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Talcott Fromkin Freehold Associates v. Freehold Township

383 N.J. Super. 298, 891 A.2d 690 (Law Div. 2006)

DEVELOPERS; AGREEMENTS; DETENTION BASINS—A municipality may lawfully require a developer to retain responsibility for maintaining a detention basin for a reasonable time even after the basin has been voluntarily dedicated and accepted.

A developer sought major subdivision approval to build a 52 lot development comprised of 49 single family homes, with 3 lots used for stormwater detention facilities. As part of the resolution approving the subdivision, the municipality required the developer to post performance guarantees and provide a mechanism for funding the maintenance of the detention basins for a period of ten years. The developer agreed, and the developer’s agreements were recorded. Ten years later, the municipality adopted three resolutions releasing the developer’s performance guarantees, subject to a condition requiring the developer to post the ten years’ maintenance fees for the stormwater detention basins pursuant to the resolutions and recorded developer agreements. The developer challenged the validity of the municipality’s deduction of the maintenance fees from the cash and surety bonds. It claimed that New Jersey’s Municipal Land Use Law (MLUL) only permits a municipality to collect maintenance fee guarantees for a two year period. On that basis, the developer argued the ordinance requiring it to pay ten years of detention basin costs was beyond the municipality’s authority and was ultra vires.

The Law Division disagreed, noting that municipal ordinances are presumed valid and that the New Jersey State Constitution confers to a municipality powers that are necessary, implied or incident to the powers expressly conferred by the MLUL and the powers are not limited to the express language of the MLUL. It also noted that the developer had to demonstrate that the ordinance was clearly arbitrary, capricious, and unreasonable or plainly contrary to the MLUL. The Court noted that there are two methods for a developer to provide for maintenance of stormwater detention agreements. One method is to create a planned community with a homeowner’s association and to pass on the maintenance obligations to the association. The other method is to dedicate the detention basins to the municipality. The Court further held that a municipality is not required to accept dedication of any improvements other than certain roadways and public utilities. Further, in approving the dedication of the detention basins to the municipality, a municipality is within its powers to require payment of maintenance fees. The remaining question was whether the ten year maintenance requirement was reasonable under the circumstances. The Court thought it was. In addition, the developer had voluntarily agreed to the maintenance provision and did not negotiate a different maintenance arrangement or provide for the ownership of the detention basins by a homeowners’ association. On that basis, the Court also found that since the developer never challenged the requirement when it received the approvals and never protested the requirements or reserved its rights thereafter, it was estopped from challenging its validity ten years later.

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