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Divan Builders Inc. v. Planning Board of Township of Wayne

Decided: March 13, 1975.


For reversal and remandment -- Chief Justice Hughes, Justices Jacobs, Hall, Sullivan, Pashman and Clifford and Judge Kolovsky. For affirmance -- None. The opinion of the Court was delivered by Pashman, J.


[66 NJ Page 586] The principal question posed by this appeal is whether the Municipal Planning Act, N.J.S.A. 40:55-1.1 et seq. authorizes a municipality to enact an ordinance

which empowers the governing body or the Planning Board, if it has been authorized by ordinance to act on applications for subdivision approval "in lieu of the governing body," N.J.S.A. 40:55-1.14 to condition subdivision approval upon a developer's installation of off-site improvements. The trial court granted summary judgment for plaintiff, Divan Builders, Inc. v. Wayne Planning Board, 122 N.J. Super. 508 (Law Div. 1973), and the Appellate Division affirmed, Divan Builders, Inc. v. Wayne Planning Board, 127 N.J. Super. 368 (App. Div. 1974).*fn1 We granted defendants' petition for certification, 65 N.J. 283 (1974).

The facts were largely stipulated by the parties. Plaintiff Divan Builders, Inc. initially applied to the Wayne Township Planning Board for subdivision approval in late 1969. Divan's proposal contemplated the construction of 31 single family dwellings in a residential zone of the Township. Because a substantial portion of the building site was covered by a pond, the developer's plan called for its draining and the construction of a conduit which would pipe the water from its upstream source through the development and into an existing drainage facility on the downstream border of the site.

Despite some preliminary concern over the drainage problem associated with the proposed subdivision, the Township governing body granted preliminary subdivision approval on October 7, 1970 on the recommendation of the Planning Board. In January 1972 final subdivision approval was granted for five of the lots, and in May 1972, plaintiff applied for final approval of the remaining 26 lots.

On June 21, 1972, the Wayne governing body amended its subdivision ordinance by adopting Ordinance No. 69-1972. The ordinance establishes procedures to be followed when off-site

improvements are deemed necessary to service a subdivision. The ordinance provides in part that:

Prior to the granting of final approval of all subdivisions hereafter submitted to the Planning Board, and prior to the issuance of any building permits for any land use, including land uses which require site plan approval . . . and any residence or other use of property on an unimproved street or where any off-site improvements have not then been installed, the subdivider or other named type of applicant . . . shall have installed, posted a performance bond, or made cash payments, in the manner provided in Section 5 below, with respect to the immediate or ultimate installation of any required off-site improvements. [Ordinance No. 69-1972, ยง 14-26(a)].

Off-site improvements include the installation of new, or the extension or modification of existing improvements made necessary in whole or in part by the subdivision which will be benefited by the improvement.*fn2 The ordinance also provides that the cost of off-site improvements shall be allocated between the applicant, other property owners, or any one or more of them. The cost allocation is based upon such factors as the benefit conferred upon the subdivision, the cost of the improvement, and the extent to which the improvement is necessary to protect neighboring property under the proposed plan.

On June 26, 1972, the Planning Board recommended final approval of plaintiff's remaining 26 lots subject to certain conditions, including the following:

[T]hat the applicant contribute to the Township of Wayne a sum of $20,000 as their share of improving the downstream conditions of the stream which carries the drainage from the subdivision.

In July 1972 plaintiff received final approval for the remaining portion of its subdivision on the condition that it pay the Township $20,000. This sum represented approximately 8% of the estimated $250,000 cost of the off-site improvement deemed necessary to serve the entire drainage basin. Only one other developer, however, was required to contribute a similar sum pursuant to the ordinance.*fn3

The parties stipulated that: (1) the drainage system would accommodate the increased runoff from plaintiff's property as well as from neighboring properties and tracts located downstream in the drainage basin;*fn4 (2) the system would protect previously developed properties from floods which would otherwise result from the development of plaintiff's subdivision and other unimproved property as well;*fn5 (3) it

was the established policy of the municipality to impose a required contribution from the owner of each of the undeveloped tracts in the drainage basin pursuant to Ordinance No. 69 for his fair share of the improvement when the owners apply for subdivision approval, site plan approval, or a building permit.

On September 6, 1972, the Wayne governing body passed Ordinance No. 108-1972, a bond ordinance authorizing the construction of the drainage basin improvement project as a general improvement -- no part of the cost of which "has been or shall be specially assessed on property specially benefited thereby" -- and appropriating $250,000 for that purpose. To meet that appropriation, bonds totaling $238,050 were to be issued, the ordinance reciting that the remaining $11,950 ("down payment") was available from contributed funds and that it was estimated that a total of $40,000 of contributed funds would be received.

Shortly after the enactment of the bond ordinance, plaintiff instituted the present action to recover the $20,000 paid to the Township. On cross motions for summary judgment, the trial court upheld the right of municipalities to require protective drainage improvements to be constructed either on-site or off-site as a condition precedent to subdivision approval when the development will be fully integrated into the community at large. Divan, supra, 122 N.J. Super. at 515. The court nonetheless entered judgment for plaintiff because in its view, while the Township could compel the developer to pay for improvements made necessary to serve the subdivided plots, the developer could not be required to pay for improvements made necessary to accommodate adjoining areas. 122 N.J. Super. at 517-18. The court also

considered the effect of the bond ordinance on the dispute and concluded that the adoption of the improvement ordinance enhanced plaintiff's right to recover since the balance of the general drainage improvement was to be paid from ad valorem taxes imposed on all taxable property within the Township, even though contributions toward the cost of the improvement would subsequently be required of other subdividers. 122 N.J. Super. at 520. Because the drainage project was undertaken as a general improvement, the court concluded that the off-site improvement ordinance could not be invoked to transform the project into an undertaking to be paid for by the subdividers. 122 N.J. Super. at 521.

The Appellate Division affirmed, essentially for the reasons set forth by the trial court, Divan, supra, 127 N.J. Super. at 368. Because the municipality conceded at oral argument that, as a result of the enactment of the general improvement ordinance, properties developed in the future and serviced by the drainage project may not be assessed a proportionate share of the cost, the Appellate Division concluded that only plaintiff and the other contributing developer will be required to pay any portion of the cost of the improvement. 127 N.J. Super. at 369-70. Since other undeveloped tracts will be equally benefited, the court found that the municipality had obviously discriminated against plaintiff. Because of this finding, the Appellate Division declined to consider the larger question of whether the Planning Act empowers municipalities to impose upon subdividers the requirement of installing or contributing to the cost of off-site improvements. 127 N.J. Super. at 370. We granted certification to consider the latter issue, a question referred to but left undecided in several of our prior opinions. See, e.g., Colonial Oaks West, Inc. v. East Brunswick Tp., 61 N.J. 560 (1972); Longridge Builders, Inc. v. Princeton Planning Board, 52 N.J. 348 (1968); Reid Development Corp. v. Parsippany- Troy Hills Tp., 10 N.J. 229 (1952).


With the continuing development of large portions of our State, it is clear that municipalities have a significant interest in exercising reasonable controls over land subdivisions.*fn6 The results of failing to insure orderly development of land were summarized by the former Supreme Court in deciding Mansfield & Swett, Inc. v. West Orange, 120 N.J.L. 145 (Sup. Ct. 1938), an early leading case in the field of municipal planning.

We are surrounded with the problems of planless growth. The baneful consequences of haphazard development are everywhere apparent. There are evils affecting the health, safety and prosperity of our citizens that are well-nigh insurmountable because of the prohibitive corrective cost. To challenge the power to give proper direction to community growth and development in the particulars mentioned is to deny the vitality of a principle that has brought men together in organized society for their mutual advantage. [120 N.J.L. at 150-51].

Although these observations were made over 35 years ago, the current condition of many of our urban areas ...

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