Adoption of Rehabilitation Plan in Woodbridge Not A Taking (D.N.J.)

by: Joseph Grather
4 Apr 2016

From the United States District Court comes a new opinion from Judge Chesler, but there’s nothing new in the precedent cited denying a property’s owner’s claim of “inverse condemnation.”  Simply stated, an inverse condemnation case is a procedure for a property owner to secure just compensation where government has taken private property for public use without first offering compensation.  The case, decided March 30, 2016, was instituted by the owners of the Jewelry Exchange in Woodbridge.  The Jewelry Exchange has occupied the ground floor of a nine story building since 1989.  Floors 2-9 house commercial/office space.  The ground floor is in separate ownership from floors 2-9 (condominium units).

The Jewelry Exchange alleged that the Township’s adoption of a rehabilitation plan, which called for converting floors 2-9 to residential uses (150 units) effectuated a partial taking of its ground floor property because it would affect the jewelry store business. (Side note: The Local Redevelopment and Housing Law does not authorize the exercise of eminent domain when a municipality adopts a rehabilitation plan).  The District Court applied the now well known Penn Central test in denying the owner’s claim, and accordingly dismissed the case with prejudice.

Of material significance was the fact that the ground floor of the building was exempted from the Rehabilitation Plan.  In other words, the Jewelry Exchange would be permitted to continue to operate its commercial business without interruption.  The court aptly noted that even if the conversion to residential units affected value, one has to prove that a “state’s land regulation denies a property owner of “all economically beneficial or productive use of [the] land.” Slip op. at 6.  The property owner could not carry the heavy burden and the case was dismissed.

Looking the case from a thousand feet, one has to think that a jewelry store would want to have 150 units of residential above his commercial enterprise:  Live-in customers!

NJ Property Tax Appeal