May 9, 2006
Assemblyman John J. Burzichelli, Chair
Assembly Commerce & Economic Development Committee
Kingsway Commons
935 Kings Highway
Suite 400
Thorofare, NJ 08086
By Facsimile
RE: Eminent Domain
Dear Assemblyman Burzichelli:
Because of a statewide conference on Smart Growth and the Economy, New Jersey’s Economy: Rebirth or Deathwatch? which RPP is hosting on May 11, 2006, in Trenton, no one from RPP is able to attend your hearing scheduled for the same day on the topic of eminent domain. We are, therefore, sending our comments in this letter.
Since 1968, RPP has supported redevelopment to achieve a number of goals:
• Revitalizing downtowns and neighborhoods
• Reducing land and resource consumption
• Densifying transit stops and hubs to support efficiency and walkability
• Increasing housing options, particularly near transit
RPP sees eminent domain as a tool that government needs to implement some redevelopment projects. When the controversy on eminent domain first arose last year, we convened a roundtable on the topic to explore the concerns and build consensus on how it should be used. We had community advocates, lawyers, planners, developers and municipal officials represented on the roundtable. Examples of abuses of the power as well as examples of the power well used were discussed.
RPP has built our position on research we have conducted and on what we learned from our roundtable discussion.
The Problem with Eminent Domain
Eminent domain is a police power, and as such, should only be used to advance the health and welfare of the general public. In the past, eminent domain was used for the construction of public projects such as highways or parks, whose public benefit could be (although was not always) considered apparent.
Redevelopment is the replacement of any existing property with new development. The most recent controversy is primarily over the government’s use of eminent domain for a private redevelopment project, carried out for private profit. It is appropriate to examine the costs and benefits – and to whom they are assigned.
If redevelopment of our cities was easy, developers would be doing it by themselves. If redevelopment of our cities is a goal of New Jersey, then we need to provide assistance to make it happen. According to our roundtable last year, land assembly is a major obstacle to redevelopment. Eminent domain can help.
The problems associated with the use of eminent domain for redevelopment include the following:
• People and businesses are displaced with too few resources to start again. People of limited resources and, therefore, limited political power, are wiped out – sometimes whole, stable communities. Because they have been displaced, these people lose their only assets and benefit little from the resulting redevelopment.
• Most redevelopment plans (if there is a plan) have no requirements for, and therefore do not include, re-housing the original community.
• Most plans have no performance measures or other standards, making it unclear what, if any, benefits to the community will result from the use of the police power. Without specifying these public benefits, the result may, indeed, be nothing more than one person’s private property was taken for the private benefit of another.
• Using eminent domain means that the purchase price need only be current market value, which is often weak or depressed by low density and/or poor conditions.
• The redevelopment planning process is not transparent, leading to the speculation, or reality, that graft was part of the decision-making process.
• The redeveloper, although bearing all the risk, reaps all the benefits if the redevelopment is successful. There is no mechanism to allow the original residents or business owners to share in these profits.
There has been a flurry of legislative proposals at the federal and State level to reform the process – a backlash to a recent US Supreme Court decision to uphold the practice. The reforms range from outlawing the use of eminent domain for redevelopment altogether, to limiting the use of eminent domain to properties that are dilapidated or in tax arrears or both. RPP would oppose both.
The problems outlined above are, indeed, extremely serious and they must be addressed with strong measures. But outlawing the use of eminent domain for redevelopment undervalues the potential public benefits that redevelopment may have.
It is clear, for example, that eminent domain must be available in certain circumstances to make Smart Growth happen – to encourage the densification of specified places, changing the current practice of developing green fields for single uses at low densities.
For this reason, banning the use of eminent domain in redevelopment is too restrictive, as is limiting its use to only those properties that are dilapidated or in tax arrears.
For Smart Growth to work, there must be the possibility of using eminent domain to achieve Smart Growth goals in areas that may not be traditionally “blighted”, but may need redevelopment to:
• address toxic sites and other public health or environmental conditions
• jump start a weak housing and job market
• create mixed uses and greater density near transit stations and downtowns, etc.
Eminent domain is needed in places where the cost of site preparation, risk to the private sector and/or difficulties of assembling the land needed to make the project profitable, requires the intervention of the public sector.
If the public sector chooses to use the police power of eminent domain, it must only be applied in conjunction with:
1. A comprehensive, up-to-date plan for the municipality and for the specified redevelopment area, developed by means of a transparent decision-making process with meaningful public involvement of the existing residents and business owners
.
2. The conditions (such as those listed above) as to why it was appropriate for the public sector to step in to help the private sector undertake the redevelopment and under what conditions it will no longer be so, e.g., the market is stronger and provides its own incentives.
3. The public benefits that the private redevelopment project must achieve for the affected community and the community at large, e.g., the higher densities and greater mix of uses that will preserve open land elsewhere, and improvements, such as mixed-income communities, public parks, plazas, new schools, enhanced multi-modal transportation option or improved management of stormwater or other natural resource.
4. A plan for re-housing the existing population and businesses – on site, as much as possible.
5. A mechanism, modeled on such tools as Tax Increment Financing, for allowing the original community to share in some of the profits.
It must be understood that poor people need as much protection from the abuse of the police power of eminent domain as middle class people. But it should also be understood that all classes could benefit from redevelopment to add density and mixed uses in the right places – especially those places with a weak current market.
For these reasons, we believe that the judicious use of eminent domain for redevelopment must be allowed. Thank you for the opportunity to share our views with the Committee.
Yours sincerely,
Dianne Brake
President, The Regional Planning Partnership
www.planningparnters.org