Where Does the Government’s Money Come From to ‘Take” Private Property?
If you read the title of today’s post, I can guarantee you that the money does not grow on trees! As you know, the government is required to pay “just compensation” when it takes private property, and that value can vary from hundreds of dollars to multiple millions of dollars depending on the size and nature of the property taken. There are numerous sources of funding for public acquisitions including bonding, available funds, and state aid. For example, check out this blog we wrote when President Biden’s $1.2 Trillion Infrastructure Bill was introduced.
Counsel to condemning authorities usually relies on the regular municipal attorney and business administrator to assure that adequate funding is available for a prospective acquisition. Municipalities may acquire lands or incur obligations without the use of in-hand municipal taxpayer funds. Some examples are the use of Green Acre funds to subsidize the acquisition of open space lands or state or federal funds to construct a sewage treatment plant.
The expenditure of municipal funds requires the availability of those funds in the first place. The “Local Budget Law” regulates the budget-making process for all counties and municipalities in New Jersey. All budgets must be prepared on a cash basis unless otherwise permitted by law. This ensures that, absent unforeseen emergencies, local governments will pay for the expenses they incur with cash collected or received during the fiscal year. See N.J.S.A. 40A:43 (requirement for annual budget); N.J.S.A. 40A:4-57 (requirement for appropriation under certain circumstances); N.J.S.A. 40A:2-37 (requirement for bond ordinance in advance of contracts); see also Square Brighton Corp., Inc. v. Atlantic City, 287 N.J. Super. 450 (App. Div. 1996) (adoption of municipal ordinance authorizing the acquisition of a strip of land without the prior authorization of public funds for that purpose did not violate the Local Budget Law because the city had entered into a stipulation of settlement under which a private party was to pay 100 percent of the acquisition cost).
Municipalities have been held to standards of fair dealing notwithstanding technical defects in appropriations for acquisitions. 405 Monroe Co. v. City of Asbury Park, 40 N.J. 457, 462-463 (1963) (“The law has become increasingly sensitive to the need for business integrity in public transactions as well as in private ones. True it is important to protect the public against official imprudence, but there is also the moral principle that a government that would encourage fair dealing in private transactions should insist upon nothing less of its own agencies. It is one thing to expect officials to know and stay within their power and to call them to account if they willfully exceed it. It is something else to ask all who deal with a municipality to bear the burden of officialdom’s ignorance of its own authority.”)
Regardless of where the funding comes from, the taking of private property has lasting and serious consequences for property owners. For over 55 years, McKirdy, Riskin, Olson & DellaPelle, P.C. has concentrated its practice in this special area of the law and has earned a reputation for persistently defending its clients’ property rights. Our firm has successfully handled a broad range of eminent domain cases involving almost every type of property, including commercial buildings, industrial properties, development land, single and multi-family residential properties, hotels/casinos, oil/ gas pipelines, water rights and beachfront property, airports, farmland, and many more. If you are confronted with the threat of eminent domain, please feel free to contact us for a free consultation.
