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Opinion: Eminent Domain, The Next Bipartisan Target for Reform

New laws are needed now; the Supreme Court can only take eminent domain reform so far.

Friday, June 24, was memorable for reasons having nothing to do with the controversial vote taking place in the legislature on the governor's pension reform bill.

Friday was also the sixth anniversary of the U.S. Supreme Court's disastrous ruling in Kelo v. New London.

In Kelo, the Justices said it was constitutional for a city to condemn private property -- Suzette Kelo's iconic "little pink house"-- through eminent domain so it could be demolished and the site handed to a corporation for a new office building (which, incidentally, has never been built).

By a 5-4 majority, the Justices reasoned that the "public use" clause of the Fifth Amendment, which allows the taking of private property only for "public use," includes taking it for any "public purpose." In other words, for almost anything a majority of the city council believes will boost economic growth.

By that logic, Justice O'Connor warned in dissent, "the specter of condemnation hangs over all property. 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."

O'Connor was right. Kelo energized a wave of "redevelopment takings" around the nation, including in New Jersey. Informed by Kelo logic, city halls across the state -- some 65 municipalities according to an informal Star Ledger scorecard -- stepped up their efforts to take allegedly "blighted property" for economic "redevelopment."

But Kelo also unleashed a backlash. According to the Institute for Justice in Washington, D.C., 43 states have "reformed their eminent domain laws to better protect homes, small businesses and farm owners" against such "redevelopment" takings.

Sadly, New Jersey is not among those 43 states. Bills attacking the worst abuses of eminent domain have regularly stalled in one chamber or the other, none getting beyond passage in the Assembly before dying in the Senate.

The abuses ripe for reform are many. They start with the open-ended legal definition of what is an "area in need of redevelopment," a statutory euphemism for "blighted area" written into a 1992 law authored by one-time political powerhouse Sen. John Lynch, later convicted of corruption. (Under the state constitution, private property may be taken for redevelopment only if it is blighted.)

With Democrats in control of the Statehouse, why the inability to pass a law backed by such consistent party allies as environmental and civil rights groups? Because most mayors are Democrats and they don't want to relinquish any of the powers handed them by this 1992 redevelopment law. They can override zoning, name a "master redeveloper" to control someone else's property, sign contracts without public bidding, and enact bond issues without seeking voter approval.

So, with a stalemate in the Statehouse, have reform hopes been dashed? Hardly. As it has often in the past when the political branches stall, the state Supreme Court stepped in to bring constitutional balance to the law. On June 13, 2007, the justices issued their Gallenthin v. Borough of Paulsboro ruling that answered Justice O'Connor's warning.

In Gallenthin the court held that only "blighted" private property may be "condemned" and "redeveloped," and no property can be deemed "blighted" simply because -- as previously assumed -- city hall believed a more profitable use could be made of it if the property is taken and handed over to a redeveloper of the council's choice.

Since Gallenthin was handed down, lower courts that previously deferred to municipal councils have vigorously enforced the court's mandate -- protecting beachfront cottages in Long Branch, a used car dealer in Harrison, a popular bakery in Belmar, a low-income trailer park in Lodi, private parking lots in Newark, a dental building in Union, and so on. (Full disclosure: The author and his law firm were attorneys for Gallenthin at the Supreme Court stage, and for property owners in many follow-up cases.)

But legislation is still much needed. Suing city hall to protect your rights is expensive, stressful and time-consuming, no matter the outcome.

Here's a thought: If Democrats and Governor Christie can enact pension reform, why not reform eminent domain?

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