United States: New Jersey Enacts Statutory Reforms To Eminent Domain Powers Under Local Redevelopment And Housing Law

New Jersey Governor Chris Christie recently signed into law A-3615 (the "Act"), which codifies recent New Jersey court holdings providing the state's property owners with greater procedural protections from eminent domain under the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq.

The Act is a reaction to the United States Supreme Court's decision in Kelo v. City of New London, which held that the taking of private property for private development under an economic development plan qualified as a public use under the U.S. Constitution. The United States Supreme Court in Kelo stated that the protections found in the U.S. Constitution served as a baseline for eminent domain for property owners and allowed states to enact stronger protections for property owners. Since Kelo, the New Jersey Supreme Court in Gallenthin Realty Development, Inc. v. Paulsboro ¹ and the New Jersey Appellate Division in Harrison Redevelopment Agency v. DeRose ² have expanded upon certain procedural protections for property owners facing a condemnation action as part of a redevelopment project. The Act primarily serves to codify these two decisions. In addition, it establishes a new designation for "Non-Condemnation Redevelopment Areas," which should allow developers to access certain subsidies that may attach to a redevelopment designation without authorizing acquisition of such properties through the power of eminent domain. New Jersey is the 44th state to enact or change its laws regarding condemnation since the Kelo decision.

First, the Act modifies one of the criteria that a condemning agency can use to designate an area as in need of redevelopment. The Act requires a lack of proper utilization of an area caused by the condition of title, diverse ownership of property or other conditions that impede land assemblage or discourage the undertaking of improvements to result in a stagnant and unproductive condition of the land. Further, the Act creates a presumption that if a stagnant and unproductive condition of the land is found, such a condition is presumed to have a negative social or economic impact or is otherwise detrimental to the community's welfare.

Once a municipality has identified an area as a redevelopment area, the Act requires the municipality to adopt a resolution stating whether the municipality is authorized to use its powers of eminent domain (a "Condemnation Redevelopment Area") or not (a "Non-Condemnation Redevelopment Area"). If the resolution designates a redevelopment area as a Non-Condemnation Redevelopment Area, the municipality may not use its power of eminent domain to acquire properties within the redevelopment area. Interestingly, if the municipality is unable to acquire all property within a Non-Condemnation Redevelopment Area, the Act permits the municipality to reconsider whether the redevelopment area could be classified as a Condemnation Redevelopment Area and acquire the properties under its eminent domain powers.

It is important to note that a property owner who has received a redevelopment area notice as required under the new provisions and who has not filed a challenge within 45 days of receipt of such notice is barred from challenging the notice. As the Act primarily codifies recent New Jersey court holdings, it did little to change redevelopment law in New Jersey. Consequently, some may contend that this Act does not go far enough in providing greater protections from eminent domain to New Jersey property owners.

Notes

If you have any questions about this Alert, please contact George J. Kroculick, Michael J. McCalley, Christopher Bender, attorney your Eminent Domain and Land Valuation Practice Group or the attorney in the firm with whom you are regularly in contact.

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