NJ Appeals Court Rejects Quid Pro Quo Allegations Against Developer and Planning Board

In Pennsgrove Associates, LP, et al. v. Carneys Point Township Planning Board, et al., the Appellate Division of the New Jersey Superior Court held that an agreement executed between a developer and planning board regarding the payment of legal fees did not amount to an unlawful quid pro quo arrangement.

NJ Appeals Court Rejects Quid Pro Quo Allegations Against Developer and Planning Board

The Facts of the Case

Plaintiffs Pennsgrove Associates, LP and Waverly Associates, its general partner, filed an in lieu of prerogative writ complaint, in which they challenged the grant of site plan approval by the Carneys Point Planning Board (Board) to Tri County Real Estate and Maintenance Company, Inc. and Affordable Salem, Inc. (collectively Tri County). Tri County’s plan proposed the construction of 60 affordable housing units at its lots on Seventh Avenue in the Township of Carneys Point (the Township).

The plaintiffs alleged that an agreement by Tri County to pay certain legal fees of the Township of Carneys Point and the Township’s agreement to accept the payment constituted an unlawful quid pro quo arrangement. Accordingly, they further argued that the action of the Board was arbitrary, capricious or unreasonable.

The agreement at issue was part of a Memorandum of Understanding entered into by Tri County and the Township to resolve outstanding litigation regarding the redevelopment project. Thereafter, the Township and Tri County formally entered into the Redeveloper’s Agreement, which incorporated the substantive terms of the MOU, including the Legal Fees Provision.

The trial court held, even in light of the Legal Fees Provision incorporated in the Redeveloper’s Agreement, that the Board’s action did not exceed its discretion. The trial court concluded the Board’s action was not arbitrary, capricious or unreasonable and did not violate the New Jersey Local Redevelopment and Housing Law (LRHL).

The Appellate Division’s Decision

The Appellate Division affirmed the dismissal of the plaintiffs’ complaint. It agreed that the payment of the legal fees was not a quid pro quo for the Board’s approval. As explained by the panel:

First, we agree with the trial court the Legal Fees Provision in the Redeveloper’s Agreement was permitted by N.J.S.A. 40A:12A-8 of the LRHL. Second, the approval by the Board was not in any way conditioned on the payment of the legal fees. Third, the underlying litigation had been dismissed and payment was part of the settlement of appeal between the Township and Tri County. Most importantly, as opined to the Board by the Township Solicitor, Tri County had a right to the approval since “the project does not require any variances or design waivers.”

The Appellate Division also rejected the plaintiffs’ argument that the trial court erred by not voiding the approvals granted in the Board’s Resolution 2012-04 as a result of no “fairness hearing” being conducted. According to the appeals court, a fairness hearing was not necessary since the project by its terms advanced the fair housing goals articulated in S. Burlington Cnty. NAACP v. Twp. of Mount Laurel, 92 N.J. 158 (1983).

For more information about the court’s decision or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

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