New Jersey Adopts Dubious Post-Kelo Eminent Domain “Reform” Law that is Likely to Endanger Property Rights More than it Protects Them

New Jersey recently became the 45th state to adopt an eminent domain reform law in the aftermath of the Supreme Court’s controversial 2005 decision in Kelo v. City of New London, which ruled that it was constitutionally permissible for government to condemn private property and give it to another private owner in order to promote “economic development.” Unfortunately, as John Ross of Reason explains, the new law does not actually impose any meaningful constraints on the use of eminent domain, and may even actually promote abusive “blight” condemnations:

The law purports to do two things: first, codify a 2007 New Jersey Supreme Court ruling favorable to property owners and, second, decouple eminent domain from redevelopment subsidies. It fails miserably at both.

When local officials declare that an area is blighted and “in need of redevelopment,” the designation both allows them to offer economic development incentives and authorizes the use of eminent domain. But sometimes officials honestly don’t want to seize anyone’s property; they just want the ability to offer subsidies to developers.

But officials cannot credibly promise not to condemn property once it has been declared blighted. Officials can change their minds. And the next city council isn’t bound by past promises….

Decoupling the incentives from condemnation would remove the threat. And the law appears to do just that, allowing for the creation of “non-condemnation redevelopment areas.” But the law lets officials transform a non-condemnation area into a condemnation area if property owners refuse to sell….

The law also muddies the issue of blight.

In Gallenthin v. Paulsboro, the New Jersey Supreme Court held that before cities can seize property for private development, officials must show “substantial evidence” the property is blighted.

Prior to Gallenthin, municipal officials could claim a variety of vague, subjective conditions like “faulty arrangement or design,” “excessive land coverage,” or “obsolete layouts” could justify a blight designation. In Gallenthin, officials argued the mere fact that they could imagine a better use for the property in question, an undeveloped field, meant it was “underutilized” and that they could seize it.

The high court ruled, however, that it would be unconstitutional to seize property without clear, quantitative evidence of a property’s malign influence on surrounding areas.

The new law, instead of codifying the court’s “substantial evidence” standard, restates the old, vague conditions for blight. Since the Supreme Court’s ruling trumps the statute, the section of the law dealing with blight is probably moot on arrival. But property owners will likely be forced into litigation when local officials decide to make sure.

As Ross points out, the new law also includes some other shenanigans that facilitate eminent domain abuse. For example, property owners are now only allowed to challenge a blight designation if they do so within 45 days after its adoption – even if their property is not actually threatened with condemnation until years later. As a practical matter, the poor and lower-middle class property owners who are the most common targets of eminent domain are unlikely to file what could be an expensive lawsuit in a situation where it’s not even clear yet whether their property will actually be taken.

Unfortunately, New Jersey is just one of many states whose post-Kelo reform laws are largely ineffective. That is tragic, because blight and economic development takings are often used to victimize the poor and politically weak for the benefit of influential interest groups.