6/24/2005

THE KELO EFFECT: New Jersey Eminent Domain Law Blog, 6/23/05

Supreme Court Defeats Property Owners in Eminent Domain Decision 5-4

By William J Ward, Esq

“Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms.” – Justice Sandra Day O’Connor, dissenting

Today the Eminent Domain trilogy is complete. In May, the Supreme Court affirmed long standing regulatory takings stands in Lingle v. Chevron USA. Today, Kelo v. New London affirms long standing decisions regarding takings for public use in Midkiff and Berman. And last Monday, in San Remo v. San Francisco, the Court said property owners could not litigate in both the state and federal courts at the same time. In other words, don’t call us, and we won’t call you.

The decision was 5-4 in favor of the City of New London, Connecticut and affirmed the Supreme Court of Connecticut. Justice Stevens wrote for the majority with Justices Souter, Ginsberg, Kennedy, and Breyer concurring.

Justice Kennedy wrote a separate concurring opinion which did not address the “scope of the project” rule as we anticipated. Justice Stevens, who delivered the opinion of the Court, suggested that the ball was in the court of the state legislatures as to defining what property could be taken for public use:
“We emphasize that nothing in our opinion precludes any State form placing further restrictions on its exercise of the takings power. Indeed many States already impose ‘public use requirements’ that are stricter than the federal baseline.”


The impact on current New Jersey practice is negligible. Redevelopment projects will move forward and private property rights will be subservient to what the Court has deemed the public good — development and economic benefit, such as increased taxes.

What could New Jersey do? We would like to see amendments to the Local Redevelopment Housing Law (LRHL) which places a cap on the length of time that a declaration of blight (now, declaration of “area in need of redevelopment”) would be effective. We suggest that five to six years would be an appropriate amount of time for a municipality to declare blight and institute a redevelopment project.

In far too many instances, such as Long Branch and Asbury Park, the blight declarations go back ten years or more. This is an unconscionable burden to the property owners within the affected area. They cannot sell, except at a discount; they are reluctant to invest in their properties because of the fear of Eminent Domain; and many municipalities neglect to enforce their building codes once the areas have been determined to be blighted. This only exacerbates the impacts on the property owners.

We’ve had many inquiries today concerning what the property owner can do. The only answer is for the property owner to be vigilant regarding proposed municipal action and to participate in and contest the blight studies when they are presented to the municipal Planning Board. If the property owner sits on their rights and does not do this, they will have a very difficult time filing a Prerogative Writ suit contesting the municipal action.

The law requires an appeal of the municipal action within 45 days of the adoption of the ordinance authorizing blight or “an area in need of redevelopment.” This is the first step toward condemning the properties. Many owners come to us well after the municipal action was undertaken. Often, they were not even aware of the municipal action and received no notice of the proposed ordinance.

Absent a viable Prerogative Writ suit on the blight declaration, property owners will be left with what they have in every condemnation case: A contest over what amount of money constitutes just compensation, and payment of relocation assistance to owner/occupants dislocated by the public project.

In her dissent, Justice O’Connor said:
"Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded, i.e. given to an owner who will use it in a way that the legislature deems more beneficial to the public – in the process."


Flashback to February and the oral argument, when Justice O’Connor asked: “Motel 6 and the city thinks, well, if we had a Ritz-Carlton, we would have higher taxes. Now is that okay?”

The simple answer, according to five Supreme Court justices, is yes.

But, we’ll leave the light on for ya.


New Jersey Eminent DomainLaw Blog: www.njeminentdomain.com