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TRENTON, NJ-In a unanimous decision, the New Jersey Supreme Court ruled yesterday that cities and towns have to prove that a site is truly “blighted” before invoking eminent domain and not simply “underutilized.” Specifically, the Court ruled as unconstitutional the use of the term “in need of redevelopment” often involved as the first step toward an eminent-domain seizure.

The case involves a 63-acre piece of property on the Delaware River waterfront in Paulsboro, Gloucester County, owned by Gallenthin Realty Development Inc., a family business. The property is bordered to the south by an industrial facility and to the north by an inactive BP storage site. In 2003, Paulsboro officials designated the site as “in need of redevelopment” based on a consultant’s report that it was “not fully productive.”

The Gallenthin family sued the town, claiming officials had misused state laws pertaining to redevelopment and eminent domain. Yesterday’s Supreme Court ruling overturned trials and appellate court decisions that had favored the town.

“Because the New Jersey Constitution authorizes government redevelopment of only ‘blighted’ areas, the Legislature did not intend [the law] to apply to circumstances where the sole basis for redevelopment is that the property is ‘not fully productive’,” says the 42-page decision, written by Chief Justice James Zazzali. Rather, the law “applies only to areas that, as a whole, are stagnant and unproductive because of issues of title, diversity of ownership or other similar conditions. Therefore, the Borough of Paulsboro’s redevelopment classification…is invalidated.”

“The Court further notes that municipal redevelopment designations are entitled to deference provided that they are supported by substantial evidence on the record,” the decision continues. “However, the substantial evidence standard is not met if a municipality’s decision is supported by only the net opinion of an expert.”

The site is part of a larger tract slated for redevelopment as a port and related facilities. As reported by GlobeSt.com at the time, the South Jersey Port Corp. in 2006 signed a formal agreement with Paulsboro officials to develop the port complex, which carries an estimated price tag of $250 million.

Paulsboro officials indicated yesterday that the port project would proceed, involving the BP site and an adjacent former Dow Chemical tract. “We will consider all of our options in the best interests of our residents,” Mayor John Burzichelli said in a prepared statement. “We are going to build this port.”

The Court’s ruling is also expected to have an impact elsewhere in the state, notably in Long Branch and Lodi, where eminent domain issues are pending. Also likely to be impacted are redevelopment plans in Camden and Hoboken, among other cities.

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