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Eminent Domain Clarified in Reversal of $8.15M Award Against NJ Transit

A New Jersey appeals court, in a published decision that overturned an $8.15 million condemnation judgment against NJ Transit, has clarified two eminent domain issues.

On Oct. 19, the Appellate Division remanded for a new trial on compensation in a case over a 1.89-acre parcel straddling Hoboken, Union City and Weehawken.

In the case, New Jersey Transit Corp. v. Franco, the court held that the defendants’ plan to build a cul-de-sac in Weehawken for access to a proposed apartment complex required a use variance for a private driveway or acceptance by the town as a public street.

The defendants failed to show a reasonable probability that the town would grant either, the court found.

In addition, the court rejected the defendants’ challenge to an order requiring $1.97 million in escrow for estimated environmental cleanup costs on the property. The court said the trial court properly calculated the amount based on the estimated cost for the highest and best use. This ruling clarified Housing Authority v. Suydam Investors, L.L.C., a condemnation case decided by the New Jersey Supreme Court in 2003.

In the NJ Transit case, the state had condemned the property in 2009 for public use. It first offered $934,000 if the tract were used for industrial development and later $1.65 million if it were used for 35 multifamily residences. The defendants sought $9.273 million and planned to build 72 apartments in Union City and 54 in Hoboken, and the cul-de-sac.

NJ Transit appealed the jury award, and the defendants the escrow amount.

The court said the cul-de-sac would constitute a new principal use and Weehawken’s approval was necessary regardless of whether the cul-de-sac was for private or public use.

The court also held that the defendants were required to show that one or the other was likely to be approved. In addition, the court said, the defendants’ experts offered neither view, rendering their opinions legally inadequate.

On the escrow issue, the court held that the amount “should be based on the remediation necessary to achieve the highest and best use,” an approach that “most fairly treats both the condemnor and the condemnee.” It found that the trial court properly calculated the escrow.

Read the opinion here.

If you have questions about this topic or would like to discuss your land-use law needs, John Wisniewski may be reached at (732) 651-0040 or [email protected].

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