2022 CAI-NJ September LAC Issue

PERFORMANCE BONDS

By A. Christopher Florio, Esq., Stark & Stark Attorneys at Law and George Greatrex, Esq., Hill Wallack LLP

“This safety measure was upended during Governor Chris Christie’s last day in office on January 16, 2018......”

F or almost 50 years, part of the New Jersey Municipal Land Use Law (“MLUL”) has required townships to require developers to post bonds and/ or cash escrows (also known as “guarantees”) for infra structure items within a community (i.e., roads, sidewalks, basins, grading, plantings, etc.), and as more specifically set forth in N.J.S.A. 40:55D-53. These bonds were always a means for a municipality to ensure that infrastructure, including those that would be for public and private use, were properly built and structurally sound. By law, the municipality is the beneficiary for these posted bonds and/ or cash escrows and has the sole right to act if a builder will not address improperly constructed infrastructure. While the infrastructure of most community associations is private, these posted bonds and/or cash escrows, and the involvement of the municipal engineer to inspect infra structure subject to these bonds and/or cash escrows, was another safety measure available to community associa tions to ensure properly constructed infrastructure. By law, no bonds and/or cash escrows may be released until the

municipal engineer “signs off” on the developer’s request to reduce or release this obligation. This safety measure was upended during Governor Chris Christie’s last day in office on January 16, 2018, when he signed into law a revision to the MLUL no longer requiring that developers post bond or cash escrows, in almost all cir cumstances for private communities, unless the infrastructure is to be dedicated to the municipality. With the benefit of hindsight, it has been CAI’s position that this MLUL revision has consequences the Legislature did not intend, nor were educated about, when the bill was working its way through the Legislature. The National Association for Industrial and Office Parks (“NAIOP”) is a trade organization that represents the inter ests of commercial real estate landowners. It is CAI’s belief the NAIOP was the impetus behind the MLUL law revision and was frankly based on the sound reasoning that there is little reason to require bonds and/or cash escrows in these settings since the infrastructure is private (for instance, a shopping center or mall) and the landowner will always CONT I NU E S ON PAGE 14

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