NJ Supreme Court Limits Municipal Authority Under Redevelopment Law

August 16, 2007
by BRUCE KATCHER
Client Alert Newsletter August 2007

The New Jersey Supreme Court recently held in Gallenthin Realty Development, Inc. v. Borough of Paulsboro that a municipality's eminent domain authority to take and redevelop "blighted" property did not apply where the sole basis for invoking eminent domain is that the property "is not fully productive." The property at issue in the case is located near the Delaware River adjacent to former industrial properties owned by Dow Chemical and BP Petroleum. Paulsboro designated the area as in need of redevelopment under the Local Redevelopment and Housing Law because of "blighted" conditions so as to facilitate access to a riverfront redevelopment project.

The Court found that "blight" connoted "deterioration or stagnation that negatively affects surrounding properties." In contrast, Paulsboro argued that "any property that is operated in a less than optimal manner is arguably 'blighted.'" The Court held that Paulsboro's interpretation unreasonably suggested that most property is eligible for redevelopment (and taking). Rather, for a property to be redeveloped on the grounds that it is not fully productive, the lack of productivity must relate to title conditions, diversity of ownership or similar conditions, none of which existed here. While heartening eminent domain critics, this decision should not affect municipal authority to redevelop truly dilapidated properties.