NJ Supreme Court Rules for Developer in Off-Site Improvements Case

May 16, 2008
Client Alert Newsletter May 2008

On March 31, 2008, the New Jersey Supreme Court reversed a judgment of the state's Appellate Division, giving developers a significant victory in the matter of Toll Brothers, Inc. v. Board of Chosen Freeholders of the County of Burlington. The underlying issue resolved was whether developer agreements pertaining to off-site improvements—used by municipalities to spell out conditions required of developers before moving forward with approved projects—are independently enforceable as a contract by the relevant municipality even after a developer has revised the project. The Supreme Court ruled that developer agreements are limited by the Municipal Land Use Law ("MLUL"), under which a developer cannot be compelled to shoulder more than its pro-rata share of the cost of off-site improvements. The Court thus concluded that a municipality violates the MLUL when it seeks to impose conditions on the developer not necessitated by the proposed project regardless of whether the developer initially agreed to such conditions. As a result, where proposed projects have changed and/or down-sized such that they no longer require the level of off-site improvements that may have been necessitated by the original project application, developers may appear before the relevant planning board to request a recalculation of their off-site improvement obligations irrespective of their obligations under any pending developer agreement.