New Jersey Update and United States Supreme Court Regulatory Takings Review

With my last post I spoke about numerous proposed legislative changes to the New Jersey eminent domain statute and the fact that none of the proposals had made it through committee. Now it seems the New Jersey Legislature is finally ready to approve changes to the existing eminent domain law. According to Sen. Ronald Rice (D-Essex) the new bill will, among other things, limit the use of property taken for use in private development. For more on this please see http://www.nj.com/news/index.ssf/2009/06/after_years_of_negotiation_bet.html.

United States Supreme Court enters eminent domain debate..........again

When the United States Supreme Court made its ruling in Kelo, et al. v. City of New London, et al. on June 23, 2005 it sent seismic reverberations throughout the eminent domain community. Now just four years later the Court has accepted another eminent domain case for review. However, this time the Court is not reviewing an affirmative decision to take property, but instead is reviewing the effect of a state statute on existing property rights.

At issue in Walton County, et al. v. Stop the Beach Renourishment, Inc., et al. is whether implementation of Florida's Beach and Shore Preservation Act, cited as Florida Statutes Chapter 161, Part I (2005), results in a taking without just compensation. This question surrounds Florida Department of Environmental Protection's establishment of a new erosion control line (ECL) in its beach renourishment activities after past hurricanes where the new ECL relocates a property owner's existing property line. The Florida Supreme Court decided no taking occurred based on a confusing historical review of littoral and riparian property owner rights.

Stay tuned for more on this case as the result will have long term effects on owners with land adjacent to water bodies not only in Florida and New Jersey, but throughout the country.

Steven E. Taylor
Taylor Law Firm, LLC
http://www.tlf-llc.com/

More Proposed Eminent Domain Changes from the New Jersey Legislature

As I previously reported in my March post "What is Eminent Domain," the New Jersey Legislature currently has bill S757 under consideration to revise the procedures for the use of eminent domain. However, in addition to S757, the New Jersey Legislature introduced several other bills relating to the exercise of eminent domain by governmental entities. The following is a synopsis of these bills.

S600: Prohibiting Campaign Contributions by Individuals and Organizations Who Purchase Property Taken By Eminent Domain

This proposed bill supplements New Jersey Statutes 19:44A-1 et seq. (New Jersey Campaign Contributions and Expenditures Reporting Act) and seeks to keep political influence separate from the acquisition of property taken under eminent domain. Banned under the bill is the ability to take title of property acquired by eminent if during the previous year the person or organization 1) is subject to the reporting requirements of the New Jersey Campaign Contributions and Expenditures Reporting Act or 2) is an organization organized under section 527 or 501 of the IRS Code. In addition, a person who purchases property taken by eminent domain may not make a political contribution described within the bill for a period of 3 years. Violation is punishable by a $50,000 fine for an individual and $150,000 for a political organization.

Currently, this bill is relieved from the Senate State Government Committee with no action pending.

S160: Compensation for Business Loss in Municipal Redevelopment Programs

Business owners bear a heavy burden when it comes to eminent domain actions. Loss of parking areas, vehicle access or gas station fuel pumps can have a disastrous affect on a business' profits. More importantly, compensation for business damages are only allowed by statute and not in all states. So in a state where compensation for business damages are not allowed, a business owner can end up shouldering the brunt of redevelopment.

Senate bill 160 is offered as a solution to the above negative effect eminent domain can have on an ongoing business. As proposed, the bill would allow a business to claim losses caused by eminent domain with the loss calculated based on assessment of business insurance coverage in the insurance industry. This may be different from the calculation of business damages in other states. For instance, business damages in Florida are calculated based on general accounting principles. Further, the calculation formula for loss of business based on business insurance coverage is proposed as a separate statute at New Jersey Statutes 20:3-29.1 and is also pending approval.

After introduction in the State Senate, the bill was referred to the Senate Community and Urban Affairs Committee. No further action has occurred.

SCR22: Constitutional Amendment Allowing Eminent Domain for Only "Essential Public Purposes"

As a further response to the Kelo decision, New Jersey is proposing to amend New Jersey Constitution Article 8, Section 3, Paragraph 1 by narrowing the definition of public purpose. Under the amendment, public purposes will be limited to utility and transportation corridors, educational facilities, airports, correctional facilities, solid waste handling facilities, landfills, sewage treatment facilities, storm water management facilities, in-patient health facilities, and recreational facilities. The amendment would also prohibit the taking of private property by eminent domain for redevelopment purposes. Clearly, this is New Jersey's anti-Kelo constitutional amendment.

This proposed constitutional amendment was referred to the Senate Community and Urban Affairs Committee where it awaits action.

S154: 24 Month Moratorium on the Use of Eminent Domain

This bill proposes a 24 month moratorium for any taking other than for the direct use by a governmental purpose. During the moratorium, a committee will study the use of eminent domain and make recommendations for its further use.

The bill is currently in the Senate Community and Urban Affairs Committee awaiting action.

As one can see, there has been no shortage of proposed legislation within the state of New Jersey concerning the use of eminent domain. The problem is no action is being taken to move the legislation out of committee. Most of the above was introduced in January 2008. As it now stands everyone is waiting to see what the final outcome will be. Will the legislature put handcuffs on the use of this extraordinary power? Or will the status quo continue?

More to come.............. Steven E. Taylor Taylor Law Firm, LLC http://www.tlf-llc.com/

What is Eminent Domain?

Simply put, eminent domain is the power of the government (and certain private entities) to acquire private property for public use. How is this possible? Easy, because the United States Constitution and each state constitution gives government this right. For example, the 5th Amendment to the United States Constitution states: "No person shall be held to answer for a capital, or otherwise infamous crime,......nor shall private property be taken for public use, without just compensation." The New Jersey Constitution, Article 1, paragraph 20 states: "Private property shall not be taken for public use without just compensation." The Florida Constitution, Article X, section 6 states: "No private property shall be taken except for a public purpose and with full compensationtherefor paid to each owner........" To the average person the above may all seem like legal mumbo jumbo, but these words, and those like them, have serious consequences. Just ask anyone who's property was taken by eminent domain. Recent years have brought about big changes to the law of eminent domain and to practitioner's in this area of the law. With the United States Supreme Court's decision in Kelo v. New London, eminent domain from state to state has been in a state of upheaval. Pun intended. For those who do not know, the Kelo decision validated New London's taking of private property for purely economic reasons. That is, New London's plans for the property was to transfer the land to a corporate entity who could then pay higher taxes on the land, thereby increasing the revenue base for New London which had previously fallen on hard times. Not for building roads, schools or any other use we've all become accustomed to viewing as a pubic use. Simply for the increase in taxes. As you can imagine the uproar was immediate and loud. This uproar was even louder when the United States Supreme Court held that New London's plan was fully within the confines of the United States and Connecticut constitutions. However, almost as an afterthought the Supreme Court gave states the perfect solution by providing that nothing in their decision could stop states from amending their own constitutions and disallowing Kelo type takings. In response states across the country heeded the Supreme Court's advise. For instance, in response to the Kelo decision the Florida legislature enacted the following language into Article X, section 6 of their constitution: "Private property taken by eminent domain....may not be conveyed to a natural person or private entity except as provided by general law passed by a three-fifths vote of the membership of each house of the Legislature." This amendment was clearly in response to the Kelo decision meant to disallow the transfer of private property through the use of eminent domain to private entities, most notably by Community Redevelopment Agencies.

As for New Jersey, legislative changes to the current eminent domain law, N.J.S.A. section 20:3-1 et seq., were proposed during the 2008-2009 legislative session. The Senate committee's substitute to those amendments were approved by the Senate Community and Urban Affairs Committee on June 19, 2008. No further action on the bill has occurred. Among the proposed amendments of significance are:

• Copy of appraisal which is the basis for the condemnor’s offer to property owner
• Payment by condemnor of a "location premium" to a displaced business

• If taking is pursuant to the Local Redevelopment and Housing Law, condemnor’s written offer cannot be less than the payoff amount of any bona fide mortgage lien on the property existing within 6 months of negotiations. Otherwise, the condemnor’s offer cannot be less than the condermnor’s appraisal

• Property owner given 45 days to consider condemnor’s offer, including requesting additional information and explanation, and can ask for an additional 25 days from condemnor which cannot be denied without good cause

• Eliminates the power of eminent domain within a “non-condemnation redevelopment area” by a redevelopment entity, but retains the power of eminent domain within a “condemnation redevelopment area” by a redevelopment entity, i.e. a municipality or an entity authorized by the governing body of a municipality to implement redevelopment plans and carry out redevelopment projects in an area in need of redevelopment

• Reimbursement of certain costs, including reasonable costs to verify appraisal of residential and small businesses; legal costs for property owner to review the basis for condemnation on residential and small businesses up to $500; lost rents for period of time between declaration of condemnation area and date redevelopment entity takes possession of property; restitution and expectancy damages for a property owner with an approved application for development under New Jersey’s Municipal Land Use Law

As one can see, the proposed New Jersey amendments offers much added protection to property owners and a new landscape for the eminent domain practitioner. At this point in time eminent domain projects are probably more affected by the current financial crisis than by any new or proposed legislation. That noise you hear is from property owners who hope that the power of eminent domain is on a very short death walk.

More to come.............

Steven E. Taylor Taylor Law Firm, LLC http://www.tlf-llc.com/