New Jersey’s Time of Application Rule Does Not Bar a Favorable Zoning Amendment

In a published decision, the New Jersey Appellate Division ruled on July 27 that the “time of application” rule, which mandates that development applications are governed by the regulations in effect at the time of submission, and was intended to protect applicants from negative zone changes while their applications were pending, does not apply to zone changes which benefit a project.

The decision, Jai Sai Ram, LLC v. Planning/Zoning Board of the Borough of South Toms River, A-2075-14, involved an application by Wawa to construct a combined convenience store and gas station on property partially in a highway development zone and partially in a residential zone. Because the proposed use was not permitted in either zone, a “d(1)” use variance was required to allow a principal use not permitted in the zone. Over plaintiff’s objection, the Board granted the use variance, together with preliminary and final site plan approval and several bulk variances. The plaintiff appealed, and the trial court affirmed the Board’s decision.

The plaintiff took a further appeal to the Appellate Division, and while that appeal was pending, the Borough amended its zoning regulations in a manner to expressly permit the proposed Wawa. The issue on appeal then became whether the zoning amendment controlled, given the so-called “time of application” rule, N.J.S.A. 40:55D-10.5.

Prior to the “time of application” rule taking effect in May of 2011, land use applications were governed by the so-called “time of decision” rule whereby the zoning regulations which apply to a project were those in effect at the time the planning board or zoning board decided the application. As a result, municipalities could change the zoning regulations to prohibit the proposed use while a project was in the approval process, often specifically in response to the project and the public opposition it engendered. For example, in Manalapan Realty, L.P. v. Tp. Committee of Tp. of Manalapan, 140 N.J. 366 (1995), the New Jersey Supreme Court upheld a zone change to keep out a home improvement store which was in the midst of a highly contested approval process, and in which the applicant had made a significant investment.

The development community for years complained that it was an unfair result when an applicant played by the rules and acted in reliance on the zoning regulations as they existed at the time the application was filed. Eventually, in 2011 the Legislature enacted the “time of application” rule whereby the zoning regulations would be locked in upon the filing of an application, thereby preventing a municipality from changing the rules midway through the approval process in order to block a project. But what about the opposite situation, when the municipality changes the zoning regulations during the approval process or during a subsequent appeal in order to facilitate the project? That was the issue presented in the recently decided case of Jai Sai Ram.

The “time of application” rule provides that “[n]otwithstanding any provision of law to the contrary, 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. Any provisions of an ordinance, except those relating to health and public safety, that are adopted subsequent to the date of submission of an application for development, shall not be applicable to that application for development.”

The court in Jai Sai Ram examined the Legislative history of the “time of application” rule and concluded that although “the literal terms of the statute could be construed to prevent a favorable land use amendment from applying to a pending application, that reading would be completely contrary to its purpose.” As a result, the court concluded that to avoid an absurd result, “the statute does not apply where the local zoning is amended to specifically permit the use which is the subject of a variance application.” The court then further concluded that the appeal itself was rendered moot by the ordinance amendment, since the project could now proceed without the variance.

Jai Sai Ram reconciles statutory language in the “time of application” rule which on its face could have been read to reach a result contrary to the statute’s Legislative purpose. Accordingly, it is now clear that applicants cannot be held to less favorable zoning requirements simply because their application for development was filed before a favorable zoning amendment was enacted.

Howard D. Geneslaw is a Director in the Gibbons Real Property & Environmental Department.