Last week’s landmark ruling by the U.S. Supreme Court in the Kelo vs City of New London case will affect the use of property condemnation powers by municipalities nationwide. Ted Zangari, a partner in the real estate and land use practice at the Sills Cummis law firm in Newark, discusses the wider implications of the ruling with NJBIZ Staff…Last week”s landmark ruling by the U.S. Supreme Court in the Kelo vs City of New London case will affect the use of property condemnation powers by municipalities nationwide. Ted Zangari, a partner in the real estate and land use practice at the Sills Cummis law firm in Newark, discusses the wider implications of the ruling with NJBIZ Staff Writer Shankar P.
NJBIZ: What did the U.S. Supreme Court rule in the Kelo vs. New London case?
Zangari: In a 5-4 decision on June 23, 2005, the court held that economic development projects which create jobs, increase taxes and contribute to a community”s revitalization efforts satisfy the Constitution”s “public use” clause. Justice John Paul Stevens, who wrote the majority opinion, noted that the Court long ago rejected the literal meaning of “public use” as a use solely intended to benefit the general public by the construction of highways. He reiterated prior decisions of the Court which gave legislative bodies broad discretion to invoke condemnation for a wide range of public purposes.
NJBIZ: Does the ruling give municipalities wider powers to condemn and acquire properties?
Zangari: Yes, but a little background is in order. This is not the first U.S. Supreme Court decision to stretch the meaning of “public use.” In a 1964 takings case known as Berman, the Court unanimously rejected efforts by the owner of a department store to derail an urban redevelopment plan in a blighted area of Washington, D.C. In last week”s Kelo decision, the Court permitted an expansion of the public-use doctrine beyond the purposes of eradicating blight to include other economic development goals such as lowering the City of New London”s high unemployment rate, which was twice the state”s rate of unemployment, and removing New London”s designation by
the state as a “distressed municipality.”
NJBIZ: So is the effect of the Kelo decision that eminent domain may be used for projects that aren”t necessarily public works like roads or parks, or the revival of blighted areas?
Zangari: Correct. The Court emphasized that there is no practical way to distinguish economic development from other public uses.
NJBIZ: Most redevelopment projects are ultimately awarded to private developers. Doesn”t this in effect take land from one private land owner and give it to another private party?
Zangari: The plaintiffs used that argument, and the Court didn”t buy it. Justice Stevens countered by arguing that the public purpose of a redevelopment plan is not diminished if a project is built by a private developer instead of a governmental agency.
NJBIZ: What is the practical impact of this ruling?
I think municipal attorneys will counsel local planning boards to reconsider the common practice of a one or two-night hearing on the determination of whether an area is in need of redevelopment. Over time, I think we”ll see more public input, more community outreach, more “deliberation” to use Justice Stevens” word.
NJBIZ: What is the future course for property owners who wake up to news that their land is the subject of a renewal project?
Zangari: It appears that, as a general rule, property owners in the United States can”t stand in the way of community revitalization. However,
as Justice Stevens noted, individual states are free to impose more stringent requirements on the meaning of “public use” and, in that regard,
New Jersey law already limits the use of condemnation for economic development purposes to only areas that are blighted.
NJBIZ: What will be the impact of this ruling on some of the pending cases in New Jersey”s courts?
Zangari: There will be very little immediate impact. Government agencies and property owners will continue to squabble over what constitutes “blight.” In the longer term, however, I think future courts in public use cases will be taking a harder look at the redevelopment process itself, to make sure that
procedural safeguards were in place to avoid abuses.
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