Eliminating the Hidden Charges of Development: The Appellate Division Holds that Subdivision Developer Cannot Be Required to Pay Detention Basin Maintenance Contribution

by:  Katharine A. Muscalino

Even after the land use approval has been won, developers still face a myriad of fees and escrow payments to get their job done. A developer challenged these fees in Majestic Contracting, LLC v. Nunziato and the Township of Howell (App. Div. November 18, 2011) and persuaded the Appellate Division that municipalities may not impose maintenance fees in excess of those permitted by statute.

Majestic Contracting, LLC, obtained subdivision approval for the creation of nine lots, one of which would be dedicated to the Township of Howell for the creation of a detention basin. The Township Engineer refused to sign the subdivision plat until the developer executed a developer's agreement, drainage-maintenance escrow agreement, and obtained approval of its tree removal and replacement plan. The resolution of subdivision approval was conditioned on Majestic's compliance with 1) all recommendations of the Board Consultants' reports, 2) all recommendations from the Township's certified tree expert, and 3) all other applicable rules, regulations, ordinances, and statutes. Majestic sued, arguing that its subdivision approval was not conditioned on the execution of a developer's agreement or a drainage-maintenance escrow agreement, the Board lacked the authority to delegate technical matters to Township officials, and that the local ordinances relied upon by the Township Engineer to require these agreements, as well as the ordinance requiring approval of the Township's tree expert, were ultra vires and illegal.


The Developer's Agreement:

Majestic argued that it could not be compelled to enter into a developer's agreement because the resolution of approval did not include a provision requiring a developer's agreement and because the Municipal Land Use Law (MLUL) does not require a developer's agreement for subdivisions. The Township's municipal code requires that "the developer shall enter into a developer's agreement with the governing body prior to the signing and recording of final major subdivision plats and as a condition of final site plan approval." The Appellate Division found that while the Boar'd resolution of approval did not explicitly require the execution of a developer's agreement, this requirement was incorporated into the resolution by the catchall condition that Majestic must comply with all applicable laws, regulations, and ordinances.

With respect to Majestic's argument that developer's agreements are not required for subdivisions under the MLUL, the Appellate Division noted that the New Jersey Constitution provides that "the powers of the counties and such municipal corporations shall include not only those granted in express terms but also those of necessary or fair implication, or incident to the powers expressly conferred, or essential thereto, and not inconsistent with or prohibited by this Constitution or by law." The MLUL also includes a provision that it "shall be considered liberally to effectuate the purposes thereof" and that "an ordinance requiring approval by the planning board of either subdivision or site plans, or both, shall include the following… (e) provisions ensuring performance in substantial compliance with the full development plan."

The Appellate Division therefore concluded that the ordinance's requirement that there be a developer's agreement is consistent with the purposes of the MLUL and is valid.

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