New Jersey Zoning Watch

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.

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In a key ruling addressing the scope of a developer’s responsibility to contribute to off-tract improvements, the New Jersey Supreme Court has held that developers cannot be required to contribute more than their fair share of costs to off-tract improvements.  Toll Bros., Inc. v. Board of Chosen Freeholders of the County of Burlington, __ N.J. __ (Mar. 31, 2008).  The Court also held that the developer’s costs are limited to its pro-rata share even where the improvements are negotiated as part of a developer’s agreement between the government entity and developer.  Furthermore, the Court ruled that if there is a material change to an approved development plan, the developer has the right to apply to have their share of off-tract improvement costs reduced, regardless of whether a developer’s agreement has been entered into between the parties.

As reported in the Star Ledger:

In the first ruling of its type, the state Supreme Court yesterday held that a developer cannot be compelled to shoulder more than its share of the cost of off-site improvements.

The unanimous ruling stems from a case brought by Toll Brothers against the Burlington County freeholders and planning board, involving a development project on property located partly in Moorestown and partly in Mount Laurel off Route 295.

Toll Brothers scaled back the project, but the county wanted the developer to provide $5 million to relocate a major intersection, which the developer had originally agreed to do.

“A vital aspect of the planning process is the ability of developers to return to the planning board and present evidence that a sufficient change in circumstances exists to warrant a modification of previously imposed conditions,” Justice Virginia Long wrote for the court.

The justices overruled two lower-court decisions favoring Burlington County and remanded the case to state Superior Court in Mount Holly. Toll Brothers will have to prove a change in its building plans has made the $5 million road improvement demand unreasonable.

The ruling is a win for developers in that it affirms the limitation on municipal and county planning boards from imposing more than the pro-rata share of infrastructure improvements upon a developer.  Furthermore, it clarifies that developers may reapply to a board to request a re-evaluation of the cost of off-tract improvements imposed, particularly where the scope of a proposed development has been reduced.

For the Star Ledger article, click here.

For the Courier Post article, click here.

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