On June 13, 2007, the New Jersey Supreme Court reversed a lower court ruling which upheld the designation of a parcel of property as being in “need of redevelopment.” Gallenthin Realty Development v. Paulsboro (A-51-2006 – decided June 13, 2007).  The property in question consists of approximately 63 acres of undeveloped open space.  In the past, the property owner used the property to receive dredge deposits from a nearby creek, a use that the property owner believed would continue on a sporadic basis in the future.  Also, the property owner cultivated wild-growing weed which was sold for animal feed.  However, the Township set its eyes on the property and decided it was necessary for a larger redevelopment project.  To take the property, the Township had to first have it designated as an area in need of redevelopment.  Once designated, the Township could invoke its power of eminent domain.  But how could open space that had been identified by the New Jersey Department of Environmental Protection as “protected wetlands” ever meet the definition of an area in need of redevelopment?  Easy – use the vague criteria of “not fully productive property” under the Local Redevelopment and Housing Law and argue that there are many more productive uses for the property that will benefit the public in general. Although the trial court and appellate division condoned this approach, the New Jersey Supreme Court did not.

The New Jersey Supreme Court started its review by taking us back to the Blighted Areas Clause of the New Jersey Constitution which confines the taking of private property for private redevelopment to those areas considered “blighted.”  When the New Jersey Constitution was amended in 1947 to add the Blighted Areas Clause, the New Jersey Legislature was concerned that certain sections of older cities had fallen in value and become “blighted” or “depressed.”  To facilitate investment in blighted areas, governing bodies needed the ability to assemble blighted properties in order to attract private investment in the hopes of reviving a depressed area.  This is a sound policy.  Years later, the legislature adopted the Local Redevelopment and Housing Law which adopted the concept of an “area in need of redevelopment” which, for all intents and purposes, was an expanded definition of blight.

In this case, the fact that the property was not fully productive, standing alone, clearly cannot be the basis for a taking under the limitations imposed by the Blighted Areas Clause of the New Jersey Constitution.  The New Jersey Supreme Court confirmed that to meet the requirements of the New Jersey Constitution, more must be shown.  Evidence must be presented as to why the property is not fully productive and that evidenced must be viewed in light of the other criteria set for in the Local Redevelopment and Housing Law.

Equally important is the New Jersey Supreme Court’s statement the a municipality must present “substantial evidence” to support its case.   A record must be created with facts and expert opinions that are more than a cursory review of the property and recitation of the statutory criteria. Trial courts are reminded that in order for a municipality to get the decision making deference it seeks, it must first come forward with substantial evidence to support its designation of an area in need of redevelopment.

This decision does not change the law – it merely enforces the law.  The Blighted Areas Clause of the New Jersey Constitution has been around for over 50 years and the New Jersey Supreme Court confirmed its limitation on redevelopment projects.  The Supreme Court’s decision re-enforces the growing trend of striking designations that resulted from net opinion reports and cursory review of properties.  More important, the decision will have no impact on legitimate (constitutional)  redevelopment projects.  Towns that do their homework and hire qualified planners will still be able to redevelop blighted and depressed parts of town as envisioned by the drafters of the Blighted Areas Clause of the New Jersey Constitution.