This past July, the New Jersey Supreme Court handed down Borough of Harvey Cedars v. Karan, 70 A.3d 524 (2013). In one sense this is a technical case about the rules of just compensation for a partial taking. The New Jersey Supreme Court clarified the distinction between “special benefits,” which can be offset against the compensation owed for a partial taking, and “general benefits,” which cannot. Where a dune restoration project would provide protection to a home in immediate proximity to the shore, if the value of that protection can be determined, it should be deducted from the compensation owed, even though the dune provides flood protection of the same kind—but in significantly less degree–to rows of houses further back from the ocean. The New Jersey Supreme Court determined that an evidentiary ruling excluding evidence of the benefit was erroneous as a matter of law, and remanded for a new trial. All five Justices participating in the opinion agreed.
The case is of more general interest because the public project involved concerned construction of a dune barrier on private property along New Jersey’s barrier islands. It’s a disaster law and climate change case. Dune projects have been underway here for some time–this one began in 2008–with the United States Corps of Engineers doing the heavy lifting, state and municipalities cooperating and chipping in a smallish part of the cost. All of Long Beach Island is part of a big old beach and dune project. And dune projects have gained special salience after Superstorm Sandy.
In the Borough of Harvey Cedars, on Long Beach Island, dune construction required the cooperation of all 82 beachfront property owners. Sixteen of them declined, forcing the municipality to begin condemnation proceedings for a strip of each recalcitrant property owner’s land. In this particular case, the Karans refuse to grant a dune easement over about a quarter of their property; the easement included a dune 22 feet high, replacing one 16 feet high. A right of public access came along with the new dune as well. So the Karans wound up with a view of other folks’ beach recreation activities on the higher dune, not the water view they had previously enjoyed. Evidence supporting the argument that the Karans’ $1.9 million home would benefit from the flood protection afforded by the dune to the tune of several hundred thousand dollars was excluded from a jury by the trial court, on the theory that the entire community also benefitted, and that therefore the flood protection was a “general benefit” which could not legally be offset against the compensation owed the Karans. The Karan’s expert had testified that they should receive $500,000 from Harvey Cedars. The Harvey Cedars expert (from the Corps of Engineers) testified that the proper amount of compensation was $300. But he couldn’t point to evidence of benefit from flood protection because it had been excluded. The jury returned a compensation award of $375,000, principally for loss of view. You can do the math and see what this does to the possibility of any dune project. Holdouts galore. No project. Read More