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Builders League of South Jersey, Inc. v. Township of Franklin

July 18, 2007


On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1753-04.

The opinion of the court was delivered by: Cuff, P.J.A.D.



Argued: November 29, 2006

Before Judges Cuff, Winkelstein and Fuentes.

Plaintiff Builders League of South Jersey, Inc. (Builders League) challenged a newly adopted ordinance that amended the zoning code and map of defendant Township of Franklin (the Township). Plaintiff alleged, and Judge Bowen agreed, that the amendment created a program for the transfer of development rights and that the program is contrary to the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -163, and specifically, N.J.S.A. 40:55D-137 to -163. The governing body appeals from the summary judgment order that invalidated Ordinance No. 2004-13 amending Chapter 253 of the Township Code. The issue before this court is whether the municipality may devise a transfer of development rights program other than as authorized by the State Transfer of Development Rights Act. We hold that it may not and affirm.

We commence our discussion with a review of the statutory framework as it affects the issue presented in this appeal. In 1989, the Legislature adopted the Burlington County Transfer of Development Rights Demonstration Act (the Burlington Act). N.J.S.A. 40:55D-113 to -129. The Legislature found that the State is "faced with the challenge of accommodating vital growth while maintaining the environmental integrity and preserving the natural resources and cultural heritage" of the State. N.J.S.A. 40:55D-114. The Legislature also recognized "that the responsibility for meeting this challenge falls most heavily upon local government to appropriately shape the land use patterns" to accomplish these goals. Ibid. The Legislature also found that local municipalities lacked "effective and equitable means" to transfer development to the most appropriate areas within the municipality. Ibid. While recognizing these limitations, the Legislature was reluctant to establish "development potential transfer programs" throughout the State without an opportunity to study the feasibility of the program. Ibid. To that end, the Legislature selected Burlington County to be the site of a pilot program. Ibid.

According to the Burlington Act, a "development transfer" means "the conveyance of development potential, or the permission for development, from one or more lots to one or more other lots by deed, easement, or other means as authorized by ordinance." N.J.S.A. 40:55D-115. Any municipality within Burlington County could adopt an ordinance that provided "for the transfer of development within its jurisdiction." N.J.S.A. 40:55D-116a. In addition, the governing bodies of two or more municipalities may adopt "substantially similar ordinances" that "provide for a joint program for the transfer of development, including transfers from sending zones in one municipality to receiving zones in the other." Ibid. The ordinances had to be approved by the county planning board. Ibid. See also N.J.S.A. 40:55D-120.

Prior to the adoption of any development transfer ordinance, a Burlington County municipality was required to prepare a report that estimated future population and economic growth, identified all potential sending and receiving zones, estimated the land values of the sending zones, estimated the existing and potential infrastructure of the receiving zones, and presented a procedure and method "to convey the development potential" from one zone to another. N.J.S.A. 40:55D-117a. Prior to implementation, a municipality was required to amend its master plan and land use regulations to provide "explicit planning objectives and design standards for the receiving zone." N.J.S.A. 40:55D-117c.

Based on the section 117a report, the municipality was authorized to prepare an ordinance that designated sending and receiving zones. N.J.S.A. 40:55D-118a. A sending zone was required to have one or more of the following characteristics: "substantially undeveloped or unimproved farmland, woodland, floodplain, wetlands, endangered species habitat, aquifer recharge area;" specific topographical characteristics, such as steep slopes, or particular uses, such as parkland; land improved or developed in a distinct or unique manner; other unimproved or improved land that should remain at low densities due to inadequate infrastructure or other reasons related to local or regional plans. N.J.S.A. 40:55D-118b. Land previously restricted from development through development or conservation easements could be included in a sending zone if inclusion was in the public interest. N.J.S.A. 40:55D-118c. Finally, the receiving zone had to be amenable to development, N.J.S.A. 40:55D-118d, and the municipality was required to determine the development potential of the receiving zone and further determine that development in that zone was "realistically achievable" at the time of adoption. N.J.S.A. 40:55D-118e.

The development transfer ordinance was also required to "provide for the issuance of such instruments as may be necessary and the adoption of procedures for recording the permitted use of the land at the time of the recording, the separation of the development potential from the land, and the recording of the allowable residual use of the land upon separation of the development potential." N.J.S.A. 40:55D-119a. The ordinance must also impose the obligation on the owner of the property from which development potential has been removed to file the necessary documentation regarding current use and future limitation on use of the property in the same manner as the deed was originally recorded. N.J.S.A. 40:55D-119b. See also N.J.S.A. 40:55D-122.

The Burlington Act also authorized the governing body of the county or a municipality in the county to "provide for the purchase, sale, or exchange of the development potential" of property in a sending zone by the device of a "development transfer bank." N.J.S.A. 40:55D-125a. The statute prescribed the principles for governance, funding and the exercise of the municipality's authority. Ibid.

In 2004, after fifteen years of study, the Legislature adopted the State Transfer of Development Rights Act (the State Act). N.J.S.A. 40:55D-137 to -163. The Legislature expressly found that the Burlington Demonstration Project was a success and that it was appropriate to expand the program statewide in a fair and equitable manner. N.J.S.A. 40:55D-138. The State Act is substantially similar to the Burlington Act with some changes based on the Burlington County experience and the statewide application of the program. Prior to adoption or amendment of any development transfer ordinance, a municipality must adopt a development transfer plan element of its master plan, N.J.S.A. 40:55D-140a; adopt a capital improvement program for the receiving zone, N.J.S.A. 40:55D-140b; adopt a utility service plan element of the master plan for the receiving zone, N.J.S.A. 40:55D-140c; prepare a real estate market analysis "which examines the relationship between the development rights anticipated to be generated in the sending zones and the capacity of designated receiving zones to accommodate the necessary development," N.J.S.A. 40:55D-140d; and receive approval from the State Planning Commission. N.J.S.A. 40:55D-140e.

Prior to adoption of a development transfer ordinance, the municipality must submit the proposed ordinance to the county planning board and the county agricultural board, if the ordinance and master plan changes involve agricultural land. N.J.S.A. 40:55D-149. The county planning board must submit formal comments to the municipality within sixty days and recommend or not recommend enactment of the proposed ordinance. N.J.S.A. 40:55D-150a. If the county planning board does not recommend enactment and the municipality and the county planning board cannot resolve their differences, the municipality must petition the Office of Smart Growth, a State agency, to render a final determination. N.J.S.A. 40:55D-150c. If the Office of Smart Growth determines that the proposed ordinance may be approved, the municipality may proceed to adopt the ordinance. ...

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