Maintaining a fair balance in Eminent Domain.

The Kelo v. City of New London decision, in which the U.S. Supreme Court ruled 5-4 that the use of eminent domain for purely economic development constitutes a valid public purpose, continues to generate a backlash of reactions in New Jersey. In the past several months, a number of New Jersey legislators have proposed new bills to counterbalance the decision.

The proposed bills appear to be a mixed bag. Some seem to be politically motivated, while others are more of a knee-jerk reaction. However, some of the proposals seek to address valid concerns within the existing eminent domain and redevelopment law.

Because many of New Jersey's largest cities are in the midst of revitalizations prompted by redevelopment initiatives, the Kelo decision is important to many in the state. When today's Redevelopment Law was adopted more than 25 years ago, it was meant for the rehabilitation of 'blighted' areas, historically defined as areas with dilapidated physical and social conditions. Now, a more aggressive use is occurring, often with terrific results but also with controversies.

As a result, the proposed bills have attracted serious attention. Whether any become law remains to be seen. Following is an overview of what we consider to be three of the key proposals and the potential impact these bills may have on urban development in New Jersey.

Bill A4331 seeks to amend the existing eminent domain law. The bill proposes 'just compensation' for condemnation of single-family residences based on cost 'comparable relocations properties' and seeks to provide financial justice to owners of single-family residential dwelling units whose residences are being condemned for a public purpose. The bill also seeks to improve the process that a municipality must undertake in an attempt to negotiate the purchase of single-family residences before exercising eminent domain.

We see this as a reasonable reaction to Kelo. Bill A4331 seeks to offer greater protection to single-family residences requiring the appraised value of the property to reflect the average purchase price of 'comparable relocation properties.'

While bill A4331 appears well intended, the provisions defining 'single-family residences' and 'comparable relocation properties' leave a number of significant questions unanswered.

This bill is aimed at changing the process of freezing property values when an area is declared 'in need' of redevelopment. This is a very sensitive point in the redevelopment process and must be thought through and carefully considered. Bill S2739 seeks to amend the Local Redevelopment and Housing Law and proposes to restrict the use of eminent domain for redevelopment purposes to make the process more transparent.

The effect of the bill would restrict redevelopment to purely commercial or industrial areas. Bill S2739 would require New Jersey municipalities to pass an ordinance in order to deem an area in need of redevelopment. This Bill would change the criteria for declaring an area 'in need' of redevelopment in a way that severely limits the potential for residential properties to be included in such areas. Currently, the statute requires merely the passage of a resolution. Requiring an ordinance would address a legitimate concern in the existing law.

Although it seeks to prevent the use of eminent domain for solely economic development initiatives, bill S2739 can become problematic and even cripple the overall redevelopment process in urban areas, where they might benefit from redevelopment areas of mixed use--containing intermingled commercial, industrial and residential uses.

Successful redevelopment requires comprehensive planning and careful consideration of the greater good of the area as a whole and cannot be accomplished where the impact upon individual parcels of property is permitted to outweigh the needs of the area as a whole.

Bill ACR256 proposes a constitutional amendment to limit use of condemnation to traditional public purposes. This amendment would remove the constitutional provision permitting redevelopment of blighted areas and long-term tax exemptions for redevelopment projects.

Cities would be left with no power to fight blight--dooming many urban areas to an irreversible condition of continuing decay. This is clearly an impulsive measure.

The proposed amendment would seem to outlaw redevelopment altogether, no matter what form or what area. By carefully weighing their options, developers and residents who live in blighted areas should work together to reach agreement on reasonable actions that make a plan viable and address individual interests appropriately.

While we agree that the redevelopment laws in New Jersey continue to require refining as the realities of urban redevelopment take shape, it is important to maintain the integrity of the existing legislation in order to avoid the risk of completely undermining revitalization efforts.

We believe the way the laws have been clarified, on a case-by- case basis, has resulted in stronger existing legislation in New Jersey than in many other states in the nation.

It is on this local level that we believe each individual case must be measured to reach a solution that ensures the proper redevelopment process is put in place when an area is declared 'in need' of redevelopment.