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Toll Bros., Inc. v. Board of Chosen Freeholders of the County of Burlington

388 N.J. Super. 103, 906 A.2d 476 (App. Div. 2006)

ZONING; OFF-TRACT IMPROVEMENTS — According to a New Jersey statute, a developer’s legal obligation to pay for off-tract improvements that are necessitated by construction is limited to its pro rata share of the cost.

A developer prepared a plan that included building a golf course, country club, residential units, retail property, and office space in a rural area. The development site was located within two municipalities, and the developer applied for site plan approval from both municipalities’ planning boards. In anticipation of the development’s impact on traffic, the planning boards conditioned their land use approvals on the developer undertaking recommended roadway improvements at the developer’s own cost. One of the boards stated that until the road improvements were made, it would not permit more than eighteen percent of the project to be built. The developer entered into developer’s agreements with one of the municipalities’ planning boards, as well as with the county planning board. The eighteen percent requirement was incorporated into the agreement with the county.

After entering into the agreements and constructing the first phase of development, the developer changed its site plan. During the second phase of development, rather than building office space, it decided to build a senior citizen condominium complex which would result in no increase in traffic.

Meanwhile, another developer applied to one of the municipalities’ planning boards for approval to build an office park on a neighboring parcel. This project would affect traffic on the same roads as the first developer was using. Consequently, the board required the second developer to contribute its pro-rata share towards road improvements.

The original developer sued the second developer and the planning board which had only required a limited contribution to road improvements from the later developer. The original developer claimed that the board unlawfully discriminated between the two developers by approving the office park without assigning more financial responsibility for the road improvements to the second developer. It also sued the county board, seeking a declaratory judgment that the developer’s agreement was void, or that it should at least be revised to require it to pay only its pro-rata share of the cost of the road improvements. Finally, the original developer sued the other municipality’s planning board, challenging the condition in that board’s approval of the senior citizen housing plan requiring the completion of road improvements before construction could begin. The original developer claimed that the substantial reduction in the project’s scale supported its arguments.

The lower court granted summary judgment to the county, the municipalities’ planning boards, and the second developer. On appeal, the Appellate Division affirmed the judgment as to the county, one of the planning boards, and the other developer, but it reversed the judgment in favor of the municipality that had required road improvements despite the change in the development plan from office space to less intense-parking senior housing.

First, the Court examined the general principles guiding developer payments for off-tract improvements. According to a New Jersey statute, a developer’s legal obligation to pay for off-tract improvements that are necessitated by construction is limited to its pro-rata share of the cost because a developer should not be burdened with a disproportionate amount of the improvement costs. Therefore, the Court found that without the original developer’s agreements, the developer could not be required to pay the entire cost of the improvements, since the reduced size of the proposed development did not necessitate such large improvements.

The question then remained whether the original developer’s agreements were binding on the developer. The original developer argued that an agreement in which a developer promises to pay more than its pro-rata share is contrary to public policy and therefore void. The Court, however, found that a developer’s agreement is not invalidated simply because a developer voluntarily offers to undertake improvements that could not be required by law. The Court further found that the conditions in the agreements did not violate any zoning laws or require any illegal conduct. It stated that basic contract principles apply, and since the terms of the contract were clear, the agreements were to be enforced as written. Therefore, the Court agreed with the lower court’s decision that the original developer was bound by its developer’s agreement with the county which stated that it must make the road improvements when the development generated more than eighteen percent of the projected traffic for the development.

As to the developer’s agreement with the planning board, however, the Court found that the intent of the parties applied to the office space that was originally planned for the property, and not to the senior citizen residential community. While the written agreement did not set forth specific developments for the property which would activate the developer’s obligation to complete the road improvements, the Court found that it was “relatively obvious” that the agreement referred to the development of office space. Unlike the agreement with the county, where the improvements were required once the traffic reached a certain threshold, the agreement with the board called for road improvements in stages, as the traffic-generating complexes were built. The first stage of improvements was completed, and the municipality and its planning board did not show that a senior housing development would generate the need for additional improvements. Further, the Court found that the language of the agreement implied that completion of the improvements was conditioned on the construction of buildings that generated the need for improvements. Therefore, the Court reversed the lower court’s grant of summary judgment in favor of this planning board.

With regards to the claim against the later developer, the Court agreed with the lower court that the later developer was not contractually obligated to contribute more than its pro-rata share of the road improvements. The original developer claimed that it held documents that formed an enforceable contract committing the second developer to contribute to the cost of improvements. However, when it entered the agreement with the county it made no mention of the second developer, and promised to pay one hundred percent of the costs. Therefore, the Court found that even if an obligation had existed, the original developer had effectively waived the agreement by repeatedly promising to be solely responsible for the improvements. The Court affirmed the lower court’s decision in favor of the second developer.

Lastly, the Court found that the second municipality’s planning board did not deprive the original developer of its equal protection, substantive due process or procedural due process rights when it approved the second developer’s site plan without requiring it to pay a larger portion of the road improvement costs. The claim was entirely unfounded and the Court simply found that summary judgment had been properly granted to the board.


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