On appeal from Superior Court, Law Division, Monmouth County.
Approved for Publication February 24, 1995.
Before Judges Pressler, Landau and Newman.
The opinion of the court was delivered by: Pressler
The opinion of the court was delivered by PRESSLER, P.J.A.D.
This consolidated appeal requires us once again to consider the consequences of illegal exactions obtained by a municipal land use planning agency from a developer during the application approval process. In Nunziato v. Edgewater Planning Bd., 225 N.J. Super. 124, 541 A.2d 1105 (App. Div. 1988), we held that a resolution approving the variance and site plan application of the developer of a high-rise luxury apartment building was vitiated by the board's imposition of the condition, agreed to by the developer, that a substantial financial contribution be made for the town's future affordable housing fund. Relying on Nunziato, the trial Judge granted summary judgment invalidating the preliminary site plan approvals granted by the Holmdel Township Planning Board to the two appellant developers here. We conclude that he erred in so doing and consequently reverse and remand for further proceedings.
The Township of Holmdel has several commercial zones which, in recent years, have been the subject of significant development, including major shopping centers, a Bell Laboratories complex, an AT&T complex, a Prudential Insurance Company complex, a hospital medical center, and numerous large office buildings. This controversy involves two separate developers, each of whom propose construction of an office building complex on its respective property. Westor Partnership owns a ninety-two acre tract in the OL-2 (office) zone abutting County Route 520. GRC Development Corp. is acting for RJS Realty Associates and HMF Associates (collectively GRC), which together own a total of two hundred and eleven acres in the OL-3 zones straddling State Highway 34. Although the site plan applications of the two developers remained at all times entirely separate, they were dealt with by the Planning Board, both substantively and procedurally, in a parallel manner, particularly in respect of off-site improvements.
Ultimately the Planning Board, following public hearings, granted preliminary site plan approval to both applicants. Westor's project, denominated Holmdel Corporate Office Center, proposed a three-building office complex containing about 379,000 square feet and requiring neither use nor bulk variances but only two relatively minor design standard waivers. GRC's project proposed a six-building office complex containing about 902,000 square feet. That project required one relatively minor zoning variance, namely provision of 3,570 parking spaces rather than the 3,604 spaces required by the ordinance. It also required several minor design standard waivers.
The issue before us involves the cash contribution for off-site improvements required by the Planning Board as a condition of its approval for each of the projects. Westor was required to make a cash contribution of $1,140,000, of which $200,000 was allocated to the cost of a fire truck and $50,000 as seed money for a recreation center. The balance was allocated in specific amounts to specific street and road improvements. GRC was required to make a cash contribution of $3,800,000, of which $100,000 was allocated to the fire truck and $100,000 as seed money for the recreation center. In addition GRC was required to transfer to the municipality title to a parcel of land, between three and four acres in size, valued at $300,000, for construction of a new firehouse. That $300,000 was calculated as part of the total $3.8 million dollars. The balance was allocated in specific amounts to specific street improvements.
The Planning Board approved the two projects in the fall of 1991. The developers accordingly each submitted the required developer's agreement to the Township Committee for execution. Before the Committee acted, however, the general election of November 1991 was held. The election changed the composition of the governing body, resulting in a majority now opposed to the continuation of large-scale development in the township. Although the newly-elected members were not yet seated at the December 1991 Township Committee meeting at which the developers' agreements were to be voted on, one member of the Committee had resigned. The agreements were rejected by a tie vote.
Three law suits, thereafter consolidated, ensued. The developers, in a joint action, sued the Township because of its failure, alleged to be arbitrary, unreasonable and unlawful, to execute the developers' agreements. Two neighboring municipalities, Colts Neck and Marlboro, both of which opposed further development in Holmdel, sued Holmdel, its planning board, and the developers, among others, seeking invalidation of the site plan approvals and of the offending portions of the Holmdel zoning ordinance. Among their various claims of invalidity was the assertion that the fire truck, fire house, and recreation center contributions were illegal exactions in violation of N.J.S.A. 40:55D-42 rendering the approvals null and void under Nunziato.
After issue was joined, Colts Neck and Marlboro moved for summary judgment on the illegal-exaction issue. In order to determine the facts pertinent to that issue, the trial Judge directed an evidentiary hearing, following which he held that since the fire house, fire truck and recreation center contributions were not authorized by that statute, they had indeed been illegally exacted. He therefore concluded for that reason alone that the approvals had to be set aside. Hence the Judge did not consider any other of the multiple challenges to the approvals and to the zoning ordinance made by the two neighboring towns. Nor did he address the developers' affirmative claims against Holmdel. The developers each appealed from the ensuing summary judgment in favor of Colts Neck and Marlboro and from the subsequent order denying the motion to alter or amend the judgment.
As we held in Nunziato, the municipal authority to condition development approvals on the developer's agreement to provide or contribute to off-site improvements is limited by N.J.S.A. 40:55D-42, which permits such contributions only with respect to street improvements and water, sewerage and drainage facilities, and only to the extent necessitated by the reasonably anticipated impact of the development on those facilities. See also N.J. Bldrs. Ass'n. v. Bernards Tp., 108 N.J. 223, 233 (1987); Longridge Builders, Inc. v. Planning Bd. of Princeton Tp., 52 N.J. 348, 350-351, 245 A.2d 336 (1968); West Park Ave., Inc. v. Ocean Tp., 48 N.J. 122, 224 A.2d 1 (1966); Lake Intervale Homes, Inc. v. Parsippany-Troy Hills, 28 N.J. 423, 441, 147 A.2d 28 (1958); F & W Associates v. County of Somerset, 276 N.J. Super. 519 (App. Div. 1994). Plainly, contributions for recreational facilities and for fire-fighting facilities, even those necessary for proper servicing of the development itself, are beyond the authorization of the statute, and hence a development application may not be conditioned on the developer's undertaking to provide them. But the mere fact that such a condition was imposed does not, in our view, necessarily and inevitably render the ensuing approval void. Nor do we read Nunziato as compelling that result. We are convinced that the undisputed facts here sufficiently distinguish this case from Nunziato so as to warrant a quite different remedy.
In sum, we view the critical issue as whether the illegal exaction constitutes a blatant quid pro quo for the approval, either demanded by the municipality and acceded to by the developer or offered by the developer and accepted by the municipality in circumstances in which the exaction is unrelated to any legitimate land use concerns generated by the development application itself and the amount thereof is entirely arbitrary. If that is so, then the transaction may be fairly regarded as an interdicted sale of a municipal approval, subversive of law, anathematic to public policy, and remedial only by vitiation of the approval. That was the case in Nunziato. It is not, however, the case here. Here there is no question that the parties acted in good faith in respect of the fire service and recreational contributions, that those contributions were incidental to and a relatively minor factor in an overall package of legally required contributions, and, perhaps most significantly, that the contributions were viewed by both parties as justifiable because they were intended to be used by the municipality to address anticipated municipal problems attributable to the proposed development. Moreover, the amount of the contributions was reasonably related both to the costs expected to be incurred and the developer's respective fair share thereof.
Our Conclusion is easily explained by comparing the manner in which the illegal exaction was obtained in Nunziato -- a process which bore all the hallmarks of a public auction intended to obtain the highest possible bid -- with the process that resulted in the contributions package here. According to this record, the Board's practice in respect of all the Township's major developments was to determine what off-site improvements were reasonably required to offset the impact of the project on public streets, traffic safety and drainage, to calculate the cost of these improvements, and to assess each developer a fair pro-rata share thereof, all in precise accordance with N.J.S.A. 40:55D-42. And see F & W Associates v. County of Somerset, supra. In the case of these two applications and because other large developments were also being proposed by others, the Board commissioned a regional traffic and drainage study to determine the scope of improvements that would be required in the southern portion of the Township to accommodate these projects. This study, undertaken during the pendency of Westor's and GRC's applications and considered at extensive Planning Board hearings, was intended to be "used as a data and information base in consideration" of these two developments "as well as other future ...