January 1, 1900

by Stephen M. Eisdorfer

Your property has just been rezoned from half-acre lots to six-acre lots. Disaster has struck. You pick up the telephone to call your lawyer. What advice should your lawyer give you?

The conventional advice given by most lawyers to builders facing this problem is that you can do two things. You can challenge this zoning as "arbitrary and capricious," or you can sue for damages on the grounds that your property has been taken without just compensation. Unfortunately, in most cases this advice is unsound. Unless there are exceptional circumstances, neither of these courses of action is very likely to succeed.

Recent Cases Unfavorable

The futility of this conventional advice has been reconfirmed by two recent decisions. In Kirby v. Bedminster Township, a trial court upheld six-acre zoning as reasonable in suburban Somerset County, even in the face of testimony of the court-appointed independent planning expert that a minimum lot size larger than three-acre lots could not be justified on planning grounds. Similarly, in Pheasant Bridge v. Warren Township, the Appellate Division reversed a trial court decision awarding compensation to a property owner whose land had been rezoned to six-acre lots. The Appellate Division held that the property owner was not entitled to any relief because it had not been entirely denied all economically beneficial use of the property - the land could still be farmed.

Faced with this problem, builders need unconventional "outside-of-the-box" legal strategies. Here are some that attorneys at Hill Wallack have utilized.

Strategies to Consider

Mt. Laurel - Is the town in compliance with its constitutional fair share housing obligation? Has it secured substantive certification from the Council on Affordable Housing? A remarkable number of municipalities remain non-compliant with their housing obligations. They are vulnerable to exclusionary zoning litigation. Hill Wallack maintains an updated list of these municipalities. A successful builder-plaintiff is entitled to a site-specific builder's remedy, i.e., a court order requiring the municipality to approve the development proposed by the plaintiff so long as it includes a substantial amount of low and moderate income housing.

Bad Intentions - Why did the town rezone? Can you show that it was trying to exclude families with children to keep down school expenditures? If so, the town may have violated the provisions of the federal Fair Housing Act or the New Jersey Law Against Discrimination, both of which prohibit discrimination against families with children. Did the town rezone to reduce the value of the land in anticipation of its attempt to acquire the property? This is an impermissible purpose under the Municipal Land Use Law. Can you show that the town rezoned because some official did not like you, or as a favor to an elected official who owns a neighboring property, or for some other reason unrelated to land use? If so, town officials may have violated principles of equal protection or substantive due process under the federal constitution. Recent decisions by the United States Supreme Court and the Third Circuit Court of Appeals suggest that builders are entitled to relief, monetary and otherwise, under such circumstances.

Moratorium - Is the town seeking to halt development in all or part of the town while it waits for some future event to take place - adoption of a new master plan, improvement of the town's roads, or accumulation of funds for public acquisition? The Municipal Land Use Law expressly prohibits municipal construction moratoriums. Utilizing this provision, the courts have struck municipal ordinances, such as West Windsor's timed-growth ordinance, that are really moratoriums in disguise.

Offer to Build What They Can't Turn Down - There are some types of development that are protected under state or federal law. Municipalities cannot lawfully refuse to permit them to be developed. For example, housing for the handicapped is protected under federal law, and specialized housing for senior citizens is protected under our state's inherently beneficial use doctrine. These protected uses include nursing homes, housing for Alzheimer sufferers, assisted living facilities, continuing care retirement communities, and similar housing.

Offer to Build What They Don't Like - Although rezoning for six-acre lots may not permit profitable housing development, it may permit other types of uses as a matter-of-right that are profitable but would be found undesirable by the municipality. Such zones, for example, may permit a wide variety of agricultural uses, including high intensity agricultural uses. Such uses may be profitable and may have the advantageous by-product of inducing the municipality to reconsider its low density residential zoning.

The Conventional Advice Revisited - Sometimes, sophisticated exploration of your particular facts may reveal that, because of your exceptional circumstances, the conventional advice is right. For example, if the six-acre zoning covers an area that is already largely developed with smaller lots, it may be deemed arbitrary and capricious even under current, permissive judicial standards. Or because of its location and soil characteristics, your land has no other economically viable uses, the rezoning may have destroyed its entire economic value.

Get Them to Buy It - Recent state and local initiatives to preserve open space will make approximately three billion dollars available to the state, counties and municipalities over the next ten years. Property acquired utilizing state funds under the Garden State Open Space Preservation Trust that has been downzoned since November 1998 must be valued as if it could still be developed under the November 1998 zoning. The credible threat of litigation on any of the above grounds may induce the municipality to negotiate to purchase your property on favorable terms.

For the present, there are no tried and true formulas for challenging downzoning. Every instance requires creative lawyering and imaginative strategies. But in today's regulatory climate, all strategies must be considered, conventional and otherwise, if the effects of a downzoning are to be avoided or mitigated.

Stephen M. Eisdorfer is also a partner within the Land Use Division of Hill Wallack. A Member of the Board of Directors of the New Jersey State Bar Association's Land Use Section, he concentrates his practice in land use litigation, including Mount Laurel litigation and litigation involving the civil rights statutes.