an additional caveat: Don’t listen to legislation being made, especially when lame duck is on the menu. It’s lame because the legislation never reaches fruition; Duck when the people in power dodge their responsibility to improve the state's eminent domain laws.

Yesterday’s hearing on S-1975 and its companion bills were at least the fifth iteration of the proposed changes to the Local Redevelopment Housing Law (LRHL) and portions of the Eminent Domain Act of 1971. Keeping up with the latest version can be a challenge: the penultimate version was issued Friday, November 23 (the Friday after Thanksgiving, which was not a state holiday). The text was amended prior to the hearing. It is always a moving target in Trenton; one arrives prepared to testify to one bill, only to find that it has been changed while you were on the N.J. Turnpike.

To cut to the chase, the Senate Community and Urban Affairs Committee adjourned once more without taking action. It appears that eminent domain reform in New Jersey will not take place in 2007. There is no push from the Democratic leadership, Governor Corzine, Senate President Codey or Assembly Speaker Roberts to do anything further this year.

The initial hurdle to eminent domain reform in the legislature was the passage of Assemblyman Burzichelli’s bill A-3257 in June 2006. Yesterday the Senate committee heard from the usual interested parties, both pro and con. The cons were lead by Mayor Jeremiah Healy of Jersey City - “If it ain’t broke, don’t fix it”- and Mayor James Maley of Collingwood who opposes reform. Mayor Maley, who is also a lawyer, argued the Gallenthin case before the New Jersey Supreme Court on behalf of the Borough of Paulsboro. “We are all following that law that you put in place. And where we don’t follow that law, courts reverse it,” he said.

Through the Gallenthin case, we are reminded that, while the Legislature enlarged the power of eminent domain to include the taking of private property for redevelopment purposes, the judiciary is the final arbiter. As Justice Zazzali said, “The People entrusted certain powers to the Legislature, and the courts are responsible for ensuring that the terms of that trust are honored and enforced.” (See my article Reversal of Blight in the New Jersey Law Journal.) While Justice Zazzali said the courts are the final arbiter of compliance with legislative intent, those who think that Gallenthin remedies eminent domain abuse are mistaken.That case did not deal with other important issues, such as notice to affected property owners, transparency in the redevelopment process, valuation, the project influence rule, relocation benefits, compensation for business loss, and other blight criteria.

Advocacy groups for affordable housing, including the Sierra Club and South Jersey Legal Services, spoke against the bill, saying it did not go far enough to protect low and moderate income tenants when their properties are acquired for a public purpose. In fact, some critics think Senator Ronald Rice’s measure is pro-development, and there are no safeguards against pay-to-play in redevelopment.

These are important public policy issues that remain unanswered and can only be addressed through legislative reform. As Senator Rice noted, “There is no such thing as a perfect bill on eminent domain.” You can’t please all the people all the time. Yet not one senator in the hearing came forward to second Rice’s effort to move the bill out of committee. A cynic might call this a victory by attrition for the forces that oppose reform. Or, perhaps the League of Municipalities, New Jersey Futures, and attorney Kevin Moore still aren’t satisfied with their own drafts of the verbiage.

After the Kelo decision, other states affected reform. According to the National Conference of State Legislatures website, the following legislation passed in 2007: 

• Connecticut  SB 167 - Requires a two-thirds vote of the legislative body of a municipality to approve the acquisition of real property through eminent domain by a development agency. If the municipality decides not to use the property for the purpose for which it was acquired, it must offer to sell it back to the original owners or heirs at the original purchase price or fair market value, whichever is less. Increases the level of compensation for property acquired through eminent domain by a development agency to 125 percent of its average appraised value. Prohibits the acquisition of real property through eminent domain if the primary purpose is to increase tax revenue.
• Montana SB 363 - Limits the use of eminent domain for urban renewal purposes to property in blighted areas where the property is a detriment to the public health, safety or welfare, and prohibits its use if the primary purpose is to increase tax revenue.
• Nevada AB 102 - Stipulates that public uses for which property may be acquired through eminent domain do not include transfer of the property to another private entity. Exceptions include where the private entity uses the property primarily to benefit a public purpose; the entity leases the property to a person that occupies an incidental part of a public facility; or the property taken was abandoned by the owner or the purpose was to abate a threat to the public health and safety. AJR 3 -Stipulates that public uses for which property may be acquired through eminent domain do not include transfer of the property to another private entity. Exceptions include where the private entity uses the property primarily to benefit a public purpose; the entity leases the property to a person that occupies an incidental part of a public facility; or the property taken was abandoned by the owner or the purpose was to abate a threat to the public health and safety. (Note: AJR 3 must be adopted by the legislature again in 2009 and be passed by the electorate on the 2010 ballot before becoming effective.)
• New Mexico HB 393 - Prohibits the use of eminent domain by municipalities for redevelopment projects under the Metropolitan Redevelopment Code.
• North Dakota SB 2214 - Prohibits the taking private property for use or ownership by another private entity, except for common carriers or public utilities. Stipulates that public use or public purpose does not include the public benefits of economic development, including an increase in tax base, tax revenue, employment or general economic health.
• Utah HB 365 - Prohibits the use of eminent domain to acquire single-family residential owner occupied property unless requested by the owners of at least 80 percent of the owner occupied property within the area representing at least 70 percent of the value of owner occupied property in the area, and two-thirds of all agency board members approve of the acquisition. For the acquisition of commercial property, the figures are 75 percent and 60 percent, respectively. Authorizes the use of eminent domain in an urban renewal project area if an agency determines the property is blighted, the urban renewal project area plan provides for the use of eminent domain and acquisition of the property begins no later than five years after the date of the plan. Requires advance written notice and good faith negotiations with property owners before exercising eminent domain.
• Virginia SB 781, SB 1296, HB 2954 - Defines public use for which eminent domain may be exercised to be, among other uses, the possession, ownership, occupation and enjoyment of property by the public or a public corporation, or for the removal of blight where the property condemned is actually blighted. Stipulates that property may only be taken where the public interest dominates any private gain and the primary purpose is not for an increase in tax base, tax revenue or employment.
• Wyoming HB 124 - Defines public purpose for which eminent domain may be exercised to be the possession, occupation and enjoyment of property by a public entity. Prohibits the transfer of private property to another private entity except to protect the public health and safety. Prohibits a municipality from delegating eminent domain authority to an urban renewal agency. Requires advance written notice and good faith negotiations with property owners before exercising eminent domain. 

Earlier this month, New Jersey Public Advocate Ronald Chen addressed the League of Municipalities. His complete remarks are well worth reading:

...[S]omething is broken with our current laws and practices governing the use of eminent domain for redevelopment in New Jersey. Thus, neither the recent adverse judicial reaction to use of eminent domain for redevelopment in New Jersey nor the public outcry for reform are an over-reaction to the Kelo decision, or part of an anti-government agenda, or the product of media hype. They are appropriate reactions to the fact that current laws and practices [d]o not always reflect the norms and values embodied in our state constitution, and the fact that the rights o[f] tenants and property owners are not being adequately protected.

Try as I might, I can not tell if the "scope of project" question is still going to be resolved after all the revisions. This is especially important in Atlantic City where CRDA and or the City seem to be gearing up for Eminent Domain.