On appeal from Superior Court, Law Division, Ocean County.
Approved for Publication January 22, 1996.
Before Judges Muir, Jr., D'Annunzio and Eichen. The opinion of the court was delivered by Eichen, J.s.c. (temporarily assigned)
The opinion of the court was delivered by: Eichen
The opinion of the court was delivered by EICHEN, J.S.C. (temporarily assigned)
This condemnation case, which we review for the second time, involves the acquisition of part of property owned by defendant John Van Nortwick (defendant) for the Department of Transportation's Route 37 highway improvement project in Dover Township, Ocean County.
In State by Comm'r of Transp. v. Van Nortwick, 260 N.J. Super. 555 (App. Div. 1992), we held the trial Judge's failure to exclude evidence of the diminution of access to a fronting highway as an element of damages was reversible error. There, we were confronted with the question of whether the diminution of access is compensable in the context of a partial taking where the remaining access is reasonable. We determined that it was not compensable, reversed the judgment in favor of defendant and remanded the case for trial. In that context, we observed as dicta, that "a diminution of access may cause other conditions on the property itself which may be compensable, as for example, . . . such things as limitation of design options or on-site maneuverability, . . . ." Id. at 558.
At the retrial following our remand, the trial Judge allowed defendant's expert, Anthony S. Graziano, to testify concerning the loss in value to defendant's remaining land occasioned by the relocation of access, specifically the loss of on-site vehicular maneuverability and building design options. Graziano had given similar testimony at the first trial. Prior to the second trial, the State sought to exclude this evidence arguing that the loss of on-site vehicular maneuverability and limitation on building design option were not compensable because they were the direct result of diminution of access and unless the substitute access was unreasonable there could be no recovery for this type of damage especially where the land was only hypothetically vacant.
Defendant responded that this court had not decided the question of whether defendant was entitled to damages to the remaining property caused by the limitation of access. He argued that on appeal from the first trial, the only evidence we had ordered excluded from jury consideration was evidence of damages attributable to the "diminution in access per se, " i.e., damages arising from off-site impact. The State then retorted that because Graziano, defendant's expert, was unable to separate the damages related to on property conditions from off-site impact (diminution of access per se), all of his expert opinion testimony on damages should be ruled inadmissible.
Judge Kannen concluded we had not considered or decided the issue of defendant's entitlement to compensation for on-site impact caused by the diminution of access. We agree. The Judge also correctly held that any such on-site impact was compensable as part of severance damages and that a properly instructed jury may be presented with evidence that allows it to separate the compensable on-site damage from the impermissible diminution per se damages. The Judge concluded the jury would have to be instructed not to consider the "diminution per se " damages in their calculations, but that limitations such as loss of building design options and limitations on vehicular maneuverability are proper elements of severance damages and should be considered. We agree with Judge Kannen's analysis and affirm.
The facts were amply set forth in our opinion, 260 N.J. Super., supra, at 555, but bear some repetition and amplification. The property is in a rural highway business zone and is used by defendant to run a tour bus company. Permitted uses in this zone include retail, wholesale and personal service establishments, offices, banks, restaurants, vocational schools and research labs. Three structures existed on the property as of the date of taking, a one-story metal building, used as a garage, a two-and-a-half-story masonry building, and a one-story masonry dwelling, the oldest of which is more than eighty years old. In connection with the highway improvement project the State took a 28 1/2 foot strip of land across the entire frontage for construction of a deceleration lane and an exit ramp. Before the taking, defendant's land had access to Route 37 through its full 328 foot frontage. After the taking, access is limited to 140 feet at the easterly end of the property. In addition, the depth of the property was reduced by the taking so as to require a variance for any future development, and the buildable area was effectively reduced by 22%. The taking of the 28 1/2 foot strip of land across the entire frontage did not affect the buildings on defendant's property.
The record reflects the most significant impact the taking would have on the property would be in terms of its depth. Most notably, whereas before the taking, the 220-foot depth met the minimum zoning requirement of 200 feet, after the taking a variance would be needed because the remaining property was only 191 feet deep on one side and 159 feet deep on the other.
Also significant was the impact on the amount of buildable area. The record discloses before the taking, the buildable area was 19,000 square feet, which reduced to only 14,399 square feet because of the twenty percent maximum requirement for lot coverage. After the taking, one could get only 11,276 square feet of buildable area, for a net loss of 3200 square feet, or 22%--even though the State took only 14% of the property. This was a net loss, in the utility of the property, over and above the loss of the land. Of course, the larger the buildable area, the more valuable the land. A potential builder would have to be content with constructing a very long, narrow building that was, in fact, less than the allowed 20% of lot coverage.
William T. Burke, the State's expert, testified that the highest and best use of this property--defined as a use that is both legally permitted and physically possible, which will provide the highest net return to the owner--is highway-oriented commercial use, the use, he testified, to which the property is currently being devoted. Burke testified defendant was entitled to be compensated for such elements of damages as on-site maneuverability problems occasioned by the limitation of access, and the moving of certain areas which had formerly housed parking and loading space. This opinion was based on appraising the damage to the land as improved property, not vacant land. On cross-examination, initially Burke noted that on vacant land there would be no problem with on-site maneuverability. Later, he conceded that in the hypothetical case of vacant land, limiting vehicle access to the eastern half of the property could cause problems in terms of future building, "required parking, the parking flow, and so forth," acknowledging the vacant property would be worth $74,400 less with the limited access because of loss of "maneuverability for parking layouts as well as building alignment," among other things. After adjusting downward the damages caused by noncompliance diminution per se damages, Burke arrived at a just compensation amount for the taking of $84,600.
Graziano testified as defendant's real estate expert. He also concluded the highest and best use for this property would be commercial development, but as a vacant lot, not in its present use, because of the high value of the land, its location in the intensely developed commercial district of Route 37 and the advanced age of the on-site improvements. Considering its higher value as vacant land, Burke testified it would be absurd to continue the existing use of the property. Hence, he opined, the improvements should be demolished and the property redeveloped in accordance with its commercial character.
Graziano also testified the limitation of on-site vehicular maneuverability is caused, not by the denial of access to the highway per se, but the location and method of the access. The record reflects the permitted access here was a single driveway on the extreme easterly side of the property. Because drivers could not loop in one driveway and out another, Graziano testified, they would have to double back to the same driveway on which they entered. To ...