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Court Considers Value of Wetlands

Posted on Monday, June 23, 2014

Court Considers Value of Wetlands

The New Jersey Appellate Division recently ordered that hearings must be conducted prior to takings of property in New Jersey where zoning changes may occur.  The matter involved the valuation of one acre of vacant land in North Bergen being acquired by New Jersey Transit Corporation.  Within this land were wetlands, under the jurisdiction of the United States Army Corps of Engineers (ACOE).  Amongst the parties, it was being disputed as to whether the value of the land should be considered as the best and highest use of the land, a two-story self-storage facility, or rather wetlands.  According to Mori, the defendant, the ACOE would have granted a Section 404 permit, which would have authorized filling wetlands for the proposed private development.  The recent decision in New Jersey Transit Corporation v. Mori reasoned that in order to fairly value the property being taken a pre-trial N.J.R.E 104 hearing must be conducted, and it must be determined whether there is a reasonable probability that a zoning change will occur on the disputed land.  They determined that the trial court prematurely determined that a Section 404 permit would have been approved without providing for a fair pre-trial hearing.

The Court cited a recent decision, in which the Supreme Court of New Jersey further reasoned that a “taking” must be properly compensated after consideration of possible zoning changes.  The Supreme Court in Borough of Saddle River v. 66 East Allendale, LLC required a pre-trial hearing to follow a two-step approach to determine the fair market value of the property:

  1. Whether there is sufficient evidence to support a conclusion that a zoning change is reasonable.
  2. Whether a buyer and seller engaged in voluntary negotiations would reasonably believe that a change in zoning may occur and will ultimately impact the value of the property.

Ultimately, the court in New Jersey Transit Corporation v. Mori reasoned that this two-step approach was not used in the property valuation, and therefore remanded the decision to further determine whether there was a reasonable probability that a Section 404 permit would have, in fact, been granted.

If you have questions, contact Sue Gieser at scg@lawwmm.com, (201) 319-5750.