New Jersey Shore Town Engaged in Legal Battle Over Sand Dune Barriers

A property dispute along the New Jersey oceanfront has taken an interesting turn in the wake of Superstorm Sandy.  A series of two-story sand dunes erected along the beach in 2010 were designed to protect a small town of oceanfront homes from flooding, and performed exactly that function when they prevented widespread damage when Sandy assaulted the community earlier this year.  However, an ongoing dispute about the dunes’ effect on the value of surrounding beachfront property was the subject of a lawsuit last year, and continues to be a key issue as the local government looks to expand their use.

In 2011, a New Jersey court awarded Harvey and Phyllis Karan a judgment of $375,000 to compensate them for the diminished property value caused by the large piles of sand blocking their view of the ocean. The local government has appealed the decision to federal court, and is pointing to the property-saving value of the dunes that became apparent due to their effectiveness against Superstorm Sandy in hopes that the large judgment will be reduced.  The federal decision will have a significant effect on the dunes project as many beachfront property owners who respect the need for the protective dunes could look for compensation for loss of property value.

Eminent Domain: The Government’s Right to Take Private Property

The local government on Long Beach Island, NJ attempted to get the Karan’s permission to build the dunes on their property.  When that failed, the government resorted to taking the beachfront under the theory of eminent domain.  While the Constitution protects private property from government taking, eminent domain allows for a government to take private property providing it satisfies two potential challenges:

  1. Is the taking legal?
  2. Is the homeowner being justly compensated?

In order to survive the first challenge, the government must show that the land being taken is for “public use.”  The Supreme Court has given a great deal of leeway to state and local governments providing there is evidence that the land will be used to benefit the public.  

If a government takes an entire parcel of land, typically just compensation is calculated based on fair market value of the property.  Determining just compensation is more difficult in circumstances when the government does not take the entire parcel of land, but either only takes part of it or takes action to reduce part of the land’s value.  When deciding whether the compensation provided to property owners is just after a partial taking, a court may weigh factors such as the benefit taking the property has on the community, the seriousness of the government’s need for the property, the loss of value suffered by the property owner, and any benefits the property owner receives from the government’s use of the land.  

New Jersey Homeowners Argue for Just Compensation

The Karans, along with a majority of other oceanfront property owners who face declining value, maintain support for the dunes and recognize their usefullness.  However, regardless of the dunes' recent effectiveness, the Karans maintain that their oceanfront property lost close to $500,000 in value when a view of the water was blocked by a large pile of sand.  Extending two-stories up from the beach, the dunes remove a significant benefit to owning a beach front home, and home owners argue they are merely looking for fair compensation.

The local government responds by citing the tremendous value that the dunes have on the community , including on the Karan home.  Arguing that the Karans benefited from the dunes when Sandy ravaged the surrounding coastline while their house survived, government officials argue that $300 would justly compensate the couple when all factors are considered.  Local officials further point out that the aim of the government project is extend the dunes along Long Beach Island to protect five of the six municipalities along the ocean.  If the government is forced to pay the Karans close to $400,000, it fears that other oceanfront property owners to make similar demands and the project could become prohibitively expensive to complete.  Citing the recently demonstrated importance of the dunes, attorneys for the government argue that the need for a protective barrier from the ocean should supersede a claim for several hundred thousand dollars in property loss.

Ultimately, a the federal court hearing the Karan case on appeal will have to weigh the competing interests, determine the effect Superstorm Sandy has on the case, and decide if the dunes cost the Karans $375,000 in property value.  The answer is not easy – on one hand the local government has a demonstrated need for protective dunes and on the other property owners will see the value of their homes suffer significantly because of them.

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