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Ferro v. State of New Jersey

A-1429-96T3 (N.J. Super. App. Div. 1997) (Unpublished)

DEVELOPERS; CONDEMNATION; REGULATORY TAKINGS—A developer that failed to appeal an exemption denial from (what turned out to be invalid) development regulations and failed even to file for a permit, could not allege a compensable taking.

A developer sought to subdivide one large parcel into 28 residential lots, and sought an exemption from the applicable emergency waterfront development regulations. After its request was denied, the developer deeded the property back to its lender in lieu of foreclosure. One month later, the Appellate Division held that the emergency regulations were invalid, whereupon the developer filed an action against the State of New Jersey contending that the regulations deprived it of the beneficial use of its property. The Law Division granted the State’s motion for summary judgment and dismissed the developer’s complaint. On appeal, the developer claimed it suffered a taking without compensation.

The Appellate Division held that the developer did not meet its burden of establishing a compensable taking. First, the developer failed to establish that the economic value of the land was substantially diminished by the regulations. The developer did not demonstrate that there was no other beneficial use for the land or that the land had no economic viability because of the regulations, it only demonstrated that it could not use the land the way it had planned. Furthermore, the developer took no action with respect to the property after rejection of his application for exemption. Specifically, the developer did not appeal the decision or apply for a permit. In fact, the Court found that the developer failed to do anything that would indicate an effort to make any use of the property within the regulatory framework. The facts showed that once its exemption was denied, the developer simply deeded the property back to the lender. The Court concluded that it was not the regulations that barred the development, nor was this a case where exhaustion of administrative remedies appeared futile or illusory; rather, it was the developer’s failure to act that rendered the property economically useless.


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