The taking of private property by exercise of the power of eminent domain is authorized by the United States and New Jersey constitutions. However, this "awesome power" is not without limitation.² The taking must be for a "public purpose," and the property owner must be justly compensated.³

Recently, some communities have resorted to condemnation in an effort to thwart unwanted development. This use of condemnation has called into question the concept of public purpose. Prior decisions in New Jersey and other states hold that, in order to be legitimate, a public purpose may not be the subject of "improper motives, bad faith, or some other consideration amounting to a manifest abuse of the power of eminent domain."⁴ When New Jersey courts have reviewed such municipal actions, they have continued to apply this line of cases.

Development of Area of Law

Because all states generally require that condemnation be for a public purpose, the law has developed rather uniformly from state to state. In early cases addressing governmental attempts to stop development, the respective state courts have found it necessary to refine their definitions of public use or purpose. Perhaps the most important question has been whether stopping development under the guise of a facially valid public purpose, such as open space conservation, is legitimate.

At the outset, a challenge to an attempt to condemn land is met with a hefty burden.⁵ In fact, the courts give deference to a condemning authority's determination regarding what property to take and how much of the property is needed.⁶ However, the determination, even if valid on its face, is subject to challenge if the opposing party is able to prove the municipality is operating in bad faith.

The claim of bad faith must be proved by dear and convincing evidence.⁷ When courts have been called upon to address a claim of bad faith condemnation, their decisions have been very fact-specific. In those cases where the cumulative weight of the evidence supports a finding that the decision to condemn was made for ulterior motives, that is, the real purpose of the condemnation is other than the stated public purpose, the condemnation has been set aside.

Long before New Jersey courts were called upon to address the issue, courts in other states were required to decide whether condemnation actions commenced for apparently valid public purposes should be dismissed. Courts in Georgia, Massachusetts and New York were presented with factual scenarios that called into question the condemnors' underlying purposes for condemning private property. In each case, the courts looked to the actual intent of the respective condemnor, which was gleaned from an exhaustive evaluation of the facts.⁸

Existing Law in New Jersey

The use of condemnation solely as a method to prevent development has been viewed with disfavor by New Jersey courts. Our courts have held that the definition of public purpose does not include preventing some unwanted usc of property, and have shown their willingness to dismiss a condemnation action if it can be proved.

The leading case in New jersey is Borough of Essex Fells v. Kessler Institute for Rehabilitation.⁹ Essex Fells is a small community made up of mostly single-family dwellings, with approximately 20 percent of its total acreage dedicated to parks and open space. The Kessler Institute for Rehabilitation provides treatment and services to persons with physical disabilities. Kessler located a 12.5 acres tract in Essex Fells that it determined would be an ideal location for skilled nursing and transitional living facilities. Kessler sought to purchase the property from the owner, a Bible college that had closed its doors.

Upon learning of Kessler's intention, the citizens of Essex Fells rallied against the project. A local organization known as the Essex Fells Preservation Committee (EFPC) was formed to oppose the proposed development. The Kessler proposal became a political hot potato, with the EFPC stridently urging the community to fight Kessler, the mayor and borough council.

The EFPC warned the citizens that Kessler "would bring dirty needles and AIDS patients" into the town, and "Kessler would probably start a large drug or alcohol rehabilitation facility."¹⁰ Apparently succumbing to the intense community opposition, borough officials sent a questionnaire to the residents to ascertain their willingness to pay extra taxes in order to finance the acquisition of the subject property. After an overwhelming approval, the borough council authorized condemnation of the acreage for use as a park.

Judge Julio M. Fuentes found that "the extensive record in this case compels the inference that Essex Fells undertook this condemnation for the sole purpose of preventing Kessler's development of a rehabilitation facility in the community."¹¹ Judge Fuentes reasoned that "[t]he credible evidence demonstrates that the public purpose articulated for taking Kessler's property, a public park, was selected not based on a true public need but in response to community opposition to Kessler's proposed use of the property."¹²

Among the evidence relied on by the court was the fact that although the property had been for sale for approximately two years prior to Kessler's proposed development of the property, no consideration was given at any meeting of the borough council to any plan or proposal to purchase or condemn the property. In fact, borough officials had stated that the borough's need for any additional recreational space was "fully met."¹³

In published guidelines, the National Recreation and Park Association suggested that a municipality maintain a minimum of 6.25 to 10.5 acres of parkland per 1,000 persons.¹⁴ Essex Fells had about 64 acres per 1,000 persons. While acknowledging that nothing prevents a municipality from exceeding the recommended standards, the court noted that the borough had not conducted any studies to determine whether there was a need for additional open space, had not presented any evidence of over-utilization of existing park land or recreational facilities, had no plans for the development of the property upon its acquisition, and had no plans for the use or demolition of the existing buildings on the property.¹⁵

In addition, the court found a number of statements by borough officials provided some evidence that the borough was more interested in who was purchasing the property than in whether the borough could acquire open space. For example, at a September 21, 1993, public hearing, one council member spoke about the "gentlemen's agreement" borough officials made with the Bible college, whereby the college would sell its property "to the right people."¹⁶ During this meeting, in response to community insistence that the borough acquire the property to prevent Kessler's use of the property, an official stated: "You've got to condemn and you've got to develop a public need . . . we've got to come up with a need that the court will allow."¹⁷

According to the court:

[t]he credible evidence in this case justifies the conclusion that, but for the public opposition to Kessler's development proposal, Borough officials would not have sought to prevent Kessler's use of the property. The power of eminent domain cannot be justified when used in response to public opinion against a proposed land use. The precipitous fashion in which the Borough moved to condemn this site, with no specific plan for its use or development, together with the size of the tract (12.5 acres) in relation to the Borough's existing park land and open space, undermines the sincerity of the Borough's stated public purpose and demonstrates bad faith."¹⁸

Recent Decisions

Recently, New Jersey courts have had the opportunity to consider claims of bad faith condemnation in other factual scenarios. In Township of Monroe v. Noonan, the court invalidated the township's condemnation because "the stated purpose for acquiring the site for open space and park use [was] a pretext for the improper purpose of precluding appellants from commercial development of the site."¹⁹

In Noonan, the contract-purchaser of the defendants' property applied for a variance to build a drug store. The application was fiercely opposed by the residents of a nearby adult community, who expressed a preference for a park on the site rather than commercial development. As a result, the township asked its engineer to develop a plan for a park that would conform with the desires of the community. The plan was subsequently approved, and the township authorized condemnation proceedings of the defendants' property. The defendants challenged the taking of their property. The Law Division found the township had acted properly, but on appeal, the Appellate Division reversed.

The court found the township was actually using the power of eminent domain to prevent unwanted development, pointing out that: 1) the engineer testified that the township only showed an interest in the property to preclude its commercial development; 2) the master plan, which was adopted shortly before the condemnation action was instituted, made no mention of the need for a park on the defendants' property; and 3) the open space plan, prepared by the township's Open Space Committee and endorsed by a resolution of the township's governing body, did not include any recommendation for the township's preservation of the defendants' property.²⁰

The township argued that it was proper to consider the opposition of local residents to development of the area in determining that a target property satisfied the public use or purpose requirement of condemnation. However, the court rejected this argument, stating that "[p]ublic sentiment may be considered in formulating a Master Plan or enacting a Zoning Ordinance [but that] it is not a proper factor in condemnation."²¹ The court noted that eminent domain should not be used to effectuate what would otherwise be achieved through zoning.²²

In another recent case—Township of North Brunswick v. U.S. Home Corp.—the Appellate Division held the facts supported the Law Division's finding that the township had duly exercised its power of eminent domain over a developer's land. U.S. Home Corp., the defendant, a contract-purchaser of approximately 105 acres, challenged the township's determination that it needed more recreational space.²³ The defendant argued that the township's condemnation proceeding was launched in bad faith to prevent development. The court, however, found the facts belied this argument.

As early as 1989, almost 10 years leading up to the defendant's attempted purchase of the land, the township master plan had recommended the acquisition of more recreational space for youth programs and adults. The estimated need (109 acres) was determined by formulas established by the Department of Community Affairs and the National Recreation and Park Association. The 1989 plan identified the subject property as an alternative acquisition site.

According to the 1994 Master Plan Reexamination Report, the subject property was one of two active farms in North Brunswick. The report recommended rezoning the property to agricultural- low-density residential, which would allow single-family homes on six-acre lots. However, the township did not adopt this recommendation. The township expressed an interest in preserving the farmland, but concluded rezoning was not necessary because the property owners promised to continue farming the land.

In 1999, after the defendant had presented a concept plan for a senior citizens' development on the subject property and requested the master plan be amended, the township asked voters to approve an open space preservation tax. The tax was approved, and the township adopted a resolution creating an Open Space Committee. The committee hired a consultant to prepare a recreation and open space plan.

The plan that was submitted by the consultant concluded the township owned adequate open space for passive recreation and conservation, but that North Brunswick had only about 40 percent of the recommended area for active recreation facilities. According to the plan, acquisition of subject property for a centralized sports and recreation complex "should have the highest priority."²⁴ The subject property was identified as ideal for such a complex.

Following public hearings on the plan, the township adopted resolutions approving it and authorizing the issuance of bonds in the amount of $15,000,000 for acquisition of a number of properties, including the subject property. When the defendant failed to respond to the township's offer to purchase the property, North Brunswick instituted condemnation proceedings.

The defendant claimed the township brought the condemnation action for the sole purpose of stopping the proposed senior citizens' development. However, in affirming the Law Division decision, the Appellate Division found the record in this case is in "striking contrast" to Kessler and Noonan, supra, where the courts set aside condemnation actions.

The court noted that the township submitted extensive documentation in public records dating to 1989 which detailed the zoning history of the property and the need for additional recreational and open space.²⁵

Given North Brunswick's "long standing and documented desire to preserve this or similar property as open space and the need for additional active recreation facilities," the court concluded that the Law Division judge properly rejected the defendant's allegations of bad faith and improper purpose.²⁶

On the other hand, the Law Division recently dismissed a township's condemnation complaint, finding that the determination of public purpose was a cover for its desire to prevent unwanted development.²⁷ In Mount Laurel Township v. Mipro Homes, LLC, the township argued that the condemnation of land was acceptable, so long as the goal was preservation. The property owner argued that when the desire to thwart unwanted development was masked by the stated goal of preservation, the use of eminent domain should be prevented by the court.

In Mipro, the defendant had agreed to purchase the subject property on which it intended to develop single-family homes. The township's planning board granted Mipro's application for conditional preliminary major subdivision approval. Less than one year later, after the conditions of initial approval were satisfied, Mipro applied to the planning board for final major subdivision approval, which was also granted. Between the time Mipro's application for final major subdivision approval was filed and the hearing on the application was held, the township council adopted an ordinance authorizing the acquisition of Mipro's property because it was under "severe development pressure" and "has been made the subject of a major residential subdivision application."²⁸

Discovery taken by Mipro revealed that, in the time preceding this action, the township had advertised its efforts to promote open spaces through signs posted on acquired property around the township. These signs read: "More Acres Saved From Development—Your Open Space Dollars At Work."²⁹ In addition, township officials had trumpeted the township council's success "interfer[ing] with the plans of the developers who have already received preliminary approval," and declared the township's goal was to "protect the land from development" and to actively acquire land "slated for development.³⁰ Moreover, the township did not consult with the planning board regarding the master plan, which stated, "[t]he Township is in an excellent position to provide park and recreation land . . . ."³¹ In fact, the township planner testified that the township had a 296-acre surplus of open public space.

The "overwhelming evidence in the record" convinced the court that the condemnation was not for a valid public purpose because "need" never factored into the decision.³² Judge John A. Sweeney described the attempted taking as "a random taking without legal justification."³³ The court noted:

[i]f the Township desires to continue to purchase property for open space, it may do so. Those purchases may be made from willing sellers, not by resort to condemnation of tracts under development from private owners unwilling to give up their properties and vested approvals . . .³⁴

Finally, in July of this year, the Appellate Division affirmed a decision by the Law Division that a condemnation for open space was "pretextual based on opposition to the construction of inclusionary and multi-family housing consistent with the municipality's constitutional obligation as well as its own master plan and zoning."³⁵

In Township of Allamuchy v. Progressive Properties, Inc., the township sought to acquire the subject properties as part of an "aggressive campaign" to acquire open space.³⁶ However, more than 90 percent of the township consisted of vacant or agricultural land; wooded areas; or state parks, and an additional 1.41 percent of open space. Only 3.41 percent of the township was developed as single-family homes, and another 0.44 percent as townhouses or multifamily uses. Commercial, industrial and office uses comprised only a small fraction of the township.³⁷

The subject properties, part of a planned unit development known as Panther Valley, of approximately 1,500 homes accounted for approximately 80 percent of the township's dwelling units and population. In addition to a number of recreational facilities within Panther Valley, the Panther Valley Property Owners Association owned "substantial" tracts of open space.³⁸

In December 1998, the defendant applied for final approval to construct 168 condominium flats, including 96 one-bedroom and 72 two-bedroom units on the 20.93-acre Village IX property.³⁹ The planning board granted approval in October 1999.⁴⁰

In February 1999, the defendant also applied for preliminary major site plan and subdivision approval for the 293-acre Village VI tract. In October 2000, the planning board approved the construction of 47 single-family homes, and 324 townhouses, 10 to be set aside to satisfy the township's affordable housing obligation. Under the approved plan, more than 70 percent of the Village VI property would remain undisturbed.⁴¹

According to the trial court:

[s]ometime in 1999, the township appears to have decided to eliminate further multi-family and affordable development in Panther Valley. The genesis of this decision is unclear. There is no adequate documentation to justify the sudden determination that Village IX [and] Village VI... had to be preserved as open space. The township determined that development, in accordance with the current zoning, would be costly in part due to the assertion that a new school would be needed.⁴²

The township sought to acquire the subject properties by agreement. Following unsuccessful negotiations, the township instituted condemnation proceedings. The defendant's answer denying the township's authority to condemn, alleged that acquisition of the properties was not for a public use or purpose, and that the township had acted in bad faith. The defendant also filed a separate lawsuit alleging exclusionary zoning and seeking a builder's remedy. The court consolidated the condemnation and affordable housing actions.⁴³

The trial judge determined that the township's own open space and recreation plan element of its master plan, adopted in 2000, specifically found that there was more than adequate recreation available for all existing and future residents of the community. Dismissing the township's complaints for failure to demonstrate a need for additional open space, the trial judge found:

Given the amount of land devoted to open space and predicted population trends within the municipality, there is sufficient open space. Thus, the uncontested facts demonstrate that the motive for the taking of defendants' property is not based upon need but, rather, improperly to thwart the development of multi-family and affordable housing in Panther Valley and the municipality."⁴⁴

On appeal, the Appellate Division affirmed substantially for the reasons articulated in the trial judge's opinion, finding ample basis in the record below that the property owner had shouldered its enhanced burden and had demonstrated, clearly and convincingly, that the township's motives were improper and lacking in good faith.⁴⁵

Conclusion

Although there was a lull from 1996 to 2001 in eminent domain cases that challenged a township's determination of public purpose, the issue has been presented to New Jersey courts several times in the last few years. In those cases, the courts have consistently applied case law that developed in the context of condemnation to prevent unwanted development. Each case has reinforced the importance of a fact-intensive analysis on a case-by-case basis to determine whether a condemnor has acted in bad faith.

Endnotes

1. U.S. Const. Amend. XIV; N.J. Const. art. I. para. 20.
2. Hous. Auth. of New Brunswick v. Suydam Investors, LLC, 177 N.J. 2, 6 (2003).
3. U.S. Const. Amend. XIV; N.J. Const. art. I. para. 20.
4. Borough of Essex Fells v. Kessler Inst. for Rehab., Inc., 289 N.J. Super. 329, 337 (Law Div. 1995) (quoting Tennessee Gas Transmission Co. v. Hirschfield, 39 N.J. Super. 286, 288 (App. Div. 1956)).
5. Township of N. Brunswick v. U.S. Home Corp., No. A-2929-01T2 (App. Div. Mar. 11, 2003).
6. Township of Monroe v. Noonan, No. A-1443-99Tl (App. Div. Mar. 9, 2001).
7. Township of N. Brunswick, supra.
8. See Earth Mgmt., Inc. v. Heard County, 283 S.E.2d 455 (Ga. 1981) (although a public park was a valid public purpose, it was merely a pretext for the real reason for the condemnation, which was to prevent the construction of a hazardous waste disposal facility); Carroll County v. City of Bremer, 347 S.E.2d 598 (Ga. 1986) (stated purpose of a training facility for local police and firefighters was a ruse, and that there was evidence that the actual purpose was to block construction of a public sewage treatment facility); Pheasant Ridge Assocs. L.P. v. Town of Burlington, 506 N.E.2d 1152 (Ma. 1987) (public purposes for which the site was taken were selected as a device to block proposed apartment development); In Re Village of Hewlett Bay Park, 265 Misc.2d 1006 (N.Y. Sup. Ct. 1966) (condemnation for municipal storage purpose improper when real reason was to prevent parking lot development). See also Redevelopment Auth. of Erie v. Owners or Parties in Interest, 1 Pa. Cmwlth. 378 (1971.) (condemnation of building by redevelopment authority dismissed when real reason was to provide new home for another property owner, not to remove blighted building); City of Miami v. Wolfe, 150 So.2d 489 (Fla. App. acquiring adjoining riparian lands).
9. 289 N.J. Super. 329 (Law Div. 1995).
10. Id. at 334.
11. Id.
12. Id. at 339.
13. Id. 2004).
14. Id.
15. Id. at 341.
16. Id. at 339.
17. Id. at 339.
18. Id. at 342.
19. No. A-1443-99Tl (App. Div. Mar. 9, 2001).
20. Id.
21. Id.
22. Id.
23. No. A-2929-01T2 (App. Div. Mar. 11, 2003).
24. Id.
25. Id.
26. Id.
27. No. L-1745-02 (Law Div. June 13, 2003), appeal pending.
28. Id.
29. Id.
30. Id.
31. Id.
32. Id.
33. Id.
34. Id.
35. No. A-987-0273 (App. Div. July 16, 2004.)
36. Id.
37. Id.
38. Id.
39. Id.
40. Id.
41. Id.
42. Id.
43. Id.
44. Id.
45. Id.

Reprinted with permission of the New Jersey Lawyer Magazine