United States: ‘Time of Application Rule' Allows Developers To Take Advantage of Changes in Zoning Laws During Pendency of Application, NJ Appellate Division Rules

New Jersey developers received some useful guidance in a case recently decided by the Appellate Division relating to (1) whether a developer can take advantage of a favorable change in a local zoning ordinance that occurs subsequent to the date that the developer submitted its pending application in light of New Jersey's "Time of Application Rule;" and (2) their ability to rely on the Nonstructural Strategies Point System matrix, which was informally promulgated by the New Jersey Department of Environmental Protection, in demonstrating compliance with municipal stormwater regulations.

In RUPE v. Planning Bd. of the Township of Hamilton, No. A-4794-13T1 (App. Div. 2015), the developer, Hamilton Crosswicks 130, LLC, initially filed an application with the Hamilton Township Zoning Board of Adjustment seeking a conditional use variance as well as preliminary and final site plan approval in order to construct a Wawa convenience store and gasoline service station on its property commonly known as Deer Path Plaza. The subject property contained existing retail development consisting of a strip shopping mall and a separate free-standing building occupied by an Army and Navy store. These existing retail buildings were served by on-site parking fields and two stormwater detention basins. The developer proposed to demolish the existing 12,605-square-foot Army and Navy store building to enable Wawa to construct in its place a 4,691-square-foot convenience store and a gasoline station with 12 fueling positions under a 4,710-square-foot canopy.

At the time the developer submitted its application, convenience stores were a permitted use in the relevant zoning district, and gasoline stations were designated as a conditional use. One of the applicable conditional use standards required that no gasoline service station be located within 1,500 feet of another gasoline station. Because there was an existing gasoline station less than 1,500 feet from the subject property, the developer submitted its application to the Zoning Board of Adjustment for a conditional use variance along with preliminary and final site plan approval.

Subsequent to the developer's submission of its application to the zoning board, but prior to the first public hearing on the matter, the Hamilton Township governing body amended the zoning ordinance to delete the 1,500-foot separation requirement from the conditional use standards applicable to gasoline stations. The effective date of the amendment was May 9, 2013. Following passage of the amendment, counsel for the developer submitted a letter to the township's land use coordinator requesting that he "deem the application [to the Zoning Board of Adjustment] be withdrawn effective May 10, 2013, and refiled as of that date before the Township Planning Board." The land use coordinator complied with this request, and the developer's application proceeded before the Township Planning Board.

One of the principal issues before the planning board was the extent to which the proposed development complied with Hamilton Township's stormwater control ordinance applicable to "major development." The developer contended that it was not required to demonstrate compliance with the stormwater standards pertaining to the quality of runoff generated from the proposed development because its proposal called for the creation of less than a quarter acre of additional impervious coverage. Nevertheless, at the request of the planning board's engineering consultant, the developer submitted a report addressing the quality of the stormwater runoff to be generated by its development proposal and incorporated therein an analysis using the Nonstructural Strategies Point System (NSPS) matrix that had been promulgated informally by the New Jersey Department of Environmental Protection (NJDEP).

At the conclusion of the second public hearing, the planning board voted to grant the developer conditional use approval, amended preliminary and final site plan approval and certain waivers. In its memorializing resolution, the planning board expressly stated that it found the developer's testimony with respect to compliance with the township's stormwater ordinance to be credible, and concluded that the proposed development complied with the township's ordinance as it pertains to stormwater quality, regardless of whether, strictly speaking, the proposed development was exempt from these requirements or not.

The plaintiff, RUPE, LLC (the owner of a competing gasoline station located within 1,500 feet of the subject property), appealed the planning board's approval. The plaintiff argued, among other things, that the planning board lacked jurisdiction to hear the developer's application because, at the time the application was filed, it required a d(3) conditional use variance that can be granted only by the zoning board. The plaintiff also argued that, since the NJDEP had promulgated the NSPS informally, without complying with the requirements for formal administrative rulemaking outlined in the New Jersey Administrative Procedure Act, the planning board's reliance on the developer's stormwater management report containing an NSPS matrix to show compliance with the township's stormwater ordinance was arbitrary, capricious and unreasonable, citing the Appellate Division's holding in In re Authorization for Freshwater Wetlands Statewide General Permit 6, 433 N.J.Super. 385 (App. Div. 2013). The trial court rejected all of the plaintiff's arguments and upheld the planning board's approval. On appeal, the Appellate Division affirmed the holding of the trial court.

To determine the threshold issue of the planning board's jurisdiction to hear the developer's application, the Appellate Division examined New Jersey's "Time of Application Rule," and the legislative history leading to its adoption. The "Time of Application Rule" is codified at N.J.S.A. 40:55D-10.5 and reads as follows: "Notwithstanding any provision of law to the contrary, those development regulations which are in effect on the date of submission of an application for development shall govern the review of that application for development and any decision made with regard to that application for development. Any provisions of an ordinance, except those relating to health and public safety, that are adopted subsequent to the date of submission of an application for development, shall not be applicable to that application for development."

In applying the "Time of Application Rule" to the facts of RUPE, the Appellate Division looked beyond the statutory language to the legislative intent behind its enactment. As the court noted, the "Time of Application Rule" was intended to benefit developers by shielding them from the often harsh and inequitable consequences of the previously applicable "Time of Decision Rule," which generally subjected developers to changes in law, sometimes adopted in direct response and opposition to the developer's proposed project, after considerable amounts of time and money had already been spent preparing and prosecuting the development application in reliance on the state of the law at the time of its initial submission. In RUPE, the change in law at issue (i.e. the township's repeal of the 1,500 foot separation distance requirement applicable to gasoline stations) favored the developer. The court held that, given its ameliorative intent, there is nothing in the "Time of Application Rule" to prevent a developer in such circumstances from withdrawing and refiling a development application to avail itself of the favorable change in the law. Accordingly, the Appellate Division validated the withdrawal and refiling procedure requested by the developer's counsel and agreed to by the township's land use coordinator, allowing the developer to avail itself of the favorable change in the ordinance and vesting the planning board with jurisdiction over the application.

RUPE also argued on appeal that the planning board's decision was invalid because it determined the developer's compliance with the township's stormwater ordinance by relying on the NSPS, which RUPE argued was contrary to the Appellate Division's holding in In re Authorization for Freshwater Wetlands Statewide General Permit 6, 433 N.J.Super. 385 (App. Div. 2013). In that case, the Appellate Division ruled that the NJDEP's failure to follow the formal administrative rulemaking procedures set forth in New Jersey's Administrative Procedure Act in adopting its NSPS stormwater evaluation system was improper. As the Appellate Division explained in its RUPE holding, In re Authorization should not be interpreted to mean that the NJDEP's NSPS matrix has no evidential value. On the contrary, the RUPE court expressly held that it was not arbitrary, capricious or unreasonable for the planning board to utilize the NSPS tool that NJDEP had informally promulgated in the planning board's efforts to apply the township's stormwater ordinance and evaluate the effects that the developer's project would have on the quality of stormwater runoff.

The RUPE case makes clear that New Jersey's "Time of Application Rule" does not prevent a developer from taking advantage of a favorable change in the applicable zoning ordinance that becomes effective subsequent to the initial filing of the developer's application and provides procedural guidance as to how this can be accomplished. In addition, it supports the use of the NJDEP's NSPS scoring matrix, promulgated without the required formalities of administrative rulemaking, in demonstrating compliance with a municipality's stormwater management ordinance.

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