In OFP, LLC v. State of New Jersey, the Appellate Division has ruled that the state’s Highlands Act requires that a property owner must first exhaust its administrative remedies under the Act and apply for a hardship waiver of the restrictions before claiming that a regulatory taking has occurred. Furthermore, the court upheld the validity of the retroactive application of the Act even where a major development project received all other required development approvals prior to the enactment of the Act.
From the August 11, 2007 Star Ledger:
Yesterday’s appellate decision upheld a November 2005 ruling by Superior Court Judge Theodore Bozonelis, who rejected a Morris County developer’s claim that the law’s development restrictions amounted to an unjust taking of land.
Developer OFP LLC got approvals to build 26 homes on 93 acres in Washington Township, but it hadn’t secured a state permit for a potable water supply until six weeks after the Highlands Act was introduced in the Legislature on March 29, 2004. While it didn’t become law until Aug. 10, 2004, the Highlands Act was retroactive to its introduction, meaning OFP’s project was subject to the law. OFP claimed the Highlands Act “operates as a bar to development as otherwise permitted by law and results in a taking of OFP’s property without compensation,” according to the ruling. The developer claimed the law results in “manifest injustice” and violates constitutional rights of equal protection and due process guarantees.
The appellate court, however, noted the law has established procedures to avoid a taking without compensation, and that OFP could have applied for a hardship waiver. “A property owner such as OFP, which obtained all but one of the approvals required for development of its property before the Highlands Act was introduced, has a stronger claim to a hardship waiver than a property owner which had taken no steps to develop its property when the Act was introduced and enacted,” Appellate Division Judge Stephen Skillman wrote.
The Highlands Act places development restrictions on approximately 800,000 acres of property in eighty-eight municipalities located in Morris, Sussex, Passaic, Hunterdon, Bergen, Warren and Somerset counties.
