Developers May be Required to Pay for Off-Tract Mass Transit Upgrades

New Jersey is the nation’s most densely populated state and it has a transit system that can boast of being the nation’s largest statewide public transit system. Throughout the country various methods have been employed in hopes of generating the necessary capital to upgrade transit infrastructure. New Jersey is no stranger to this problem and Senators Joseph P. Cryan (D-20, Union) and Loretta Weinberg (D-37, Bergen) are sponsoring S-368, a bill that they believe provides the solution.

The New Jersey State Senate’s Community and Urban Affairs Committee recently voted S-368 out of Committee. S-368 would amend the Municipal Land Use Law (“MLUL”) to allow municipalities to require a developer, as a condition of a development approval , to pay for reasonable and necessary off-tract mass transit improvements that are necessitated or required by the proposed development.

As reported out of the Committee, the bill adds mass transit improvements to the street improvements and water, sewerage, and drainage facilities for which contributions currently can be required. The contributions are limited to the proportionate or pro-rata share of the reasonable and necessary mass transit improvements. The regulations governing these contributions would be developed by the municipalities in consultation with any affected mass transit agencies. The regulations would have to be adopted by ordinance and would have to be based on an adopted circulation plan element of the municipality’s master plan.

The theory behind charging developers for mass transit improvements is that with new development comes additional mass transit usage requiring improvements to the mass transit system. Proponents of the bill argue that developers would realize an increased return on sales and rentals for property built near newly improved transit lines. Industry groups, like the New Jersey Builders Association and NAIOP, have expressed concern that the bill does not adequately define the costs to be borne by developers, and that the increased cost to development and to affordable housing would, in fact, stifle new projects.

No action has been taken on A-3544, the Assembly companion legislation, introduced by Assemblyman Daniel R. Benson (D-14, Mercer). For more information about the potential impact of these bills, please contact firm Partner Jennifer Mazawey, Esq. at jmazawey@genovaburns.com or 973.535.7126.