4/18/2006

Legislators pushing eminent domain limits: NorthJersey.com (Hackensack NJ), 2/27/06

By John Brennan and Elise Young

Eminent domain — the centuries-old right of the government to seize private property for public use — has become a lightning rod for controversy since last summer, when the U.S. Supreme Court endorsed an expansive interpretation of that right.

Now, New Jersey lawmakers are pushing a variety of bills to limit eminent domain to its more traditional uses, such as obtaining land for hospitals and highways, while forbidding its use simply for economic development.

An Assembly committee took a first step at reining in the practice Thursday, convening a two-hour hearing that underscored the opposition to eminent domain among homeowners and small-business owners who fear their property will be seized. But the committee also heard from development advocates, worried that some of the measures might go too far.

Assemblyman Richard Merkt, R-Morris, has proposed an amendment to the New Jersey Constitution that would narrow the ways in which state and local governments could invoke eminent domain. Assemblywoman Charlotte Vandervalk, R-Montvale, is seeking a four-year moratorium on broader takings, and state Sen. Joseph Coniglio, D-Paramus, is sponsoring a bill with a two-year moratorium.

"The cold fact is that most of the redevelopment deals employing eminent domain are thinly disguised moneymaking opportunities for politicians and their developer friends," Vandervalk said.

Merkt said the level of public resentment is almost unprecedented.

"I think there is a dawning recognition among the general public that they really don't have a guarantee of property rights," he said. "They feel threatened, and rightly so."

That sentiment swept the country following last June's 5-4 ruling by the Supreme Court that upheld the right of New London, Conn., to seize nine homes as part of an attempt to revitalize its waterfront.

Writing for the majority, Justice John Paul Stevens said there was extensive precedent for the court to interpret the "public use" clause of the Fifth Amendment as permitting a variety of public purposes. He said a redevelopment plan designed to increase jobs and tax revenues "unquestionably serves a public purpose."

O'Connor dissent
Justice Sandra Day O'Connor — who has since retired — passionately disagreed.
"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 -- [meaning,] given to an owner who will use it in a way that the legislature deems more beneficial to the public," O'Connor wrote in her dissent. "Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall or any farm with a factory."

The ruling has led a handful of states to enact laws restricting eminent domain, and the Institute for Justice — a libertarian law firm that has closely followed the controversy — estimates at least 40 state legislatures have proposed limits.

In November, the House of Representatives passed a bill that would limit the scope of the high court's ruling, which is known as Kelo v. New London after homeowner Susette Kelo. The measure is pending in the Senate.

The National League of Cities, has sent members of Congress a letter urging them "not to preempt or displace state laws and constitutions that govern the local application of eminent domain in their haste to scramble onto the property rights bandwagon."

The group warns of possible "irreparable damage" to federal programs, such as affordable housing or brownfield reclamation, if eminent domain is severely limited.

In New Jersey, the Assembly's Commerce and Economic Development Committee hearing Thursday included testimony from William Potter, a lawyer representing the New Jersey Coalition Against Eminent Domain Abuse. He said homeowners are being treated as pawns by developers.

"They are not detritus," Potter said. "They are not something to be scooped out by bulldozers so wealthy people can move in. It's become too darn easy to say an area is a redevelopment area. This is a violation of the letter and spirit of the Constitution. It's a cleaning of lower-income people from these municipalities. This is not justice."

Assemblyman John J. Burzichelli, D-Gloucester, said the committee would listen to affected homeowners.

"The word 'abuse' has our attention," Burzichelli said. "This is a troubling matter for our residents."

But Collingswood Mayor Jim Maley said the threat of an eminent domain action helped turn around Sutton Towers, a blighted 1,000-unit apartment complex.

Ten years ago, after threatening to seize the property, the borough came to an agreement with GE Capital, the mortgage holder, to renovate the units. Of the $45 million project cost, Collingswood kicked in $7.7 million — more than its annual municipal budget.

As an equity shareholder, Collingswood stands to profit when the building is sold. The borough has taken on a number of other projects, some using eminent domain. The downtown "renaissance" has led to soaring property values in the Camden suburb, he said.

Merkt said that while he would support bills that limit eminent domain, a constitutional amendment would be far more useful.

"The problem with legislation is that what one legislature does, the next legislature undoes it," Merkt said. "We do it all the time."

Coniglio said his bill would establish a bipartisan commission that would "examine ways which eminent domain can be used in a manner that honors citizens' property rights and benefits the public as a whole."

John H. Buonocore, an attorney with the Morristown firm of McKirdy and Riskin who has practiced eminent domain law for more than 25 years, said the Legislature's efforts may prove to be just "window dressing."

"Our eminent domain law, properly applied, is OK," Buonocore said. "But what's happened is that in recent years, municipalities have really tried to stretch the criteria for whether an area really is in need of redevelopment. What we need to do now is tighten the standards."

Dozens of N.J. battles
Attorney Bruce Rosenberg, who represents a number of small-business owners, said he hopes that the spotlight on eminent domain will lead to improvements in the process.

"I think that we're going to see issues addressed, such as whether compensation to private owners is adequate and whether the process is fair," he said. "For instance, in some cases an owner might only receive a 10-day notice from a planning board that his property is being targeted for redevelopment, yet he has to somehow marshal the resources to fight it."

The variety of bills and the complexity of the issues mean months may pass before any legislation is put to a vote. But there already are dozens of eminent domain battles raging statewide, including court fights in Lodi, North Arlington and Little Ferry.

'Woke everyone up'
Some taxpayers say the issue can't wait.

"I think they need to put in a moratorium right now, so they have time to look into this mess and stop people from having their homes stolen out from under them," said George Mytrowitz, an auto-body shop owner in Newark who is a member of the Mulberry Street Coalition. The group has been battling for three years to block the city from taking their businesses and homes for a new condominium development.

"Unbelievably, that [Supreme Court] ruling was actually a help, because it woke everyone up," said Mytrowitz, whose family business dates back nearly a century. "At the rate we're going, who in 20 years won't know someone who has had this happen to them?"

That was the idea that led Larry Reid, a real estate agent from River Vale, to attend Thursday's hearing, even though he is not personally involved in any eminent domain case.

"It could be anybody that has a desirable piece of property," he said. "It could be you next."


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