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New Jersey Sports and Exposition Authority v. Renepar Realty Co., L.L.C.

A-0714-07T1 (N.J. Super. App. Div. 2008) (Unpublished)

CONDEMNATION; EASEMENTS; ENVIRONMENTAL REMEDIATION — When a public authority condemns a property to acquire an easement but, as a result, becomes required to perform environmental remediation, then the cost to perform the remediation is to be paid out of the amount of money the property owner would otherwise be receiving for the easement.

The New Jersey Sports and Exposition Authority condemned a small piece of property, owned by a realty company, for the construction of a rail link to its sport complex. Specifically, the Authority acquired a permanent easement to install rail tracks and deposited funds representing the easement’s appraised value with the court. The Authority, in its condemnation complaint, noted that it would object to any withdrawal of funds to pay for environmental cleanup costs. The Authority appraised the property as if it were remediated. The lower court entered an order for final judgment and appointed commissioners. Subsequently, the realty company filed a motion to withdraw all funds deposited with the court. The lower court granted the motion, holding that the Authority could not use the funds to offset remediation costs. It held it was physically impossible to remediate an easement because an easement is a non-possessory interest in land.

The Appellate Division reversed, noting that the New Jersey Department of Environmental Protection and the United States Environmental Protection Agency had required remediation. It found that the withdrawal was barred by a “trust-escrow” approach to condemnation, where a property with substantial remediation issues is valued at its full remediation value and the amount needed for the remediation is retained in escrow until the remediation is complete. The Court saw nothing inequitable about putting the money in trust, given that the Authority was obligated to perform a cleanup under federal and state standards. The Court held that the realty company received full value for the property rather than the lesser value of the easement. Thus, it ordered the realty company to redeposit the entirety of the withdrawn funds into escrow.

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