Vol. 5 No. 3, March 2008
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Casinos versus Community?
Use eminent domain judiciously, to everyone’s benefit
With the success of the Borgata, casino projects in Atlantic City are requiring larger and larger land parcels to achieve new market expectations. But the need for expanded hotel and non-gaming accommodations for tomorrow’s customers sometimes pits developers against existing businesses and residents.
When it comes to eminent domain, legislators must balance the benefits of such projects with the welfare of the community at large. It falls to municipal government to successfully resolve land disputes. Developments of the size and scale envisioned for tomorrow’s Atlantic City provide considerable economic investment to the community, as well as substantial municipal property tax revenue and thousands of construction and operations jobs.
But when property owners don’t want to move, their pleas can’t be ignored. They are taxpayers. They vote or employ other taxpayers.
The U.S. Constitution protects property owners from wrongful takings. The Fifth Amendment declares that private property shall not be taken for public use “without just compensation.” The New Jersey Constitution has a similar guarantee against wrongful takings.
In the 2005 Kelo v. City of New London case, the United States Supreme Court allowed the condemnation of private land for construction as part of the city’s economic redevelopment plan. In New Jersey, courts have defined public use broadly (to include open space) and narrowly (to limit only the lands necessary for a road itself).
Eminent domain is a complex procedure. In Atlantic City, the vast acreage sought by casino developers often requires an “area in need of redevelopment” designation. Under this process, a prospective area, usually containing a diverse mix of properties (vacant, residential and commercial) is identified to allow the condemnation of an entire site to make room for a new project. Now the tricky part begins!
To be named an area in need of redevelopment, the proposed area must be determined to be “blighted.” As you can imagine, the term “blighted” is subject to multiple interpretations. What one person might describe as a seedy area, another might call rustic. In the state Supreme Court definition, “(A)t its core, blight includes deterioration or stagnation that has a decadent effect on surrounding property.”
Empty lots, or vacant and burned-out structures easily satisfy a blighted designation. Existing buildings that are substandard, unsafe, unsanitary or obsolescent can qualify. So might buildings that have obsolete layouts, or are so lacking in light, air or space that it would limit wholesome living or working conditions.
Here’s the monkey wrench. What happens when a property with historical significance is located in a proposed redevelopment area? A historically significant facility might certainly be substandard by today’s building codes. Lack of light and obsolete layouts are among the very characteristics preservationists cite to save certain historic structures.
Take an older commercial establishment, perhaps with apartments above, that has for decades served a small but dedicated customer base. Despite the fact that the owner-occupants are guaranteed “just compensation” in a condemnation action, there is often little opportunity to find an equivalent property elsewhere.
New Jersey Public Advocate Ronald Chen is working to strengthen procedural fairness in eminent domain cases. Chen’s intervention in a recent case challenged a municipality’s declaration that the subject properties were not “fully productive.” He argued successfully that under such criteria, almost all of the land in New Jersey could be deemed not fully productive. The result of that case should caution the state’s municipalities to adopt standards of review supported by substantial evidence.
In a perfect world, Atlantic City will evolve as a major destination resort noted for superior visitor accommodations alongside vibrant, stable neighborhoods.
We might as well aim for perfect. If we remain focused, we may just hit the mark!
