S. TOLL BROS., INC., et al. v. THE PLANNING BOARD TOWNSHIP OF MT. OLIVE, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NOS. A-2023-04T22023-04T2

A-2836-04T2

TOLL BROS., INC., TOLL N.J. II,

L.P., TOLL N.J. V L.P., ARD MOUNT

OLIVE ASSOCIATES, L.P.,

Plaintiffs-Respondents,

v.

THE PLANNING BOARD OF THE

TOWNSHIP OF MT. OLIVE, THE

TOWNSHIP OF MT. OLIVE, a

Municipal Corporation of the

State of New Jersey,

Defendants-Appellants.

__________________________________

ARD MOUNT OLIVE ASSOCIATES, L.P.,

Plaintiff-Respondent/

Cross-Appellant,

v.

THE TOWNSHIP OF MOUNT OLIVE and

THE PLANNING BOARD OF THE

TOWNSHIP OF MOUNT OLIVE,

Defendants-Appellants/

Cross-Respondent.

__________________________________

 

Argued March 22, 2006 - Decided

Before Judges Wecker, Fuentes and Graves.

On appeal from Superior Court of New

Jersey, Law Division, Morris County,

Docket Nos. MRS-L-1529-04 and MRS-L-2-04.

Edward J. Buzak argued the cause for

appellant Planning Board of the

Township of Mt. Olive on both appeals

(Mr. Buzak and Alyse C. Landano, on

the brief).

Joel A. Kobert argued the cause for

respondent Toll Bros., Inc., Toll N.J. II,

L.P. Toll N.J. V L. P. (Courter, Kobert &

Cohen, attorneys; Mr. Kobert, of counsel;

Lauren E. Sweeney, on the brief).

Carl S. Bisgaier argued the cause for

respondent/cross-appellant ARD Mt. Olive

Associates (Flaster/Greenberg, attorneys;

Mr. Bisgaier, Richard J. Hoff and Tracy A.

Siebold, on the brief).

Dorsey & Semrau, attorneys for appellant/

cross-respondent Township of Mt. Olive

(Fred Semrau, on the letter relying on the

brief filed on behalf of appellant/cross-

respondent Planning Board of the Township

of Mt. Olive).

PER CURIAM

Defendant Planning Board of the Township of Mount Olive ("Planning Board"), appeals from two orders entered by the Law Division granting plaintiffs', Toll Brothers, Inc., Toll N.J. II L.P., and Toll N.J. V L.P. ("Toll"), and ARD Mount Olive Associates, L.P. ("ARD"), requests for an extension of zoning approvals to construct a residential development on Block 4400, Lot 79 on the Official Tax Map of the Township of Mount Olive, known as "Morris Chase." Although originally conceived as one project, the construction of the development has been divided into two phases, in order to accommodate the concerns raised by the State Department of Environmental Protection ("DEP"). Toll will develop Phase II, which will actually precede the construction of Phase I, which is under the control of ARD.

In addressing the arguments raised by the parties, we are asked to answer three questions: (1) whether the trial court erred in finding that the Planning Board's denials of ARD's and Toll's extension applications were arbitrary, unreasonable and capricious; (2) whether the Planning Board is estopped from denying the Phase II extension application; and (3) whether ARD and Toll are entitled to the tolling of the original ten-year extension pursuant to N.J.S.A. 40:55D-21. In addressing these questions, we acknowledge that what hangs in the balance, is whether the density of the original development plan will have to be reduced to conform with existing zoning regulations.

After reviewing the record, and in light of prevailing legal standards, we affirm the trial court's orders granting both Toll's and ARD's requests for extensions. We hold that Toll was entitled to a one year extension of the final subdivision and site plan approvals, under N.J.S.A. 40:55D-52a and d. We further hold that ARD was entitled to a one year extension of its preliminary subdivision and site plan approvals, under N.J.S.A. 40:55D-49c and f.

We also affirm the trial court's decision finding that the Planning Board abused its discretion in denying Toll's and ARD's requests for extensions under N.J.S.A. 40:55D-52b (Toll) and N.J.S.A. 40:55D-49d (ARD). The trial court also correctly denied Toll's and ARD's application to toll the extensions under N.J.S.A. 40:55D-21.

I

FACTS

These are the facts. On May 18, 1989, the Planning Board adopted a resolution granting ARD preliminary and major subdivision approval and site plan approval to develop for residential purposes a 168.8 acre tract of land now identified as Morris Chase. At the time of the initial approval, the property was zoned R-3, which permitted the construction of 3 housing units per acre. The application described the project as consisting of 168 single-family detached housing units to be built on 15,000 square-foot lots; 250 townhouses to be built at 4.69 units per acre; and 7 open space/utility lots.

The Planning Board granted these approvals subject to a number of conditions, including: (1) construction of a potable water system with a 2.5 million gallon water tank; (2) construction of an on-site sanitary sewer disposal system; (3) improvements to the Route 46 and Mount Olive Road intersection; (4) improvements to Flanders Road; and (5) approval by the United States Army Corps of Engineers ("Corps Engineers") for a nationwide permit, as well as a letter of jurisdiction relative to the Freshwater Wetlands that was part of the property. Pursuant to N.J.S.A. 40:55D-49, these preliminary approvals were scheduled to expire in May of 1992.

In 1992, the Legislature enacted the Permit Extension Act, N.J.S.A. 40:55D-130 to -136, which extended approvals through the period beginning January 1, 1989 and ending December 31, 1996. N.J.S.A. 40:55D-131a. On June 18, 1992, the Planning Board granted ARD a ten-year extension of protections against changes in the general terms and conditions of the preliminary major subdivision and site plan approvals, which was set to expire June 17, 2002. The extension was granted based upon the following factors:

a) number of dwelling units which at 418 units is equal to 10 (years) times 42 (the average annual number since 1980) (Mount Olive Building permits for new dwelling units);

b) the potential number of other units in Mt. Olive awainting [sic] final approval which is in excess of 1,000;

c) the exonomic [sic] conditions of the 1990's which industry experts predict will be poor by comparison to the mid-1980's;

d) the comprehensiveness of this development which will require tremendous up-front costs to construct the on-site wastewater treatment facility, the water system which includes supply wells and well houses, and a 2.5 million gallon storage tank which services not only this development but is an integral part of the Township's Water Master Plan; as well as on-site recreational facilities sized to service the entire 418 units.

At the time the Planning Board granted the extension to ARD, there were no pending revisions to the Township's zoning regulations that would affect the site plan or overall subdivision. ARD also had secured the protection of a Nationwide Permit issued by the Corps of Engineers, establishing the wetlands delineations of the project. Therefore, based on this information, the request for a ten-year extension was granted in accordance with N.J.S.A. 40:55D-49(d) and set to expire in June 2002.

REZONING AND WETLANDS DELINEATION

In April 1998, the Township rezoned several parcels of property, including the property at issue, from R-3, permitting 3 units per acre, to R-1, permitting only one unit per acre. Due to the protection from zoning changes provided by the extension, ARD's development was unaffected by the zoning change. By a letter dated August 30, 1990, the Corps of Engineers reconfirmed the applicability of the previously issued Nationwide Permit, and indicated once again that its jurisdiction was limited to 4 stream crossings on the project. By a letter dated August 12, 1991 to the Township, the DEP indicated that ARD was exempt from the Freshwater Wetlands Protection Act.

In early 1994, the DEP assumed responsibility for enforcing the wetlands regulatory provision of the Federal Clean Water Act, a responsibility previously vested in the Corps of Engineers. In December 1994, the DEP voided the wetlands delineation for the property, which had formed the basis of the prior approvals for the project. The letter provided, in pertinent part:

Please be advised that this project is no longer exempt from the requirement of obtaining a freshwater wetlands or open water fill permit due to the State's assumption of the Federal 404 program on March 2, 1994 . . . .

Without a verified wetland delineation pursuant to the Freshwater Wetlands Protection Act, information necessary to confirm the validity of the May 18, 1989 subdivision approval, and a current site plan; the Department cannot assess the impact of these regulatory changes on your proposed development.

* * * *

Pursuant to the Freshwater Wetlands Protection Act Rules at N.J.A.C. 7:7A-2.4(a), the designation of the freshwater wetlands shall be based upon the three parameter approach enumerated in the Federal Manual for Identifying and Delineating Jurisdictional Wetlands and any subsequent amendments thereto (specifically the 1989 amendment). Therefore, the Department cannot, by law, accept the previous Army Corps of Engineers delineation.

In response to this letter from the DEP, ARD applied for a new wetlands boundary delineation and a wetlands permit. On April 16, 1997, DEP denied ARD's application for the wetlands permit. ARD appealed DEP's denial of the wetlands permit, and the matter was transferred to the Office of Administrative Law for a hearing. ARD Mount Olive Associates v. DEP, OAL Docket No. ESA 01382-98N (the "Wetlands Litigation").

THE PHASING OF THE PROJECT

In or about 1998, ARD reached a tentative settlement agreement to the Wetlands Litigation. Pursuant to this settlement, the previously approved plans for the project were revised, reducing the total number of units to be constructed. The settlement also required a phasing plan for the project. Under this phasing approach, ARD is required to first complete the portion of the project that did not impact the wetlands areas on the property ("Phase I"), before it would be permitted to proceed with the construction of the remainder of the project ("Phase II"). This second phase includes the wetlands areas as well as some buildable lots (approximately 58 single-family units and 79 townhouse units).

Under the settlement agreement, the lots not currently "buildable" in Phase II due to wetlands impacts could be approved for construction in the future, after the construction of Phase I. The agreement also provided for DEP to extend permits, such as the Treatment Works Applications ("TWA") for the wastewater treatment plant, the collection system, and the pump station; and an extension of the permit issued by the Bureau of Safe Drinking Water ("BSDW").

Recognizing the need to include the municipality in this process, representatives of ARD and a staff representative from the DEP appeared before the Planning Board seeking a resolution that the proposed changes to the plan would not involve a substantial departure from the configuration, terms, and conditions of the original approval. The proposed changes included: (1) phasing of the preliminary approvals previously obtained due to the impact of wetlands regulations; (2) a revised plan layout; (3) relocation of a treatment plant; (4) relocation and enlargement of the clubhouse; and (5) revisions to the recreational facilities. On February 4, 1999, the Planning Board adopted a resolution approving the proposed changes, including the phasing plan. All parties acknowledged that Phase II could not proceed prior to the completion of Phase I.

In August 2000, ARD and the DEP executed a settlement agreement ending the Wetlands Litigation. On December 7, 2000, the Planning Board reviewed the settlement agreement and granted ARD/Toll a revised preliminary major subdivision and site plan approval ("2000 Approval") based on the required changes in the settlement agreement. The 2000 Approval, while accepting the changes required by the DEP in the settlement agreement, required the infrastructure necessary to serve the entirety of the original project to be constructed during Phase I. The final settlement agreement was approved by the Commissioner of DEP on January 10, 2001.

TOLL BROTHERS

Sometime prior to November 1999, Toll became the contract purchaser of Phase I of the project (involving construction of the 105 single-family units and 171 townhouse units). ARD remained the owner of the Property. On December 7, 2000, ARD/Toll received preliminary major subdivision and site plan approval for Phase I. The Planning Board granted final site plan approval for Phase I on February 7, 2002. The Planning Board conditioned final approval on Toll providing an interconnect from the water system for Morris Chase and Toll's adjacent development, currently under construction, "Morris Hunt," to an existing Township development, "Gold Mine Estates," (built by another developer), at no cost to the Township.

From the time it became the developer, Toll spent two years conducting site tests in an attempt to locate a sufficient and adequate water supply. Toll's efforts to locate a sufficient supply of water were unsuccessful, requiring it to request a new permit from the BSDW, as well as for a Water Allocation Permit ("WAP"). Through its contractor, Toll diligently filed revised WAP and BSDW permit applications. Toll received an "Administratively Complete Notice" on the WAP modification application in October 2002. It then submitted a renewal application for the original and current WAP, which were set to expire on December 31, 2004. In May 2003, Toll received a permit to construct from BSDW. This permit is due to expire on May 16, 2006.

As part of the settlement with ARD, the DEP extended the TWA permit for the wastewater treatment plant, originally issued in 1992. Due to the changes to the site plan, the passage of time, and technological developments, Toll submitted an application for a new TWA permit for the wastewater treatment plant. This TWA permit was issued on April 29, 2004. Toll obtained an extension, which pushed back the expiration date to August 15, 2005.

Under the DEP settlement agreement, the TWA permits for the wastewater collection system and pump station were extended through December 2005. Toll remained obligated, however, to change the site plan, and therefore needed to request a revision of the permit. The existing TWA permit was still in effect on June 12, 2003, when Toll submitted its revised application for a TWA permit to DEP and the Township. The Township endorsed the application on August 1, 2003. DEP issued the TWA permit for the wastewater system and pump station on October 24, 2003.

THE DEVELOPER'S AGREEMENT

On July 9, 2002, the Township Council adopted a resolution authorizing the execution of the Developer's Agreement with Toll to construct Phase I of the property. The Developer's Agreement was not signed by the Township for almost two years. The Township's refusal to sign the Developer's Agreement stemmed from a dispute over the sanitary sewer and treatment center for the property. Despite its prior agreement to the contrary, the Township requested Toll to turn over the sanitary sewer and treatment system at no cost to the Township. Toll refused, contending that to do so would be inconsistent with the Planning Board's final approvals and the Township's resolution. Correspondence and negotiations between Toll and the Township ensued, without resolution.

On or about February 23, 2004, Toll sent a drafted complaint to the Township attorney, putting the municipality on notice that it was prepared to commence legal action to bring this matter to closure. On March 18, 2004, the Township executed the Developer's Agreement. The complaint was never filed. The Developer's Agreement provides that Toll has 24 months from March 18, 2004, with a six-month extension, to complete the development's infrastructure.

In December 2003, Toll made a request for an extension to the Planning Board of its final subdivision and site plan approvals set to expire on February 7, 2004, and recorded its final plats on May 13, 2004.

Toll complied with the terms of the Developer's agreement in order to commence construction, including: (1) posting all performance guarantees and inspection fees for both preliminary and final approvals and participating in the pre-construction meeting with the Township engineer; (2) providing approximately $1,200,000 in cash bonds, inspection fees and contributions, as well as performance surety bonds in the amount of $7,717,230.34 to the Township for the development of the property; (3) improving an intersection of Flanders-Drakestown Road and Flanders-Netcong Road; (4) constructing a water tank designed to serve Phase I, Phase II and Morris Hunt and obtaining the necessary permits; and (5) contributing $350,000 to the Township for the development of a recreational park.

DENIAL OF EXTENSION

Toll presented its application for extension of its final subdivision and site plan approval on May 13, 20, June 17, and July 8, 2004, which was denied on July 8, 2004. On August 19, 2004, the Planning Board adopted a resolution memorializing the reasons for denying Toll's Phase I extension application. In so doing, the Board made the following findings of fact:

1) On or about February 7, 2002, the Planning Board granted final approvals for Phase I of the project, which were set to expire on February 7, 2004.

2) In April 1998 the property was rezoned from 3 units per acre to one unit per acre. This change in zoning reflects a goal of the Township to reduce the density of the development of certain areas.

3) The Planning Board acknowledges and recites the history of litigation between ARD and DEP from 1994 up through the settlement agreement in August of 2000 that resulted in a phasing of the project with Toll as the developer for Phase I consisting of 276 units and Phase II a potential subdivision involving the construction of a maximum of possibly 137 units if wetlands classifications and delineations are changed.

4) The record reflects that the Township and Toll negotiated regarding the ownership of the proposed water and sewer system. The Township initially required that the water system be turned over to the Township in order to promote having a unified water and sewer system for the town.

5) On March 18, 2004, after the water and sewer issues were resolved, a Developer's Agreement was signed by the Township, which provided Toll 24 months to complete the improvements. The Developer at this time paid the Township $350,000 and several hundred thousand dollars in the form of escrow accounts and surety bonds.

6) Despite the existence of WAP permits, in November 1999, when Toll became involved in the project, Toll determined that there was insufficient water capacity for the project. Toll spent 2 years conducting tests to see if they could find adequate water since the project hinged on having an adequate water supply. In January 2002, Toll submitted to DEP a modified application for a WAP permit. Additional modifications to the application were submitted through June 21, 2002. The application was determined to be administratively complete in October of 2002, but was not approved at the time of the hearing. The original existing WAP, which as noted by the Planning Board "while technically effective is inadequate and insufficient to produce the water capacity to furnish Phase I with potable water, is set to expire December 31, 2004."

7) Again despite an existing BSDW permit when Toll became involved in the project, Toll determined that additional testing was required, which occurred in 2000 and 2001. To perform the testing Toll drilled numerous wells on the site. On December 15, 2001, the existing BSDW expired. Toll submitted a completely new application on July 1, 2002. The BSDW permit was issued on May 16, 2003 and will expire on May 16, 2006.

8) The existing TWA permit was also called into question when Toll became involved in the project. Toll proposed new design technology and submitted the application on February 27, 2001. A new TWA permit was issued on August 6, 2001, which expired on August 15, 2003 and Toll then received a one-year extension. Toll then modified this permit and on June 12, 2004, requested another one-year extension, which had not been decided by the DEP at the time the Planning Board's decision was made.

9) The existing TWA permit for wastewater collection system and pump station also needed to be modified according to Toll. After obtaining assurances that the BSDW permit would be approved, Toll submitted a permit application to the Township for endorsement on June 12, 2003, which was endorsed by the Township on August 19, 2003 and submitted to the DEP on September 5, 2003. The TWA permit was issued on October 23, 2003.

10) Toll received the renewal of an original New Jersey Pollutant Discharge Elimination System ("NJPDES") permit on August 1, 2003, which will expire on July 31, 2008.

After this factual recitation, the Planning Board concluded that:

[T]he Project had received all of the NJDEP approval[s] necessary to allow the Project to be constructed and completed during the original three (3) year period of protection and the subsequent ten (10) year period of extension. Thirteen (13) years is a significant time period for a project of this magnitude to proceed to completion.

[] Furthermore, at the time of the extension request, the Applicant had been protected from the major change in zoning in 1998 for six (6) years. At some point, the public interest must take precedence over the private interests, especially where those private interests have been given almost fifteen (15) years to pursue and complete development.

Under the heading "Public Interest" the Planning Board further noted the public's concern that the Township's modern zoning scheme was inconsistent with the scale and character of a project conceived and approved fifteen years earlier. These concerns were noted, despite the absence of expert testimony regarding the potential negative impacts due to the project.

THE ARD PROJECT

In August 2002, ARD requested a seven-year extension of the 2000 Approval. On September 5, 2002, the Planning Board granted a one-year extension on the previous ten-year extension for preliminary approvals, which were originally valid through June 18, 2002. Thus, the new extension was set to expire June 18, 2003. In the resolution granting the one-year extension, the Planning Board specifically found that a seven-year extension was "overly long."

On May 29, 2003, ARD requested an additional extension of the protection period for Phase II of the project for a period of six years. On July 10, 2003 and October 16, 2003, the Planning Board conducted public hearings to consider the request for this extension of the protection period associated with the preliminary approvals. From our review of the record, the discussion by the Planning Board focused less on the expenditures by Toll and more on the desire for additional open space in the Township. At the conclusion of the hearing, the Planning Board voted to deny the Phase II extension application. The denial was memorialized in a resolution adopted on November 13, 2003.

In denying the request for extension, the Planning Board acknowledged that it had previously adopted the phasing plan proposed by the developer, "so as to build on those lots outside of the wetland at present, and retain the units within the wetland area until such time as a change in wetland classification enables construction." In furtherance of this phased approach, the Planning Board granted revised preliminary approvals based on the DEP settlement. These revisions modified the placement of recreational amenities, roads and the sanitary sewerage treatment plant servicing the development. The preliminary approvals also acknowledge that the non-wetland area would be developed first in Phase I while "the environmentally sensitive area, including wetlands, would be developed as Phase II, sequentially."

THE OPINION OF THE TRIAL COURT

ARD commenced litigation against the Planning Board, challenging the denial extension request, and seeking a declaration that the re-zoning of the property was unlawful. The matter came before Judge Bozonelis who considered ARD's and Toll's litigation together.

Judge Bozonelis determined that Toll was entitled to relief pursuant to N.J.S.A. 40:55D-52(a) and (d) and N.J.S.A. 40:55D-52(b), and remanded to the Planning Board the issue as to the appropriate length of Toll's extension under N.J.S.A. 40:55D-52(b). Judge Bozonelis gave the following explanation for his ruling in favor of Toll:

And in looking at the background of the matter, this is not a case where a developer simply obtained preliminary approval and then sat on it until a zoning change occurred in 1998. This is a case where after the preliminary approvals were obtained, the law concerning wetlands changed significantly in New Jersey. The DEP took it over and voided out fire regulations, which meant that the developer had to undertake to pursue new wetland permits, and the developer did that diligently here.

In -- after 1994, in 1995, went for the delineation and letter of interpretation. In 1996 right thereafter submitted this application. It was denied in '97. Litigation ensued. It brought the litigation, ended up in a settlement agreement, which was not finally resolved until 2000.

During this period of time they had this 10 year period of -- of protection, from '92 to 2002. But something else has happened. What happens is as a result of the settlement with the DEP, the project, in essence, changes. It becomes a two-phase project under a conceptual plan, with essentially the Phase 2 properties being put in the wetlands in Phase 1 being developed. And that project is consented to by everyone: the Township of Mount Olive, the DEP, and the plaintiffs in that regard.

A resolution was passed by the Township as to the phasing in that regard, and further what follows thereafter -- after the 1999 resolution, is the preliminary -- amended preliminary approval in 2000 in that regard. Now when that is all occurring, of course the town is aware that the zoning has changed. Now the town is aware that the zoning has changed. Now the town is saying, well, we're bound by this preliminary approval because they had this extension to 2002, and they were amending it in that regard. However, the -- Mount Olive cannot change the undisputed fact that they were participating in this particular project, while it was going on with the DEP. And the conceptual plan that was developed, and the final settlement with the DEP and the approvals in that regard, which went on after the zoning change.

So there wasn't objections from the Township coming. There was the consent, the conceptual plan, and the participation of the Township in that regard. So there -- I cannot find that there was delay by the developer during this period of time, that they had this 10 year to -- of -- essentially to pursue their development. And, of course, they were aware that their extension was going to expire in 2002 in that regard, and that they wanted, after all of this effort, to develop the property and sought final approval in order to obtain the two-year extension to 2004 in that regard.

So that when we look at the magnitude of this particular project and what was going on, the actions that were taken by the developer were all reasonable in that regard. And then there is another aspect that is going on at the same time. And that is during the period of the approval of 2002 and the automatic protection period for two years, the developer's agreement is finally finalized with the Township. It took litigation to do it. It was the same agreement that was executed in 2004 that existed, and that it was written in 2002, but it's finally executed in March of 2004, and that's talking about a recognition that's going to take at least two years for this infrastructure to develop in that regard.

At the same time, Toll Brothers is expending, at the request of the Township, $350,000 to a nearby recreational development. It is improving roads -- Township roads while this is going on in that regard, in terms of reliance and equities that are taking place with respect to the plaintiff's actions.

After hearing oral argument, and considering the voluminous record before him, Judge Bozonelis declared that ARD was also entitled to relief, pursuant to N.J.S.A. 40:55D-49(c), (d) and (f), but denied ARD's request for relief under N.J.S.A. 40:55D-21. The judge gave the following explanation in support of his ruling:

There was substantial activity that was going on with respect to this project and with respect to what occurred year [ ] after year. . . . There wasn't inactivity here. This whole project was going forward in a logical manner from 1989 through 2003 by virtue of all the activity that I just laid out on the record.

And the Board's position that, well ARD did nothing with respect to laying out the money for Phase One and that in addition to that did not seek DEP wetland approvals with respect to fill or the like I -- I think is an argument that does not have merit. . . .

First of all, ARD decided to have a contract purchaser here, Toll. What ARD did as a developer between Toll and who's going to expend these monies and how these monies were going to be expended was a negotiation between Toll and ARD. That's up to them. They're still the property owners. They're still proceeding with respect to what was endorsed by the Board, that is this project for Phase One and Phase Two [ ] and it's clear from the record that these projects were considered together. The language of the resolution talks of it in terms . . . of the fact that these are -- it's a project. It's a land project for the whole 168 acres. I talked about that in terms of the extension under [N.J.S.A. 40:55D-52] with respect to the fact that this was an overall project over 150 acres in terms of approvals for extensions in that regard.

* * * *

The fact to use -- for the Board to say, well, ARD didn't do anything because Toll expended the money here, ARD didn't, I think ignores the fact of years of -- of what transpired from 1989 to 2002. It further ignores the fact that Toll is a contract purchaser to ARD, that ARD is the property owner here and that they're free to negotiate their -- how these costs are going to [be] paid in that regard and that the projects are inextricably tied together. And there is no question that Phase Two cannot start until Phase One is completed. That -- that is absolutely clear in that its infrastructure is dependant on Phase One in that regard.

So to use the point that, well, they didn't go forward and make application for DEP permits I think is an argument that cannot withstand a balancing of the equities with respect to everything that has occurred here.

So that is why I said [o]n November 19th that I considered ARD simply to follow the logic of the Court's reasons with respect to Toll, and I adopt that for all the supplemental reasons I say today.

We agree with Judge Bozonelis's decision and affirm substantially for the well-reasoned and comprehensive analysis reflected in his oral opinion. We add the following comments in the interest of clarity.

II

LEGAL ANALYSIS

A planning board's decision is presumed to be valid, and may be reversed only if arbitrary, capricious or unreasonable or if it violates legislative policies expressed or implied in the act governing the agency. New Brunswick Cellular Tel. Co. v. Borough of South Plainfield Bd. of Adjustment, 160 N.J. 1, 14 (1999); Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963). Judicial review is limited to determining whether the board's decision is supported by the record and is not so arbitrary, capricious, or unreasonable as to amount to an abuse of discretion. Smart SMR of New York, Inc. v. Fair Lawn Bd. of Adjustment, 152 N.J. 309, 327 (1998). If the decision is not supported by the record, a board's decision may be reversed. Ibid. A municipal board's "peculiar knowledge of local conditions" entitles it to wide latitude in the exercise of discretion. New York SMSA v. Bd. of Adjustment of Twp. of Weehawken, 370 N.J. Super. 319, 331 (App. Div. 2004).

Generally, municipal decisions have a presumption of validity. Witt v. Borough of Maywood, 328 N.J. Super. 432, 442 (Law Div. 1998), aff'd, 328 N.J. Super. 343 (App. Div. 2000). However, this presumption does not apply when a court reviews a municipal decision regarding questions of law that is based upon the interpretation of the Municipal Land Use Law ("MLUL") and the local zoning ordinance. Wyzykowski v. Rizas, 132 N.J. 509, 518-19 (1993). Rather interpretation of the MLUL and local zoning ordinances are reviewed under a de novo standard. Adams v. DelMonte, 309 N.J. Super. 572, 583 (App. Div. 1998); Tennis Club Assocs. v. Planning Bd. of Teaneck, 262 N.J. Super. 422, 432 (App. Div. 1993). Legal decisions are not entitled to deference because a land use board "has 'no peculiar skill superior to the courts' regarding purely legal matters." Chicalese v. Monroe Twp. Planning Bd., 334 N.J. Super. 413, 419 (Law Div. 2000)(quoting Janatausch v. Borough of Verona, 41 N.J. Super. 89, 96 (Law Div. 1956)), aff'd, 24 N.J. 326 (1957).

In order to determine the propriety of the Planning Board's actions here, we must review the factual circumstances of this project against certain well-established principles of land use law. When a planning board grants an application for preliminary site plan approval, it confers upon a developer the assurance that for three years the general terms and conditions of the preliminary approval will not be changed even if the ordinance changes. N.J.S.A. 40:55D-49. Similarly, preliminary approval of a major subdivision provides a three-year period of protection from zoning changes. Ibid. The developer may apply for extensions of such preliminary site plan approval for additional periods, generally not to exceed two years. N.J.S.A. 40:55D-49.

The statute's purpose is to provide a developer with protection to begin to develop a property within a reasonable period of time. Toll Bros., Inc. v. Planning Bd. of Pohatcong, 359 N.J. Super. 448, 454 (App. Div.) certif. denied, 177 N.J. 492 (2003); Aronowitz v. Planning Bd. of the Twp. of Lakewood, 257 N.J. Super. 347, 364-65 (Law Div. 1992) (recognizing the risks involved in constructing a large development). If construction does not start within the three-year period, a developer may apply for final site plan approval which will permit an additional two years of protection. Toll Bros., supra, 359 N.J. Super. at 457. Additionally, a developer may apply to the planning board for an extension of the preliminary site plan approval. N.J.S.A. 40:55D-49. See Toll Bros., supra, 359 N.J. Super. at 453-54.

The decision to grant an application for an extension of time for a preliminary site plan approval rests in the sound discretion of the planning board. Such a decision should be based upon the factual situation with respect to the development and any applicable changes in the zoning ordinance. N.J.S.A. 40:55D-49.

As is the case with a preliminary site plan approval, a planning board may grant extensions for preliminary subdivision approval generally, for up to two years. N.J.S.A. 40:55D-49(c). However, if the subdivision involves more than 50 acres, a planning board may grant an extension exceeding three years as determined by the board to be reasonable. N.J.S.A. 40:55D-49(d). Pursuant to N.J.S.A. 40:55D-49(f), the board must grant an extension for a period of up to one year if the developer was barred from proceeding due to delays in acquiring necessary approvals from the State or government subdivisions.

A developer must file an application for final subdivision approval within three years from the date of the preliminary approval unless an extension has been granted. D.L. Real Estate Holdings, L.L.C. v. Point Pleasant Beach Planning Board, 176 N.J. 126, 135-36 (2003). Final approval continues to protect the developer from zoning changes for an additional two years. N.J.S.A. 40:55D-52a. Extensions of time for subdivisions and site plans are governed by the same statute. N.J.S.A. 40:55D-52.

A final approval of a site plan by a planning board provides the developer with protection against zoning changes for a further period of two years after the date of adoption of the resolution. N.J.S.A. 40:55D-52a; R.J.P. Builders, Inc. v. Twp. of Woolrich, 361 N.J. Super. 207, 216 (App. Div.), certif. denied, 178 N.J. 31 (2003); Aronowitz, supra, 257 N.J. Super. at 360-68; B. & W. Assocs. v. Planning Bd., 242 N.J. Super. 1, 3-4 (App. Div. 1990).

N.J.S.A. 40:55D-52 authorizes extensions of the period of protection for a final site plan approval. Under N.J.S.A. 40:5D-52a, the board has discretion to grant extensions of one to three years. Subsection b permits the board at its discretion to grant an extension with a flexible time period for large projects. Subsection d requires a planning board to grant an extension not to exceed one year if the developer was prevented from starting construction due to delays beyond the developer's control.

Under N.J.S.A. 40:55D-52(a), a planning board is to engage in a balancing test to determine whether a developer should be granted an extension of protections from zoning changes. Jordan Developers v. Planning Bd. of Brigantine, 256 N.J. Super. 676, 679-80 (App. Div. 1992)(upholding the denial of an extension finding that there was not a sufficient delay caused by the process of obtaining government approvals and permits nor was the fact that the real estate market was soft an adequate reason for the delays and applicant's failure to advance the project). In determining whether to grant an extension pursuant to N.J.S.A. 40:55D-52a "[t]here must be a balancing process, in which the board weighs the public interest in the implementation of the zoning change, the developer's interest in extending protection and the circumstances in which the need for extension arose." Id. at 680. Thus, in Jordan, we noted that an intervening zoning change did not require a denial of the extension, but merely was a factor for the board to consider, a factor that obviously weighed against the grant of an extension. Ibid.

Jordan, also applied for an extension based on the delays that were due to the need to obtain DEP approvals. Referring to Jordan, the leading commentator in this area of law, William Cox, has noted that:

While this application was made under N.J.S.A. 40:55D-21 . . . it should have been made under N.J.S.A. 40:55D-52d. Under subsection d the board must grant such extensions for a period of up to one year if the developer demonstrates that delays were beyond his or her control.

[New Jersey Zoning and Land Use Administration, 15-5.2(b) at 353 (2006).

In Knowlton Estate v. Planning Bd. of the Twp. of Knowlton, we reversed the trial court, and upheld the board's denial of plaintiff's request for an extension under N.J.S.A. 40:55D-52d for a project that had been on-going for eight years. Knowlton Estate v. Planning Bd. of the Twp. of Knowlton, 347 N.J. Super. 362, 369-75 (App. Div.), certif. denied, 172 N.J. 357 (2002). In so doing, we agreed with the board's findings that plaintiff delayed in renewing its wetland permits (not doing anything for 18 months) and gaining DOT highway access permits, which the applicant's engineer admitted. Id. at 374. There was no indication that the time the DEP took to review plaintiff's application was unreasonable. Id. at 371. The planning board was also concerned that the applicant would not be able to financially complete the development project. Id. at 366.

Thus, in order to be entitled to an extension under N.J.S.A. 40:55D-52d, a developer must demonstrate:

to the "reasonable satisfaction" of the Board that (1) it "applied promptly for and diligently pursued [legally required approvals]"; (2) "there were delays in obtaining [those] approvals from other governmental entities"; and (3) those delays "barred or prevented" the developer, "directly or indirectly, from proceeding with the development." If a developer makes these factual showings, N.J.S.A. 40:55D-52d provides that "[t]he planning board shall grant an extension of [the] final approval." Thus, the grant of an extension of time under this subsection is mandatory . . . .

[Knowlton, supra, 347 N.J. Super. at 368-69.]

The trial court found authority to reverse the Planning Board's denial of Toll's application for an extension in three specific sections in the Municipal Land Use Law. N.J.S.A. 40:55D-52a provides:

The zoning requirements applicable to the preliminary approval first granted and all other rights conferred upon the developer . . . whether conditionally or otherwise, shall not be changed for a period of two years after the date on which the resolution of final approval is adopted; provided that in the case of a major subdivision the rights conferred by this section shall expire if the plat has not been duly recorded within the time period . . . . If the developer has followed the standards prescribed for final approval, and, in the case of a subdivision, has duly recorded the plat . . . the planning board may extend such period of protection for extensions of one year but not to exceed three extensions. Notwithstanding any other provisions of this act, the granting of final approval terminates the time period of preliminary approval . . . for the section granted final approval.

N.J.S.A. 40:55D-52b provides:

In the case of a subdivision or site plan for a planned development of 50 acres or more, conventional subdivision or site plan for 150 acres or more, or site plan for development of a nonresidential floor area of 200,000 square feet or more, the planning board may grant the rights referred to in subsection a. of this section for such period of time, longer than two years, as shall be determined by the planning board to be reasonable taking into consideration (1) the number of dwelling units and nonresidential floor area permissible under final approval, (2) economic conditions and (3) the comprehensiveness of the development. The developer may apply for thereafter, and the planning board may thereafter grant, an extension of final approval for such additional period of time as shall be determined by the planning board to be reasonable taking into consideration (1) the number of dwelling units and nonresidential floor area permissible under final approval, (2) the number of dwelling units and nonresidential floor area remaining to be developed, (3) economic conditions and (4) the comprehensiveness of the development.

[Emphasis added.]

N.J.S.A. 40:55D-52d provides:

The planning board shall grant an extension of final approval for a period determined by the board but not exceeding one year from what would otherwise be the expiration date, if the developer proves to the reasonable satisfaction of the board that the developer was barred or prevented, directly or indirectly, from proceeding with the development because of delays in obtaining legally required approvals from other governmental entities and that the developer applied promptly for and diligently pursued these approvals. A developer shall apply for the extension before (1) what would otherwise be the expiration date of final approval or (2) the 91st day after the developer receives the last legally required approval from other governmental entities, whichever occurs later. An extension granted pursuant to this subsection shall not preclude the planning board from granting an extension pursuant to subsection a. or b. of this section.

N.J.S.A. 40:55D-52b recognizes that large developments may take additional time to complete and allows extensions of final approvals for planned developments that are over 50 acres.

The term "planned development" includes: "planned unit development, planned unit residential development, residential cluster, planned commercial development or planned industrial development." N.J.S.A. 40:55D-6 (emphasis added). Under the statute, a "residential cluster" is "a contiguous or noncontiguous area to be developed as a single entity according to a plan containing residential housing units which have a common or public open space area as appurtenance." Ibid. The term open space encompasses "any parcel or area of land or water essentially unimproved and set aside, dedicated, designated or reserved for public or private use or enjoyment for the use and enjoyment of owners and occupants of land adjoining or neighboring such open space . . . ." N.J.S.A. 40:55D-5.

Here, the Morris Chase property qualifies as a "residential cluster," because it is a subdivision of approximately 80 acres involving 105 single-family homes and 171 townhouses. In addition the development includes common open recreational space. Under both N.J.S.A. 40:55D-52a and b, a planning board is required to engage in a balancing test to determine whether a developer should be granted an extension of protections from zoning changes. Jordan Developers, supra, 256 N.J. Super. at 679-80. "There must be a balancing process, in which the board weighs the public interest in the implementation of the zoning change, the developer's interest in extended protection and the circumstances in which the need for extension arose." Id. at 680.

Judge Bozonelis's analysis properly balanced the public's interest in insuring that major construction projects are completed within a reasonable time, against the right of the developer to realize the economic benefit of the project. The Planning Board's conclusion that Toll had not diligently pursued the required governmental approvals is not supported by the record. The decision to deny the extension requested is therefore arbitrary and capricious.

The court also properly recognized and applied the relief accorded in N.J.S.A. 40:55-52d. Toll diligently followed-up on every aspect of this complicated project, and pursued the regulatory approvals necessary. As noted by Judge Bozonelis, the delay involved here was not of Toll's creation.

We will now address ARD's request for extension. We agree with Judge Bozonelis, and reject the argument that ARD is not entitled to rely on Toll's actions, to support its contention that it has diligently pursued the development of Phase II of the project.

N.J.S.A. 40:55D-49f provides a mechanism for relief to ARD as the holder of preliminary approvals, similar to the relief afforded to Toll in N.J.S.A. 40:55-52d.

The planning board shall grant an extension of preliminary approval for a period determined by the board but not exceeding one year from what would otherwise be the expiration date, if the developer proves to the reasonable satisfaction of the board that the developer was barred or prevented, directly or indirectly, from proceeding with the development because of delays in obtaining legally required approvals from other governmental entities and that the developer applied promptly for and diligently pursued the required approvals. A developer shall apply for the extension before (1) what would otherwise be the expiration date of preliminary approval or (2) the 91st day after the developer receives the last legally required approval from other governmental entities, whichever occurs later. An extension granted pursuant to this subsection shall not preclude the planning board from granting an extension pursuant to subsection c. or d. of this section.

[N.J.S.A. 40:55D-49f (emphasis added).]

Here, because construction of Phase II (ARD) was contingent upon the completion of Phase I (Toll), the Planning Board's denial of ARD's extension request under N.J.S.A. 40:55D-49f was arbitrary and capricious. Moreover, as Judge Bozonelis noted, the Planning Board has authority to grant further relief to ARD under N.J.S.A. 40:55D-49c, which provides:

That the applicant may apply for and the planning board may grant extensions on such preliminary approval for additional periods of at least 1 year but not to exceed a total extension of 2 years, provided that if the design standards have been revised by ordinance, such revised standards may govern.

[Emphasis added.]

Finally, N.J.S.A. 40:55D-49d confers upon the Planning Board the authority to enlarge the extension granted under N.J.S.A. 40:55D-49c.

In the case of a subdivision of or site plan for an area of 50 acres or more, the planning board may grant the rights referred to in subsections a., b., and c. of this section for such period of time, longer than 3 years, as shall be determined by the planning board to be reasonable taking into consideration (1) the number of dwelling units and nonresidential floor area permissible under preliminary approval, (2) economic conditions, and (3) the comprehensiveness of the development. The applicant may apply for thereafter and the planning board may thereafter grant an extension to preliminary approval for such additional period of time as shall be determined by the planning board to be reasonable taking into consideration (1) the number of dwelling units and nonresidential floor area permissible under preliminary approval, and (2) the potential number of dwelling units and nonresidential floor area of the section or sections awaiting final approval, (3) economic conditions and (4) the comprehensiveness of the development; provided that if the design standards have been revised, such revised standards may govern.

[Emphasis added.]

 
The record here amply supports Judge Bozonelis's decision, including a remand to the Planning Board of ARD's request for further relief under N.J.S.A. 40:55D-49c and Toll's request for further relief under N.J.S.A. 40:55D-52b, to determine the appropriate length of an extension pursuant to these provisions in the statute. Because we agree with Judge Bozonelis's legal analysis under the statutes cited, we decline to decide whether Toll and ARD are entitled to the tolling provisions in N.J.S.A. 40:55D-21.

Affirmed.

This land was originally known as Dyrham Woods.

On February 15, 1990, ARD also sought and obtained amended preliminary major subdivision and site plan approval, including various height variances.

It was at this time that Toll changed the name of the development from Dyrham Woods to Morris Chase.

This contribution was based on the estimated savings for Toll when the Township informed Toll that it could reduce the capacity of the water tank for the development.

Although Toll was not involved in the application, it was called by the Planning Board to clarify certain issues relating to the progress of Phase I.

(continued)

(continued)

37

A-2023-04T2

April 26, 2006