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Administrative Remedies Must Be Exhausted Before Inverse Condemnation Lawsuit

The Supreme Court in Griepenburg v. Ocean Township, 220 N.J. 239 (2015), considered the circumstances under which municipal zoning ordinances represent a legitimate exercise of a municipality’s power to zone property consistent with its Master Plan and the Municipal Land Use Law (“MLUL”) goals. 

In the late 1990s, Ocean Township, which is bordered by the Pinelands National Reserve and Barnegat Bay, began a comprehensive planning process in anticipation of population growth and incurred development.  The Township subsequently adopted the smart growth principles fostered by the State Development and Redevelopment Plan.  The Township worked with the NJDEP and other agencies to update its Master Plan for development in accordance with smart growth principles.  In 2004, the Township submitted a Petition for Plan Endorsement to the State Planning Commission to have its Waretown section designated as a town center and to convert a large area of land from PA-2 Suburban Planning Area to a PA-5 Environmentally Sensitive Planning Area (which restricted development to 20 acre lots or larger).  The State Planning Commission endorsed the Township’s petition and mandated that the Township “revise its municipal zoning ordinance to be consistent with the master plan and planning area changes within 60 days of the endorsed plan.”  In 2006, the Township abided by this requirement.

Plaintiffs owned a home and large tract of land in Ocean Township, which consisted of undeveloped woodlands.  When Plaintiffs acquired the property, it was subject to mixed zoning.  As a result of the Planning Commission’s endorsement of the Township’s petition, all but one of plaintiffs’ lots were converted to PA-5 Environmentally Sensitive Planning Areas.  In 2007, plaintiffs filed a complaint against the Township, NJDEP, and the New Jersey Department of Community Affairs challenging the validity of the ordinances that affected their property.  They alleged that they were arbitrary, capricious, unreasonable, and illegal and that the rezoning constituted inverse condemnation.

The Trial Court dismissed plaintiffs’ entire complaint, but later reinstated their inverse condemnation claim if a variance was sought and denied.  The Appellate Division reversed the Trial Court’s decision and held that the ordinances were invalid as applied because the downzoning was not required to serve the ordinances’ stated purposes. 

The Supreme Court reversed the Appellate Division’s decision.  The Court held that the Township’s downzoning of plaintiffs’ property was a valid and a legitimate exercise of the municipality’s power to zone property consistent with its Master Plan and MLUL goals.  The Court also found that the creation of environmentally sensitive areas, preservation of natural resources, and fostering smart growth were appropriate municipal goals, even if some of the land designated in the environmental sensitive areas was not actually environmentally significant, so long as the land is connected to the environmentally significant land. 

Importantly, the Court held that plaintiffs must exhaust their administrative remedies before bringing a claim for inverse condemnation.  In other words, plaintiffs must try to develop their land before they can attempt to be compensated for zoning that might prohibit development.   

This is just one example of the interplay between land use law and environmental law in the State of New Jersey.  Lieberman & Blecher, P.C. is experienced at navigating clients through land use boards and the various environmental commissions and agencies in the State.  

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