Builders were dealt a blow in October when the U.S. Supreme Court opted not to hear a case in which Medford, N.J.–based builder MiPro Homes claimed the township of Mt. Laurel, N.J., unlawfully seized a 16-acre parcel that was under site development and had been legally zoned and approved for construction.
The case, which dates back to 2002, pitted the township against the builder. The township claimed that exercising eminent domain to protect open space was perfectly legal, while the builder argued the township's real goal was to halt residential development.
Home builder MiPro won the case in trial court. The lower court agreed with the builder that Mt. Laurel sought to stop development that it determined would be a drain on municipal services. That decision was reversed on appeal and the reversal was upheld late last year by the New Jersey State Supreme Court.
“The message to all future [site-plan] applicants is that you can't rely on New Jersey's policies when it comes to residential development,” says Patrick O'Keefe, former CEO of the New Jersey Builders Association. The state trade group worked closely with the Builders League of South Jersey and the NAHB on the MiPro case.
“The mere mention of the words ‘open space' is sufficient justification to grab a parcel of land, irrespective of what the state or local government had planned,” O'Keefe continues.
Getting the U.S. Supreme Court to hear the case was a long shot, especially since the court accepts less than 1 percent of the cases petitioned.
O'Keefe said the builders hoped the court would view the MiPro case as a chance to clarify the opinion of Justice John Paul Stevens in the Kelo case, in which Justice Stevens said New London, Conn., was justified in condemning the Kelo property because it had conducted a rigorous planning process prior to the taking, and that redevelopment was an acceptable public use.
“Preserving open space is a proper public use, but in this case it was not part of a well-thought-out plan,” says Mary Lynn Huett, director of legal services for the NAHB. “The home builders contend that it was an ad hoc reaction to residential development.”
Michael Mouber, the township attorney who handled the MiPro case for Mt. Laurel, says the notion that the township condemned the property in a vacuum is not accurate.
He says that at least seven months before the condemnation, the township notified MiPro in writing that it intended to preserve the land as open space. He adds that the town council also stated its intentions publicly at a town meeting several months before the condemnation.
Mouber says MiPro determined it could make more money building homes on the property than the $2.1 million the township offered, so the builder got itself into a “cat and mouse” game with the municipality.
The Mt. Laurel attorney says the combination of a series of recent state laws that allow municipalities to preserve open space by holding referendums to raise tax money, along with the state Supreme Court decision, has put municipalities on a more even footing with developers.
“Up until the laws were passed and we won this case, municipalities were powerless to compete with developers for land, because they didn't have the money,” Mouber says, adding that, by and large, taxpayers in New Jersey are willing to pay to preserve open space.