New Jersey Builders Ass'n v. Mayor and Tp. Committee of Bernards Tp., Somerset County

• Decision Date: 08 July 1987
• Citation: 528 A.2d 555,108 N.J. 223
• Parties: NEW JERSEY BUILDERS ASSOCIATION, a corporation not for profit of the State of New Jersey, Builders Association of Somerset and Morris, a corporation not for profit of the State of New Jersey, and Mill Race Limited, a partnership, Plaintiffs-Respondents, v. The MAYOR AND TOWNSHIP COMMITTEE OF BERNARDS TOWNSHIP, SOMERSET COUNTY, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 223

108 N.J. 223

528 A.2d 555

NEW JERSEY BUILDERS ASSOCIATION, a corporation not for profit of the State of New Jersey, Builders Association of Somerset and Morris, a corporation not for profit of the State of New Jersey, and Mill Race Limited, a partnership Plaintiffs-Respondents, v. The MAYOR AND TOWNSHIP COMMITTEE OF BERNARDS TOWNSHIP SOMERSET COUNTY, Defendant-Appellant.

Supreme Court of New Jersey.

Argued Feb. 2, 1987.

Decided July 8, 1987.

Howard P. Shaw, Morristown, for appellant (Schenck, Price, Smith & King, attorneys).

Stewart M. Hutt, Woodbridge, for respondents New Jersey Builders Ass'n etc., and Builders Ass'n of Somerset and Morris, etc. (Hutt, Berkow & Jankowski, attorneys).

Roy E. Kurnos, Morristown, for respondent Mill Race Limited, etc. (Murphy, Kurnos & Nish, attorneys).

The opinion of the Court was delivered by

STEIN, J.

The narrow issue that we address in this appeal is whether Bernards Township's Ordinance 672 is a valid exercise of the authority conferred upon municipalities by the Municipal Land Use Law (MLUL), specifically N.J.S.A. 40:55D-42. We hold that that portion of the ordinance that requires new developers to pay their pro-rata share of the Township's long term, twenty-million dollar road improvement plan exceeds the Township's authority under the MLUL and is therefore invalid. Accordingly, we affirm the judgment of the Appellate Division.

I

The material provisions of Ordinance 672 are set forth at length in Judge D'Annunzio's well-reasoned opinion below, New Jersey Builders Ass'n v. Bernards Township, 211 N.J.Super. 290, 511 A.2d 740 (Law Div.1985). We reiterate them only to the extent necessary to permit a full understanding of the ordinance's purpose and intended implementation.

Bernards Township, bisected by Interstate Highways 78 and 287, is a rapidly-developing municipality in northern Somerset County. During the late 1970's, and in response to the impact of new and increased development, the Township authorized a consulting firm to undertake a comprehensive transportation and traffic study of the entire Township. The study summarized the existing traffic conditions in the community, made traffic projections based on current and projected development in accordance with the zoning ordinance, and set forth road improvements deemed necessary to accommodate current and anticipated development throughout the Township. The result of the study was a Transportation Management Plan that was substantially incorporated into the circulation element of the Township's Master Plan. See N.J.S.A. 40:55D-28b(4). Reflecting the consultant's recommendations, the Master Plan proposed an extensive roadway improvement program involving improvements to twenty-two township roads, seventeen intersections, seven county roads, two county bridges, and off-street commuter parking facilities. It was anticipated that the improvements would be constructed over a twenty-year period at an estimated cost of twenty million dollars.

As recommended by the Master Plan, Ordinance 672 was adopted to provide a mechanism for allocating the cost of the road improvement program between the Township and its residential and commercial developers. The premise underlying Ordinance 672 is that all new development within the Township contributes to the need for Township-wide road improvements. Thus, allocating the cost of such roadway improvements, on the basis of "trip generation" forecasts, between the Township--to reflect the impact of existing development--and new developers was a reasonable and appropriate exercise of the Township's regulatory authority under the MLUL.

Judge D'Annunzio carefully summarized the cost-allocation formula set forth in Ordinance 672:

Utilizing the Trip Generation Handbook published by the Institute of Transportation Engineers the appendix to the ordinance establishes trip generation rates for six basic uses: single family, multi-family, senior citizen, general office, professional office and retail. For example, a single-family residence will generate 1.1 p.m. peak hour trips. Specifically it will generate 0.7 arrivals and 0.4 departures. Similarly, a general office will generate 1.63 p.m. peak-hour trips per 1,000 square feet. A development of 100 single-family residences will generate 110 p.m. peak hour trips. The township determined that at full development 23,700 p.m. peak-hour trips per day will be generated. It was further determined that development in place in 1982 generated 7,450 p.m peak-hour weekday trips. Utilizing simple mathematics the township determined that the share of the cost of the roadway improvement program to be borne by general township revenues is 31.4%

( 7,450

23,700)

and the share to be borne by future developers is 68.6%. The estimated cost for the improvement of municipal roads is $14,800,000. The general revenue share, i.e., the share allocated to existing development is 31.4% or $4,547,000. The balance of $9,933,000 is allocated to new development as is the entire projected cost of improvements to county roads which are to be made by the township in the amount of $5,520,000. Therefore, the total cost to be borne by future development is $15,453,000. Dividing that amount by the 16,250,000 p.m. peak hour trips to be generated by all future development yields an assessment of $951 per trip generated by all new development. The developer of 100 single-family homes resulting in 110 trips must pay Bernards Township $104,610 as his share of the cost of the transportation network improvement program. This assessment would be in addition to the cost of off-tract improvements necessitated or required by the new development where no other property owners receive a special benefit. In a non-residential context the builder of four retail stores of 1,000 square feet each would pay an assessment of $54,770.60 because each 1,000 square feet of retail space generates 14.40 p.m. peak-hour trips. [211 N.J.Super. at 292-93, 511 A.2d 740.]

The ordinance requires developers to pay 50% of their share of the road improvement cost upon issuance of a building permit, to post security for the unpaid balance, and to pay the balance upon issuance of a certificate of occupancy. The ordinance permits payment on the basis of construction in stages, or payment on a per-unit basis at an accelerated rate. ¹ Money paid to the Township pursuant to Ordinance 672 is to be segregated, until spent, in a separate dedicated account. The ordinance permits a developer, or its successor in title, to apply for a refund if the funds paid are not spent by the Township within twenty years, or ten years after execution of the particular Developer's Agreement, whichever is later. If no refund claim is made within one year after the date on which it may first be asserted, the money reverts to the Township for general capital purposes.

Plaintiffs New Jersey Builders Association and its local affiliate, Builders Association of Somerset and Morris, are trade organizations consisting of builders and developers, some of whom allegedly own property in Bernards Township that they intend to develop. Plaintiff Mill Race Limited is a purchaser of land in the Township that has since been developed. ² Although the Township challenges plaintiffs' standing to seek a declaratory judgment that Ordinance 672 is invalid, we are fully in accord with the Appellate Division's conclusion that "plaintiffs have demonstrated a sufficient stake and adverse interest as to entitle them to sue under New Jersey's liberal rules of standing." 219 N.J.Super. 539, 530 A.2d 1254 (App.Div.1986) (citing Crescent Park Ass'n v. Realty Equities Corp. of N.Y., 58 N.J. 98, 105-111, 275 A.2d 433 (1981)).

The Law Division held that the road improvement provisions of Ordinance 672 violated the limited grant of authority, set forth in N.J.S.A. 40:55D-42, ³ permitting municipalities to require developers to pay their share of "reasonable and necessary" off-site improvements. 211 N.J.Super. at 297, 511 A.2d 740. The Law Division did not determine the validity of the ordinance's provisions relating to off-tract drainage improvements. The court also declined to rule on the Township's motion that the decision invalidating the ordinance should apply prospectively only. The Appellate Division, affirming on the basis of the opinion below, specifically ruled that the judgment would not be limited to prospective application. 219 N.J.Super. at 539, 530 A.2d 1254. We granted the Township's petition for certification. 104 N.J. 421, 517 A.2d 417 (1986).

II

Although our disposition of this appeal is controlled by what we discern to be the intended scope of N.J.S.A. 40:55D-42, a broader context is indispensable to a full understanding of the implications of the issue before us. We acknowledge that our experience with municipal attempts to charge developers for off-site improvements has heretofore been limited to the cost of facilities closely related to needs generated by the specific development. See, e.g., Divan Builders v. Township of Wayne, 66 N.J. 582, 334 A.2d 30 (1975) (municipality sought contribution toward improvement of drainage basin serving subdivision and adjacent area); ordinances adopted by state Longridge Builders v. Planning Bd. of Princeton Township., 52 N.J. 348, 245 A.2d 336 (1968) (municipality required developer to pave dedicated right-of-way from subdivision boundary to public street); cf. Daniels v. Point Pleasant, 23 N.J. 357, 129 A.2d 265 (1957) (municipality enacted invalid ordinance amendment increasing building permit fees for the purpose of raising revenue to meet increased school costs). In other states, local governments have attempted to impose a variety of indirect capital costs on new developers, a trend that appears to have gained momentum during the past decade. Bauman & Ethier, "Development Exactions and Impact Fees: A Survey of American Practices," Law & Contemp. Probs., Winter 1987, at 51. See...