The Appellate Division has ruled that the New Jersey Municipal Land Use Law does not authorize municipalities to demand open space set asides or payments in lieu to support recreational opportunities as a condition of a general development approval. New Jersey Shore Builders Assn. v. Township of Jackson, (N.J. App. Div. June 23, 2008)(approved for publication).

The unanimous appellate panel noted that while open space preservation is a “laudable” goal, the MLUL does not allow for such exactions in the land use approval process. The lone exception is for large, “planned developments” on at least five acres and totalling 100 units or more, for which the MLUL specifically provides for such recreational improvements.

According to the Star Ledger:

The ruling came from cases that builders’ associations brought challenging land use ordinances in Jackson Township in Ocean County and Egg Harbor Township in Atlantic County that required them to set aside land in developments for open space or recreational areas and facilities.

A Superior Court judge shot down the ordinance in Jackson Township as unenforceable last year, and the municipality appealed. Around the same time, another judge upheld Egg Harbor’s ordinance, and the builders’ association appealed.

Yesterday, the Appellate Division said the [MLUL] does not give communities the power to demand such things from developers in the name of preserving open space — a practice they had followed for nearly three decades.

. . . .

The court made a distinction between subdivisions common to New Jersey and planned developments — large-scale housing projects of at least 5 acres and 100 units, such as senior communities. Since the land use law specifically allows for open-space set-asides in the latter, the judges ruled that open-space requirements there are appropriate.

Developers who objected to set-asides, or “exactions” in planning parlance, often were given the option of paying a fee that would go toward building recreational space somewhere else in town or toward purchasing a big-ticket item, such as a fire engine, that a community would not otherwise be able to afford.

The court said yesterday those fees also are illegal if they are not limited to improvements for water, sewer, drainage and streets as provided in the Municipal Land Use Law.

Bill Dressel, the executive director of the League of Municipalities, stated that the ruling “removes a tool used by municipalities to ensure that usable open space and recreation areas are provide to serve the citizens who will be living in the developments.”

The decision will likely be attacked on two fronts: an appeal to the State Supreme Court and potential legislative amendments to the MLUL.