Last week, the New Jersey Supreme Court decided a case brought by property owners to challenge a municipal ordinance that “down-zoned” their property. (A full copy of the decision is here). The property owners lost before the trial court, won before the Appellate Division, but lost in the Supreme Court.
The Supreme Court held: “We conclude that the ordinances represent a legitimate exercise of the municipality’s power to zone property consistent with its Master Plan and Municipal Land Use Law (MLUL) goals, and we hold that plaintiffs have not overcome the ordinances’ presumption of validity.” (p. 5).
As is most relevant to our fellow condemnation practitioners, the Supreme Court also “reassert[ed] the importance of exhausting administrative remedies and conclude that plaintiffs’ claim for redress for the down-zoning of their property is better addressed through their inverse condemnation claim, which, as the trial court held, plaintiffs may pursue if they are denied a variance.” (p. 5). (Speaking of, our colleague, Robert Thomas (writing from sunny Hawaii), beat us to the punch on this one in his Inverse Condemnation blog on the case, found here).
The property owners went from owning (a) a 34 acre tract of land zoned for mixed residential and commercial uses “including use for hotel, retail, medical, and office facilities — on a minimum of one-acre lots, while the R-2 residential zone permitted single-family dwellings, public parks, and nature preserves on a minimum of two-acre lots”, to (b) an Environmental Conservation District with a minimum lot size of twenty acres. The property owners’ direct challenge to the ordinance was denied based on the lengthy and substantial planning process set forth in the record before adoption. With respect to the inverse claim, “the court later reinstated plaintiffs’ inverse condemnation claim and ultimately granted the Township’s motion for summary judgment, holding that it was not clear that an application for a variance would be futile. The trial court’s judgment held open the opportunity for plaintiffs to pursue an inverse condemnation claim if a variance were to be sought and denied.”
While this decision may give local government agencies something to cheer about in making land use and zoning decisions, the Supreme Court’s ruling did give the owners’ takings claim a glimmer of hope in the event variance relief is later denied. Perhaps more will be heard at a later date.