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Home Safe?

New Jersey takes the first steps toward curbing eminent domain abuse.

12:00 AM, Jun 2, 2006 • By JONATHAN V. LAST
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ON MAY 18, the newly appointed New Jersey public advocate, Ronald Chen, released his report on the use of eminent domain. Commissioned by Gov. Corzine, Chen's study is a model of judiciousness and tenacity. It sends a clear message to those bent on abusing the power of eminent domain--in other words, not for public-use highways or hospitals, but to generate "public purpose" revenue--the jig is just about up.

Abuse of eminent domain, long a hallmark of New Jersey history, has seen a golden age for more than a decade. The first skirmishes took place in 1994 in Atlantic City, when Donald Trump persuaded the state redevelopment agency to use eminent domain to seize the home of Vera Coking, who lived across the street from the Trump Plaza. Trump wanted to put a limousine parking lot--and eventually a new casino--on the land where Coking lived. Even though her home was a perfectly normal, middle-class dwelling, the state declared it "blighted" so that it could seize the property and hand it over to Trump.

Coking went to court and won a narrow victory.

But the floodgates were open.

As real-estate prices soared in the '90s, developers saw a chance to make piles of money by working with local governments to seize low- and middle-class houses in desirable locations--often near water views and mass transit--and build luxury condos and townhouses. From Camden and Collingswood to Long Branch and Asbury Park, ordinary New Jerseyans saw their property rights evaporate.

Eminent domain was originally conceived as a last resort, to be used in rare instances where the public good necessitated it. Yet in 2006, 64 New Jersey municipalities were somewhere in the process of invoking its power.

When Corzine was elected, he made vague, not entirely reassuring noises about changing eminent domain. In March, he appointed Chen public advocate and set him to studying the issue.

Chen's resulting report is unambiguous in its conclusions. Current laws, he says, "do not adequately protect the rights of tenants and property owners"; the system "needs to be reformed."

Chen takes two major avenues of attack. First, he addresses the notion of blight. Under the New Jersey Constitution, eminent domain can be invoked only against property the state designates as blighted. Over the years, this designation has come to be meaningless. Blight no longer means that property is dilapidated or unsafe. Current law (which, as Chen notes, is baldly unconstitutional) has redefined the word to include property that is "underutilized" or "not fully productive."

By those criteria, nearly every piece of property in the state suffers from blight.

As Chen notes: "Drumthwacket, the governor's official residence, is a 'stately home' that is 'one of the most fabled and elegant of America's executive residences' . . . yet the property could also be considered 'not fully productive' because a hotel or apartment house catering to hundreds, for instance, would be a more productive use of the property."

Chen recommends that the statutory criteria for designating areas as blighted be severely restricted. He then goes further, recommending that if a property owner fights a blight designation in court, the burden of proof should be shifted away from the citizen and onto the government: The "municipality should be required to present 'clear and convincing evidence' that the area has been properly designated as blighted," he says.

Chen's second major suggested change involves altering compensation. As of now, developers often get away with giving property owners a fraction of the value of their homes by cooking up "fair-market" determinations. Chen suggests that the fair-market value be supplanted by a "replacement value"--which means "enough to buy a home of similar size and quality within the municipality under comparable conditions."

Chen understands that that may make some redevelopment projects unattractive to developers, who often get their profit by using eminent domain to pay pennies on the dollar for property. But such projects, he notes, are "essentially being financed on the backs of current homeowners."

Now it's up to Corzine and the state Legislature to follow through. If they do, New Jersey's eminent domain nightmare will finally be finished.

Jonathan V. Last is online editor of The Weekly Standard and a weekly op-ed contributor to the Philadelphia Inquirer. This essay originally appeared in the May 28, 2006 edition of the Philadelphia Inquirer.