New Jersey Supreme Court Hands-Down Unanimous Decision: Municipalities Cannot Require Land Set-Asides or “In Lieu” Payments

Recreation and Open Space Ordinances, Fees Deemed Invalid by State’s Highest Court

June 25, 2009 - Today, the New Jersey Supreme Court upheld the Appellate Division’s decision in a unanimous ruling stating that municipal governments do not have the right under the Municipal Land Use Law (MLUL) to require developers to set-aside land for open space or recreation facilities – or require payments in lieu of the same – as a condition of approval. The one-page decision ruled in favor of the Builders League of South Jersey and the Shore Builders Association of Central New Jersey through consolidated appeals in their cases versus Egg Harbor Township and Jackson Township, respectively, challenging those township’s ordinances which imposed such requirements on developers.

Traditionally, and as the Courts have now ruled – unlawfully, towns have demanded that builders provide open space within their communities or make an “in lieu” payment to the township as a stipulation of approval. With today’s ruling, the Court affirmed the Appellate Division’s conclusion that “the municipalities lack the authority to promulgate the ordinances in issue”.

The Court’s decision has state-wide implications as it relates to the ways in which municipalities exercise their powers relating to zoning, land use and development, requiring that municipal governments “strictly conform to that statute’s [the MLUL’s] provisions”.

“The New Jersey Builders Association applauds the Courts’ decisions,” said NJBA President Michael Karmatz. “Homebuilders have long held that these demands and/or fees have been imposed improperly and unreasonably, and to the detriment of the home-buying public. While we affirm the need to preserve and plan for open space, municipalities have over-stepped their authority to provide for it – without basis and without compensation to the landowner.”

In a statement released earlier today, Paul H. Schneider, Esq. of Giordano, Halleran & Ciesla, P.C., who represented the Shore Builders Association of Central New Jersey said, “We are delighted that the Supreme Court has agreed that these types of ordinances are unlawful.”

According to Michael Paparone, President of the Builders League of South Jersey, “This case was not about a municipality’s authority to take land for open space and recreation, but rather a municipality’s belief that it can enact land use ordinances to take land for free. We asked the New Jersey Supreme Court to reject them.”

And reject them, they did.

Schneider continued, “This decision will help homebuilders provide more reasonably-priced homes for the citizens of New Jersey.”