Posted by: Patricia Salkin | October 6, 2020

NJ Supreme Court Holds That MLUL Prohibits a Municipality From Applying New Zoning Ordinances Within Two-Years of a Developer’s Rights Vesting

This post was authored by Victoria Stone, Touro Law Center

Shipyard Associates L.P. (“Shipyard”), a developer, sought to amend a previously approved development plan for a mixed-use development in Hoboken, New Jersey. The original plan included both residential and commercial elements, along with several tennis facilities, which would have been available for public use. Shipyard changed its development to eliminate the tennis facilities and replace them with two additional residential high-rise buildings. The City of Hoboken (“Hoboken”) opposed modifications to the original development plan and cited a previously signed development agreement as a binding contract on Shipyard. Hoboken filed suit attempting to compel Shipyard to complete construction as initially approved. During the pendency of the lawsuit, Hoboken failed to hold the required public hearing concerning Shipyard’s modifications. Hoboken’s failure to have a hearing was determined in a related case to have been an automatic approval of Shipyard’s modified plans.

After filing suit and failing to hold the required hearing, Hoboken passed two ordinances (“Ordinance Z-263” and “Ordinance Z-264”), which in effect, prohibited Shipyard’s modifications. The ordinances did not specifically target Shipyard’s development; however, as applied, the ordinances would prohibit Shipyard’s construction of the additional residential buildings. Hoboken maintained that the ordinances were passed under the legislature’s police power to ensure public health and safety. Under MLUL, developers are afforded a two-year period where they are protected from ordinances that are passed subsequent to final approval.

The New Jersey Supreme Court did not find Hoboken’s arguments that the ordinances were health and safety-related, rather than zoning ordinances. The court held that Ordinance Z-264, as it had been specifically designated as a zoning ordinance, was subject to the two-year protective period. The court reasoned that the effect of Ordinance Z-263 was to drastically change the zoning of any property located within a V-Zone (coastal high-hazard area). The court also found that MLUL does not provide an exception to the two-year protective period for developers when an ordinance is related to health and safety, because the plain language of the statute did not include such an exception. Although other sections of MLUL, namely Section 10.5 and 49, contain exceptions where a municipality may retroactively apply zoning ordinances for public health and safety, these exceptions are for preliminary approvals and not final approvals, as is the case now.

Lastly, the court held that the two-year protective period was tolled by Hoboken’s attempts to block construction for public health and welfare reasons. The New Jersey Supreme Court upheld the previously entered judgment of the Appellate Division.

Shipyard Associates, LP v. City of Hoboken, 242 N.J. 23, 230 A.3d 278 (5/5/2020).

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