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New Jersey Appellate Court Invalidates Municipal Efforts to Limit the Duration of Development Approvals

Article

In-Sites

July 31, 2002

Development projects approved pursuant to the New Jersey Municipal Land Use Law (“MLUL”) are accorded a statutory protective period during which the project is immune from changes in the terms and conditions upon which approval is granted, including changes in zoning, other than those that pertain to public health and safety. Thus, once a developer receives approval, development may proceed without concern that the zoning provisions can be changed in a manner that thwarts the project. Subject to certain possible extensions, the MLUL provides a three-year protective period upon the grant of preliminary major subdivision or site plan approval, and a two-year protective period upon the grant of final major subdivision or site plan approval, during which such changes are barred. N.J.S.A. 40:55D-49a. and N.J.S.A. 40:55D-52a.

Prior court decisions had established that only the protection from changes in terms and conditions, rather than the approval itself, expired upon the termination of the statutory protective period. See Palatine I v. Planning Board of the Township of Montville, 133 N.J. 546, 553 (1993) (site plans) and MCG Associates v. Dep’t of Environmental Protection, 278 N.J. Super. 108, 127-28 (App. Div. 1994) (subdivisions). Under these decisions, the approvals were deemed to have perpetual life. The question that remained unresolved until now, however, was whether municipalities could limit the validity of the approvals themselves to a specified period of time, whether by ordinance or through imposition of conditions of approval.

In the unreported decision of D.L. Real Estate Holdings, LLC v. Point Pleasant Beach Planning Board, Docket No. A-4833-00T5 (App. Div. April 23, 2002), the appellate court ruled that a municipal ordinance purporting to limit the life of development approvals “without any cognizable relation to land development or ‘the public health, safety, morals and general welfare’ cannot be said to further any of the purposes promulgated by the MLUL.”

The underlying facts are fairly typical. The Point Pleasant Planning Board, in 1994, granted preliminary major subdivision approval for a 14-lot residential subdivision. In 1999, a successor in title applied for final major subdivision approval. The Planning Board denied the application on the basis that it was untimely, relying on both (a) a Borough ordinance which required submission of a final plat within three years from the date of preliminary approval, and (b) a condition in the resolution granting preliminary subdivision approval which provided for its expiration after the passage of 190 days.

The property owner filed an appeal in Superior Court, which ruled that the Borough ordinance was valid and in furtherance of a legitimate public policy. Accordingly, the trial court dismissed the complaint and the property owner appealed that decision to the Appellate Division. The Appellate Division reversed, finding both the ordinance and the condition of approval to be invalid, and remanded the case to the Planning Board for consideration of whether the final plat met all of the conditions of preliminary subdivision approval.

The Court’s analysis centered on whether the Borough ordinance was consistent with the MLUL. Noting that the MLUL was adopted in part to standardize approval procedures throughout the State, the Court emphasized that the zoning power must be exercised within the limits set forth in the MLUL and must be consistent with the underlying statutory purposes. Since the MLUL establishes specific application procedures and expressly allows municipal ordinances to impose only those additional requirements that are not inconsistent therewith, the Court found that only ordinances pertaining to health and safety were permitted. An ordinance that limits the duration of development approvals does not pertain to health and safety and is therefore invalid. Similarly, the Court determined that the Planning Board was without authority to arbitrarily impose its own restriction on the duration of the approval.

The Court was careful to emphasize that its decision would not cause dormant approvals to reincarnate in a way that undermines municipal land use objectives. Municipalities have the ability to amend the zoning regulations so that, upon expiration of the statutory protective period, development must conform to the municipality’s then-current objectives. In this instance, the Borough made no pertinent amendments to its zoning ordinance since the 1994 preliminary major subdivision approval, although it could easily have done so. According to the Court, the goals of fostering uniformity and predictability in the approval process would be undermined if individual municipalities could establish their own time limits on development approvals.

Although the Court’s decision pertains specifically to subdivision approval, the same rules should apply to site plan approval since the same statutory provisions apply to both. As a result of D.L. Real Estate Holdings, developers no longer need be concerned that municipal ordinances or conditions of approval purporting to terminate their approvals after a stated period of time will be given legal effect.