Would You Pay $1.6 Million for a Driveway?

We all know that a picture is worth a thousand words.  Well, in New Jersey, a driveway apparently is worth $1.6 Million.  So sayeth a Burlington County jury in a condemnation action involving the loss of one of three driveways at the Marlton Crossing shopping center to make way for an overpass along Route 73 at the intersection with Route 70.  Marlton Crossing, which is owned by a subsidiary of Centro Properties Group, is on southbound Route 73, about a quarter mile below the former circle at Route 70, and has more than 300,000 square feet of retail space.  It holds Champps Restaurant, Burlington Coat Factory and T.J. Maxx, among other tenants.  According to an article from the CourierPostOnline, the $63 million NJ DOT project (which began in April/2009) will replace the former circle with a Route 73 overpass, among other changes, and the former driveway is being replaced by a ramp from the overpass as part of the circle's elimination.  The driveway in question apparently has been closed for some time.

Here's a recap per articles linked to above:  the NJ DOT exercised its eminent domain authority in August/2007 to take a narrow strip of property with highway frontage that included the driveway.  (A "partial taking.")  The center's owner, Marlton Plaza Associates, did not challenge the driveway's acquisition, but sued the DOT over the value of the 10,000-square-foot parcel.  The State argued that the owner should only be compensated for the value of the land that was taken.  The owner argued that it should be compensated for the taken land and for the damages to the shopping center caused by the driveway taking ("severance damages").   With regard to the claim for severance damages, proofs included evidence from a transportation consultant for the owner indicating that the loss of the third driveway from Route 73 would have a significant negative impact on the shopping center's internal traffic flow, particularly at peak shopping periods, compromising ease of access and reducing the overall value of the shopping center.  (Hello, upcoming Holiday Season!)  According to the NREI article (first link above), the Judge agreed with the owner and ruled that the jury could consider the issue of severance damages to the shopping center, not just the value of the land taken.  Advantage, property owner.

The case is significant for several reasons:

  • As astutely pointed out by the owner's attorney in the NREI article, federal stimulus dollars have fueled a nationwide deluge of street/highway projects in which eminent domain is oftentimes used to gain right of way from private property owners.  In other words, Uncle Sam is currently footing the bill for a tremendous amount of street/highway work and you could be next, Mr. Property Owner, if you get in the way.
  • The jury award of $1.6M was 8x more than the State's last offer.  NJ DOT apparently was inflexible on its last/best offer of $194,000.00.  (The owner sought $2.25M.)
  • Getting severance damages for this partial taking was no slam-dunk.  This case involved a partial taking that resulted in a change of access to the shopping center and "access" cases are incredibly fact specific and difficult to prove.  The general rule: a NJ property owner subject to a partial taking will not be entitled to severance damages for a resultant change in access if the remaining access to the property is "reasonable."  To be entitled to severance damages, the property owner must prove that the change of access has caused a significant limitation on design options or "on-site maneuverability problems."  In this case, there were still two driveways available after the taking so the State presumably argued that the remaining access to the shopping center was reasonable.  There does not appear to have been any significant limitation on design options, so the owner's transportation consultant must have knocked it out of the park at trial. 

The State reportedly is considering its options, including an appeal.

I would hope so.

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