For reversal and remandment -- Chief Justice Hughes, Justices Mountain, Sullivan, Pashman and Clifford and Judge Conford. For affirmance -- None. The opinion of the Court was delivered by Mountain, J.
This case presents the question of whether there can be a taking of property for which the Constitution demands just compensation, absent a physical invasion of the property or a direct legal restraint on its use. The suit arises out of the activities of the City of Trenton in first undertaking and then abandoning an urban redevelopment project for the business district of central Trenton. Plaintiff alleges that these activities resulted in the substantial destruction of the value of its property. It seeks to compel condemnation, or in the alternative, to be recompensed by way of damages for loss of value. At the trial level, defendant's motion for summary judgment was successful. We granted direct certification of plaintiff's appeal, R. 2:12-2, because of the importance of the issue presented.
The premises in question consist of a parcel of land upon which has been erected a large building designed for commercial use. Allegedly, what had been tenantable office and retail space is now largely vacant. It is contended that this is attributable, wholly or in large part, to the action taken by the City.
For reasons hereinafter set forth, we hold that where planning for urban redevelopment is clearly shown to have had such a severe impact as substantially to destroy the beneficial use which a landowner has made of his property, then there has been a "taking of property" within the meaning of that constitutional phrase.
As the matter is before us on appeal from a grant of summary judgment awarded the defendant, we must accept as true all record facts and reasonable inferences therefrom in the light most favorable to the plaintiff. Judson v. Peoples Bank and Trust Co. of Westfield, 17 N.J. 67 (1954).
In 1958 Trenton undertook a feasibility study for the redevelopment of a considerable part of the downtown area of the municipality. From the very beginning a large shopping mall was planned which would require, were the project to come to fruition, the condemnation of plaintiff's property. After considerable study the city decided to proceed first with a smaller undertaking (the Fitch Way Project) immediately to the south of the planned mall area. The land for the Fitch Way Project was acquired and buildings thereon razed in 1963. In 1964 a public hearing was held on the question of whether the proposed mall area (now designated as the Center City South Project) should be declared "blighted," this being the first formal step looking to ultimate acquisition. For reasons not of record no declaration of blight was forthcoming at that time (apparently the City was experiencing difficulties in developing the Fitch Way Project). During this period and the ensuing years there were repeated newspaper accounts of the progress being made toward the creation of the proposed mall and officials of the City were making public statements describing the plans which had been made with respect thereto.
In 1967 another public hearing was held, and in September of that year the land encompassing the Center City South Project (including plaintiff's property) was declared a blighted area. Before the City moved to acquire the land, the Department of Housing and Urban Development of the federal government altered the designation of the project from a conventional Urban Renewal Program to a Neighborhood Redevelopment Program. The change meant that instead
of receiving a block grant to acquire all of the properties at one time, the City would receive smaller grants in each of several successive years and only gradually come to acquire the entire tract. In the ordinary course plaintiff's property would have been one of the last taken, as it was large and in relatively good condition. The program continued for three years after the change mentioned above. During this time half of the properties in the project area were acquired by the City. In May of 1973 Trenton finally concluded that its redevelopment priorities lay elsewhere and notified the remaining property owners (including plaintiff) that the project was to be abandoned and that their lands would not be taken.
Plaintiff alleges that beginning in 1963 tenants began moving out in direct response to the threatened condemnation.*fn1 After 1963 it was impossible to find a long-term tenant interested in the building. The space was finally rented to two temporary tenants whose rent barely met the expense of upkeep. After the declaration of blight in 1967 the area surrounding plaintiff's property markedly deteriorated and several buildings in the area were boarded up. Many neighboring properties were purchased or condemned. In 1972 the temporary tenants vacated and thereafter the building was for the most part vacant.*fn2 Premises which had been generating $160,000 annually in 1963, were yielding $6,300 in rent in 1973.*fn3
The trial court, in deciding the motion for summary judgment, relied upon a section of the Blighted Area Act, N.J.S.A. 40:55-21.10, and upon our decisions in Wilson v. City of Long Branch, 27 N.J. 360, cert. denied. 358 U.S. 873, 79 S. Ct. 113, 3 L. Ed. 2d 104 (1958); Lyons v. City of Camden, 52 N.J. 89 (1968); and Jersey City Redevelopment Agency v. Kugler, 58 N.J. 374 (1971). The trial judge concluded that under New Jersey law there can be no taking absent a physical invasion or a direct legal restraint on use. He felt that this was a "harsh" rule and was "completely unfair"; nevertheless, he felt bound by these precedents and entered judgment for the defendant.
In Wilson the validity of the Blighted Area Act, N.J.S.A. 40:55-21.1 et seq. was challenged, largely on constitutional grounds. One of the arguments advanced was that the very act of filing a declaration of blight was a "taking of property" because it seriously impaired land values. We held that this was not a taking, saying:
It is akin to the result which flows from municipal zoning. If some diminution in market value can be said to follow from a finding of blight inspired by the valid exercise of police power, it is damnum absque injuria. [ Id., 27 N.J. at 374]
We sustained the constitutionality of the statute.
In Lyons, homeowners challenged the propriety of including their properties within an area declared to be blighted. The thrust of their claims was that while most of the land covered by the declaration was doubtless blighted, the area where their properties were located was not. While upholding the action of the condemning agency, we expressed our sympathetic recognition of the plight of the landowner in these terms:
There can be no doubt that a declaration of blight ordinarily adversely affects the market value of property involved. This is unfortunate because in so many ...