New State Law Allows Designation of Redevelopment Areas without Eminent Domain

09.20.13

The Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq. (the “Redevelopment Law”) provides municipalities and redevelopment entities with a broad array of economic development tools in areas that have been designated as being “in need of redevelopment”, also known as “blighted”. However, concerns regarding the potential for eminent domain have often been an obstacle to effective redevelopment. Part of the problem arose from the statutory sequence of events; under the previous law, municipalities were required to designate redevelopment areas first, with the identification of areas that would be subject to eminent domain coming months or even years later in the process, in the adoption of a redevelopment plan.

P.L. 2013, Chapter 159, signed into law on September 6, 2013, removes this stumbling block by moving this critical question to the very beginning of the redevelopment process. Now, when asking the local planning board to investigate whether an area should be designated as in need of redevelopment, the municipality must indicate whether it is seeking to designate a “Non-Condemnation Redevelopment Area” or a “Condemnation Redevelopment Area”. The criteria for each type of area are the same; the only difference is the power to use eminent domain.

This change allows municipalities with no intention or expectation of using eminent domain to designate a redevelopment area and use all of the other statutory tools without causing undue concern in the community or potentially bogging down the process with years of litigation. If, in the course of redevelopment, the municipality later determines that the power of eminent domain is necessary, the law provides for a second review and investigation of the area as a Condemnation Redevelopment Area.

In addition, the recent amendments have expanded the “e” criterion, which concerns the redevelopment designation of underutilized properties which have become stagnant and unproductive. The amendments also expand the criteria for designating an area in need of rehabilitation where there is environmental contamination or a persistent pattern of property tax delinquencies.

Chapter 159 became effective on September 6, 2013, however, its requirements with respect to the identification of “Non-Condemnation Redevelopment Areas” and “Condemnation Redevelopment Areas” do not become effective until December 5, 2013, ninety days following enactment. A copy of the advance law can be found at http://www.njleg.state.nj.us/2012/Bills/AL13/159_.PDF. If you have any questions about these amendments, please contact Jennifer Credidio or any member of our redevelopment and land use practice group.