There was no DD for January 1, a holiday which the Editor celebrated at the Rose Parade. The Editor wishes to salute the National Association of Home Builders, whose float, according to the grandstand consensus in the editor's area, was the hands down recipient of the "Best Float That Didn't Win A Prize" award.

Daily Development for Wednesday, January 2, 2002

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

EMINENT DOMAIN; POWER TO CONDEMN; PUBLIC PURPOSE: Where a proposed development parcel has access on a dedicated street, City cannot constitutionally condemn property for an alternate access way for the sole purpose of accommodating more intense development on the parcel as such condemnation would be for a primarily private purpose.

Township of West Orange v. 769 Associates, L.L.C., 341 N.J. Super. 580, 775 A.2d 657 (App. Div. 2001).

A developer of a residential subdivision submitted a site plan to the municipality for review and approval. The site plan called for access to the development along an existing dedicated roadway, not yet improved.

However, the residents who lived near that unimproved road formed a group and objected to the widening and improvement of that road. One of the members of the group served as a councilman and a planning board member, and voted as a councilman and planning board member to seek an alternative access route to the development.

Thereafter, the municipality hired a consultant to conduct a study to determine alternative access routes. The results of this study suggested an alternative route that would require condemnation proceedings. Thereafter, the developer and the municipality entered into a developer's agreement whereby it was agreed that the municipality would make a determination of an access route not inconsistent with the findings in the consultant's report. The developer also agreed to pay for all of the architectural, engineering, and condemnation costs associated with the relocated access route.

The municipality adopted an ordinance to condemn affected properties, including a property owner's parcel and filed condemnation proceedings against each of the affected owners. Appellant was one of the condemnees. The proposed condemnation would take a strip of land only a few feet from the edge of its existing medical office building.

. The lower court concluded that the "condemned property will be used by the municipality as a public road for ingress and egress out of the development, as well as ingress and egress for an adjacent property." It concluded that the municipality retained the authority to condemn on the basis that the proposed roadway would be "public" because it would serve more than one development.

Appellant argued to the intermediate appeals court that the proposed condemnation constituted an unlawful taking of private property for private use and not for any legitimate public purpose. It contended that that a court must apply heightened scrutiny in reviewing a claim that the public interest was the predominant interest being advanced. The Appellate Division began by recognizing that "generally, a government entity may take, or condemn, private property where it is in furtherance of a valid public purpose, and where just compensation has been made to the owner. Where, however, a condemnation is commenced for an apparently valid public purpose, but the real purpose is otherwise, the condemnation may be set aside." New Jersey courts have declined to define the term "public purpose," but have generally interpreted it broadly.

The Appellate Division concurred that "heightened scrutiny" was the correct standard because the taking was designed to benefit a private and not a public interest. It then concluded that there was no sufficient reason for the municipality to proceed with the condemnation activities when the unimproved road was a viable alternative. It noted that the proposed road would provide little access to anyone other than those seeking ingress and egress to the proposed development. Even if the project would be landlocked without the proposed right of way, the court noted, this condition did not justify the use of eminent domain to render the site more developable unless the landlocked condition was caused by the public. The court stated: "The power of eminent domain by government or public agencies is an awesome power which may only be properly used for a public purpose." The Court concluded that "the proposed right-of- way, which would be established partly through condemnation, was to serve the private interests of the developer," and reversed the lower court and denied the condemnation.

Comment 1: Note that there were additional factors that the court did not cite as supporting the decision, but that many may argue were distinctive factors justifying distinguishing this case as authority.

First, there was the potential conflict of interest of a member of the City Council, whose property abutted the road that the City was trying to avoid using.. The court refused to rule specifically on whether a conflict of interest existed. Appellant introduced the evidence of the conflict to raise a question of whether there were ulterior motives for moving to the alternative route. The court does not take the gambit, holding that the "private interests" served were those of the developer, and not those of the owners of property abutting the existing street, but one is left to wonder . . .

Second, there is the question of the payment by the developer to the City f or the costs of condemnation. The developer made out two $75,000 checks to the Mayor, which the Mayor, the court says "presumably"

deposited in the general fund. The court says that another case in which developer funded condemnation was held to be acceptable was distinguishable from the instant case, but again it is not clear that the developer funding was critical to the final conclusion.

Comment 2: The court also noted that the traffic study indicated that development of other properties might in the future benefit from the acquisition and construction of the proposed new road. But it did very little with this fact. Did it conclude that even if development of these other parcels would be accommodated there would still be an inappropriate private purpose, since those parcels were also privately owned? Or did it conclude that the proposed benefit to development of these parcels was too speculative? We don't know.

Comment 3: Although there were a number of uncertainties that the court identified in the record, it didn't remand or order further proceedings. It killed the whole deal. One might have expected most courts to give the agency another chance to support its conclusions.

Comment 4: Although one is tempted at first to root for the landowners who fought off a condemnation actions under the rubric of "private property," it should be recognized that we have here an opinion that, if it influences precedent, will make if difficult for public agencies to accommodate desirable development by providing necessary infrastructure. Owners of nearby parcels, by refusing to deal on access, can suppress development of their neighbor's property for any number of reasons, good or ill. The editor loves the market, but recognizes a need for rational public support of infrastructure. This case, if indeed it means what it says, does not help.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

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