Recently, the New Jersey Senate Community and Urban Affairs Committee reported favorably on Senate Bill No. 1451 (S1451) with Committee amendments. The so-called Rice Bill, named after the State Senator primarily responsible for seeking reform, proposes to amend significantly the Local Redevelopment and Housing Law. The Eminent Domain Act of 1971 and the Relocation Assistance Act of 1971 would also be amended. As a basis for reform, the legislation itself states that the Legislature received input from a number of interested citizens and interest groups over an extended period of time.

S1451 proposes to create two tracks for municipal designation of redevelopment areas: the first as a non-condemnation redevelopment area and the second as a condemnation redevelopment area. For the latter, enhanced requirements will be built into the statute consistent with two seminal cases decided within the last few years, Harrison Redev. Agency v. DeRose, 398 N.J. Super. 361 (App. Div. 2008) and Gallenthin Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007). Under this legislation, a municipality will be required to give notice to a property owner informing that their property is at risk of being forcibly taken for redevelopment purposes, giving them a time frame within which they can contest the redevelopment designation. Further, blight determinations must be recorded at the County Recording Office. Finally, the redevelopment designation will lapse after a period of time unless redevelopment work is ongoing.

In recognition of Gallenthin, the criteria for blight under the statute is proposed to be modified and specific factors must be found by the municipal governing body to exist in order for a blight declaration to withstand scrutiny. Moreover, no more than 20% of the land mass designated for private ownership in a redevelopment area may be comprised of non-blighted land.

Further, changes will be made to condemnation procedures and relocation assistance. Non-blighted property cannot be condemned without a certification that all means have been exhausted to acquire the property short of condemnation. The valuation standard is modified to require that properties be valued at no less than replacement cost of the property. Also, any displaced resident and small business operator will be given a statutory right of first refusal to purchase or lease property in the redevelopment area post-development. For relocation assistance, which has not been increased since 1971, there will be a phased increase with significant bumps over the next several years.

Finally, procedural safeguards are built into S1451 that include the right to contest various governmental actions in court. Further, the Superior Court is given specific authority to suspend redevelopment activities in the event a notice under the LRHL was defective. Importantly, existing redevelopment activities are proposed to be grandfathered to the extent that they have been undertaken and there will be a four-month period of repose after S1451 is made law.