In Pond Run Watershed Association v. Township of HamiltonZoning Board of Adjustment, the Appellate Division reversed anapproval for a mixed-use project on a 10.9-acre site consisting of119 age-restricted units, two retail buildings and a restaurant. Aspart of the approval, which did not include on-site recreationalamenities, the applicant agreed to pay $476,000 to the Township tobuild an amphitheatre in a municipal park. During the hearings, thetownship administrator confirmed that the contribution had beennegotiated with the applicant and that it was considered anintegral part of the mayor's plan to revitalize the park.

The court overturned the approval in part because it concludedthat the contribution was an illegal exaction. The court alsoconcluded that this contribution was a major feature of theapproval process. As a result, in lieu of simply excising thiscondition, the court invalidated the entire approval, finding thequid pro quo arrangement had tainted the process.

The Municipal Land Use Law already contains standards formunicipalities to require contributions for improvements that arereasonably necessitated by development, such as street improvementsand water, sewerage and drainage facilities. However, the MLUL doesnot authorize a municipality to assess, as a condition of approval,a contribution to benefit municipal facilities not directly relatedto the project, such as schools, fire stations, ball fields orparks.