Redevelopment Matters (Really!) November 9, 2007LAND AND POWER: THE IMPACT OF EMINENT DOMAIN IN URBAN COMMUNITIES By: Robert S. Goldsmith, Esq. Greenbaum, Rowe, Smith & Davis LLP
Half of New Jersey Is Developed andPolicies Restrict or Prohibit Development In: Wetlands Farmlands Highlands Pinelands Coastal Areas
The English tended to take property without compensation from circa 1000 to 1776 (in the U.S.). The U.S. Constitution provides“[N]or shall private property be taken for public use, without just compensation.”
Berman v. Parker U.S. Supreme Court (1954), unanimous decision What is in the public interest is for legislature to determine, not the court Once the valid legislative objective is established, it is within the legislature’s power to determine means to obtain that objective, including eminent domain Exercise of eminent domain does not violate the Constitution when property is taken from one private party for redevelopment by another private entity, as the latter may well better be situated to carry out the project (Notably, the power can be delegated as with railroads) It rarely is.
Berman v. Parker U.S. Supreme Court (1954), unanimous decision Governing body need not determine that every property is blighted or substandard, on a structure by structure basis, and may acquire property not in itself blighted when necessary to effectively carry out a comprehensive redevelopment plan Aesthetics, not just health and welfare, is a legitimate public interest Once it is determined that a taking is for a public purpose, it is for the legislature, not the court, to determine the amount and character of land to be taken Private property may be transferred to private parties because the likelihood is that the public sector does not have the means or expertise necessary to effectuate redevelopment The constitutional rights of property owners whose land is taken by eminent domain are satisfied by payment of just compensation
Inherent Safeguards Market Reality Political concerns and political reality Judicial review to ensure no abuse EMINENT DOMAIN IS A TOOL OF LAST RESORT
A-3257/S-1975Proposed Amendments for the Local Redevelopment & Housing Law Far More Complicated, Far More Costly Most Notably Would Shift the Presumption of Validity
NJ CONST Art. 8, Sec. 3, p 1:The clearance, replanning, development or redevelopment ofblighted areas shall be a public purpose and public use, forwhich private property may be taken or acquired. Municipal,public or private corporations may be authorized by law toundertake such clearance, replanning, development orredevelopment; and improvements made for these purposesand uses, or for any of them, may be exempted from taxation,in whole or in part, for a limited period of time during whichthe profits of and dividends payable by any privatecorporation enjoying such tax exemption shall be limited bylaw. The conditions of use, ownership, management andcontrol of such improvements shall be regulated by law.
GALLENTHIN•The decision sustains the constitutionality of redevelopment•The New Jersey constitutional provision, Article 8, Section 3, Paragraph 1 isboth a grant of power and limitation•The Supreme Court maintains the presumption of validity of the designation ofa redevelopment area despite requests to shift to a presumption of invalidity•The Court reaffirms the decisions of Levin v. Bridgewater and Forbes v.Village of South Orange Township•The Court continues the principle that properties not in and of themselvesblighted may be included in a Redevelopment Plan if necessary forrehabilitation of a larger blighted area (indeed the Court invited that possibility)•The Court has clarified that not fully productive is not a stand alone basis fordetermining an area in need of redevelopment. Thus, a Motel 6 cannotautomatically become a Ritz Carlton, however, if the Motel 6 is in a state ofdisrepair, is not well maintained, is vacant and otherwise adversely affecting aneighborhood, then the Motel 6 can be redeveloped but it cannot beredeveloped solely because it is not fully productive in that it may be a moreproductive use.•The Court has required something more than net expert opinion that merelycites redevelopment criteria conditions without any real substantive analysis.
The Court revised sub-section (e) which had read as follows:growing lack or total lack of proper utilization of areas caused by thecondition of the title, diverse ownership of the real property therein orother conditions, resulting in a stagnant or not fully productive conditionof land potentially useful and valuable for contributing to and serving thepublic health, safety and welfare.To read as follows:growing lack or total lack of proper utilization of areas caused by thecondition of the title, diverse ownership of the real property therein orother similar conditions, resulting in a stagnant and not productivecondition of land potentially useful and valuable for contributing to andserving the public health, safety and welfare.
The Nevada Supreme Court stressed that “[m]ining is thegreatest of the industrial pursuits in this state. All otherinterests are subservient to it. Our mountains are almostbarren of timber, and our valleys could never be madeprofitable for agricultural purposes except for the fact of ahome market having been created by the miningdevelopments in different sections of the state. Themining and milling interests give employment to manymen, and the benefits derived from this business aredistributed as much, and sometimes more, among thelaboring classes than with the owners of the mines andmills….The present prosperity of the state is entirely dueto the mining developments already made, and the entirepeople of the state are directly interested in having thefuture developments unobstructed by the obstinateaction of any individual or individuals.”
For more information contact Robert S. Goldsmith, Esq. Greenbaum, Rowe, Smith & Davis LLP email@example.com 732-476-2620 Partner, Real Estate Department Chair, Redevelopment Practice Group