From the Record:
Ruling limits use of eminent domain
New Jersey towns will have a harder time seizing private property for redevelopment after the state Supreme Court ruled Wednesday that targeted property must be blighted and not merely underused.
The ruling will have far-reaching effects, state officials said, and could aid property owners fighting eminent domain in Lodi, North Arlington and Passaic.
The 42-page unanimous decision said that town officials cannot seize homes and businesses simply because they believe those properties can be put to better use.
“The court is giving notice that municipalities no longer have unfettered access to private property,” said Harvey Pearlman, a lawyer who represents a Passaic homeowner whose house was condemned by the city without his knowledge.
The court wrestled with what constitutes blight in deciding a case from Gloucester County, where the town of Paulsboro sought to condemn a 63-acre tract made up mostly of wetlands.
Chief Justice James Zazzali wrote that Paulsboro considered blight to be property that is “stagnant or not fully productive” but could be rehabilitated.
I am very happy about this, my co-op complex in Fort Lee kept looking like a large target if they kept doing this in our state.
“Dear Resident,
They are tearing down all the buildings so they can build 4 3000 unit luxury towers, please move now”
I’m happy about this too, because an “underused” property could be construed as being a 1500-square-foot 1950’s cape or ranch with which the owner is perfectly happy instead of the 4000-square-foot McMansion that a developer wants to build on that same piece of land.
The key part of the US Supreme Ct’s Kelo holding was that economic benefit to the community qualified as a public use thereby serving as a lawful basis for eminent domain. The primary economic benefit is considered to be “increased ratables”, ie more tax revenue overall and lower taxes for any individual property.
But if you look at NJ municipalities that have engaged in redevelopment projects (usually luxury condos and retail) using the Housing Law, you really don’t see a tax benefit to the community. What you often find are steep tax increases above the median before the project is complete (to pay for the benefits to the developer) and sharp increases after with no rebate of the prior large increase.
Eg–In Camden County the median five year tax increase was 33%. Haddonfield taxes went up 49.5% in five years despite “King’s Court”. Collingswood taxes went up 44%. Collingswood is especially egregious because the boro borrowed over $10million to get the “Lumberyard” project going and won’t see a ROI for over 30 yrs. There are other examples.
Neither Haddonfield nor Collingswood used eminent domain to take properties. But other commuities are looking at similar redevelopment projects and using/trying to use eminent domain (Merchantville, Paulsboro, Westmont) But the idea of whether there truly is an economic benefit to the community from a particular redevelopment project should be pressed forward. In none of the Camden County cases I looked at did the municipality do a fiscal impact statement. It’s always assumed that the same luxury condo and retail project provides economic benefit whatever goodies the developer is given.
The Gallenthin case actually supports Kelo on this matter. It just requires a more detailed report on blight from the municipality. To truly attack Kelo, short of legislative action, you have to get at the heart of the decision–where is the economic benefit to the community in this particular project?