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

194 N.J. 223, 944 A.2d 1 (2008)

DEVELOPERS; OFF-SITE IMPROVEMENTS — A developer cannot be compelled to pay more than its fair share of the costs of off-track improvements notwithstanding any earlier development agreement with a municipality because a developer’s agreement is not independent of, but rather is subject to, the provisions of the Municipal Land Use Law.

Owners of adjacent properties sought zoning variances and waivers from two municipalities and the county in order to develop their properties. The properties were located in a rural area serviced by two-lane roads. The larger parcel, located primarily in one municipality, was to be a commercial, residential, and retail development that included a golf course. The smaller parcel which was to be developed for an office complex, was located primarily in the other municipality. The owners’ applications were treated as one overall application. Traffic studies were conducted. The municipalities and the county concluded that in order to accommodate the traffic anticipated from the new developments, substantial road work was required. The road work included relocating an intersection and widening roads. The county approved the applications. The overwhelming majority of the development was to be on the larger parcel. The owner of the larger parcel was to be responsible for three-fourths of the cost of the road work, with the owner of the smaller parcel responsible for the balance. A buyer acquired the larger parcel, including the approvals and the seller’s obligations imposed under those approvals. As part of the process, the buyer was required to execute a developer’s agreement whereby it agreed to be solely responsible for the completion of the road work at its expense. The buyer scaled back its project. Meanwhile, the owner of the smaller parcel received approvals for an office building, but the buyer, as owner of the larger parcel, was still obligated to pay for all of the road work, with the owner of the smaller parcel only obligated to contribute only 7.7% of the cost.

The buyer sought to have its obligations reduced based on the scaled-back development and changed circumstances. The municipalities and the county refused. The buyer sued. The lower court found that the developer’s agreement was clear and unambiguous, and therefore, as a matter of contract law, the buyer was not permitted to move before the county planning board to demonstrate a change in circumstances.

The Appellate Division affirmed. The Court recognized that the Municipal Land Use Law (MLUL) prohibits government from requiring a developer to pay for more than its pro rata share of off-site improvements. It also found that, under the MLUL, the county could not require the buyer to pay the entire cost of the road work because it would be significantly greater than the need for such work based on the scaled-down development plan. However, the Appellate Division held that the restrictions in the MLUL were inapplicable in this case because the buyer had signed a voluntary agreement to do the road work at its own cost.

The buyer appealed, and the Supreme Court reversed, holding that, under the MLUL, a developer cannot be compelled to pay for more than its fair share of the costs of off-tract improvements. It found that a developer’s agreement is a contract between the municipality and the developer that merely details the manner in which a developer will meet its obligations to pay for its pro rata share of off-tract improvements under the MLUL. Contrary to the findings by the lower court and by the Appellate Division, a developer’s agreement is not independent of, but rather is subject to, the provisions of the MLUL. Therefore, notwithstanding the terms of the developer’s agreement, the buyer was entitled to appear before the municipal planning board to demonstrate why the scaled-back project and the change in circumstances warranted relief from its obligations to pay for the road work.


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