The case of Ginsburg Development Companies, L.L.C v. Township of Harrison stands for the proposition that a developer can be responsible for the cost of off-site improvements that are made prior to the construction of the proposed development.  This is an unpublished opinion decided by the Superior Court of New Jersey, Appellate Division.

In 2005, the Planning Board of Harrison Township (“Board”) granted final major subdivision approval to Ginsburg Development Companies, L.L.C (“Ginsburg”) for the construction of 77 single family homes.   The approval was contingent on Ginsburg obtaining water treatment works approval from the New Jersey Department of Environmental Protection, a NJDEP-TWA permit.  This permit could not be obtained without Harrison Township (“Township”) certifying that the existing sanitary sewer could accommodate Ginsburg’s project.

The Township’s sewer system was inadequate to accommodate Ginsburg’s development.  A Developer’s Agreement between Ginsburg and the Township was executed in November 2005 in which the Township agreed to provide the certification and sewer service to Ginsburg’s development, provided that Ginsburg make a contribution to the off- site sanitary sewer improvements.  The parties reached an agreement as to Ginsburg’s pro rata share of the improvements.

Pursuant to the Developer’s Agreement, Ginsburg agreed to make payment within thirty days of the Township’s written notice indicating the price of the improvements.   The Township proceeded to make the necessary improvements to its sewer system and sought reimbursement from Ginsburg pursuant to the Developer’s Agreement.

Ginsburg took the position that it was not required to make any payment for the improvements until it commenced development of its project.  Ginsburg tried to cite the cases of River Vale Planning Board v. E & R Office Interiors, Inc., 241 N.J Super 391, 575 A.2d  55 (App. Div. 1990) and Toll Brothers, Inc. v. Board of Chosen Freeholders, 194 N.J. 223, 944 A.2d 1 (2008) for the proposition that “conditions of land use approvals are only enforceable when the developer actually proceeds with the project.”   The Court held that Ginsburg’s interpretation of those cases is too broad and also distinguished those cases.

The Court noted that the resolution granting Ginsburg’s approval remained valid and Ginsburg intended to develop the property.   Ginsburg did not seek to modify the conditions of its approval, allege that there were changed circumstances or allege that the percentage that it was assessed for the improvements exceeded its pro rata share of the completed work.  Ginsburg merely stated that it had not yet commenced to develop the property.  The Court found nothing unfair about having Ginsburg make payment pursuant to the terms of the Developer’s Agreement even though it had yet to commence construction.

As illustrated by this case, it is imperative that developers be careful about the wording in Developer’s Agreements and understand their commitments under these agreements. 

Eric Goldberg is a shareholder in Stark & Stark’s Real Estate and Franchise Groups.  If you have any questions or need additional information, please contact Mr. Goldberg at (609) 791-7013 or egoldberg@stark-stark.com.