New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

The New Jersey Department of Transportation and New Jersey Transit have developed a program known as the Transit Village Initiative, which recognizes municipalities that are committed to redeveloping the area around a transit facility into a compact, mixed-use community.  Once designated, a municipality may obtain technical assistance and financial benefits.  New Jersey’s Transit Village Initiative is an offshoot of the so-called “smart growth” policies first advanced by former Governor Christine Todd Whitman and included in the New Jersey State Development and Redevelopment Plan.  It is not supported by specific legislation.  However, this could soon change if the State Legislature enacts and Governor Jon Corzine signs into law the proposed New Jersey Transit Villages Act introduced earlier this year in the Senate as bill number S1223.

Under the proposed New Jersey Transit Villages Act, at Section 11, “[a] municipality or a county in which a transit village has been designated by the [C]ommissioner [of Transportation], shall receive priority on all applications for funding from programs that are administered by State agencies and departments that support the use of transit through transit oriented developments.”  This legislation would also, among other things, authorize the New Jersey Department of Environmental Protection to develop an expedited and coordinated permit review and approval process for transit villages and make available to developers of property within a designated transit village tax credits “equal to four percent of allowable costs plus such other incentives deemed appropriate[.]” The term “allowable costs” is defined under Section 12 of the Senate bill and includes such expenses as “legal, engineering, architectural, and other professional fees allocable to construction or rehabilitation . . . not to exceed $200 per square foot of finished interior space.”

The New Jersey Transit Villages Act is also being considered in the State Assembly under a companion bill (No. A1633).  However, the future of this proposed legislation is uncertain.  In light of the current economic downturn and the concomitant budgetary concerns, it appears unlikely that the Legislature or the Governor will be receptive to any new funding or tax credit programs. On the other hand, because the proposed New Jersey Transit Villages Act encourages redevelopment planning and construction which, in turn, promotes economic activity it might have a chance during the 2008-2009 legislative session.  It certainly is a bill that is worth watching.

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On April 22, 2008, the New Jersey Law Revision Commission issued a revised draft of its tentative report on the Construction Lien Law, N.J.S.A. 2A:44-1, et seq., which includes numerous suggestions that, if enacted, would serve to clarify some and completely change other provisions of the statute. There are also some brand new sections proposed for the Construction Lien Law. One example of the Commission’s recommended legislative amendments relates to the Construction Lien Law’s definitions section. The Commission proposes revising the meaning of certain terms, such as “contract” and “residential construction contract” and creating new definitions for terms that had not previously been defined in the statute, such as “dwelling,” “lien fund” and “residential unit.”

Another example is the proposed clarification of the language governing entitlement to liens for work performed and materials or equipment provided on leased property at N.J.S.A. 2A:44-3. Presently, a construction lien attaches to the leasehold estate rather than the interest of the owner in the real property, unless the owner-landlord authorized in writing the specific improvement contracted to be installed at the leased premises. This essentially was how the Appellate Division read N.J.S.A. 2A:44-3 in its 2007 unreported decision captioned Cherry Hill Self Storage, LLC v. Racanelli Construction Company, Inc. The proposed change, if enacted, would allow construction liens for improvements to leased premises to attach to the owner-landlord’s interest in the real property without a separate written authorization for a given improvement provided that “the tenant’s lease agreement, signed by the owner, permits the improvement without further owner authorization[,]” and would thereby legislatively overrule the Cherry Hill Self Storage case.

The Commission’s revised draft tentative report also contains revisions to the requirements for the filing of lien claims at N.J.S.A. 2A:44-6, which specifies what must be included in a lien claim and increases the amount of time to file lien claims for work performed and materials or equipment provided on residential construction contract from 90 to 120 days. Additionally, among other things, the Commission seeks to create a new section - proposed to be codified at N.J.S.A. 2A:44-9.1 - that outlines in detail the method for calculating a lien fund, an owner’s maximum liability and impermissible reductions from a lien fund. The addition of proposed N.J.S.A. 2A:44-9.1 is one of the most significant changes to the Construction Lien Law recommended by the Commission, which was prompted, at least in part, by a number of case decisions, such as Labov Mechanical, Inc. v. East Cost Power, L.L.C., 377 N.J.Super. 240 (App. Div. 2005) and Craft v. Stevenson Lumber Yard, Inc., 179 N.J. 56 (2004).

It is uncertain what the fate of the aforesaid proposed legislative revisions will be in the coming months. However, it is interesting to see how a handful of judicial rulings on the Construction Lien Law have sparked debate and provided the basis potentially for some decisive legislative action in this area of law.

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Milford Mill 128, LLC v. Borough of Milford, et al.

On May 2, 2008, the Appellate Division in Milford Mill 128, LLC v. Borough of Milford, et al. evaluated, among other issues, the validity of a redevelopment plan that required the municipal governing body to review of all proposed redevelopment projects for consistency with the redevelopment plan and any relevant redeveloper agreement as a prerequisite to the filing of an application for development with the local planning board - in this case a joint board - and prohibited the joint board from granting any variances from the plan requiring, instead, that any such deviations be approved by the governing body by way of amendment to the redevelopment plan. Ultimately, the Court upheld the redevelopment plan, but was careful to limit its ruling strictly to the circumstances presented.

In this matter, the plaintiff had sought consistency review for a redevelopment project within a redevelopment zone that contained uses not permitted in the redevelopment plan or by the underlying zoning district regulations for the subject property and proposed an intensity of development well in excess of permitted densities. When the municipal governing body failed to conduct a review of the plaintiff’s redevelopment proposal for consistency with the redevelopment plan in a timely manner, the plaintiff proceeded to file an application for variances directly with the joint board. However, this application was deemed incomplete due to the lack of the aforesaid consistency review. The plaintiff then brought suit against the municipal governing body and the joint board alleging, among other things, that the redevelopment plan was arbitrary, capricious and unreasonable and that the joint board unduly delayed its review of the application for variances and, thereby, should have been approved.

Although the Appellate Division determined that the plaintiff’s challenge to the redevelopment plan was barred by the 45-day appeal period provided by the Rules of Court, the Appellate Division addressed the plaintiff’s substantive challenge to the review procedures contained in the redevelopment plan and rejected it. According to the Court, nothing in the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq. (“LRHL”), the governing statute, “foreclose[s] a redevelopment plan from specifying, as here, that an applicant must present its proposal initially to the governing body for a determination of consistency.” Moreover, “[i]t is entirely sensible for the municipal governing body, rather than the municipal land use board or boards, to conduct an initial review of a developer’s proposal to assure that it does not amount, in effect, to a de facto repeal of, or amendment to, the redevelopment plan.”

The Appellate Division also upheld the provision in the municipality’s redevelopment plan that restricted the joint board’s review of variance applications as applied to the instant circumstances where “the massive scope of plaintiff’s proposal” was in effect an attempt “to rezone the entire redevelopment area.” However, the Court noted that had plaintiff sought approval of “a ‘minor exception’ to the requirements of the Redevelopment Plan, as we countenanced in Weeden [v. City Council of Trenton, 391 N.J.Super. 214 certif. denied 192 N.J. 73 (2007),] it might not have permitted the governing body to foreclose such consideration.

In short, although a victory for the municipality, the Appellate Division’s decision in Milford Mill 128, LLC v. Borough of Milford, et al. should be viewed with caution by local governments that are intent upon restricting redevelopment of designated areas through the use of pre-application review procedures or other development controls. Indeed, the Court made clear in its decision that redevelopment plans will not pass muster if they have the effect of depriving developers or landowners “of the opportunity to make use of the property in an economically productive manner.” The Milford Mill 128 opinion has been approved for publication and is officially reported at 400 N.J.Super. 96 (App. Div. 2008).

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Monroe Properties, LLC, et al. v. The City of Hoboken, et al.

On May 30, 2008, the Appellate Division in Monroe Properties, LLC, et al. v. The City of Hoboken, et al. (and the companion case Hoboken Parks Organization, et al. v. The City of Hoboken, et al., which was consolidated with the former for purposes of the opinion) squarely rejected an attempt on the part of a municipality to select and enter into a memorandum of understanding with a private redeveloper prior to designating the study area as an area in need of redevelopment.

According to the Court, a municipality or other redevelopment entity has no inherent authority to enter into a memorandum of understanding for redevelopment but, rather, must abide the statutory procedure set forth in the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq. (“LRHL”). This procedure requires the conduct of a preliminary investigation by the local planning board into whether a given study area is in need of redevelopment, the actual designation of such area by the municipal governing body and the adoption of a redevelopment plan by ordinance. “Once an area is determined to be a redevelopment area and a redevelopment plan is adopted, then a municipality may exercise redevelopment functions[,]” which includes, among other things, entering into contracts with redevelopers “for the planning, replanning, construction, or undertaking of any project or redevelopment work.” N.J.S.A. 40A:12A-8f.

Although the Monroe Properties decision has not yet been approved for publication, and therefore has no precedential value, it is well reasoned and firmly grounded in the statutory text of the LRHL. As such, municipalities or developers who have entered into (or are considering entering into) a memorandum of understanding or other pre-redevelopment agreement would be well advised to reevaluate their legal strategy.

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Local ordinances requiring the disclosure of political contributions in connection with applications for land use approvals under the Municipal Land Use Law (“MLUL”) have popped up in one form or another in numerous New Jersey municipalities. Enacted ostensibly for the purpose of fostering good government and reducing corruption and appearances of impropriety, such laws can be unduly burdensome on landowners and developers. On April 17, 2008, in a case of first impression captioned Greenridge Estates, L.L.C. v. The Mayor and Township Council, et al. the New Jersey Superior Court, Law Division, reviewed an ordinance enacted in Monroe Township, Middlesex County, which required applicants for land use approvals and their professionals to disclose certain political contributions and business relationships and found it to be unconstitutional and contrary to the dictates of the MLUL.

In Greenridge Estates, a developer filed an application for preliminary major subdivision approval with the local planning board and, two days later, the municipal governing body adopted an ordinance requiring certain disclosures by applicants for land use approvals. For example, the said ordinance provided that an applicant must “[d]isclose all political donations made by the applicant, and any professionals of the applicant, within the past two (2) years, and any business relationship of the applicant or any of the applicant’s professionals with a board member, and list all consultants, facilitators or other professionals used in connection with the pending application.” All such disclosures “shall be a required checklist item for any land development application requiring a variance, waiver or exception,” and any “knowing failure” on the part of an applicant to comply with this mandate “shall be punishable by a two thousand dollar[-f]ine and/or remanding of the application to the board for reconsideration.”

When the planning board had deemed the developer’s application incomplete for failing to make the aforesaid disclosures, the developer filed suit against the municipality. In evaluating the merits of the developer’s challenge, the trial court described the controversy as impinging upon the developer’s constitutionally protected right to freedom of association and right to privacy and invalidated the Monroe Township ordinance on both grounds. The trial court based this ruling principally on the lack of a rational connection between the disclosures required by the subject ordinance and the stated purpose of the ordinance, that being the elimination of appearances of impropriety, and due to its being both over-inclusive and under-inclusive. In this regard, the trial court opined that “[t]here cannot be an appearance of favorable treatment due to political contributions since none of the members of the Zoning Board of Adjustment are elected, and only two of the nine Planning Board members may be elected officials.” In addition, “the Ordinance cannot be upheld because it is overly-broad[,]” since it requires the disclosure of all political contributions irrespective of the amount or the person to whom they were made requiring, hypothetically, “the disclosure of a $10 political contribution made by an applicant to the governor of Hawaii[.]” By the same token, “the Ordinance is under-inclusive[,] . . . because it does not apply to objectors to an application.”

In addition to constitutional infirmities, the trial court struck the “remand remedy” in the ordinance due to the lack of legislative authority in the MLUL to enact such provisions and “without such authority in the MLUL, the governing body cannot confer upon itself or anyone else the authority to remand an application for reconsideration once rights have vested.”

In the face of mounting regulations at every level of government, the Greenridge Estates decision is a breath of fresh air for beleaguered landowners and developers in Monroe Township. Although not precedential, the Greenridge Estates decision is well-reasoned and could serve as a springboard for positive rulings in other cases and the eventual elimination of local disclosure laws in the land use application process.

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Cotswold vs. Renaud, et al.

On April 30, 2008, the Appellate Division in Cotswold v. Renaud, et al. evaluated whether an historic fountain, although not affixed to the real estate, was protected under a local preservation of historic landmarks ordinance.  In this case, a dispute arose when a property owner sought to remove from the grounds of an historic estate a six-foot high fountain after converting the property into condominiums without first obtaining a certificate of appropriateness from the municipality under the ordinance.  The fountain / statue, which consisted of four figures around an urn and weighed over 1,000 pounds, was designed by sculptor, Enid Yandell, and had been located at the historic estate since 1925.  The property owner maintained that the fountain was not attached to the land and, therefore, it was not within the historic site designation. After being instructed by the municipality to return the fountain, the property owner instituted a declaratory action for a court order finding the fountain to be outside the ambit of the municipality’s regulatory authority under the ordinance.  The municipality brought a counterclaim requesting the return of the fountain and the imposition of penalties.  The trial court ruled that the fountain was a part of the historic estate and ordered the property owner to return it until and unless the property owner is able to obtain a certificate of appropriates for its removal and relocation.  The trial court denied the municipality’s request for penalties.

On appeal, the property owner reiterated its position that the fountain is not properly governed by the local preservation of historic landmarks ordinance and also raised, for the first time, the contention that the subject ordinance is unconstitutional, as applied, because it effects a taking of the fountain.  The Appellate Division affirmed the trial court’s ruling in all respects and rejected the property owner’s constitutional argument stating, among other things, that “the Ordinance does nothing more than require that the fountain remain on the property where it has been for more than eighty years unless a Certificate of Appropriateness is obtained.”  Under these circumstances, which neither establish a physical taking nor deprive the property owner of all economic or beneficial use of the fountain, there is no governmental taking.

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On March 31, 2008, the New Jersey Supreme Court decided Toll Bros. v. Board of Chosen Freeholders, which principally held that a developer may seek to modify or reform an off-tract improvements obligation in a developer’s agreement when the project to which such obligation relates has changed.  By ruling in this fashion, the Supreme Court took a practical and equitable stand in resolving the problems that developers and property owners face when things just don’t work out as planned.

The facts of Toll Bros, like all cases, are of importance to understanding fully the context of the instant controversy and the breadth of the Supreme Court’s decision.  Briefly, the developer in this case - Toll Brothers, Inc. - acquired a parcel of land in foreclosure with municipal and county approvals and, thereafter, entered into developer’s agreements with Burlington County and Moorestown Township to memorialize its agreement to complete certain off-tract roadway improvements, which the local planning board and the county planning board had required as a condition of the approvals applicable to the Toll Brothers property and a smaller, adjacent parcel owned by another corporate entity.  Over time, Toll Brothers substantially decreased the scope of the original development plan for its property while the approximate cost of the required off-tract improvements had risen from $2,100,000 to $5,000,000.  However, notwithstanding these circumstances, neither the County nor the Township were willing to adjust Toll Brothers’ obligations and, consequently, a multitude of lawsuits were commenced.

The trial court consolidated all of the aforesaid actions and found, among other things, that unlike the conditions of approval contained in a resolution Toll Brothers had no right to seek a modification or reformation of a developer’s agreement based upon a change in circumstances.  In a reported decision, 388 N.J.Super. 103 (2006), the Appellate Division affirmed the trial court with respect to its rulings on the County’s right to enforce its developer’s agreement, but reversed the trial court’s decision regarding the Township’s developer’s agreement.  The reason for the Appellate Division’s distinction in this regard resided in the specific text of each contract.

Under the County’s developer’s agreement, Toll Brothers had to construct all the off-tract improvements when the number of buildings for which permits had been issued generated more than 18% of the traffic projected for development under the original plan.  As such, according to the Appellate Division, Toll Brothers’ downsizing was largely irrelevant to the County’s developer’s agreement, because its obligation to build out the improvements was not tied to the completion of development under the original plan but, rather, accrued upon the 18% trigger. 388 N.J.Super. at 129.  Although the Appellate Division acknowledged that the Municipal Land Use Law prohibited the County from requiring Toll Brothers to build the off-tract improvements identified in the developer’s agreement as a condition of approval for Toll Brothers’ downsized development plan, it ruled that such limitations are inapplicable to a voluntary agreement. Ibid. at 123-124.  Contrarily, under the Township’s developer’s agreement, the contractual language required staged improvements that were directly linked to the original development plan and, therefore, could not be enforced once the scope of such plan had been reduced. Ibid. at 130-131.

On appeal, the Supreme Court began its analysis by recognizing that “[u]nder the MLUL, a planning board may only impose off-tract improvements on a developer if they are necessitated by the development.”  As such, “[a] developer cannot be compelled to shoulder more than its pro rata share of the cost of such improvements. . . . [This] is so even if the developer is a willing participant in a separate developer’s agreement.” – A.2d –, 2008 WL 833160 (N.J.) at *1.  To hold otherwise, would be contrary not only to the letter and spirit of the MLUL, but also sound public policy. Ibid. at *14.

Furthermore, even if disproportionate public benefits and improvements could be obtained from developers on a truly voluntary basis, such arrangements would “[p]lainly violate the nexus and proportionality requirements in the MLUL that serve as the Legislature’s check on a municipality’s limited planning power[,]” and thereby would be unenforceable.  A municipality’s exercise of this “limited planning power” must comply with the dictates of the MLUL even if the same is expressed in a contract rather than a resolution of approval.  Indeed, “[a] developer and a municipality cannot do by contract what the statute prohibits.” Ibid. at *15.  On the contrary, “[a] developer’s agreement is an ancillary instrument, tethered to the conditions of approval, and exists solely as a tool for the implementation of the resolution establishing the conditions.  Accordingly, if the resolution . . . changes, the developer’s agreement enjoys no independent status and must be renegotiated.”  As such, “[w]e do not view the ancillary developer’s agreement as a bar to Toll Brothers’ application for modification of the resolution setting the conditions of approval.” Ibid. at *13.

The Court also rejected the County’s alternative arguments, namely, that “[e]ven if Toll Brothers is not barred from advancing a changed circumstances challenge to the conditions of approval,” it is not entitled to relief, because the project was not completely abandoned and “[b]ecause the County relied to its detriment on what it considered the binding developer’s agreement in its later dealings with other developers.”  As to the first alternative point, the Court stated that limiting a developer’s right to seek a modification of a condition of approval only to instances where a project is abandoned “would offend the nexus and proportionality requirements reflected in the MLUL.”  Respecting the County’s detrimental reliance claim, the Court likened this to promissory estoppel and given that “[b]oth Toll Brothers and the County knew or should have known that the conditions of approval were subject to change if the facts in the case changed and that the developer’s agreement was not a stand-alone obligation[,]” the County’s reliance was not reasonable and, therefore, “this argument too must fail.” Ibid. at *15-16.

In light of the Court’s determinations, it reversed the Appellate Division and remanded the matter to the trial court for further proceedings.

The foregoing summary of Toll Bros. v. Board of Chosen Freeholders shows how the Supreme Court in this case was determined not to let local and county government reap a windfall of public benefits at the expense of a single developer, who for one reason or another was unable to complete a particular project as originally approved and, instead, send a firm message that such situations call for flexibility and accommodation.  The common sense approach taken by the Supreme Court will have positive implications for developers and the building industry, especially now, in the current financial climate where flexibility is unquestionably at a premium.

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On March 31, 2008, the New Jersey Superior Court, Appellate Division, decided Viecelli et al. v. Planning Board of the Borough of Point Pleasant, et al., an unpublished decision. In this case, the plaintiffs constructed improvements on land for an ice cream shop after receiving site plan approvals from the planning board. After numerous inspections, the planning board’s engineers advised the municipality by letter that the plaintiffs had satisfactorily completed the project in accordance with the planning board’s resolution of approval and in reliance upon these representations the municipality issued a certificate of occupancy.

Some time later, the planning board discovered that the completed improvements differed from the approved site plans and demanded that the plaintiffs remedy all such deficiencies.The plaintiffs filed suit challenging the planning board’s decision. In addition to requests for declaratory and injunctive relief, the plaintiffs brought claims for damages under the Tort Claims Act and the Civil Rights Act of 1871. In response the planning board filed a claim against the plaintiffs under the Frivolous Litigation Statute and one of its members, who the plaintiffs were suing personally, brought a counterclaim alleging the plaintiffs’ facilities constituted a nuisance.

The chancery judge found, among other things, that the planning board was not estopped from requiring the plaintiffs to comply with the approved site plan despite the issuance of a certificate of occupancy and, as such, required the plaintiffs to either submit to the planning board an amended site plan application or comply with the site plan, as approved. Additionally, the chancery judge dismissed without prejudice the Tort Claims Act causes of action for failing to comply with the statute and dismissed with prejudice the Civil Rights Act claim on grounds of immunity.The chancery judge also dismissed the nuisance counterclaim and denied the planning board’s request for counsel fees under the Frivolous Litigation Statute.

 

The plaintiffs appealed from the judgment of the trial court, which the Appellate Division affirmed. In upholding the trial court’s ruling on the estoppel issue, the Court found that the plaintiffs had no grounds for reliance upon the certificate of occupancy.

Although the CO was issued by the Planning Board on their engineer’s apparently erroneous recommendation, plaintiffs did not fulfill their obligations either.  The authorizing resolution and the application for the CO specifically required plaintiffs to bring any deviations to the Planning Board’s attention, and they chose not to do so. . . . [P]laintiff’s knowledge and failure to act in accord with the resolution and the application for a CO defeats their claim of equitable estoppel.

In light of this determination, the Court concluded that the planning board “[w]ill not be barred from compelling plaintiffs to modify their completed site, or seek approval of a modified site plan, despite the issuance of a CO.” 

 

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Gregory v. Borough of Avalon

In Gregory v. Borough of Avalon, recently approved for publication, the Appellate Division evaluated the legality of extending the period of limitations under Rule 4:69-6(a) for challenging resolutions of a municipal governing body that are closely related to a subsequent resolution of a municipal board that was challenged in a timely manner in the same action.  The Court answered this question in the affirmative based upon the unique set of circumstances involved in the case.

Specifically, the owner of a beachfront motel seeking preliminary and final major site plan and variance approval to expand its facilities, prior to the municipal board’s hearing on the matter, obtained permission to maintain these encroachments certain encroachments in the street right-of-way and over public dunes, which the governing body gave in the form of written agreements and authorized by resolution.  In partial reliance upon these encroachment continuation agreements, the municipal board granted the owner’s site plan application and request for variance relief.  Following the municipal board’s memorialization of these approvals by resolution, several objectors asked the municipal board to reconsider its decision based upon assertions supported by a transcript of testimony given in a prior proceeding that the owner had made misrepresentations to the municipal board on the aforesaid application.  Soon thereafter, the objectors filed an action in lieu of prerogative writs challenging both the validity of the municipal board’s action and, although out of time, the governing body’s resolutions.  In light of the pending litigation, the municipal board did not rule upon the objectors’ request for reconsideration.  The trial court dismissed the objectors’ challenge to the resolutions of the municipal governing body as untimely and upheld the municipal board’s resolution granting site plan and variance approvals without considering the objectors’ supplemental evidence.

In deciding the pivotal issue of the appropriateness of enlarging the time to appeal the resolutions of the municipal governing body, the Court first recognized the public interests involved in authorizing “a private property owner to encroach upon a public beach area or property dedicated to a street right-of-way” and the significance of “the issues presented by plaintiffs’ challenge to the resolutions,” namely whether the municipal governing body could legally authorize the parking and dune agreements only by ordinance.  Moreover, the Court found that the “close relationship between the . . . governing body’s resolutions authorizing the parking and dune agreements and the [b]oard’s resolution granting the land use approvals” further supported its decision in this regard.

Following its determination on the timeliness of the objectors’ appeal, the Court remanded the portion of the matter relating to the resolutions of the municipal governing body to the trial court “for a determination on the merits of plaintiffs’ challenge to the parking and dune agreements[,]”  and ordered the municipal board to reconsider the owner’s application for development “[i]n light of the court’s disposition of the challenge to the agreements and the evidential materials plaintiffs submitted in support of their application for reconsideration.”

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Weeden v. City Council of Trenton
Zoning Boards Have Jurisdiction to Grant Variances from Redevelopment Plan
(at Least when the Plan Constitutes Overlay Zoning)

In Weeden v. City Council of Trenton, recently approved for publication, the Appellate Division evaluated whether a zoning board of adjustment (“ZBA”) has jurisdiction to grant variances from a redevelopment plan that serves as an overlay to existing zoning.  The Court answered this question in the affirmative based upon, but apparently not limited to, the unique set of circumstances involved in the case.

Specifically, an applicant interested in constructing a combined fast food restaurant with drive-thru on property located within a redevelopment overlay zone, made application to the local ZBA for a use variance from an express prohibition in the redevelopment plan for drive-thru operations.  After the ZBA approved the application, an objector filed an appeal with the municipal governing body, which affirmed the ZBA’s grant of the use variance.  The original objector, along with others, then filed a complaint in lieu of prerogative writs alleging that the ZBA had no authority to grant a use variance and that, even if it did, the grant of a use variance in this case was otherwise arbitrary and capricious.  The complaint also challenged City Council’s decision affirming the ZBA’s grant of a use variance.  The trial court ruled that the ZBA, indeed, had jurisdiction to grant variances from the redevelopment plan, but remanded the matter to City Council due to that body’s failure to conduct a de novo review of the ZBA’s decision, and retained jurisdiction.  Upon remand, City Council reaffirmed its initial decision.  The parties provided dueling certifications addressing allegations that the grant of the use variance was based upon political considerations rather than substantial credible evidence.  Rather than permitting discovery and/or having additional hearings on this issue, which might be extensive and time-consuming, the trial court proceeded simply to evaluate the merits of the use variance application and decide the matter.

Although several issues were discussed and decided on appeal, the Court’s ruling on the jurisdictional question is the most significant, as it is one of first impression in this state.  Specifically, the Appellate Division held that although the Local Redevelopment and Housing Law (“LRHL”) does not address whether a ZBA may grant variances from the requirements of a redevelopment plan constituting overlay zoning, such authority is consistent with its power to grant variances under the Municipal Land Use Law (“MLUL”).  The Court then went on to adopt an opinion on this issue offered in the legal treatise New Jersey Zoning and Land Use Administration, and cautioned that if the objectors’ view were to prevail, “[p]roperty owners would be unable to obtain even the most minor exception to the requirements of a redevelopment plan without applying to the governing body for a plan amendment. . . . Nothing in the LRHL or its stated purpose suggests that the Legislature intended to impose such a cumbersome, impractical, and potentially unconstitutional requirement.”

In our opinion, the case is more significant for one of the issues it did not decide, that being whether a ZBA has jurisdiction to grant variances when a municipality adopts a redevelopment plan that supercedes the underlying zoning for the redevelopment area, and amends its zoning district map accordingly, pursuant to the LRHL.  The Court strictly limited its holding.  The Appellate Division noted that it was not addressing whether a ZBA had authority to grant variances from a redevelopment plan where a redeveloper has “covenanted with a municipality to carry out the redevelopment plan,” or where a redevelopment plan “required that all redevelopment be conducted by a designated redeveloper or with the redevelopers prior approval.”  Apparently, we will have to wait for further clarification and when that comes, whether it be through additional case decisions or legislative action, we will keep you posted.

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