January 20, 2011

In recent months, land use boards across the state have seen an increase of applications seeking to convert their approvals for age-restricted (55+) residential developments to non-age restricted developments that would be open to persons of all ages. Due to the abundance of approved age-restricted developments and overall lack of demand for such products, developers increasingly are taking advantage of a 2009 law to apply for conversions.

The deadline for filing conversion applications is July 31, 2011, but land use boards have the discretion to extend the deadline by up to six months if they determine it is warranted due to market conditions.

The 'Conversion' Law

On July 2, 2009, ex-Governor Corzine signed legislation that allows builders to apply to land use boards to convert age-restricted developments to non-age restricted developments. Under this “conversion” law, builders that have not sold any units or taken deposits for sales may apply to planning boards to convert approvals obtained prior to July 2, 2009.

Such builders must agree to set aside 20 percent of the units as affordable housing, conform to the Residential Site Improvement Standards (RSIS) and building codes, demonstrate that the water supply and sanitary sewer systems are adequate to serve the converted development, and show that there are sufficient parking facilities for the converted development.

Provided a builder meets these requirements, a land use board must approve the conversion application unless it determines that the conversion would cause “substantial detriment to the public good and substantially impair the intent of the zoning ordinance and master plan.”

Recent Activity

Since the deadline for filing conversion applications expires in less than 10 months, developers eager to resurrect their stalled age-restricted projects are appearing before planning boards with increasing frequency. Additionally, courts are beginning to hear more appeals concerning planning board decisions on conversion applications under the 2009 law.

Thus far, the general trend has shown that planning boards feel constrained by the 2009 law to grant conversion applications, even when the public opposes such applications. In instances where planning boards deny conversion applications, the courts often have reversed such denials.

Sayreville Borough

In a case decided earlier this summer, a court reversed the Sayreville Borough Planning Board’s denial of a developer’s conversion application, holding that planning boards have very little discretion to deny applications when a developer satisfies the criteria of the 2009 law. In that case, Heritage at Towne Lake, LLC v. Planning Board of the Borough of Sayreville, the builder submitted a fully conforming application to convert 184 age-restricted multifamily units to non age-restricted units, with 20 percent of the units set aside for affordable housing.

The builder provided uncontroverted professional testimony that the conversion would not involve any changes to the building footprints, water and sewer capacity, and parking and traffic requirements. Nevertheless, the Planning Board denied the application, primarily on the basis that a conversion would contradict the purpose of the zoning ordinance and master plan and that a conditional use variance would be required.

The court rejected the Planning Board’s argument, finding that non-age restricted housing was a “permitted” use under the 2009 law and that the Board could not have required the developer to seek a conditional use variance for a permitted use.

Raritan Township

In Raritan Township, a builder holding approvals for a 422-unit age-restricted development filed a conversion application with the Planning Board, seeking to scale down the project to 360 units, including 73 affordable housing units, within the footprint of the previously approved development. The Planning Board denied the application, prompting the developer to file a lawsuit challenging the denial. Soon after the lawsuit was filed, the Planning Board settled the case largely on the terms of the developer, likely recognizing that it was destined to lose if it chose to litigate.

Hamilton Township

Similarly, in Hamilton Township, a developer filed an application under the 2009 law to convert its approval for a 133-unit age-restricted development to a non-age restricted project that would include 28 affordable housing units.

Reluctantly, and with much consternation, the Zoning Board of Adjustment granted the application in September, stating that it had no discretion to deny it under the 2009 law. The Board questioned the wisdom of the law and bemoaned the impacts of schoolchildren, but advised opponents to the project that its “hands were tied.”

Going Forward

The 2009 conversion law is a valuable tool for reviving stalled projects and salvaging profits from approvals that are not economically feasible in the current housing market. Developers holding approvals for age-restricted projects should note that they now have less than ten months to take advantage of the law and should promptly begin the process of re-engineering their previous plans and applying for conversions.

Hill Wallack LLP's Land Use Team

Hill Wallack LLP has one of the premier land use practices in New Jersey. Our Land Use Team provides comprehensive solutions to issues arising in every area of law affecting the land development permitting process at the local, county, state and federal levels.

Our team represents both private and public sector clients, including some of the nation’s leading homebuilders, developers, redevelopers, office and commercial developers, state and local redevelopment authorities, public transportation authorities, municipalities and local boards, and other public and private entities.

Clients count on Hill Wallack LLP's Land Use Team to create solutions for many of the toughest challenges they face. Our extensive experience enables us to present a number of pragmatic options to our clients, and where we can, we work to avoid litigation. But when litigation is our clients’ only—or best—alternative, we provide aggressive, cost-effective advocacy, at the trial court and appellate levels, and before our state courts and the federal courts.

Our attorneys are contributing authors to the blog, New Jersey Land Use Law Blog.

For more information, contact one of the attorneys who work in this area: Thomas F. Carroll, III, Esq.; Stephen M. Eisdorfer, Esq.; Kenneth E. Meiser, Esq.; Henry T. Chou, Esq. or Michael J. Lipari, Esq.

This article provides information of general interest and is not intended, and should not be used, as a substitute for consultation with legal counsel. Any questions regarding the specific issues raised in this article should be directed to the authors or to your contacts at Hill Wallack LLP.