New Jersey Supreme Court Limits Application of Blight Designation in Ongoing National Debate over Eminent Domain

Not Fully Productive Use" Alone Is Not Sufficient Basis for Condemnation

Gallenthin Realty Development, Inc. v. Borough of Paulsboro, A-51-2006 (New Jersey Supreme Court, June 13, 2007)

In a potential blow to municipalities seeking to redevelop "underutilized" properties, the New Jersey Supreme Court has held that a municipality's designation of a property as blighted and subject to the municipality's power of eminent domain based solely upon a finding that the property is not being utilized in a fully productive manner (i.e., "not fully productive use"), without producing evidence that the condition was due to conditions of title or diversity of ownership, is invalid. Accordingly, with its recent decision in Gallenthin Realty Development, Inc. v. Borough of Paulsboro, A-51-2006 (New Jersey Supreme Court, June 13, 2007), the New Jersey Supreme Court has provided some hope to property owners whose property has been designated as or included in an area "in need of redevelopment" based purely on a finding that the area is not being put to an optimal use.

Gallenthin, supra, involved the Borough of Paulsboro's attempt to condemn a 63-acre parcel of largely vacant wetlands partially surrounded by industrial facilities. The family had enjoyed the property as early as 1902, when it used the land to moor barges transporting produce from Mantua to Philadelphia and had been owned by the Gallenthin family since 1951. No title issues existed regarding the property's ownership.

The property historically has been used as a deposit site for dredging materials and consists of mostly undeveloped open space. It also contains protected wetlands, an unused railroad spur, an active gas pipeline that bisects the property, and several mooring pylons designed to receive boats navigating along Mantua Creek. At the Gallenthins' request, the property had been rezoned by the Paulsboro Planning Board in 1998 from manufacturing to marine industrial business park, which permits various commercial, light industrial and mixed non-residential uses.

However, other than the property's sporadic use as a dredging depot, the Gallenthins leased portions to an environmental clean-up organization in 1997 and 1998 to allow the organization river access, employee parking and storage. In addition, since 1997, a wild-growing reed (Phragmites australis), which is used as cattle feed and is recognized as a valuable plant for neutralizing soil pollutants, has been harvested from the site...