Land Use and Development

The Appellate Division has once again confirmed that “distinctions between renters or property owners in the application of zoning and land use laws have no place in the application of legitimate objectives of zoning.”

In Tirpak v. Bor. of Point Pleasant Beach, A-5088-17T1/A-5147-17T1, decided Feb. 11, 2019, the property owner sought to remove a deed restriction imposed as a condition in connection with an earlier use variance. The restriction allowed for the use of the property as a two-family residence only if one of the units was owner-occupied.  The trial court vacated the condition after finding it legally impermissible and the municipality subsequently challenged that determination.

On appeal, the court confirmed that it was improper for the zoning board to condition its grant of a use variance on whether the residence was occupied by an owner or tenants.  In so doing, the court recognized the well-established principle that while zoning may be utilized to regulate the usage of property it cannot be applied to control the identity or status of the persons occupying the land. See DeFelice v. Point Pleasant Beach Bd. Of Adj.,  216 N.J. Super.  377 (App. Div 1987) and United Property Owners Ass’n of Belmar v. Borough of Belmar, 185 N.J. Super. 163, 165 (App Div. 1982)).  While the Zoning Board argued that the condition furthered the legitimate objectives of controlling noise and nuisance conditions, the court held that such objectives must be achieved through the police powers of the municipality, not its zoning laws.

In sum, a municipality may not employ its zoning laws in a manner that favors property owners and discriminates against tenants.

In a recent unpublished decision, the Appellate Division again confirmed that a zoning board may not reverse course without justification once it has made findings regarding a specific property.

In Oster v. Zoning Board of Adjustment of the Township of Middletown (Docket No. A-0037-17T3, decided January 11, 2019), the applicant sought and obtained a hardship variance from the Zoning Board (the “Board”) pursuant to N.J.S.A. 40:55D-70(c)(1).  The variance, which was obtained in 2009, permitted construction of an underground storage area and above-ground conservatory within the side yard setback.  The Board concluded that a variance was warranted because of the construction difficulties posed by the property’s unique shape, irregular configuration and use as a vineyard.

In 2016, the applicant abandoned the original development plan approved by the Board and filed an application seeking a variance to build an underground storage area/garage with a peaked roof in the same location.  The Board, however, disregarded its prior 2009 ruling concerning the property’s unique characteristics (even though the property’s shape and use remained unchanged) and denied the requested variance relief.  The applicant subsequently challenged the decision in a prerogative writ action, but the trial court sided with the Board.

The Appellate Division reversed after finding that the Board was required to honor its prior ruling concerning the property’s unique character.  The court held that the doctrine of collateral estoppel bars a zoning board from re-litigating any issue that was actually determined by it during a prior application.  Consequently, the court instructed the Board to conduct further proceedings on the sole issue of whether the applicant had satisfied the other requirements for c(1) variance relief.

This decision underscores the importance of reviewing all prior land use applications and decisions when pursuing or objecting to variance relief for any given property.

Developers often employ the “time of application” rule (“TOA Rule”) to avoid having to comply with certain legal requirements enacted after an application has been submitted to a local planning or zoning board.  More specifically, the TOA Rule provides that “notwithstanding any provision of law to the contrary, those development regulations which are in effect on the date of submission of an application for development shall govern the review of that application….”  See N.J.S.A. 40:55D-10.5 (emphasis added).  Notwithstanding this statutory provision, developers must still comply with any new laws that specifically relate to health and public safety.

The TOA Rule replaced the “time of decision” rule, which allowed municipalities to apply new or amended ordinances to pending development applications.  As a result, applicants were often compelled to incur significant costs and delays associated with altering their applications in an effort to meet the new legal requirements.  The TOA Rule only applies, however, once a development application has been “submitted” to a municipality.  Until that time, a developer remains responsible for complying with all legal requirements regardless of when they took effect.

While the term “submission” is not expressly defined under the statute, the New Jersey Supreme Court squarely addressed the issue in Dunbar Homes, Inc. v. Zoning Board of Adjustment of Franklin Township, 233 N.J. 546 (2018).  In Dunbar Homes, the developer filed an application to construct 55 garden apartments on a site where garden apartments were considered a permitted conditional use.  The next day, the Township enacted an ordinance that prohibited garden apartments in the zone where the site was located. The zoning official subsequently determined that the developer had not submitted all documents required by the zoning board’s development application checklist.  The developer was then notified that the TOA Rule was inapplicable and that it would need to file a new application with the zoning board seeking a “use” variance pursuant to the more stringent standards implicated by N.J.S.A. 40:55D-70(d)(1).

The zoning board sided with the zoning official and the developer appealed to the Law Division.  The Law Division judge disagreed and concluded that the application was deemed “submitted” because it provided the board with “sufficient information to begin its review” and, therefore, the TOA Rule applied.  The Township appealed and the Appellate Division reversed that decision after finding that the relevant statute defining the term “application for development” included all documents prescribed by the board’s checklist for development.  Applying this bright-line rule, the Appellate Division concluded that the failure to submit even one of the items on the board’s checklist precluded application of the TOA rule.  The Supreme Court ultimately agreed with the Appellate Division, noting that N.J.S.A. 40:55D-3 expressly defined an “application for development” to include:  “the application form and all accompanying documents required by ordinance.”  Because it was undisputed that the developer failed to submit all required documentation and neither sought nor obtained a waiver regarding any requirements, the Court found that the application was never submitted and the TOA Rule did not apply.

Accordingly, developers must be certain to submit all documents identified in the municipal development application checklist or seek and obtain a waiver.  Only by vigorously complying with the requirements of the municipal checklist can a developer expect to avail itself of the protections afforded by the TOA Rule.

The Opportunity Zone program enacted as part of the 2017 federal Tax Cuts and Jobs Act is designed to spark long-term capital investment into low-income and urban communities. The 169 Opportunity Zones (or tracts) designated in New Jersey by Governor Murphy are a complete game changer and contain attractive investment incentives for developers and investors.

Via the Opportunity Zone program, developers and investors can tap into and reinvest their unrealized capital gains without paying capital gains for a period of time, if at all. For example, capital gains invested or reinvested in an Opportunity Fund will receive a step up in basis of 10 percent if held for at least five years and by an additional 5 percent if held for at least 7 years, excluding up to 15 percent of the original gain from taxation.

An even greater savings is realized if the investment in the Opportunity Fund is held for at least 10 years. The gain accrued while invested is permanently excluded from taxable income of capital gains upon the sale or exchange of the investment.

With these tax incentives in place, Senator Corey Booker (NJ) believes the barriers between communities and the capital needed to generate economic growth and opportunity will be broken down.

The Opportunity Zones were designated based on key economic indicators in certain neighborhoods and communities such as income, unemployment rate and property values but also consideration was given to accessibility to mass transit and the value of existing investments. The 169 tracts were approved by the US Department of the Treasury on April 9, 2018. You can view the interactive map of designated Opportunity Zones for New Jersey by clicking here.

The pitfalls of failing to provide statutorily required public notice in the land use context were once again recently addressed by the Appellate Division in Concerned Citizens of Livingston v. Township of Livingston, (A-4171-15T3, decided June 11, 2018).  There, the Appellate Division reversed the trial court decision and found that the underlying zoning amendment, upon which a development applicant relied, was invalid due to notice deficiencies.

In Concerned Citizens, the Township of Livingston sought to amend its zoning ordinance to liberalize the conditions associated with locating an assisted living facility in its R-1 residential district.  Specifically, although an assisted living use was originally permitted as a conditional use in the zone, the amendment permitted such facilities to be of increased density that is, allowing for even more assisted living units on smaller parcels.  In conjunction with this amendment the governing body conducted the necessary hearings and ultimately amended the zoning district.

Acting on the newly adopted zoning amendment, a developer filed an application with the municipal planning board to develop an assisted living facility consistent with the requirements of the newly amended R-1 zone.  As hearings before the board commenced with respect to this assisted living project, a group of concerned citizens filed suit in the trial court seeking to overturn the adoption of the amended zoning district.  Because this action was filed beyond 45-days from the Township’s publication of the newly enacted zoning ordinance, the trial court summarily dismissed the appeal as untimely.  On appeal, the Appellate Division reversed.

Because the increase in permitted density of assisted living facilities in the R-1 district was found to be tantamount to a “change” in the “classification” of a zoning district, the Appellate Division held that the more onerous notice requirements of N.J.S.A. 40:55D-62.1, requiring personal written notice, were triggered.  Under the circumstances, the Appellate Division held that the municipality was required to provide written notice, via personal service or by regular and certified mail, to all property owners entitled to receive notice at least 10 days prior to the hearing at which time the zoning amendment was to be considered.  Specifically, that meant that such personal notice was to have been provided to all property owners located within the affected district in which the classification change was proposed, and also to all property owners located within 200 feet in all directions of the proposed boundaries of the affected district.  Instead, the municipal clerk merely provided notice by publication only, in conflict with the statutory requirements.

Citing to well-established authorities, the appellate court found that “strict compliance with statutory notice requirements is mandatory and jurisdictional, and non-conformity renders the governing body’s resultant action (adoption of the zoning amendment in question) a nullity.”  (See Rockaway Shoprite Assocs., Inc. v. City of Linden, 424 N.J. Super. 337 (App. Div. 2011); Cox & Koenig, New Jersey Land Use Administration, § 10-2.3 at 159 (2018) (citing Robert James Pacilli Homes, LLC v. Township of Woolwich, 394 N.J. Super. 319 at 333 (App. Div. 2007)).  Due to this notice defect, the zoning ordinance amending the R-1 district requirements was deemed invalid.

Consequently, although the complaint of the citizens group was originally dismissed by the trial court as being filed well beyond the typical 45-day prerogative writ action appeal period, as prescribed by Rule 4:69, the Appellate Division held that the failure to file the complaint within this time frame was excusable because of the defective notice.  Moreover, since the greater public good was involved (concerning the interests of property owners located within an entire zoning district and beyond), the relaxation of the 45-day appeal period, as expressly afforded by Rule 4:69, was also held to be appropriate in this instance.

In the end, while Concerned Citizens is unpublished, it remains persuasive as it applies well-established law concerning the requirements of public notice.  It also warrants careful consideration as the court’s holding further signals a championing of due process concerns over the strict construction of the 45-day appeal period where the interests of justice are implicated.