The “Time of Application Rule” and the Definition of an “Application for Development” That Triggers That Rule

Dunbar Homes, Inc. v. Franklin Tp. Bd. of Adj., 448 N.J. Super. 583 (App. Div. 2017).  The Municipal Land Use Law (“MLUL”), in N.J.S.A. 40:55D-10.5, contains a “time of application rule” that determines what ordinance governs a land use development application.  Under that provision, regulations that are in effect “on the date of submission of an application for development” will apply.  But what qualifies a submission to a planning board as an “application for development” so as to lock in the ordinance in effect on the date of that submission?  That was the question that Judge Espinosa, who labeled the issue as one “of first impression,” faced in her opinion for the Appellate Division in this case today.

Plaintiff Dunbar, a developer, sought approval to build 55 garden apartments on a 6.93-acre property in the General Business zone.  That property was next to one also owned by plaintiff and also located in the General Business zone, which housed 276 units.  The new development required a conditional use variance under N.J.S.A. 40:55D-70(d)(3) because the zoning required a minimum of ten acres in order to construct garden apartments as a conditional use.  One day after Dunbar filed its application, however, the Township introduced an amendment to its zoning ordinance that deleted garden apartments as a conditional use in the zone.  The ordinance was adopted not long afterward.

When Dunbar’s application came on for hearing, the defendant Board took the position that, due to the ordinance amendment, Dunbar could no longer seek a conditional use variance.  Instead, the Board asserted, Dunbar had to get a use variance under N.J.S.A. 40:55D-70(d)(1), a more onerous approval to obtain.  Dunbar, in response, invoked the time of application rule, contending that it had submitted its “application for development” before the amendment kicked in.  The Board’s rejoinder was that Dunbar’s application had to be complete before the amendment, and it was not.  On that basis, the Board concluded that Dunbar needed a use variance.

Disagreeing, Dunbar filed an action in lieu of prerogative writs.  The Law Division found for Dunbar and reversed the Board’s decision.  The Board appealed to the Appellate Division, which applied principles of statutory interpretation in order to determine the meaning of “application for development” as relevant to the “time of application rule.”  That was a legal issue that implicated de novo review, though Judge Espinosa noted that, in general, local zoning decisions are set aside on review only when arbitrary, capricious, or unreasonable.  Dunbar cross-appealed in certain respects as well.

Judge Espinosa determined that the Board’s argument that Dunbar’s application had to be “complete” before it could constitute an “application for development” was without merit.  The MLUL did not specify in section 10.5 that the application for development be “complete,” in marked contrast to other MLUL sections that had so specified.  The Board then argued that its own ordinance required a “complete” application, so that the absence of that term in the key MLUL section was irrelevant.  Judge Espinosa did not agree.  “Because the planning and zoning power stems from legislative allowance, it must be exercised in strict conformity with the delegating enactment– the MLUL.”  The Township was thus not free to deviate from the MLUL definition, which did not require that Dunbar’s application be “complete.”

That left the issue of how much an applicant’s submission must contain before it is considered an “application for development.”  Invoking the need to defer to local expertise in zoning and planning matters, Judge Espinosa cited another section of the MLUL, N.J.S.A. 40:55D-3, which she found “provides sufficient guidance for the determination whether a submission should be afforded the protection of the time of application statute.”  That provision referred to “the application form and all accompanying documents required by ordinance for approval” of the application in question.  In other words, though the submission need not be “complete,” it is required to include all papers required by the ordinance for the relief being sought.  That approach differed from the view of the Law Division, which had said that all that was needed was a submission sufficient to allow a Board to “functionally begin a review” of a submission.

From there, it was easy.  The Township’s ordinance required a long list of things in connection with a condition use variance application.  Not all of them had been submitted by Dunbar.  Nor had Dunbar paid all the required fees.  Accordingly, Dunbar’s submission was not sufficient to constitute an “application for development” so as to bar the use of the amended zoning ordinance.

Though there is significant sense in the panel’s result, this case of first impression brought about two very different interpretations of what the MLUL considers an “application for development” in this context: the Law Division’s “functional to begin review” test and the Appellate Division’s more objective test, which looks at whether a developer has submitted all the materials required by ordinance (even if some of those materials might be required to be supplemented).  The Supreme Court might well take this case up should Dunbar seek further review.