Recent NJ Appellate Court Decision Creates Conditional Use Ordinance Conundrum for Land Use Lawyers

September 2010Newsletters In the Zone

A recent Appellate Division case has created a conundrum for land use lawyers in New Jersey faced with conditional use ordinances that may arguably be ambiguous or otherwise of questionable legality. In Jackson Holdings, LLC v. Jackson Township Planning Board, 2010 W.L. 2756763 (approved for publication) (N.J. App. Div., decided July 14, 2010), the Appellate Division held that where a trial court believes a conditional use ordinance may be of questionable legality because it fails to provide clear and ascertainable standards to guide the decision of the board, it is incumbent upon the parties and the trial court to join the township governing body as a party to ascertain the validity of the conditional use ordinance. This requirement creates a conundrum for land use practitioners. To understand this conundrum, a little background is necessary.

In New Jersey, conditional use ordinances are specifically permitted by the Municipal Land Use Law, N.J.S.A. 40:55D-67. A conditional use is a use permitted anywhere in a zone subject to demonstration of compliance with specific conditions applicable solely to that use. Historically, conditional use ordinances have been utilized to regulate uses such as gasoline service stations, fast food restaurants or other similar type uses with characteristics that require unique land use regulation.

Courts have required conditional use ordinances to set forth “definite specifications in standards” in order to constitute a valid conditional regulation. See PRB Enterprises Inc. v. South Brunswick Planning Bd., 105 N.J. 1, 7-10 (1987). The court’s holding arises directly from the express language of the Municipal Land Use Law governing conditional use regulations that require “the zoning ordinance may provide for conditional uses to be granted by the Planning Board according to ‘definite specifications in standards which shall be clearly set forth with sufficient certainty and definitiveness to enable the developer to know their limit and extent.’” See N.J.S.A. 40:55D-67(a). Conditional use ordinances that do not provide sufficiently definite specification and standards or are not sufficiently certain are not valid conditional use regulations. PRB Enterprises, supra, 105 N.J. at 8.

The Jackson case involved a residential development in the RG-2 Regional Growth Zone. The Jackson ordinance permitted the Planning Board to grant higher density residential development in any part of the zoning district served by a public sanitary sewer system. The ordinance designates the higher density development areas as a conditional use in its ordinance. The conditional use standards require that the board find the proposal (1) is not inconsistent with and will not create traffic hazards or adversely affect traffic patterns established by the surrounding developments; and (2) the proposal is consistent with the intent and purpose of the Master Plan and Pinelands Comprehensive Management Plan. If the Planning Board makes these findings and the developer uses Pinelands development credits to authorize the increased density, a developer may construct up to three units per acre on lots as small as 9,000 square feet.

Jackson Holdings proceeded under this conditional use standard seeking an approval for a 493 single family residential lot development on a 303-acre property. The development proposed 393 9,000-square foot building lots and 100 10,200-square foot lots.

After three hearings, the Planning Board denied the application. The Board based its finding on its determination that Jackson Holdings had failed to demonstrate its proposal was consistent with the Pinelands Comprehensive Management Plan as it has not obtained a “consistent” Certificate of Filing from the Pinelands Commission. The Board also found the developer had failed to address the issue of the presence of a northern pine snake on the development site. Finally, the Board found that Jackson Holdings’ proposed development would create additional traffic hazards and adversely affect traffic patterns in the area. On these grounds, the Board concluded that Jackson found and failed to meet the conditions necessary for the grant of conditional use approval and denied the application.

Jackson Holdings filed a lawsuit challenging the Planning Board’s determination. The trial court concluded there was a substantial question as to the validity of Section A of the Conditional Use Ordinance regarding the proposed development not creating adverse traffic hazards or conditions. In particular, the court found the traffic hazard language under Ordinance 109-81D(2)(a) provided the Planning Board with no definite specifications or standards to guide the Board in the evaluation of whether traffic hazards exist or whether the proposed development would adversely affect traffic patterns. Notwithstanding the trial court’s questioning of the validity of that ordinance’s standards, the trial court concluded Jackson Holdings had presented compelling, uncontroverted evidence to support the conditional use variance and the Planning Board’s denial was arbitrary, capricious and unreasonable.

On the Planning Board’s appeal of the trial court’s decision, the Appellate Division specifically addressed the following question: “If a court hearing an action in lieu of prerogative writs challenging the grant or denial of a development approval concludes that there is a substantial question concerning the validity of the zoning ordinance under which that approval is sought, does the court have an obligation to raise the question of the validity of the ordinance and require joinder of the municipal governing body in the action?” The Appellate Division held that where a trial court finds a conditional use ordinance creates a substantial question as to whether an ordinance condition is valid under the Municipal Land Use Law, the trial court is required to conduct a plenary hearing to determine whether the ordinance provision is in fact compliant with the Municipal Land Use Law. This issue of the validity of the conditional use ordinance must be determined prior to the underlying review of the planning board action.

In many prerogative writ actions, the action is brought between the applicant/objector plaintiff/defendant and the municipal planning board. In those incidents where there is a challenge to the validity of an ordinance section as a result of this case, it will be necessary to join the township governing body as a party, as the township governing body must defend the validity of its ordinance.

The implications of the Jackson Holdings decision are substantial. First, land use practitioners should advise their client as to whether the conditional use ordinance under which an application is being proposed contains provisions that may be of suspect legality. Second, in the event of a board action and subsequent appeal, the question of the ordinance validity may require that the governing body be brought in as party and a trial de novo occur regarding whether that conditional use provision in question is compliant with the Municipal Land Use Law. In the event the ordinance condition is found to be arbitrary, the normal procedure would be for the trial court to remand the ordinance back to the governing body for further consideration as to whether any modifications to the ordinance are necessary in order to permit the legislative body to take its action. Obviously, this has an enormous potential to create significant delay. It also provides an issue for an objecting party to raise to both delay and potentially challenge a conditional use ordinance through subsequent legislative review. The Appellate Division ended its opinion with a cautionary note that the issue of the validity of the ordinance section can not be a “spurious challenge to the validity of the zoning ordinance,” and noted it is the trial court that must make the preliminary determination as to whether there exists a substantial question as to the validity of the ordinance and not a party to the action. However, given the enormous inertia present in New Jersey Zoning and Land Use Regulation, it is probable that numerous conditional use ordinances contain conditions of suspect legality. Therefore, a party may raise these issues in an appeal process in order to delay or potentially thwart what would be otherwise a permissible conditional use application.

For more information, please contact Henry L. Kent-Smith at 609.896.4584 or [email protected]