New Jersey Commissioner of Transportation v. 200 Route 17, LLC
New Jersey Superior Court, Appellate Division
22 A.3d 1012 (2011)
The New Jersey Department of Transportation (plaintiff) took 1.65 of the 2.86 acres owned by 200 Route 17, LLC (defendant) through eminent domain, including a building and parking lot, leaving the owner with 1.21 acres of vacant, industrially zoned land. The parties agreed the vacant land's highest and best use would be commercial retail, which would require significant improvements and regulatory approvals. At trial, the court calculated fair market value by assuming the property was already improved and ready for retail use, simply subtracting the hypothetical construction costs, and the Department of Transportation appealed.
Whether fair market value for just compensation in an eminent-domain taking must account for the reasonable probability of the improvements and regulatory approvals needed to reach the property's highest and best use, discounted for the associated risks and costs.