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What’s it worth to be able to see the intersection of sand and ocean waves from your house? Is it worth more or less than knowing your home will be protected by the sand dunes separating it from the rage of ocean storms?
Once upon a time, Harvey and Phyllis Karan bought a house on the New Jersey shore, enamored with its view of the crashing waves just a few hundred feet away. The Karans could see over the remains of an eroding 16′ high dune from their second and third story decks, enjoying panoramic views of the beach and the waves.
Life was wonderful until the Borough of Harvey Cedars, where the Karans lived, joined in a beach-restoration and storm-protection project to armor the barrier island on which the Borough was situated. The massive undertaking on Long Beach Island was funded by federal, state, and local governments and carried out by the US Army Corps of Engineers and the New Jersey Department of Environmental Protection. It included extending the beach seaward 200 feet through pumping in huge volumes of sand, battling beach erosion through beach nourishment every seven years over a 50-year period, and constructing dunes along the entire length of Long Beach Island to dissipate storm-triggered waves that would otherwise seriously damage or even destroy homes and businesses.
The final dune height was to be 22 feet, significantly higher than the prior dune between the Karan property and the shoreline. To build the dunes, the Borough had to acquire 82 perpetual easements over privately owned properties closest to the ocean, and 66 landowners voluntarily gave those easements. The other 16 owners, including the Karans, refused, and the Borough resorted to its right of acquisition by condemnation in 2008. Governor Chris Christie got into the act by threatening to "call out" those refusing to voluntarily grant easements, accusing them of selfishness in holding their views of the ocean above the protection dunes offer the entire community.
The process of exercising powers of eminent domain requires an appraisal of the private interests to be condemned, whether those interests are easement or fee simple. No one disagreed that just compensation was owed. It was the amount of compensation and how it was to be determined that sparked the legal battle between Harvey Cedars and the Karans. The Borough established a value of $300, but the Karans claimed loss of their view to be worth $500,000 (their property value is currently listed in the tax rolls as over $1.7 million). The Karans said that with the higher dune, even while standing on their decks rather than sitting they could no longer see any of the beach or rolling surf, only open water. (No one mentions the eroding shoreline’s approach to the dune’s seaward base as a factor in this scenic deprivation.) At the trial to settle their differences, a jury awarded compensation of $375,000 for the easement and any damages to the rest of the Karan property.
Ouch! Local governments have a responsibility to keep citizens safe. But if this Borough and other shore towns would have to pay such amounts to individual property owners, none of them would be able to afford participation in the shore protection project, and the towns could wash away. In fact, just a few miles up the coastline, the duneless town of Mantoloking did just that. Breaches cut from ocean to bay left only rubble and random pieces of houses in what looked like a horizontal landslide (I’d never seen anything like it before).
How could Harvey Cedars and the Karans be so far apart in their valuations? The primary arguments were rooted in a distinction between "general benefits" to the community from the project and "specific benefits" to the Karans. This distinction is rooted in appraisal practices that have historically established a different approach for partial acquisitions rather than complete condemnations.
When there is a total acquisition of a property, there is no award of damages because nothing is left to the former private owner; the condemnation paid is based on the total value of the property taken. But when only part of a private owner’s rights are taken, the process is stickier. The amount of the damages is related to the loss in value to the remaining land or rights, determined by comparing the value of that remainder before and after the taking. Calculating the value of the part taken and damages to the remainder generally entails a comparison between the value of the fair market value of the whole property before the taking and the value of the remaining rights after the taking. The value of any "specific benefits" to a particular remaining property (benefits resulting from the project for which the acquisition is necessary) can be deducted from the amount of damages awarded. "General benefits" to the public at large from public projects are not given any weight, and speculative benefits are similarly dismissed from valuation of awards.
There is much written about appraisals in instances of partial acquisitions and how to apply or disallow values of specific or general benefits. When the New Jersey Supreme Court heard Harvey Cedars’ appeal from the trial court award and appellate court decision to uphold that award, the high court found that the trial court had erred in disallowing testimony by the Borough regarding the very specific benefit of protection that would accrue to the Karans by having the dune between them and the sea.
But the court went on further to say that the approach to computing just compensation should be no different for partial takings than for total takings, a break from traditional appraisal. Compensation should be based on quantifiable and non-speculative benefits that can be calculated at the time of the taking, and account for benefits that both a willing buyer and willing seller would agree enhance the value of the property– like protection from storm surge.
While the jury had been instructed not to consider the value of the dune’s protection to the Karan property in its assessment of value taken and the Karans argued that their home lost value by the presence of the dune, Superstorm Sandy drove a stronger point home. The Karan’s house stood safely after the entire new dune washed away, although unprotected structures elsewhere up and down the coastline were swept off their foundations or crushed under the weight of sea-borne debris. The New Jersey Supreme Court, deciding just eight months after the hurricane wreaked havoc along the coast, never mentions Sandy, but her presence is clear.
Wendy Lathrop is licensed as a Professional Land Surveyor in NJ, PA, DE, and MD, and has been involved since 1974 in surveying projects ranging from construction to boundary to environmental land use disputes. She is a Professional Planner in NJ, and a Certified Floodplain Manager through ASFPM.
A 583Kb PDF of this article as it appeared in the magazine—complete with images—is available by clicking HERE