A proposed settlement could clear the way for a major residential development at the former Circus Liquors property along Route 35 in Middletown Township, potentially ending a three-year legal battle over affordable housing and development rights at the 52-acre site.

Under the proposed agreement between Middletown Township and AAMHMT Property LLC, the property could accommodate up to 450 residential units, including 68 affordable homes for very-low-, low- and moderate-income households. The affordable units would count toward the township’s Third Round affordable housing obligation.

The proposal represents a significant reduction from the developer’s original plans. AAMHMT initially sought approval for 937 units when it filed its builder’s remedy lawsuit in 2023. A special adjudicator later determined that a reasonable level of development for the property would be between 485 and 500 units, with the proposed settlement setting the maximum at 450.

Townhomes and Affordable Housing

The newly released concept plans provide a closer look at what the development could look like. The proposal includes 170 traditional townhomes, 226 stacked townhomes and 54 affordable flats. The plans also show internal roads, sidewalks, parking, amenity areas and open space throughout the property.

The settlement requires at least 15% of the residential units to be affordable housing. At the full 450-unit buildout, that would mean 68 affordable units. The agreement also includes provisions addressing wetlands, stormwater management, landscaping and preservation areas on the site.

Years of Affordable Housing Litigation

The project stems from a lengthy dispute over Middletown’s obligations under New Jersey’s Mount Laurel affordable housing doctrine. AAMHMT filed its builder’s remedy lawsuit in 2023, arguing that the township had not satisfied its affordable housing obligations.

A 2024 court finding determined that Middletown was not constitutionally compliant with its Third Round obligation. The township had estimated its obligation at roughly 600 units, while the plaintiff argued it was closer to 1,000 units. Subsequent court proceedings allowed the builder’s remedy case involving the Circus Liquors property to continue.

The proposed settlement now gives the township and developer a potential path forward without returning to a larger court fight over the site's development capacity. If approved, the settlement would resolve the pending litigation between the parties.

Court Hearing Scheduled for October

The settlement has not yet received final approval. A fairness hearing is scheduled for October 2, 2026, at the Monmouth County Superior Court in Freehold, where Superior Court Judge Gregory L. Acquaviva will consider whether the agreement is fair and reasonable.

If the settlement is approved, Middletown would amend its redevelopment plan to permit up to 450 residential units on the property. The project would still need to proceed through subsequent municipal planning and development approvals before construction could begin.

For Middletown and the broader New Jersey housing market, the proposed agreement could turn a long-disputed property into a substantial new source of housing. The combination of 450 planned homes, 68 affordable units and significant open-space and environmental provisions makes the former Circus Liquors site one of the more closely watched housing developments in Monmouth County as the state continues working through its affordable housing requirements.