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R.J.P. Builders, Inc. v. Township of Woolwich

361 N.J. Super. 207, 824 A.2d 1114 (App. Div. 2003)

ZONING; CONDITIONS; GUARANTIES—A land use board may require a developer to furnish both a maintenance guarantee and a performance guarantee as pre-condition to subdivision approval, but cannot unduly restrict the amount of time within which a developer must complete construction.

A developer was granted final major subdivision approval with a number of conditions. One condition was for “complete construction and installation of the improvements required for the subdivision reflected in the cost estimate for bonding ... within 18 months from the date of adoption of this resolution.” Another was that a maintenance guarantee “securing maintenance of all improvements to be constructed in the subdivision” be posted and that guarantee “run for a term of two years from the date of acceptance of the improvements by this township.”

The Municipal Land Use Law (MLUL) “authorizes municipalities to obtain two types of guarantees from developers: performance and maintenance guarantees.” A performance guarantee is to make sure sufficient funds are available to complete all necessary improvements. A maintenance guarantee “is to insure the completed improvements.” Maintenance guarantees “may be in the form a surety bond or cash, ..., or an irrevocable letter of credit.” The statute governs “whether a municipality can require a developer to post a maintenance guarantee before recording a subdivision plat.” Here, the resolution approving the subdivision provided that the subdivision plat would not be signed and filed with the county clerk until the maintenance guarantee had been posted. The statute speaks of the same subject, requiring that “as a condition of final site plan approval or as a condition of the issuance of a zoning permit, ..., the approving authority may require and shall accept in accordance with the standards adopted by ordinance and regulation ... for the purpose of assuring the installation and maintenance of on-tract improvements: (1) the furnishing of a performance guarantee ... (2) [p]rovision for a maintenance guarantee to be posted with the governing body but not to exceed two years… .” The developer relying upon the difference in language between subsections (1) and (2), argued “that a municipality may not require the developer to provide a maintenance guarantee until final acceptance of its improvements.” It pointed out that “while subsection (1) required ‘[t]he furnishing of’ a performance guarantee, subsection (2) required the developer to make’ provision for’ a maintenance guarantee, which is ‘to be posted’ for a period not to exceed two years ‘after final acceptance’ of the improvements. Based on this difference in language, [the developer] argued that subsection (2) only requires a maintenance guarantee ‘to be posted’ after final acceptance of the improvements.”

The Court looked to the introductory language of the statute and concluded “that the requirement that a developer provide a maintenance guarantee before recording a subdivision plat is valid. [T]he introductory language states: ‘Before recording of final subdivision plat ... the approving authority may require ... for the purpose of assuring the installation and maintenance of on-tract improvements’ the performance and maintenance guarantees described in subsections (1) and (2).” To the Court, this meant that “both performance and maintenance guarantees may be required before a subdivision plat is recorded.” Just because subsection (1) uses the term “furnishing” while subsection (2) uses the term “provision for” does not “undercut this conclusion, because ‘furnish’ and ‘provide’ are often used as synonyms.” Further, the statute also uses the plural term “guarantees” in its last sentence and that reinforced the Court’s conclusion “that a municipality may require a developer to provide both a performance guarantee ... and a maintenance guarantee… before a subdivision plat will be approved and filed.

The Court was troubled about the requirement that the developer “construct[] and install[] its improvements ‘within the 18 months from the date of adoption of [the] resolution’ granting final subdivision approval.” Given the time periods allowed for the approval process, “a developer may wait as long as 285 days after the planning board signs the subdivision plat, and for a substantially longer period if it is prevented from filing the plat because of delays in obtaining legally required approvals from other governmental agencies.” During that period, “the subdivision approval is not perfected and the developer cannot begin selling lots.” Therefore, according to the Court, “if there were delays in obtaining legally required approvals from other agencies, the [18 month] period for completing improvements could expire before the final subdivision approval even becomes effective.” Moreover, New Jersey statutes only “establish[] a two-year period during which the developer is protected from changes in zoning law or other rights conferred by final major subdivision approval.” Accordingly, the Court struck the addition that the developer complete all approvals within 18 months.


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