On appeal from the Superior Court, Law Division, Hudson County.
Before Judges Petrella, Havey and Brochin. The opinion of the court was delivered by Havey, J.A.D.
The opinion of the court was delivered by: Havey
This is a condemnation case. Defendants The Mack Brothers Company #3 and Mack Advisors Corp. (Mack) appeal from a judgment, entered after remand, which reconfirms a prior determination by the trial Judge fixing fair-market value of Mack's condemned property at $1,953,000, based on its use as a warehouse. On appeal, Mack argues that the trial Judge failed to make findings of fact as mandated by our prior opinion concerning whether a hypothetical buyer would deem it reasonably probable that, as of the date of taking: (1) the subject property could be developed for a use other than warehousing based on existing zoning; or (2) a zoning change or use variance would be granted in the near future allowing more intense uses than permitted under existing zoning standards. We reverse and remand for further proceedings.
On April 7, 1986, plaintiff Jersey City Redevelopment Agency (JCRA) filed a complaint condemning Mack's property, a 5.05 acre parcel in Jersey City, situate on the Hudson River waterfront. The parcel, on which is located a 44,850 square foot warehouse built in 1974, is in the "intensive industrial" use zone (I-2) which allows warehouse and other industrial uses, as well as office complexes with a floor-to-area ratio (FAR) of 3:1. *fn1 The parcel is one of the few large tracts remaining undeveloped on the Jersey City waterfront. The trial Judge himself described the property as having a "breathtaking view across the Hudson River of Battery Park and the Twin Towers of the World Trade Center in lower Manhattan."
JCRA intended, upon condemnation, to convert the property from warehouse to a high-density office and residential mixed use as part of Harsimus Cove South Redevelopment Plan. Nevertheless, during the original bench trial JCRA's valuation expert concluded that the subject property's highest and best use was industrial development, predicated on his study of a universe of 80.7 acres surrounding the property. In contrast, Mack's experts testified that the property was well suited for high-rise, residential and office development based on the significant demand for and actual construction of such uses in Jersey City during the previous decade. They concluded that, given the high density of the new developments along the Jersey City waterfront, the subject property was valued at $9.9 million based on a high-rise residential or office complex with an 8:1 FAR, assuming the likelihood that necessary zoning changes or variances could be obtained. Alternatively, Mack's experts stated that the property had a value of $5,270,000 as an office building with a FAR of 3:1, which conformed to existing zoning standards. In support of its claim, the experts made reference to the evolution of land use along thewaterfront in the last decade, as well as generous governmental action approving zoning changes or variances and encouraging redevelopment plans through tax abatements.
For example, Mack established that immediately south of the property a 1.8 million square-foot warehouse terminal was converted to an office and commercial use complex. Approximately 1,000 feet north, a 4.3 million square-foot office, retail and residential complex was planned. Another office complex containing 325,000 square feet south-west of Mack's property had been approved in 1983 and completed in 1987. Further, the City's 1984 Master Plan depicts the subject property as part of a mixed-use area, consisting of residential and office uses.
A central issue during the original bench trial was whether Mack's alternative proposals for high-rise residential or office use were feasible. Thus, competing testimony was presented concerning: (1) the probability of a zone change or grant of a use variance; (2) the feasibility of plans for off-site development of nearby streets to provide access to the proposed uses; (3) the financial feasibility of constructing a bridge over a Conrail easement, if necessary; and (4) whether Mack would obtain a tax abatement for the subject property. JCRA argued that: (1) rezoning was unlikely; (2) no tax abatement would be forthcoming; (3) an existing sewer moratorium would prevent the development; and (4) Mack could not overcome other physical impediments to construction of its proposed uses. In response, Mack's battery of experts gave exhaustive and detailed testimony to the contrary, detailing the methods to be employed in overcoming the development handicaps, and plans which they asserted were economically feasible and consistent with sound planning. Moreover, Mack's experts presented their testimony in the context of whether a hypothetical buyer and seller would consider the prospect of obtaining all necessary approvals was reasonably probable.
In a written opinion dated February 5, 1990, the trial Judge accepted JCRA's proofs and concluded that the highest and best use of the property was for warehousing. Implicitly, the Judgefound insignificant the historical development of the waterfront as a whole and adopted JCRA's expert's "universe" of 80.7 acres surrounding the property in concluding that the prevailing characteristics of the neighborhood were industrial in nature. The Judge also stressed the physical impediments to Mack's proposals and the manner by which it intended to overcome them. He characterized Mack's proofs as "speculation and conjecture, resting upon a fragile chain of attenuated, interdependent assumptions." However, he made no findings regarding the testimony of Mack's experts that a buyer and seller, in fixing value, would reasonably believe that the impediments could be overcome. Accordingly, the Judge fixed the fair-market value of the property at $1,953,000, based on the property's value as a warehouse use.
In an unreported per curiam opinion rendered on March 24, 1992 (A-6465-89T5), we reversed and remanded. Citing State v. Gorga, 26 N.J. 113, 138 A.2d 833 (1958), and other pertinent case law, we identified two "central questions" which must be addressed in resolution of the question of value:
(1) whether a hypothetical buyer, acting without compulsion, would deem it reasonably probable that the subject property could be developed for a use other than warehousing in the near future based on existing zoning restrictions; and
(2) whether the hypothetical buyer would deem it reasonably probable that a zoning change or the grant of a variance in the near future would allow even more intense uses of the property than permitted under existing zoning standards.
We remanded with direction that findings of fact and Conclusions of law be made in the context of these questions, leaving it to the trial Judge to decide whether additional testimony should be received. JCRA's petition for certification was denied by the Supreme Court. See 130 N.J. 18 (1992).
On remand, the parties provided extensive proposed findings of fact and Conclusions of law to the trial Judge. Without taking additional testimony, the Judge reiterated his previous finding that the subject property had a fair-market value of $1,935,000, based on a warehouse use. Noting the stipulations of the parties concerning problems regarding access as well as the testimonyconcerning the physical ...