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ARTICLE ID 188131

$________ – EMINENT DOMAIN – LAND TAKEN FOR IMPROVEMENT OF ROUTE 18 AND ________ INTERCHANGE – PROPERTY ZONED FOR RESIDENTIAL USE AT TIME OF TAKING – PROPERTY PREVIOUSLY ZONED FOR BUSINESS USE AND INITIAL APPRAISAL BASED ON PROBABILITY OF OWNER OBTAINING USE VARIANCE FOR BUSINESS.

Middlesex County, NJ

This case involved the issue of just compensation for the plaintiff state’s taking of the defendant owners’ ________ acres of wooded land for the improvement of the State Highway Route 18 and County Route ________ interchange in Old Bridge, New Jersey as of January 5, ________. The property is located in the southwest quadrant of the State highway and the County road interchange and also fronts on a local street with residences directly across from it. The property was zoned for residential use at the time of the taking. The State contended at trial that the value of the property was $________ based upon its likely development as a four lot residential subdivision. The property had previously been zoned Office General which allowed uses including offices and banks.

The owners contended that, based upon the probability of obtaining a use variance for office or bank/office use under the prior zoning, the value was approximately $3.1 million. A hearing before three commissioners, consisting of two attorneys and one realtor, had previously been held and any party who appears at the hearing can move for a trial de novo following such hearing. As a result of the hearing, the commissioners awarded $________ and both sides appealed for a trial de novo.

During pre-complaint bona fide negotiations, the State had made an offer to the owners based upon its appraiser’s initial report that had concluded that the highest and best use of the property was for development under the prior Office General zoning and that the property was not appropriate for residential use. At trial, relying upon an engineering report subsequently obtained by the State, the State’s appraiser changed his position and concluded that the highest and best use of the property was for a four lot residential subdivision and estimated value at $________ based on $________ per lot. The State’s engineering expert reported that he had met with municipal officials (none of whom were voting members of the municipal board that would have jurisdiction over any development or use variance application) and concluded that the property would only receive approval for a four lot residential subdivision.

While the owners elicited that the State’s appraiser’s initial report was based upon the likelihood of a use variance being granted for development under the prior Office General zoning, the court did not allow the State to present the value opinion contained in its initial report, which was actually less than $________, as it was not as of the date of valuation and therefore not relevant. The owners argued that the State’s original position as to the highest and best use of the property for development under the prior Office General zoning was correct. The owners contended that, although the land was zoned for residential use at the time of the taking, there was a reasonable probability that a use variance could be obtained for an office or bank/office use and that, while the property cannot be valued as though the use variance were actually granted, the impact on value of the likelihood of obtaining the use variance can be considered.

The State maintained that, since the property boarded on a local street with residential homes, it was unlikely that a variance would be granted and that valuing the property based upon the actual residential zoning was appropriate. The owners contended that, even though eight to nine modest homes were on the other side of the local street across from the property, the local street was actually posted as the means of access from the County road to Route 18 southbound. Also, based upon its unique location in the southwest quadrant of the interchange of a State highway and County road, the property was not appropriate for the residential use as actually zoned.

The owners also presented expert land use planning testimony that the property would satisfy the requirements of a use variance and that there was no justification for the rezoning of the property from Office General to residential. In view of such considerations, the owners argued that it was likely that a use variance would be granted. There was a jury view of the property and the surrounding area, and the jury saw the posted directional signs directing traffic to use the local street for access to Route 18 southbound and also the painted double yellow line down the center of the local street and the property being subject to the intrusion of the adjacent State highway traffic.

The owners’ proofs were that the value, based on the probability of office or bank/office use, was approximately $3.1 million. Alternatively, as part of the highest and best use analysis (to determine the use that results in the highest value), the owners’ appraiser presented evidence of value based upon the actual residential zoning in the amount of $1.6 million. The owners’ experts concluded that the property could be subdivided into eight lots under the residential zoning. Overall, the owners stressed that the State’s appraiser had originally concluded that there was a reasonable probability of a use variance for an office or bank/office use.The jury awarded $________.

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