## Facts

- Raymond Plaza applied to the Township of Saddle Brook Zoning Board of Adjustment for a use variance and related approvals to build a condominium complex consisting of three multi-story residential buildings on Fifth Street.
- The site was located in the Township’s industrial zoning district, where multi-family residential use was not permitted, so Plaza sought a use variance and other variance relief along with site-plan approval.
- Plaza amended the proposal to limit most units (about eighty percent) to residents age 55 or older.
- Plaintiffs 520 Victor Street Condominium Association and Sawmill Condos, LLC, which operated and owned interests in an adjacent condominium complex, opposed the application.
- The area had preexisting sanitary sewer and stormwater/drainage problems.
- The proofs before the Board included that Plaza’s project, as designed, would not worsen those existing conditions and would partly reduce them.
- After hearings, the Board voted to approve the application and later adopted a written resolution granting the variances and site-plan approval subject to conditions.
- One condition required Plaza to pay the Township $400,000 toward off-tract improvements intended to address the existing sewer and drainage issues.
- The Board selected the $400,000 figure without determining the total cost of the off-tract improvements and without allocating costs between Plaza’s project and other property owners or developers who benefited from, or contributed to, the off-tract conditions.
- The Law Division affirmed the Board’s approval, and plaintiffs appealed.

## Issues

1. Whether the Board could condition approval on a $400,000 off-tract monetary contribution when the record did not show a pro-rata allocation of improvement costs as required by N.J.S.A. 40:55D-42 and the Township’s off-tract improvement ordinance.
2. If the condition was invalid, whether the approval should be left standing with the condition removed, or vacated and remanded for the Board to reconsider the application under the proper standard.

## Decision

- The Appellate Division held the Board did not comply with N.J.S.A. 40:55D-42 or the Township ordinance when it required Plaza to pay $400,000 for off-tract improvements without a pro-rata allocation.
- The court reversed the Law Division in part, vacated the Board’s approval, and remanded to the Board for reconsideration consistent with statutory and ordinance requirements.

## Legal Principles

- Under N.J.S.A. 40:55D-42, a municipality may require a developer to pay a share of the cost of off-tract improvements only when the obligation is authorized by ordinance and tied to improvements made necessary by the development.
- Off-tract improvement payments must be based on a rational pro-rata allocation; the developer may be charged only for the portion fairly attributable to the development, not for the full cost of correcting existing municipal deficiencies.
- A board must build an adequate record and make findings that explain how the improvement cost was determined and how the developer’s proportionate share was calculated, including consideration of other properties or future development that will benefit from or contribute to the need for the improvement.
- A lump-sum exaction is invalid when imposed without determining total costs and without allocating the obligation among other benefiting or contributing lands.
- When an invalid exaction is a material part of the approval, an appellate court may vacate the approval and remand so the board can reconsider the application and any conditions under the correct legal framework.

## Conclusion

The Appellate Division vacated and remanded the Saddle Brook Zoning Board’s approval of Plaza’s condominium project because the Board imposed a $400,000 off-tract improvement payment without the pro-rata cost allocation and supporting findings required by N.J.S.A. 40:55D-42 and the Township’s ordinance.


520 Victor Street Condominium Association v. Plaza, 2013 WL 5525719 (2013)