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New Horizon Investment Corp. v. Mayor and Municipal Council of the Township of Belleville

2008 WL 4601899 (U.S. Dist. Ct. D. N.J. 2008) (Unpublished)

CONDEMNATION; REDEVELOPMENT — Until a property owner receives a final administrative determination on its claims that zoning changes have eliminated the owner’s ability to develop its land, any claim of inverse condemnation may not yet be ripe for review.

A property owner filed a lawsuit in federal court against a municipality and its officials in which it alleged an unlawful taking as a result of its land having been zoned as open space leaving it with no value. The history of the controversy was that the property owner business had bid at a county public auction on parcels owned by the municipality, each of which had been designated a redevelopment area by municipal ordinance. The auction notice conspicuously indicated that the lots could be subject to redevelopment district zoning. Three years after taking title, the property owner filed a similar lawsuit in state court challenging the redevelopment plan’s open space designations, and requesting that the state court revise the zoning to permit it to develop residential properties. On motion, the state court dismissed the complaint, holding that the owner had purchased the properties with knowledge of a redevelopment plan and that the plan restricted the use of the land to open space and passive recreation. In that suit, the Court observed that the owner had not exhausted all administrative remedies, such as filing for a variance.

In this federal matter, the municipality alleged that it had never taken formal action to abandon or withdraw the redevelopment plan. It similarly argued that the property owner never applied to develop its property, never sought zoning changes, never requested amendments to the redevelopment plan, and never applied for a variance from the open space restrictions.

The federal court dismissed the lawsuit on summary judgment, holding that the matter was not ripe for review. It agreed that the property owner also had yet to receive a final administrative determination on its claims from the municipality. Accordingly, the owner’s land use claim was not ripe for judicial review because no government entity charged with implementing regulations had yet reached a final decision regarding the application of the regulations to the property at issue. It held that this finality rule requires that some governmental action or statement make it clear that the government would deny the owner’s right to develop the land. The Court said that the owner failed to provide sufficient evidence of futility in the administrative process. Accordingly, it found that the owner had failed to even apply for a variance and so failed to receive a final administrative decision that would evidence a violation of federal laws dealing with unlawful takings.

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