Controversy over land deals in Chesterfield Township

Ten years ago, a rural community in Burlington County came up with a vision for future development.

Instead of allowing new homes and businesses to eat up its pastures and cornfields, Chesterfield Township would cluster growth in its northwest corner.

Old York Village would be built as a walkable community of shops, parks, a school, and 1,200 homes. In return, the developers would pay farmers to preserve open land elsewhere in the township.

In 2004, the program that grew out of a county pilot project won a national award, and its success helped lead to a law permitting its use in towns across New Jersey.

But an Inquirer examination has found that four of the six projects in Old York Village are going forward after developers made $3.1 million in preservation payments to farmers who are members of the Planning Board and who voted on the projects.

The biggest beneficiary: Lawrence Durr, a township committeeman and Planning Board member who used his position to ease the way for a developer with whom he had a contract to preserve farmland. The developer ultimately paid Durr $2.37 million.

In recent months, controversy over Durr's land deals has led the township to repeal one ordinance and redo a hearing on a developer's subdivision application.

"It's kind of this incestuous circle . . . there's a lot of conflict of interest," said Jeff Baron, an attorney representing two residents who recently sued to halt the program.

"It's just a situation where the residents, their interests, aren't being put first," he said.

State ethics law bars local officials from engaging in "any business, transaction, or professional activity which is in substantial conflict with the proper discharge of his duties in the public interest."

Durr maintains that his farm-preservation payments from developers - including another for $116,500 in 2003 - did not affect his judgment in voting on matters regarding those developers.

"If you're going to serve your community, which is what I feel I have done for the last 18 years, you can't be precluded from participating in what's allowed in the town," he said.

Durr, a retired farmer in this community of 7,000, spoke passionately about the program's achievements on a drive through Chesterfield. Old York Village is now one-third built, more than 2,200 acres of farmland have been preserved, and the township just broke ground on the village school.

"If there were mistakes made, they were unintentional," said Durr, 59, a former mayor on the three-member Township Committee. "I'll take some of the credit for the success of the program. It hasn't been for personal gain."

In most farm-preservation programs, farmers are paid with tax dollars not to develop their land. But Chesterfield adopted a system, known as Transfer of Development Rights, that did not rely on public money.

Instead, developers pay landowners the difference between what the land is worth as a farm and its value developed, calculated in the form of "credits." Developers then use the credits they have bought to build in a designated high-density area.

More than 20 states, including Pennsylvania, have some form of TDR. As Chesterfield has learned, where township officials are also landowners, conflicts can emerge.

Durr was one of many in town who initially balked at giving up the option to develop his land. But he said he became an advocate of development credits after realizing that this innovative way to curb sprawl was feasible as well as fair to landowners.

In 1998, along with other Chesterfield leaders, he approved a plan that allocated credits to 12 square miles of farmland and was soon among the first in town to strike a deal. More than 30 farms followed, including those of three colleagues on the nine-member Planning Board.

Still, developers struggled to round up enough credits.

Some landowners held out for a better offer. (At first, a credit sold for about $15,000; by 2007 the price had climbed above $60,000.) Others were reluctant to promise they'd never develop their land.

That was the position in which one developer found itself when it signed an agreement with Durr, potentially worth millions.

Chesterfield L.L.C., created in 2005 by a Middlesex County developer, wanted to build shops, houses, and apartments on prime land at the entrance to Old York Village. To do so, it needed about 260 credits, but a concerted outreach effort to local credit-holders yielded a dismal response.

In 2006, Durr and Chesterfield L.L.C. sealed what would become a mutually beneficial plan.

On July 12, Durr and his wife paid $2 million to buy 105 acres of land he had leased as a farmer, next to his house. The land came with 28.25 credits, worth nearly what he'd paid for the land if he could sell them.

To help secure financing, he signed a contract with Chesterfield L.L.C. that gave the company the option to buy those credits from him later, Durr said. He declined to show it to The Inquirer.

"I needed [the agreement] to borrow money to buy the land. . . . It certainly gave me favorable terms on the mortgage," said Durr, who got a $1.6 million bank loan.

The company paid Durr a deposit but could have walked away at any time, said Robert Adinolfi, vice president of acquisitions at Renaissance Properties, which created Chesterfield L.L.C.

Even with Durr's agreement, the developer had nowhere near enough credits to break ground. Records show that over the next year, while under the agreement with Chesterfield L.L.C., Durr worked to help the company get many of those credits.

At a Planning Board meeting on July 20, eight days after buying the land, Durr stepped down from the dais and was sworn in before Planning Board colleagues whom, as a committeeman, he had voted to appoint.

Durr asked them to allocate 10.25 more credits to his new land, based on an engineering report he'd privately commissioned. Any landowner can file such appeals.

The Planning Board approved the credits, worth over a half-million dollars.

The approval pushed the total value of Durr's credits to well above what he'd just paid for the land.

Next, Chesterfield L.L.C. and Durr - without disclosing their agreement to Burlington County officials - petitioned them to help the developer secure more credits. The county can step in when the credit market stalls, but generally won't unless approached by a town.

On Aug. 9, Adinolfi laid out his problem at a Township Committee meeting attended by county development officials. Durr suggested ways the county could encourage landowners to sell credits.

He was persuasive.

"Larry Durr, I thought, was a really constructive force on behalf of the township," said Susan Craft, executive director of the State Agriculture Development Committee and former coordinator of the county's farmland-preservation program.

Craft, who attended the meeting, said recently that she did not know about Durr's ties to the developer.

In September, with Adinolfi and Chesterfield L.L.C. managing member Robert McDaid at his side, Durr appeared on behalf of the town to ask the county's TDR Bank Board to hold a credit auction and, for the first time, sell county-owned credits.

"We would very much like it to go forward," said Durr.

Board member Michael Catania recently said he was surprised by Durr's position because the committeeman had long argued before the board against county intervention.

"He just did a complete 180. . . . None of us knew quite what to make of him," Catania said.

Durr said he felt the credit agreement was a done deal, and "what could possibly be the gain for me that they need more credits and I'm trying to get them more credits? . . . I don't see a conflict."

News of the county credit auction on March 1, 2007, prompted some landowners to work out deals in advance.

At the event, Chesterfield L.L.C. successfully bid for 50 credits - 22 from the county, said county open-space coordinator Matt Johnson.

Johnson, who attended both meetings where Durr spoke, said that he would have wanted to know about Durr's financial ties, but that the county talked to other Chesterfield officials who supported the plan.

Catania, a former ethics officer for the Department of Environmental Protection, said public officials should "bend over backwards" to disclose such relationships, especially because development credits are so complicated.

A year and a half after the county talks, Durr reported the company as a source of income for 2007 on a state-required disclosure form.

Chesterfield L.L.C. got another break in an April 2007 township ordinance. Citing the difficulty in obtaining credits, the ordinance relaxed the number of credits required to build commercial space and eliminated those needed for apartments built over commercial areas.

It meant Chesterfield L.L.C., the only developer pitching those uses, needed 15 to 20 fewer credits - a savings of about $1 million. Durr voted for the ordinance and also motioned to introduce and adopt it.

Asked why he voted, Durr said he "didn't connect the dots" and "nobody told me I couldn't." He said he did not recall consulting the township solicitor for advice.

Durr's actions helped the program and their credit agreement resulted in no special treatment, said Adinolfi, the development executive.

On June 28, 2007, a year after buying the 105 acres, Durr sold most of his credits to Chesterfield L.L.C. for $2.37 million - $372,500 more than he paid for the land.

According to township credit records, it was among the largest payments a Chesterfield citizen had received from a developer in the program's history.

Other Chesterfield Planning Board members sold credits against their properties to developers on whose requests they sometimes voted.

Consider Chesterfield Downs, awarded "2008 Community of the Year" by a state builders group. F. Gerry Spence in 2004 sold credits to its developer, then voted to approve its subdivision application in 2005.

Greg Lebak, who also voted on Chesterfield Downs, later sold a credit to the company.

Neither responded to several requests for interviews.

Joseph Malison, then chairman of the Planning Board, abstained from voting on a Toll Bros. application, just before selling the company $168,000 in credits on his land. Later, he approved Toll's request for variances that reduced yard setbacks, increased maximum building heights, and relaxed some other rules.

"I didn't think it was a conflict because those were different types of requests," Malison said.

Experts on the program said that they found the pattern troubling, but that it shouldn't taint an otherwise successful planning tool.

Burlington County Freeholder William S. Haines Jr., a member of the county's TDR Bank Board, said "it seems obvious" that officials who sell credits to a developer should not vote on issues affecting the developer. That doesn't mean officials set out to take advantage, he said. "In little towns . . . you just don't think about it at all."

Developer Mark Fauci, whose company paid Durr in 2003 for credits, voiced surprise that anyone would see a conflict of interest in the committeeman's votes for him.

"He did not try to hide it," said Fauci, who later sold the credits and project to another developer. "The attorneys knew about it, the Planning Board knew about it, the Township Committee knew about it."

Today, Chesterfield Township is backpedaling.

In August, Planning Board Solicitor Fred Hardt said during a hearing on Chesterfield L.L.C.'s subdivision application that Durr's credit sale "disqualified" him from voting.

Ernest Liptak and his daughter Pamela, who had long contested the application, then sued Durr, Chesterfield L.L.C., and their town. They allege a "quid pro quo" between the parties and claim development will bring traffic and pollution to their home. They want the program invalidated and officials to return money from credit sales.

Local officials call the suit frivolous.

"Just because one guy [Liptak] has been disgruntled for 10 full years now is not a reason to put aside a nationally recognized model of planning," said Township Solicitor John Gillespie, who maintains he did not know about Durr's financial ties.

After Liptak's attorney complained that Durr had sat on the dais - but not yet voted - during the developer's application, the board redid the hearings without Durr in October. In January, citing the suit, the township repealed the 2007 ordinance that benefited the developer and readopted it without Durr's vote.

The company's application was approved in October, but it says building is on hold until the economy improves.

As controversy over the project took off, Gillespie made a suggestion at a public meeting last fall, more than eight years after officials began striking land-preservation deals.

All conflicts of interest involving the program, he said, should be fully disclosed at the next meeting.