New Law Gives Green Light to Solar Collectors in Planned Communities

On August 21, 2007, Governor Jon Corzine continued the the promotion of green building initiatives in the Garden State by signing into law A-2853, which prohibits homeowners’ associations from instituting a ban on the installation of solar collectors on the roofs of single family dwellings and townhouse units which are part of a planned community with commonly-owned property managed by an association. 

The law, which is an amendment to the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 et seq., does permit an association to to restrict the aggregate size or coverage or the total number of solar collectors, provided that the regulations imposed by the association do not inhibit the solar collectors from functioning at maximum efficiency.  Additional regulations relating to aesthetics, such as concealing supportive structures and piping and harmonizing colors with the color of structures and landscaping in the community, are also allowed under the new law.

In another bill signed into law the same day, A-3983, the Governor required the State to replace all incandescent light bulbs in buildings owned by the State with compact fluorescent bulbs over the next three years and for the New Jersey Board of Public Utilities (“BPU”) to undertake a public information campaign regarding the benefits of using compact fluorescent bulbs.  The bill authorizes the BPU to utilize both electronic and print media as well as other appropriate methods.  All informational flyers sent out by the BPU will, undoubtedly, be printed on recycled paper.

Equitable Estoppel Does Not Prohibit Revoking Zoning Permit Where Zoning Officer Admittedly Failed to Review Zoning Map

In a sobering reminder of the limitations of the use of the equitable estoppel doctrine where a business owner relies on an erroneous act of a municipal zoning officer, the appellate division affirmed the revocation of a zoning permit where the zoning officer admitted at trial that she simply failed to review the zoning map before offering her opinion.  Yard Sale Treasures L.L.C. v. Township of Berkeley, (N. J. App. Div. August 13, 2007).    

In Yard Sale Treasures, Plaintiffs wanted to open a restaurant and bar. They purchased a pocket liquor license for $385,000 and commenced a search for a location.  In the course of the search, the Plaintiffs “repeatedly consulted” with the zoning officer “to be sure that any property [Plaintiffs were] considering was in an area zoned for restaurants and bars.”  Upon finding an existing restaurant in a suitable location, Plaintiffs spoke to the zoning officer who “assured [Plaintiffs] that a restaurant and bar would be a permitted use in that location.  On the strength of her assurances, and the subsequent issuance of a zoning permit, Plaintiffs bought the business and spent $75,000 renovating it.”

Shortly before the restaurant and bar was to open, the Township attorney advised Plaintiffs that the premises was in the Neighborhood Business Zone (“NBZ”), which did not permit restaurants or bars.  While there was a question whether the restaurant would be a preexisting non-conforming use, he noted that the bar was clearly not and that the Township would not issue a CO.  Plaintiffs then commenced suit (and did not first seek an appeal or interpretation by the zoning board of adjustment).  After suit was filed, the Township conceded that the restaurant was a prior non-conforming use and allowed the restaurant (without the bar) to open.

The zoning officer testified that she gave Plaintiffs her opinion without looking at the zoning map, based upon her assumption that because there were several other restaurant/bars in the area and because the existing premises itself was a restaurant, the zoning permitted such uses.  She did not contend that her interpretation of the zoning ordinance was debatable but rather admitted that she was in error and that the zoning permit should not have been issued.

The trial court held that the ordinance did not permit restaurants or bars in the NBZ, and since the zoning permit was issued in clear violation of the zoning ordinance, the Township was not equitably estopped from revoking it. 

The appellate division noted that the parties agreed that under certain circumstances, a municipality may be estopped from revoking a zoning permit, where the owner has applied for the permit in good faith and has acted in reliance upon its issuance (citing Bonaventure, Int’l Inc., v. Borough of Spring Lake, 350 N.J. Super. 420, 435-36 (App. Div. 2002)).  However, the court stated that there is a distinction where the act is “utterly beyond the jurisdiction of the municipality and an act which involves an irregular exercise of a basic power possessed by the municipality.  The former is ultra vires and void while the latter is ultra vires in a secondary sense “and would not preclude application of the doctrine of estoppel in the interest of equity and essential justice.”  The court stated that this required consideration of whether the zoning permit was issued in clear violation of the ordinance or whether it was based on a colorable, but mistaken, construction of the ordinance.

The court found that the zoning ordinance was not ambiguous and that, reading the NBZ and the Highway Business Zone (“HBZ”) (which specifically permits restaurants and bars) in pari materia, the court concluded that the municipality clearly intended to permit bars and restaurants in the HBZ and intended to prohibit them in the NBZ.  As the zoning officer did not testify that she relied upon a debatable construction of the ordinance, “rather, she candidly admitted that she made a mistake because she did not check the zoning map before giving her opinion” the court held that the Township was not equitably estopped from revoking the zoning permit.   The appellate division noted that its opinion did not preclude Plaintiffs from applying to the zoning board of adjustment for approval of the use. 

While this is a particularly unfortunate result given the time and money spent by the business owner, it underscores the need to retain counsel at the initial stages of a potential business purchase or development project who can provide advice regarding crucial underlying zoning matters and guide a business owner through the land use permitting process which is as important to the success of a project as finding the “right” physical location or securing a critical license to operate a business.

Court Rules Highlands Act Is Not Unconstitutional

In OFP, LLC v. State of New Jersey, the Appellate Division has ruled that the state’s Highlands Act requires that a property owner must first exhaust its administrative remedies under the Act and apply for a hardship waiver of the restrictions before claiming that a regulatory taking has occurred.  Furthermore, the court upheld the validity of the retroactive application of the Act even where a major development project received all other required development approvals prior to the enactment of the Act.

From the August 11, 2007 Star Ledger:

Yesterday’s appellate decision upheld a November 2005 ruling by Superior Court Judge Theodore Bozonelis, who rejected a Morris County developer’s claim that the law’s development restrictions amounted to an unjust taking of land.

Developer OFP LLC got approvals to build 26 homes on 93 acres in Washington Township, but it hadn’t secured a state permit for a potable water supply until six weeks after the Highlands Act was introduced in the Legislature on March 29, 2004. While it didn’t become law until Aug. 10, 2004, the Highlands Act was retroactive to its introduction, meaning OFP’s project was subject to the law. OFP claimed the Highlands Act “operates as a bar to development as otherwise permitted by law and results in a taking of OFP’s property without compensation,” according to the ruling. The developer claimed the law results in “manifest injustice” and violates constitutional rights of equal protection and due process guarantees.

The appellate court, however, noted the law has established procedures to avoid a taking without compensation, and that OFP could have applied for a hardship waiver. “A property owner such as OFP, which obtained all but one of the approvals required for development of its property before the Highlands Act was introduced, has a stronger claim to a hardship waiver than a property owner which had taken no steps to develop its property when the Act was introduced and enacted,” Appellate Division Judge Stephen Skillman wrote.

The Highlands Act places development restrictions on approximately 800,000 acres of property in eighty-eight municipalities located in Morris, Sussex, Passaic, Hunterdon, Bergen, Warren and Somerset counties.

AG Opines that Highlands Council Master Plan Will Supersede State Plan Guidance, Local Zoning

An opinion from the New Jersey Attorney General from April, but released only this week by the Office of Smart Growth, confirms that the Highlands Council’s Master Plan will supersede local and county zoning regulations as well as the guidelines in the State Plan in the Highland’s preservation area.  The preservation area constitutes approximately half of the 850,000 acres in the Highlands.  Adoption of the draft plan is expected this fall.

“It is clear that, upon adoption of the regional master plan by the Highlands Council, the Council will exercise statutory and regulatory authority with regard to the development and use of land within the preservation area,” wrote [Senior Deputy Attorney General Daniel] Reynolds.

All towns located in whole or part in the preservation area will be required to submit local master plans and development regulations — as applicable to the preservation area — to the Highlands Council for approval, Reynolds wrote.

Towns in the less-restrictive planning area could voluntarily bring those lands under the umbrella of the preservation area, which could provide fiscal incentives and development protections, he noted.  Even in the planning area, the Legislature intended the State Planning Commission to work closely with the Highlands Council in developing rules and maps, Reynolds wrote.

There are 88 municipalities and portions of seven counties in the Highlands region. Five towns are totally in the preservation area, 36 are totally in the planning area and 47 towns are split between the areas.  – Star Ledger, June 28, 2007

State Planning Commission Amends Plan Endorsement Guidelines

At a meeting on June 20, 2007, the State Planning Commission (“SPC”) has voted to amend the Plan Endorsement guidelines of the SPC and Office of Smart Growth (“OSG”).  While Plan Endorsement is a voluntary step by a municipality, it will be essential to gain certain types of state grants, low interest loans, tax incentives and streamlined regulatory review as well as certification by the Council on Affordable Housing (“COAH”).

According to the guidelines, the SPC has “linked state laws, regulations and programs to the State Plan and the Plan Endorsement process so that communities that undertake this comprehensive planning effort receive the coordinated financial and technical support from the State.”  The process includes several detailed tasks, including preparing a “build-out” analysis and adopting a “vision statement” that projects a 20-year vision for the community utilizing tools such as focus groups, surveys and mapping exercises, to ensure that municipal planning and zoning are crafted from the State Plan’s perspective.

The guidelines require that a municipality appoint a “plan endorsement advisory committee” which is separate from the local planning board, to take the lead on initial assessment for ultimate consideration by the governing body.

When Can a $600,000 Difference in Price Be Considered “Substantially Similar”?

Preservationists undoubtedly cheered the recent decision in Bruce Paparone, Inc. v. State of New Jersey, Agricultural Development Committee, in which the Appellate Division held that it was a question of fact as to whether an offer to purchase farmland from a property owner under the Agricultural Retention and Development Act by the State Agricultural Development Committee (“SADC”) of $2.28 million was “substantially similar” to a developer’s proposed contract price of $2.88 million and that the trial court improperly granted summary judgment when the SADC was denied additional time to present its expert report as to valuation in opposition to Plaintiff’s motion.

Inverse Condemnation Action Subject to Six Year Limitation Period

In Raab v. Borough of Avalon, decided on April 30, 2007, the Appellate Division held, on issues of first impression, that (1) the physical taking of real property by a governmental agency, without compliance with the statutory safeguards established by law for the lawful exercise of eminent domain constitutes inverse condemnation, and (2) that actions to recover the value of the real property taken by inverse condemnation must be filed within six (6) years of accrual pursuant to N.J.S.A. 2A:14-1, when the landowner becomes aware of, or through reasonable diligence, should have become aware that he or she has been deprived of all reasonable beneficial use of the property.

Developer Wins Dispute Over Escrow Fees

In the case of Borough of Bloomingdale v. Bloomingdale Joint Venture/Meer Bloomingdale Estates, the Appellate Division recently upheld a determination by the Passiac County Construction Board of Appeals in favor of a developer who disputed a payment of $59,258.75 by the Bloomingdale Planning Board to their traffic consultant.  The County Board found that the “reasonable and necessary fees” were only $12,420, and, the Appellate Division, applying the deferential “arbitrary, capricious and unreasonable” standard to the County Board’s determination, upheld the reduced charges and ordered the balance returned to the applicant.  The lesson – make sure you review those escrow charges carefully….

ICSC Supports Bill Eliminating Time of Decision Rule in New Jersey

The International Council of Shopping Centers supports Assembly Bill A-3870, which proposes to eliminate the “time of decision” rule in New Jersey.  Under the Time of Decision rule, a municipality may change its zoning and site plan ordinances after a development application has been filed and even after a building permit has been issued.  So long as an application does not substantially rely upon the issuance of the building permit, it is subject to the amended ordinance.  New Jersey law permits municipalities to amend their ordinances in direct response to applications.   New Jersey is the only state that still follows the Time of Decision rule.  As provided in the ICSC’s letter (Page 1, Page 2) in support of A-3870, the Time of Decision rule can have a significant chilling effect on bringing new business into the state.  Eliminating the Time of Decision rule will greatly enhance the business climate in New Jersey and will substantially enhance planning as the underpinning of zoning.  Ad Hoc decisions affecting zoning will no longer be permitted.  Therefore, it is highly recommended to follow the ICSC’s lead and contact your local legislator to support A-3870 and its identical bill in the Senate, S-457.   Many other notable associations such as the New Jersey Apartment Association, New Jersey Builders Association, and New Jersey Association of Realtors are also supporting the legislation.  Click here to access the ICSC’s government relations website, where you can email your local Assemblymen and Senators your message in support of the bills.

Assembly Housing and Local Government Committee To Consider Eliminating The Time of Decision Rule And Other Key Bills

The New Jersey General Assembly Housing and Local Government Committee is meeting to discuss critical legislative initiatives on Monday, March 5, 2007 at 2:00 pm.  Each proposed bill would have a profound impact on development in New Jersey. 

Of particular significance, A3870 proposes to eliminate the time of decision rule.   The bill provides that “those development regulations which are in effect on the date of submission of an application for development shall govern the review of that application for development and any decision made with regard to that application for development.”  Eliminating the time of decision would promote greater predicability in the land development process.  Almost all other states have rejected the time of decision rule because of its inequitable results.  Supporting A3870 should be a top priority for developers this legislative session.   

A3860 proposes to amend N.J.S.A. 40:55D-92 to further clarify that the MLUL is enabling legislation and that municipalities cannot exceed the authority granted by the Legislature.  Currently, N.J.S.A. 40:55D-92 only provides that the MLUL shall be liberally constructed.  The bill also proposes to amend N.J.S.A. 40:55D-2, which sets forth the intent of the MLUL.  The amendment would add the goal of providing “a supply of housing adequate to meet the demographic, social, and economic needs of the State’s diverse and dynamic population.”   A3860 should be supported because it would help protect developers from ultra vires actions by municipalities and clarify that municipalities must permit the construction of diverse housing stock for their residents. 

Another bill which should be supported is A3887 .  A3887 proposes to prohibit the Board of Public Utilities (“BPU”) from requiring landowners outside designated centers to pay for utility infrastructure expansions.  

Each bill is supported by the New Jersey Builder’s Association.  Since significant opposition is anticipated for the aforementioned bills, it is critical for New Jersey’s development community to attend next Monday’s hearing in support of the proposed legislation.