A5520

An Act concerning the disclosure of public use in eminent domain proceedings, amending P.L.1971, c.199, and amending and supplementing P.L.1971, c.361.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 5 of P.L.1971, c.199 (C.40A:12-5) is amended to read as follows:

5. [(a)] a. Any county, by resolution, or any municipality, by ordinance, may provide for the acquisition of any real property, capital improvement, or personal property:

(1) [By] by purchase, gift, devise, lease, exchange, condemnation, or installment purchase agreement;

(2) [Subject] subject to lawful conditions, restrictions or limitations as to its use by the county or municipality, provided the governing body accepts [such] the lawful conditions, restrictions, or limitations. When any county or municipality shall have acquired any real property, capital improvement, or personal property upon any lawful condition, restriction, or limitation, it is hereby authorized to take [such] steps as may be necessary and proper to the compliance by the county or municipality with [such] lawful conditions, restrictions, or limitations; and

(3) [Whether] whether the acquisition of any real property is by lease, purchase, installment purchase agreement, or exchange, the governing body may require the construction or repair of any capital improvement as a condition of acquisition.

[(b)] b. To the extent that the acquisition is by an installment purchase agreement, the obligation of the county or municipality shall be valid and binding for the term thereof which shall not be greater than 40 years and shall not be otherwise subject to annual appropriation, and the authorization of [such] the obligation shall not be subject to any of the provisions of the "Local Bond Law," (N.J.S.40A:2-1 et seq.), except that:

(1) the repayment schedule of the principal shall be consistent with the requirements of N.J.S.40A:2-26 et seq., unless otherwise approved by the Local Finance Board within the Division of Local Government Services in the Department of Community Affairs[,] ;

(2) a supplemental debt statement reflecting the principal sum of the installment purchase agreement shall be filed consistent with the provisions of N.J.S.40A:2-10; and

(3) to the extent that [such] the supplemental debt statement reflects debt in excess of the debt limitations imposed on counties or municipalities, as appropriate, by N.J.S.40A:2-6 and not otherwise within the exceptions contained in N.J.S.40A:2-7, the county or municipality must obtain the approval of the Local Finance Board.

[(c)] c. Any county or municipality having acquired any real property, capital improvement, or personal property or any real estate or interest therein, which acquisition or estate or interest shall have become unsuited or inconvenient for the use for which it was acquired, may, at any time convert a portion or the whole thereof to any other public use unless otherwise provided by law or by the terms of acquisition, provided that the governing body first adopts a resolution or ordinance specifying the new public use.

[(d)] d. Whenever the governing body of any county or municipality to which there has been conveyed any real property, capital improvement, or personal property subject to [such] lawful conditions, restrictions, or limitations shall by ordinance, in the case of a municipality, and by resolution, in the case of a county, determine that [said] the real property, capital improvement or personal property can no longer be used advantageously for the purposes for which the same were acquired by the county or municipality, [said] the county or municipality may, by ordinance or resolution, authorize the sale or exchange pursuant to section 13 of [this act] P.L.1971, c.199 (C.40A:12-13) of the interest of the county or municipality in [said] the real property, capital improvement or personal property.

Whenever the county or municipality, by resolution or ordinance, as the case may be, determines that property, which has been acquired by purchase, gift, devise, lease, exchange, or otherwise for a nominal or no consideration for a specific purpose, or subject to lawful conditions, restrictions, or limitations as to its use, can no longer be used for the purposes for which acquired, it may offer or reconvey [said] the property to the original grantor or [his] the grantor’s heirs for a similar or no consideration, prior to other disposition pursuant to section 13 of [this act] P.L.1971, c.199 (C.40A:12-13).

e. If a county or municipality authorizes the acquisition of real property by condemnation, the resolution or ordinance authorizing that acquisition shall, at the time of its adoption, specify the particular public use or uses for which the property is being acquired. A resolution or ordinance that states only that the acquisition is for a public use or purpose, without specifying that use or purpose, shall not satisfy the requirements of this subsection, and the resolution or ordinance shall have no force or effect related to acquiring the real property.

(cf: P.L.1992, c.157, s.5)

2. Section 6 of P.L.1971, c.361 (C.20:3-6) is amended to read as follows:

Whenever any condemnor shall have determined to acquire property pursuant to law, including public property already devoted to public purpose, but cannot acquire title thereto or possession thereof by agreement with a prospective condemnee, whether by reason of disagreement concerning the compensation to be paid or for any other cause, the condemnation of [such] the property and the compensation to be paid therefor, and to whom payable, and all matters incidental thereto and arising therefrom shall be governed, ascertained and paid by and in the manner provided by [this act] P.L.1971, c.361 (C.20:3-1 et seq.); provided, however, that no action to condemn shall be instituted unless the condemnor is unable to acquire [such] the title or possession through bona fide negotiations with the prospective condemnee, which negotiations shall include an offer in writing by the condemnor to the prospective condemnee holding the title of record to the property being condemned, setting forth the property and interest therein to be acquired, the particular public use or uses for which the property is being acquired, the compensation offered to be paid and a reasonable disclosure of the manner in which the amount of [such] offered compensation has been calculated, and [such] any other matters as may be required by the rules. A written offer that states only that the property is being acquired for a public use or purpose, without specifying that use or purpose, shall not satisfy this section. Prior to [such] the offer the taking agency shall appraise [said] the property and the owner shall be given an opportunity to accompany the appraiser during inspection of the property. [Such] The offer shall be served by certified mail. In no event shall [such] the offer be less than the taking agency's approved appraisal of the fair market value of such property. A rejection of [said] the offer or failure to accept the same within the period fixed in written offer, which shall in no case be less than 14 days from the mailing of the offer, shall be conclusive proof of the inability of the condemnor to acquire the property or possession thereof through negotiations. When the holder of the title is unknown, resides out of the State, or for other good cause, the court may dispense with the necessity of such negotiations. Neither the offer nor the refusal thereof shall be evidential in the determination of compensation.

(cf: P.L.1971, c.361, s.6)

3. (New section) Notwithstanding any provision of any other law, rule, or regulation to the contrary, whenever any condemnor, as defined in section 2 of P.L.1971, c.361 (C.20:3-2), seeks to acquire property by condemnation, the resolution, ordinance, or any other type of formal action of the condemnor's governing body authorizing the acquisition shall specify the exact public use or uses for which the property is being acquired. Any resolution, ordinance, or other formal action stating only that the acquisition is for a public use or purpose, without a specified use or purpose, shall not satisfy the requirement posed by this section, and the resolution, ordinance, or other formal action shall have no force or effect related to acquiring the real property. The provisions of this section shall apply to every condemnor, as defined in section 2 of P.L.1971, c.361 (C.20:3-2), including, but not limited to: the State, counties, municipalities, independent authorities, redevelopment entities, school districts, and public utilities which possess the power of eminent domain, regardless of whether that condemnor is also subject to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

4. (New section) If any condemnor, as defined in section 2 of P.L.1971, c.361 (C.20:3-2), acquires property by condemnation for a stated public use, determines the property has become unsuited or inconvenient for that use, and attempts to convert the property, in whole or in part, to a different public use, the condemnor's governing body shall adopt a new resolution, ordinance, or other formal action identifying the new public use prior to conversion. Any resolution, ordinance, or other formal action that states only that the property is being converted to a public use or purpose without specifying the exact use or purpose shall not satisfy this section, and the resolution, ordinance, or other formal action shall have no force or effect related to acquiring the real property. This section shall apply to every condemnor, as defined in section 2 of P.L.1971, c.361 (C.20:3-2), regardless of whether that condemnor is also subject to section 5 of P.L.1971, c.199 (C.40A:12-5).

5. This act shall take effect on the first day of the sixth month following enactment and shall apply to any resolution, ordinance, or other formal action authorizing an eminent domain acquisition of real property on or after that date.

STATEMENT

This bill requires any resolution, ordinance, or other formal action authorizing the acquisition of real property through eminent domain to specify the exact public use or uses for which the property is being acquired, at the time of acquisition. The bill applies this requirement to every condemnor in the State, including: counties, municipalities, independent authorities, redevelopment entities, school districts, the State, and public utilities which possess eminent domain powers. The bill requires that the written offer required to be provided to a property owner by a condemnor during bona fide negotiation under the "Eminent Domain Act of 1971," P.L.1971, c.361 (C.20:3-1 et seq.) (EDA), shall disclose the exact public use for which the property is being acquisitioned. The bill further requires a condemnor that has already acquired property for a State public use and later determines the property is to be converted to a different public use is required to first adopt a new resolution, ordinance, or other formal action identifying the new public use before the conversion occurs.

The bill is in response to the August 10, 2026 decision by the New Jersey Supreme Court in Borough of Seaside Park v. Shree Jyoti, LLC, Docket No. A-2 25, in which the Court held neither the "Local Lands and Buildings Law," P.L.1971, c.199 (C.40A:12-1 et seq.) (LLBL), nor the EDA requires that the condemning municipality specify the intended public use for the property it is taking in the ordinance authorizing the acquisition of the property. The Court asserted that municipalities should, as a matter of best practice, identify the intended public use for properties they seek to condemn as early as practicable, as doing so will ensure transparency, facilitate meaningful participation by affected property owners, and conserve municipal resources and uphold public trust in the government's exercise of eminent domain. In Justice Hoffman’s dissent, while he agreed with the majority's holding that the LLBL and EDA do not expressly require a municipality to state the public purpose for the taking in the authorizing ordinance, he noted that through the Borough's intentional lack of candid engagement, it failed to "turn square corners." The "square corners" doctrine is a mandate that municipalities comport themselves with transparency, candor, and integrity. Justice Hoffman recommended "that the Legislature consider requiring that municipalities disclose the intended public purpose for the property in question at the time of adopting an ordinance authorizing the taking of that property." This bill codifies that requirement by amending the LLBL and the EDA and supplements the EDA applying the requirement to every condemnor in the State.

The bill is to take effect on the first day of the sixth month following enactment and is to apply to any resolution, ordinance, or other formal action authorizing an eminent domain acquisition of real property on or after that date. The bill also makes technical corrections.