New Jersey Court Strikes Down Use of Eminent Domain to Take Property to "Bank" it for Possible Future Use

The court concluded that property may only be condemned for projects that will proceed in "the reasonably foreseeable future."

Charles Birnbaum, standing in front of his house, which the Casino Reinvestment Development Authority sought to condemn (Institute for Justice).

In CRDA v. Birnbaum, an important decision issued yesterday, a New Jersey appellate court ruled that the state's Casino Reinvestment Development Authority (CRDA) could not use eminent domain for the purpose of seizing private property in order to "bank" it for a possible future use. Under the New Jersey state constitution (like the federal constitution), land may not be taken by the government unless it is for a "public use." The Appellate Division of the Superior Court of New Jersey upheld the trial court's 2016 decision concluding that there cannot be a public use unless CRDA can provide "evidence-based assurances that" it will use the land for a project that "would proceed in the reasonably foreseeable future."

In this case, CRDA sought to condemn Charlie Birnbaum's house even though "[a]t the time of the [trial court] decision under review, the CRDA had no specific redevelopment plans under consideration for the Project; it had not issued a request for proposals (RFP) to prospective developers, and no developer had committed to redeveloping within the Project area." CRDA claimed that "it is statutorily entitled to bank land for future public use, without any temporal limitation."

Particularly since the US Supreme Court's controversial 2005 decision in Kelo v. City of New London, which ruled that private economic development projects are a permissible "public use," there has been a longstanding debate over exactly what qualifies as a public use under federal and state constitutions. Proponents of the "narrow view" of public use argue that it only covers publicly owned projects or private ones that the general public has a legal right to use. Advocates of the broad view (endorsed by the Kelo decision), contend that virtually anything that might potentially benefit the public in some way qualifies as a public use. I believe the narrow view is correct, for reasons outlined in detail in my book on the Kelo case. But even those who otherwise favor a broad view of public use should recognize that unlimited "banking" of property for a potential, as yet unspecified, future use doesn't qualify. In such a situation, there is no assurance that the government will ever use the condemned property at all, much less for a purpose that somehow benefits the public.

The trial court decision in the Birnbaum case (which I analyzed here), puts the point well:

In this Court's view, the CRDA is not empowered to condemn a property only to have it sit idly, for years on end, as they wait for the right project to present itself. This has already happened in many of the surrounding properties that sit vacant waiting for a project to come forward …..[T]o meet constitutional and statutory muster, to justify the taking of the Birnbaum property, there must be some reasonable assurance that the Birnbaums' property will be put to a public use within the next year or the next ten years.

Those who follow eminent domain and property rights issues may recall that CRDA is the same state government agency that in 1998 sought to condemn private homes in order to build a limo parking lot for one of Donald Trump's casinoes. That taking, too, was struck down by a state court as a violation of the New Jersey constitution, because it was not for a legitimate public use. The Birnbaum taking is arguably even more egregious than that in the Trump case. In the latter situation, at least Trump and the CRDA had a clear plan for what they were going to build on the condemned property. Both cases were litigated by the Institute for Justice, a prominent libertarian public interest law firm that has long been the nation's premier advocate of tightly enforcing constitutional constraints on eminent domain. For IJ's analysis of the Birnbaum ruling, see here.

In the aftermath of the Kelo decision, many states enacted legislation to try to limit the use of eminent domain for the benefit of influential private interests. While some states enacted valuable reforms that really do constrain eminent domain abuse, others enacted largely ineffective ones that only pretended to address the problem. New Jersey was the last of the 45 states that reformed their laws after Kelo, and its reform is one of the weakest, in some ways making things worse rather than better. But New Jersey courts have, under their state constitution, nonetheless imposed tighter limitations on the use of eminent domain than is the case in some other states, such as neighboring New York.

In the aftermath of yesterday's ruling, CRDA says that it will "respect" the court's decision. Hopefully, this will finally put an end to Charlie Birnbaum's prolonged struggle to save his family home. The agency is also said to have "largely shifted its focus from land acquisition and has sought to auction off some of its tax-exempt holdings." If so, it's about time for it to end its longstanding pattern of abusive condemnations.

NOTE: I have done pro bono work for the Institute for Justice in other eminent domain cases. However, I had no involvement in the Birnbaum litigation.