In a case arising in Connecticut, several homeowners challenged a redevelopment plan that involved 115 land parcels located on approximately 90 acres near the Thames River in New London, Connecticut. The redevelopment plan intended to divide the property into 7 separate parcels which would be developed by private companies. The plan involved the construction of new homes, a hotel and a conference center. The City of New London argued that the redevelopment was a public benefit since it would generate significant tax revenue, create both temporary and permanent jobs through construction, and revitalize the distressed city.
Property owners challenged the plan since they did not believe that the development plan constituted a “public purpose” as required by the state and U.S. Constitution. The Connecticut courts disagreed and permitted the taking of the properties.
The United States Supreme Court agreed to review the decision to determine whether the economic development plan meets the requirements of the United States Constitution. In short, the primary issue is what are the limits under the “public use” requirement of the United States Constitution when the government takes land for private economic development.
It appears that most people are not opposed to redevelopment plans for inner-city projects that will seek to improve blighted areas. In addition, projects that involve a direct public use (i.e., new schools and road widenings) also appear to be favored by most people. However, the type of plan that causes the most concern are those that seek to expend the tax base and new create jobs. Under this scenario, the line between public use and private benefit becomes blurred.
The case is very important to New Jersey property owners filing redevelopment plans for several reasons. First, there are many redevelopment plans on the drawing board which seeks to increase the tax base just as in New London. Second, New Jersey mayors are under tremendous pressure to lower property taxes and are consistently chasing “ratables” high valued properties which provide the income to local government. As a result, many of the redevelopment plans seek to create new ratables. Finally, increased open space purchases reduce the available land for developers. As a result, many developers will look to redevelopment projects as a means to remain in business.