New Jersey Appellate Division Warns Planning Boards That Avoiding Controversy Risks Automatic Approval

When reviewing land use applications, “the rule of law is paramount and cannot be sidestepped to avoid deciding unpopular land use applications.” In issuing this reminder, the New Jersey Appellate Division recently affirmed the automatic approval of a site plan application that modified a planned unit development approval (PUD) dating back to 1997, underscoring the principle that land use applications are to be adjudicated on the merits in a timely fashion.

In Shipyard Associates v. Hoboken Planning Board, et al., an unpublished decision, a developer was granted PUD approval in 1997 for a mixed use waterfront project that included residential high-rise apartment buildings, commercial retail space, a parking garage, and tennis courts. The developer constructed the project, except for the tennis facilities, and, in 2011, applied for site plan approval to build two additional residential towers instead of the tennis courts. Although the applicant was deemed complete in October 2011, the matter was not scheduled to be heard at a Planning Board meeting until approximately eight months later. In the interim, the City sued the developer seeking to enforce its perceived rights under the developer’s agreement for the 1997 PUD approval. Due to the filing of that lawsuit, when the Planning Board finally turned to the application in July 2012, the Planning Board refused to consider the matter, claiming it lacked jurisdiction in light of the City’s pending lawsuit, and instead denied the application “without prejudice.” The developer subsequently sued the Planning Board, asserting that its failure to adjudicate the merits of the application resulted in its automatic approval under N.J.S.A. 40:55D-61 of the Municipal Land Use Law (MLUL). The City and the developer’s lawsuits were consolidated by the trial court, which held in favor of the developer. On appeal, the Appellate Division addressed both the City’s lawsuit against the developer, and the developer’s lawsuit against the Planning Board.

Concerning the former, the Appellate Division affirmed, consistent with the New Jersey Supreme Court’s decision in Toll Bros., Inc. v. Bd. of Chosen Freeholders of Burlington, that a developer’s agreement cannot be enforced so as to prevent a developer from seeking a modification of a previously-issued approval because “a developer’s agreement is not . . . an independent contractual source of obligation.” The Appellate Division also stressed that the MLUL “signals the Legislature’s intent to permit a developer to apply to a planning board to modify the terms of approval of a PUD,” and that ultimately, the merits of an application to modify prior approvals should be decided by the board, and not the trial court. Accordingly, the City’s claim against the developer necessarily failed.

The Appellate Division also held in favor of the developer on its claim against the Planning Board. Emphasizing that “there was nothing inadvertent or unintentional about the Planning Board’s action,” the court found its actions an attempt “to circumvent the automatic approval statute by ‘denying’ [the developer]’s application ‘without prejudice.’” This was tantamount to the Board “unlawfully granting itself an extension of time to hear the application,” which was at odds with the “Legislature’s considered policy judgment that land use applications should be heard promptly and local governments should not give developers the runaround.” As a result, the Appellate Division affirmed the automatic approval of the developer’s application.

Thus, this case serves as a reminder to land use boards that failure to render a decision is, in fact, a decision. As the Appellate Division warned, “failure to follow the law may insure the success of an application that local objectors vigorously oppose. We appreciate that it may be difficult for planning board members, who are unpaid appointees, to stand firm in the face of vocal objectors and carry out their statutory duty. We have read the transcript of the July Board hearing, in which objectors were interrupting the proceedings and shouting, ‘we want tennis courts.’ However, the Planning Board was obligated to hear Shipyard’s application, no matter how controversial it was. Ironically, had the Board considered the application on its merits, it had authority to deny the application unless Shipyard’s evidence justified modifying the original PUD approval which included the tennis courts. But, because the Planning Board yielded to public pressure, and refused to hear Shipyard’s application, the result is automatic approval of the application.”

Jennifer P. Smith is a Director in the Gibbons Real Property & Environmental Department.
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