On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. 905-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern, Sabatino and Lyons.
Appellant, New Jersey Turnpike Authority ("NJTA"), appeals from a final judgment awarding respondent, Forsgate Industrial Complex ("Forsgate"), $3,954,000 as just compensation for the taking of property. NJTA also appeals from a denial of its motion to amend its pleadings to require the payment of certain taxes to be paid from the proceeds of the condemnation award. Because we find that the determinations of the trial court were based upon sufficient probative evidence and in accordance with law, we affirm.
The factual dispute underlying this matter concerns the February 2004 partial taking of vacant property by NJTA from Forsgate for the construction of a new exit ramp off the Turnpike. The subject property owned by Forsgate prior to the taking is adjacent to Exit 8A of the Turnpike in the Township of South Brunswick and is 32.38 acres. It is located in the Township's I-3 general industrial district. Forsgate also owns an adjacent lot which measures approximately ten acres.
NJTA filed a verified complaint with the Superior Court to exercise eminent domain over a 10.83-acre portion of the 32.38-acre tract of vacant land. After the taking, the lot is divided into two separate parcels, the larger portion measuring 16.32 acres and the smaller portion measuring 4.884 acres. The smaller parcel is bordered on all sides by public rights of way.
The court granted NJTA possession of the property and appointed commissioners to determine just compensation for the taking. NJTA estimated that proper compensation for the taking was $1,165,000 and deposited this amount with the Trust Fund Unit of the Superior Court. Following their analysis of the taking, however, the commissioners determined that an award of $2,850,000 was just compensation. Finding both values inadequate, Forsgate appealed the commissioners' award and the matter then proceeded to a de novo trial in the Law Division to determine the highest and best use of the property before and after the taking and the amount of just compensation due Forsgate.
Prior to the commencement of trial, however, the South Brunswick Tax assessor notified NJTA that a complaint to invoke roll-back taxes for tax years 2002 through 2004 had been filed with the Middlesex County Tax Board because the property was no longer qualified for farmland assessment, and thus was not exempt from taxation. After a hearing, the Board entered a judgment adding South Brunswick's roll-back assessment to the Omitted Tax List on the property. NJTA appealed the Board's judgment to the Tax Court and filed a motion with the Superior Court to amend its condemnation complaint to permit NJTA to pay the rollback taxes from the proceeds of the condemnation proceeding. Judge Robert Longhi denied the motion to amend. NJTA subsequently filed a motion for leave to appeal nunc pro tunc with our court which was denied.
The case was then assigned to Judge James P. Hurley for a bench trial on the issue of just compensation. Trial was held from February 6-9, 2006 and on February 14, 2006. Although this appeal presents several specific issues, the underlying issue concerns whether the trial court evaluated sufficient probative evidence to arrive at a just result.
Both parties agreed at trial that the highest and best use of the property before the taking was a full-service luxury hotel of 350 rooms, with a large banquet hall and meeting space.
Forsgate's before-taking concept plan was a 755,000 square foot, full-service hotel with a 19,500 square foot ballroom, 10,290 square feet of meeting space, a 6,300 square foot restaurant, 7,000 square feet of pre-function space and 1,750 square feet of retail space. The plan required all 42.9 acres of land and projected a hotel with a 17.33-acre footprint, consisting of three floors of rooms in a west wing, two floors of rooms in an east wing and two floors above a meeting corridor.*fn1 At trial, Forsgate's experts advised that to comply with the township's ordinance which would permit a hotel in a I-3 zone as a conditional use ("Section 62 ordinance"), approximately 1,196 parking spaces would be required and between 1,200 and 1,280 spaces would be appropriate.
The Section 62 ordinance (section 62-1427 of the South Brunswick Zoning Code) is entitled, "Uses permitted as conditional uses," and outlines conditional uses permitted in the township's I-3 general industrial district. "Lodging Accommodations" is listed among the conditional uses permitted by this ordinance.*fn2 Pursuant to this section, a lodging accommodation must meet numerous requirements to be permitted in an I-3 zone. Among these requirements are the following parking conditions: (1) one parking space per guest room; (2) one parking space per employee (based upon the shift having the most employees); (3) one parking space for every three restaurant seats or one space for every fifty square feet devoted to such use (whichever is greater); and (4) one space for every 200 square feet of retail space. The Section 62 ordinance also contains a shared parking provision which allows minimum parking to be reduced, "upon such recommendation that shared parking is feasible, likely and absolute." South Brunswick Land Use Ordinance, Ch. 62 § 62-1427(2)(i), October 2005.
The before-taking concept plan of NJTA also envisioned a 350-room, full-service hotel, but on a thirty-two acre campus. The hotel would be a six-story building and would include 25,652 square feet of conference space. NJTA's engineers concluded that a full-service, 350-room hotel would require only two parking spaces per room, or 700 spaces, leaving space for a 237,837 square foot industrial building with associated parking and loading space on the remaining subject lot. NJTA's expert planner, Paul Phillips, testified that shared parking under the Section 62 ordinance was likely, feasible and adequate and that it was reasonably probable that the planned 350-room full- service hotel would be approved with a provision for 700 parking spaces both before and after the subject taking.
The trial court examined both plans and determined that Forsgate's before-taking concept design was legally permissible, physically possible, and financially feasible. The court approved of its before-taking plan that included a 350-room, full-service hotel with a conference room and ballroom. It found NJTA's plan to be "unrealistic" on several grounds.
First, the trial court determined that NJTA's plan was incompatible with a forty-foot height restriction imposed by another township ordinance. Second, the trial court found that NJTA's parking lot design was not feasible because it relied upon the assumption that the township would permit a waiver for a reduction of parking spaces from approximately 1,200 parking spaces to 700. Consequently, the trial court relied upon Forsgate's before-taking plan in its determination.
At trial, the parties presented after-taking designs for the court's consideration. Forsgate's experts projected that after the taking, they would be restricted to the construction of a 200-room, limited-service hotel with 14,000 square feet of meeting space and a 4,500 square foot lobby on the 27.3-acre portion of the site remaining.*fn3 The limited-service hotel would offer a small retail space but would not have a ballroom or a banquet hall. It would, however, include a pool and exercise space. Forsgate estimated that under the township's Section 62 ordinance, the limited-service hotel would have to provide 693 parking spaces. In addition to the limited-service hotel, Forsgate's after-taking design included a 35,000 square foot industrial building on the smaller, 4.884-acre remainder of the lot.
NJTA's after-taking concept plan provided for a 350-room, full-service hotel which would be six stories high and built upon the 16.32-acre northerly portion of the remainder of the property. The hotel would offer 25,652 square feet of conference space and would have 700 parking spaces. On the smaller, 4.884-acre remainder of the property, NJTA planned a 46,000 square foot industrial building with a small parking lot and loading area.
The trial court evaluated both plans and determined that after the taking, a 200-room, limited-service hotel offering a pool, limited meeting rooms, a restaurant and retail shops was the highest and best use of the property. The limited service hotel, in the court's view, would require 693 parking spaces. In its after-taking determination, the court also found that only the plan for an industrial warehouse for the smaller, 4.884-acre lot would be approved. It held that Forsgate's proposed 35,000 square foot industrial building would not be the highest and best use and found that a warehouse between 40,000 to 46,000 square feet could be developed on the smaller lot.
The trial court found NJTA's after-taking concept plan unrealistic, particularly with regard to parking requirements, because the plan rested on the assumption that a variance or waiver for fewer parking spaces than required by the Section 62 ordinance would be granted. The court noted, as an example, that a strict interpretation of the parking requirements as a conditional use under the Section 62 ordinance would require approximately 1,200 spaces for NJTA's concept plan. The court stated that a variance or waiver reducing the number of spaces from 1,200 to 700 was unlikely. The court, in evaluating the realistic probability of a variance from 1,200 to 700 parking spaces also noted that if the Section 62 ordinance, which would require about 1,200 parking spaces, were found not to apply as a result of the passage of ordinance 18-00, which NJTA argued repealed the Section 62 ordinance, that the amount of parking required pursuant to ordinance 18-00 would be 2,067 spaces for a 350-room hotel.*fn4 The court stated that these two ordinances, "support the conclusion that a variance or waiver [seeking 700 spaces] for less than the number of spaces required by section 62-1427(2)(i) [1,200] would not be granted" when the standard parking ordinance that would apply in the absence of the Section 62 ordinance permitted use would require 2,067 spaces.
The court later held that ordinance 18-00 did not repeal the Section 62 ordinance and that the provisions of the Section 62 ordinance controlled in this case. The court analyzed the two ordinances as follows:
. . . The question then is does ordinance number 18-00 . . . repeal section 62-1427[I], for purposes of this case and only this case, the court holds that it does not. Ordinance 18-00 contains the general parking regulations applicable to the zones mentioned therein[,] among them the I[-]3 zone. A general rule [of] interpretation is that a specific provision and ordinance [Section 62 ordinance] trumps a general provision [ordinance 18-00]. Ordinance number 18-00 amends parking provisions for "hotels" in the I-3 zone. Although "hotels" are not specifically listed as a permitted or conditional use [in subdivision "XXIX. I-3 General Industrial District"]. "Lodging accommodations" is listed as a permitted conditional use . . . This Court concludes that ordinance 18-00 was not adopted with the intent to repeal section 62-1427[I] therefore the conditional use standards for parking apply regardless of the amendment.
Having ruled on the highest and best uses of the property before and after the taking, the court next considered the impact of the taking on the value of the property. We, therefore, focus our discussion on the submitted valuation analyses.
In analyzing the value of the property before and after the taking, the sales comparison method was utilized because the property consists of vacant land. This approach requires the appraiser to analyze land sale figures of comparable properties in the same market, or comparables, to determine the appropriate value of the subject property.
At trial, Forsgate presented its expert, Raymond Cirz, a licensed real estate appraiser, to discuss its valuation estimates before and after the taking. In his analysis, Cirz examined four comparable land sales, all of limited-service hotels, making adjustments where appropriate.*fn5 After applying the adjustments, Cirz concluded that the net valuation for the four comparables ranged from $22,000 to $24,000 per room. He concluded that the property in question was valued at $23,000 per room and arrived at a before-taking value of $8,050,000 for 350 rooms.
Cirz also conducted an after-taking analysis of the property on behalf of Forsgate. He testified at trial that the local market could support another 200-room, limited-service hotel at seventy-five percent occupancy. To evaluate Forsgate's after-taking plan, he utilized the same comparables used in his before-taking study. He also considered that the after-taking plan by Forsgate did not include a banquet hall or ballroom. Cirz used the Smith Travel Research manual to evaluate the difference in net income between limited and full-service hotels. He determined that Forsgate's after-taking hotel would be twenty-five percent less profitable per room than its before- taking hotel based upon the difference in average net income per room for full-service banquet hotels (approximately $41 per night) and ...