Public Advocate Ronald Chen’s Testimony on S-757 before the Senate Committee on Community and Urban Affairs
May 5, 2008

Thank you Mr. Chairman and members of the Committee for this opportunity to testify.

The use of eminent domain for private redevelopment is an important issue to New Jersey residents – the laws governing this process affect the security of a family’s most important asset and shape the tools local leaders use to revive our communities.

I commend the Chairman and this Committee for tackling this important topic, for engaging in public hearings around the state to solicit feedback from the people of New Jersey, and for working closely with a wide array of interested parties to craft this bill.

I also would like to thank Chairman Rice for his leadership, and his effort to foster a positive and productive relationship with me and the Department of the Public Advocate.  We have consulted extensively about this legislation, and I hope and believe that the product is better as a result. 

As you know, I also supported and continue to support the bill passed in the Assembly under the leadership of Assemblyman Burzichelli, formerly A3257 and introduced in this session as A1492, and I look forward to the process of adjusting any differences in these two important pieces of legislation once a bill is released from Committee.  In the past two years the courts have rendered some very important decisions in this area setting out constitutional limitations, and I think it is vital that the written words of the statute accurately reflect those rules and limitations.

The Department of the Public Advocate supports the bill before you today. 

The proposed legislation would significantly advance the law in each of the three respects I have highlighted since my Department began to pursue eminent domain reform more than two years ago:

• The bill’s definition of blight conforms to state constitutional requirements and provides clear guidance to municipalities and redevelopers about what areas are properly subject to redevelopment.
• The bill sets out a fair and transparent process through which redevelopment may occur, and
• The bill would offer property owners and tenants significantly increased compensation and relocation assistance when they are forced out of their homes and businesses.

Let me discuss each of these important issues in turn.

Blight Definition

As you know, the New Jersey Constitution explicitly restricts the use of eminent domain for private redevelopment to “blighted areas.”

Last June, in a landmark decision in the case of Gallenthin Realty Development, Inc. v. Borough of Paulsboro, the New Jersey Supreme Court clarified the meaning of the term “blight.”  “At its core,” the Court wrote, “‘blight’ includes deterioration or stagnation that has a decadent effect on surrounding property.”  This constitutional definition of “blight” limits all redevelopment designations: the government may not designate private property for redevelopment unless it meets this definition. 

The bill before you today fully incorporates the constitutional definition of blight.  It makes deterioration or stagnation the hallmark of every redevelopment area.  It requires a finding that blighted conditions “are the prevailing characteristics of the delineated area.”  It describes the conditions of blight in concrete and limited terms. 

The bill would therefore bring the statute in line with the State Constitution and case law on the foundational issue of what constitutes “blight.”  It is of course critical for all affected parties to know what the law is when they open the statute books, without also having to resort to intensive study of the constitution and the cases. 

Due Process

I turn now to the issue of a fair and transparent process.

The bill makes a useful and important distinction between redevelopment projects where the use of eminent domain is contemplated and those where it is not.  The process for pursuing redevelopment is then tailored to fit the circumstances: the process is faster and easier when a municipality does not intend to use eminent domain, and more demanding when a municipality does intend to use eminent domain. 

Chairman Rice deserves real credit for crafting different processes suited to different kinds of redevelopment and for carefully balancing the needs of municipalities to pursue redevelopment with the rights of property owners who may be subject to redevelopment. 

In keeping with the Appellate Division’s recent decision in Harrison Redevelopment Agency v. DeRose, the bill demands clear and timely notice, so that property owners and tenants will know what is at stake in a proposed redevelopment. 

This notice would inform affected parties about whether or not their property might be subject to eminent domain.  Notices would be sent to owners, tenants, and others with property interests by mail, posting, and other methods actually designed to reach them.  Affected parties would therefore have a real opportunity to participate in the municipal hearings on a redevelopment designation.  The notice would also inform parties of their right to challenge a redevelopment designation in court and of the time period for filing a case. 

The bill would thus bring the statute into conformity with the notice requirements of the State Constitution and the case law. 

The bill retains the language of the current law providing that, at a municipal hearing: “All objections to . . . a [blight] determination and evidence in support of those objections, given orally or in writing, shall be received and considered, and made part of the public record.”  We believe this provision should, as a practical matter, be interpreted to provide for interested parties a right to present and cross-examine witnesses. 

As to the court hearing, the bill provides that “the municipality, redevelopment entity, or redeveloper shall have the burden of producing substantial evidence” that the area is blighted.  This is an improvement over current law, which requires the property owner to prove the absence of substantial evidence that the area is blighted.  Under the bill, the municipality will at least be required to submit evidence to support its declaration of blight. 

We would like the bill to go further.  We have long argued that the municipality should bear the burden of proving that the blight designation is sound.  When the government seeks to deprive a person of a constitutionally protected right, such as the right to possess and enjoy property, the government should bear the burden of proof.  And the government’s proof of blight should, at a minimum, outweigh the property owner’s evidence to the contrary.  That is, the government should have to make its case by a “preponderance of the evidence.” 

While we adhere to this view, we nevertheless support this bill because of its many other, significant improvements to the process of redevelopment.

Compensation and Relocation Assistance

Many of those improvements are in the area of compensation and relocation assistance. 

The bill would substantially increase the now shamefully low levels of relocation assistance offered to displaced residents and businesses.  And those increased amounts would rise with inflation going forward.  These provisions are major steps toward the important goal of making displaced residents and businesses whole. 

As to compensation, the bill proposes many improvements.  It would make the appraisal process fairer by expanding the owner’s opportunities to participate and negotiate.  It would mandate a price at least sufficient to retire the owner’s outstanding mortgages, thus protecting owners from the sometimes ruinous consequences of being forced to sell during downturns in the real estate market, such as we are experiencing now.  And it would entitle owners to reimbursement for some of the incidental costs of a condemnation, such as appraisal costs, legal fees, and lost rents. 

We have proposed that the law go even further.  We believe that an owner who is forced to sell his home is entitled to “replacement value.”  That is, compensation should be sufficient to enable the family to relocate to a comparable home in the same community.  Eminent domain should not force families to move away from their schools, their friends, and their neighborhood support systems.

Again, we support this legislation, despite our difference on this issue, because of the significant advances it makes in closing the financial chasms now opened and unrepaired when a family or business loses its assets through redevelopment. 

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I look forward to continuing to work with the Legislature to pass this important bill.  It might not accomplish everything, but it would undoubtedly move us forward in protecting property owners from eminent domain abuse.

Let me once again thank the Chairman and members of this Committee for this opportunity to testify.

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