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Beta Realty Unit 6 LLC v. Township of Randolph

A-3910-09T1 (N.J. Super. App. Div. 2011) (Unpublished)

DEVELOPERS; FEES — Although there is an exemption under the Statewide Non-Residential Development Fee Act for non-residential developments meeting the definition of an amenity, including recreational facilities such as tennis courts, those amenities must be made available to the public, and not only to its own paying members.

A municipality enacted an ordinance requiring non-residential developers to pay a fee of two percent of the equalized assessed value of their proposed improvements. This was to fund the municipality’s obligations under the Mt. Laurel line of cases and the Fair Housing Act. Then, a developer with property in the municipality filed an application for site plan approval to build an indoor tennis facility. It received preliminary and final approval with the necessary variances and waivers.

Later, the Statewide Non-Residential Development Fee Act was enacted. It superseded local development fee ordinances and provided for uniform fees for funding Mt. Laurel housing. As a result, the municipality determined that the developer was required to pay a higher fee. The developer applied for a building permit and paid half of the requested amount. Because of the economic recession, the legislature enacted another law, the New Jersey Economic Stimulus Act. It cancelled, for several years, collection of development fees in order to stimulate commercial development. This Act relieved the developer of any further payment and also provided for a refund of fees already paid under the Fee Act. However, the Stimulus Act excluded any refund of development fees that a developer had committed to pay before a certain date.

The developer unsuccessfully sought a refund from the municipality. While acknowledging that the development was exempt from payment, the municipality claimed that the developer had committed to pay a sum under the prior, long-established municipal ordinance and was entitled only to a refund of the difference between the amount committed and the actual amount paid. The municipality also assessed the developer with attorney fees in connection with the refund request.

The developer then filed a three-count complaint against the municipality in lieu of prerogative writs. In it, it demanded a full refund on the ground that its tennis facility was exempt under the Fee Act; for a full refund under the Stimulus Act; and a nullification of the attorney fees charged. The lower court granted summary judgment to the municipality on the first two counts, but granted summary judgment to the developer on the issue of attorney fees. The developer appealed.

The parties disagreed as to whether development qualified for exemption under the Fee Act as an amenity made available to the public. The tennis facility was to be open to anyone, for a fee. The Appellate Division found the Act’s clause to be ambiguous and looked to the legislature’s intent. The legislature had stated that the Act was to balance the needs of developing and redeveloping communities and to provide a fair and balanced funding method to address the State’s affordable housing needs. The statute did not require that an amenity that was available to the public had to be for non-profit; however, the statute did include examples of traditional non-profit uses. The court determined that being open to the public for business is not the same as being available to the public. The Court noted that some fee-charging uses are available to the public, such as tennis courts, but declined to determine the amount of fees that can be charged and yet retain the exemption.

The developer then requested a refund under the Stimulus Act, which permitted refunds for fees paid under the Fee Act after a certain date. However, the municipality contended that the developer had committed to payment prior to that date. The Stimulus Act stated that a commitment could be found within a condition in a land use approval issued by a municipality. Here, although the planning board’s resolution did not expressly state that the developer had to pay the development fee, that fee was not a charge that the municipality had discretion to impose or to waive. The ordinance established a mandatory fee for which all developers were responsible. Thus, the developer had committed to paying a development fee prior to the Stimulus Act and was not entitled to a refund.

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