CAPE MAY — A developer with plans and local approvals to build 366 residential units off Pittsburgh Avenue is accusing the state of improperly exceeding its authority by offering a smaller development on environmentally sensitive lands.
The developers, who have owned the land since 1951, well before environmental laws were in place, have been in litigation for years to force the state Department of Environmental Protection to compensate them for lost use of the 96-acre tract of marshy land.
The DEP denied permits to East Cape May Associates in 1989 over concerns about wetlands, endangered species and other ecological issues.
If the developers are able to prove their use of a property is taken through regulation, they can be entitled to compensation. A 1991 appraisal by the developer valued the 366-unit project at $28 million, but it is unclear what the value would be today.
The DEP has made numerous offers over the years to allow some development and settle the case. The city, which is liable for $15 million in infrastructure costs if the 366 units are built under a 1969 deal made when the city was courting development, even put together a $4.4 million funding package to sweeten the deal.
The latest DEP offer, made last year, proposes several different development concepts, ranging from 65 to 90 units. Jack Plackter, the attorney for East Cape May Associates, said the lands offered, which are within the tract, are too sensitive and any development is unlikely to get other approvals, such as from the U.S. Army Corps of Engineers. Also, it’s questionable whether the DEP can even waive its own regulations, he said.
In a letter to the DEP, obtained by opponents of the project via an Open Public Records Act request, Plackter said one of the sites offered would involve destruction of 20 acres of “exceptional value wetlands.” Development there would violate the DEP’s own rules, he wrote.
Plackter said a second site offered for development would result in losing 26 acres that hosts threatened and endangered species. Again, he argued the DEP was violating its own regulations.
Trenton Avenue resident Charles Hendricks, who leads a group fighting any development on the site, said the DEP wants to protect the tract but does not have the open space money to pay the takings claim.
“The state is in a bind and about has to prostitute itself to make this thing work,” Hendricks said.
Larry Ragonese, a spokesman for the DEP, said the agency is preparing a final offer.
“We’re working on that now and sometime later this year will have that offer presented to the developer. It’s up to him to determine if that is acceptable,” Ragonese said.
Plackter, in an April 23 letter to the state, pushed for a final offer.
The city is not party to the lawsuit, but Mayor Ed Mahaney said it supports no development on the tract. He put together the $4.4 million funding package from local, county and state sources to try to turn it into a wildlife sanctuary. Mahaney said the recent DEP offer included lands too far from the ocean, with no water views, that would not bring a high enough return for the developers.
Mahaney wrote the DEP in January saying the city prefers no development but would accept some construction if a 2009 settlement offer is followed. The offer would result in 80 percent of the tract being undeveloped and owned by the city, county and state. The city would also receive 14 affordable housing units in the development and get out of the 1969 infrastructure agreement. Hendricks is critical of Mahaney for being willing to accept any development.
If it does come down to cash, the question is what is the property worth?
“We haven’t had it appraised in some time,” Plackter said in a phone interview.
In a 2013 letter, Plackter told the state his client had $5.3 million invested, but that did not include substantial fees for his work and that of attorney Fredrick Schmidt.
Contact Richard Degener: