Measure Provides First Update To NJ Laws Since 2005 Kelo Decision

TRENTON – Legislation sponsored by Senator Jeff Van Drew and Senator Ron Rice that would provide the first update to New Jersey’s eminent domain laws since the U.S. Supreme Court handed down its landmark decision in Kelo v. City of New London in 2005, was approved today by the Senate Community and Urban Affairs Committee.

The bill (S-2447) would create a two-track system for redevelopment, establishing separate requirements for redevelopment projects that would involve condemnation and for those that would not. The purpose of the measure is to provide additional protections to homeowners whose properties may be subject to condemnation, but also to provide for a more streamlined process for municipalities undertaking redevelopment projects that do not involve condemnation.

“Eminent domain is a tool that has been used by governments for decades to obtain private property for a public purpose after providing the property owner with compensation. We have to make sure protections are in place to prevent abuse of this mechanism, while at the same ensuring that municipalities undertaking redevelopment projects to improve local economic conditions are not hamstrung by laws that may cause unnecessary delays,” said Senator Van Drew (D-Cape May, Cumberland, Atlantic).

The Supreme Court approved eminent domain as an exercise of blight removal over 50 years ago. However, the expansive “public use” definition struck by the U.S. Supreme Court in Kelo v. City of New London, 545 U.S. 469 (2005) caused a firestorm of state legislative action. Kelo involved the removal of residential homes and investment properties through eminent domain that, although not blighted, were located within a blighted redevelopment area. In the case, the court ruled that the "public use" provision of the "takings clause" of the 5th Amendment of the U.S. Constitution permits the use of eminent domain for economic development purposes that provide a public benefit. Forty-four states enacted post-Kelo reform legislation to curb eminent domain abuse. New Jersey is one of the six states that did not pass reform legislation. This bill would be the first legislative update to New Jersey’s redevelopment laws since the Kelo decision.

“It is important that our laws provide flexibility to local governments to be able to complete redevelopment projects in their communities, especially at a time when local economies remain under pressure from the economic recession,” said Senator Rice (D-Essex). “However, when a government plans to use eminent domain as part of their redevelopment strategy there must be additional requirements in place to make residents aware that their properties may be impacted and give them the information they need to take the appropriate action necessary under the law.”

The legislation would require municipalities to advise property owners within a proposed redevelopment area of the municipality’s intent to use or not use eminent domain to facilitate a redevelopment plan at the outset of the redevelopment study as well as to provide specific notice of such designation. Unless a municipality notifies owners of property located in a proposed redevelopment area that the designation will allow the municipality to take property located in the area by eminent domain – or that the proposed area is a Condemnation Redevelopment Area – the “Local Redevelopment Housing Law” would not authorize the use of eminent domain.

The bill would also authorize municipalities that intend to implement redevelopment initiatives without using eminent domain to do so but to still take advantage of the other tools available under the LRHL that encourage and facilitate economic development activities, create job opportunities, increase commerce, and enhance ratable values within their communities during these difficult economic times. This process would require designating the proposed area as a Non-Condemnation Redevelopment Area.

The committee approved the bill by a vote of 5-0. It next heads to the Senate Budget and Appropriations Committee for consideration.