New Jersey Court Strikes Down "Open Space" Set-Asides

July 15, 2009

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New Jersey homebuilders are applauding a unanimous June decision by the state Supreme Court that stops towns from requiring builders and developers to set aside land for open space (or pay a cash fee) as a permitting condition for housing developments. In the cases of New Jersey Shore Builders Association v. Township of Jackson and Builders League of South Jersey v. Egg Harbor Township, the court held that New Jersey towns have been exceeding the authority given to them under the state’s Municipal Land Use Law (MLUL).

Upholding an appellate court’s previous decision in the matter, the Supreme Court said, “The Legislature, although recognizing the benefits to be derived from open space, and although including its preservation among the enumerated purposes of the MLUL, limited the manner in which municipalities may demand that it be made available.” While towns can require open space in certain developments, called Planned Unit Developments (PUD), they can’t do the same thing for just any proposed development. And even in the case of a PUD, the appeals court remarked, the towns’ power under the law is limited: They can’t, for example, require a cash payment “in lieu of” the land set-aside, as towns have been doing. “Such an alternative would not advance the goal of ensuring that adequate open space be provided within the PUD and because the statutory authority that permits a municipality to require contributions for off-tract improvements is itself limited,” said the court. “We therefore note that, although not precisely the focus of this appeal, the suggestion that the MLUL would permit a payment in lieu designed to fund off-tract open space, as an alternative to the set-aside within a PUD, does not square with the MLUL.” The full text of the court’s opinion is posted on the website of the Rutgers University law library.

In an Asbury Park Press story (“Builders don’t have to set aside open space,” by Keith Ruscitti), an attorney for the builders’ groups was particularly critical of the cash option towns have pushed: “‘The towns can talk about open space or recreational facilities, but what they really wanted were the fees,’ said Paul H. Schneider, the attorney who represented the New Jersey Shore Builders Association. ‘This was a type of extortion, to squeeze more money out of the developers.'”

For New Jersey builders, however, this issue may not go away. The court’s decision rested on the phrasing of current legislation, not on any sort of constitutional issue. Accordingly, hinted Bill Dressel, executive director of the New Jersey League of Municipalities, towns may still press lawmakers to grant the authority that the court has ruled they lack under current law: “The Court has made it clear that a legislative solution will be necessary.”

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