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Centex Homes, LLC v. The Township Committee of the Township of Mansfield

372 N.J. Super. 186, 857 a.2d 649 (Law Div. 2004)

ZONING; PLANNED DEVELOPMENTS—A municipality may terminate an approved general development plan if, after many years, the project is not completely built and the developer has dramatically changed its plans without first having obtained additional approval.

A local municipality’s committee terminated a general development plan that had been approved by the municipality’s planning board approximately twenty-six years earlier. The developer challenged the termination by filing an action in lieu of prerogative writs. The developer argued that its development rights had vested and that only if a developer were guilty of fraud or deceit could the municipality terminate its vested rights. The municipality argued that the developer had failed to develop the project as it was approved; that the municipality was entitled to a presumption of validity and legitimacy; and that it had laid out its findings in a comprehensive resolution. The developer argued that the municipality had the burden of proving, by a preponderance of the evidence, good cause to terminate the plan. The municipality argued that because this was an action in lieu of prerogative writ, the burden was on the developer to show that the committee’s actions were arbitrary, capricious or unreasonable.

The Court agreed with the municipality and affirmed the termination of the plan. It held that the arbitrary, capricious, and unreasonable standard was applicable because this was an action in lieu of prerogative writ, and the committee’s actions were neither arbitrary nor capricious. N.J.S.A. 40:55D-45.1 provides that a planned development must be developed in accordance with the general development plan approved by the planning board, and there can be no variation without the planning board’s approval unless the variation occurs as a result of a negative decision by the New Jersey Department of Environmental Protection (DEP). N.J.S.A. 40:55D-45.7 states that if a municipality has cause to believe that the developer is not fulfilling its obligations, it can terminate the applicable development plan.

In this case, the Court determined that the developer’s plans for development had changed dramatically, and that the planning board had never approved those changes. Thus, the municipality had the required “cause to believe” that the developer was not capable, and would not be capable, of fulfilling its obligations under the approved plan.

The developer argued that a “mere change” was not enough to terminate a plan in the absence of fraud or deceit. The Court disagreed, finding that removal of a parcel from the plan was sufficient, by itself, to allow a municipality to require the developer to present evidence to the planning board regarding continued compliance. It also found that the developer’s removal of a particular tract had substantially altered the plan because it eliminated sixty-eight acres and thirty-six lots from the project and because it had impacted a substantial portion of the open space requirements.

The developer argued that under N.J.S.A. 40:55D-45.5, the alteration was permitted without the board’s approval because the removal was done in response to a negative decision by the DEP. The court disagreed, holding that the developer failed to persuade the planning board that the proposed variation was a “direct result” of a DEP determination and had failed to show that it was unable to create a less dramatic variation of the plan.

The Court held that one of the legislative goals for allowing for extended protection for general development plans against changes in local zoning laws was to permit a greater degree of certainty with regard to large-scale developments to be phased in over a period of years. Even though this specific ten-year project was approved in 1997, more than six years had passed without any houses or infrastructure improvements being built. As a result, the Court found the project was not supplying the certainty that had been contemplated by the Legislature. The Court also found that the development plan was an integrated plan and that the survival of any portion of the plan was dependent on the survival of the whole plan. By the time of the planning board’s action, the originally approved plan no longer existed, and only pieces of it remained. Therefore, the Court held that the municipality’s termination of the plan was appropriate and was not arbitrary, capricious or unreasonable.

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