Non-Residential Development Fees: the Plain Language Confirms

by: Allan Zhang
30 Jul 2019

The New Jersey Tax Court recently determined 1) whether a subject property was improved for the purposes of calculating the Non-Residential Development Fee (“NRDF”)(N.J.S.A. 40:55D-8.1 to 8.7) and 2) the correct date to use when determining the preexisting value of the subject property for the purposes of computing the NRDF owed. The NRDF is applied whenever nonresidential development occurs on real property that has been previously developed with a building or structure. Here, Tax Court Judge Andresini held the subject property was improved with a parking structure for purposes of NRDF calculation and the application of the NRDF began accruing when plaintiff, Glenpointe, first sought approval under the Municipal Land Use Law (“MLUL”) for its site plan and waivers to build a hotel.

In December 2014, Glenpointe submitted an application to the develop subject property into a 13 story hotel. The subject property was listed as vacant land and assessed at $732,000 ($0 allocated to improvements) but there was a parking structure on the property. In March 2015, the application was approved. On May 2016, Glenpointe was approved for construction permits and for a permit to install pilings at the subject property. As of May 2, 2016, subject property was assessed at $9,975,000 (entire amount allocated to land and $0 for improvements).

An NRDF was imposed on Glenpointe for $1,271,854. Glenpointe appealed to the Director, Division of Taxation which determined December 2014 was when calculation of the NRDF should have began as it was when Glenpointe first sought approval for its plan. Additionally, the Director noted that the value for pre-existing improvements and land was not deducted from the Township’s NRDF calculation as it should have been. Glenpointe then filed a complaint to reduce the NRDF and obtain a $254,184.47 refund. The Township filed a counterclaim to uphold the original NRDF calculation.

Glenpointe filed for summary judgment and defendants cross-moved for summary judgment. The court determined that Glenpointe’s property had parking lot improvements that preexisted construction of the hotel for purposes of calculating NRDF. However, Judge Andresini concluded that all parties had previously acknowledged and were in agreement that subject property had been improved with a parking lot structure and the equalized assessment for the structure had to be deducted from the NRDF. Accordingly, summary judgment on this matter was granted to Glenpointe and Director as the NRDF was properly calculated.

With regard to the calculation date, Judge Andresini determined, based on the NRDF Act,  the correct date to be used is December 9, 2014, the date the developer first sought approval under the Municipal Land Use Law.  Glenpointe argued that the correct date for determining value of the land and improvements was May 2, 2016 when Glenpointe first sought issuance of a construction permit, however, defendants Township and Director argue the beginning date should be December 2014 when Glenpointe first sought approval. After reviewing the plain language of the statute, Judge Andresini agreed with the Township and Director. He held the statute is clear that the date to be used to determine a NRDF is “the chronologically earlier of: a) the date the developer first sought approval for a construction/demolition permit; or b) the date the developer first sought approval under the MLUL. Summary judgment granted in favor of both defendants on this issue. Accordingly, summary judgment was granted on this matter in favor of Township and Director on this issue.

A copy of Glenpointe Associates IV, LLC v. Twp o f Teaneck and Director, Division of Taxation can be found here.