Opinion
DOCKET NO. A-5797-10T1
08-30-2013
JOSEPH KUSHNER HEBREW ACADEMY, INC., and TMB PARTNERS, LLC, Plaintiffs, v. TOWNSHIP OF LIVINGSTON, LIVINGSTON TOWNSHIP COUNCIL and LIVINGSTON PLANNING BOARD, Defendants. SQUIRETOWN PROPERTIES, LLC, Plaintiff-Respondent, v. TOWNSHIP OF LIVINGSTON, LIVINGSTON TOWNSHIP COUNCIL and LIVINGSTON PLANNING BOARD, Defendants-Appellants. HILLSIDE-NORTHFIELD PARTNERS, LLC, Plaintiff-Respondent, v. TOWNSHIP OF LIVINGSTON, LIVINGSTON TOWNSHIP COUNCIL and LIVINGSTON PLANNING BOARD, Defendants-Appellants.
Gary T. Hall argued the cause for appellants (McCarter & English, LLP, attorneys; Mr. Hall, of counsel and on the briefs). Craig M. Gianetti argued the cause for respondent Squiretown Properties, LLC (Giordano, Halleran & Ciesla, P.C., attorneys; Paul H. Schnieder, of counsel; Mr. Gianetti, on the brief). Robert Axel Kasuba argued the cause for respondent Hillside-Northfield Partners, LLC (Bisgaier Hoff, LLC, attorneys; Mr. Kasuba, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Alvarez, Waugh and St. John.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket Nos. L-9126-07, L-9785-07, and L-7509-08.
Gary T. Hall argued the cause for appellants (McCarter & English, LLP, attorneys; Mr. Hall, of counsel and on the briefs).
Craig M. Gianetti argued the cause for respondent Squiretown Properties, LLC (Giordano, Halleran & Ciesla, P.C., attorneys; Paul H. Schnieder, of counsel; Mr. Gianetti, on the brief).
Robert Axel Kasuba argued the cause for respondent Hillside-Northfield Partners, LLC (Bisgaier Hoff, LLC, attorneys; Mr. Kasuba, on the brief). PER CURIAM
Defendants Township of Livingston, Livingston Township Council, and Livingston Planning Board appeal from builder's remedies awarded to plaintiffs Squiretown Properties, LLC, (Squiretown) and Hillside-Northfield Partners, LLC (Hillside). On September 1, 2009, the Township adopted a housing element and fair share plan as required by a February 20, 2009 order. Thereafter, defendants moved for reconsideration by the trial court after the Supreme Court accepted certification on In re Adoption of N.J.A.C. 5:96 & 5:97, 416 N.J. Super. 462 (2010), certif. granted, 205 N.J. 317 (2011). The relief was denied. The parties have not submitted the transcript for that hearing.
Defendants earlier entered into a settlement agreement with plaintiffs Joseph Kushner Hebrew Academy (JKHA) and TMB Partners (TMB) in accord with the special master's recommendation.
After three days of trial on Hillside's builder's remedy, on November 4, 2010, Judge Carey issued an oral decision granting plaintiffs relief.
I
We briefly discuss, for context, the history of affordable housing and the builder's remedy. In 1975, the Supreme Court held that our Constitution requires each municipality to "plan and provide, by its land use regulations, the reasonable opportunity for an appropriate variety and choice of housing, including . . . low and moderate cost housing, to meet the needs, desires and resources of all categories of people who may desire to live within its boundaries." S. Burlington Cnty. N.A.A.C.P. v. Twp. of Mount Laurel, 67 N.J. 151, 179 (1975), cert. denied, 423 U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (Mount Laurel I). If a municipality has been adjudicated to be non-compliant with its obligation, and has not adequately revised its zoning ordinances, a prospective developer may seek a "builder's remedy." S. Burlington Cnty. N.A.A.C.P. v. Twp. of Mount Laurel, 92 N.J. 158, 279-80 (1983) (Mount Laurel II). "'The builder's remedy is a device that rewards a plaintiff seeking to construct lower income housing for success in bringing about ordinance compliance through litigation.'" Mount Olive Complex v. Twp. of Mount Olive, 340 N.J. Super. 511, 525 (App. Div. 2001), remanded on other grounds, 174 N.J. 359 (2002) (quoting Allan-Deane Corp. v. Bedminster Twp., 205 N.J. Super. 87, 138 (Law Div. 1985)).
A developer is entitled to a builder's remedy if it satisfies three prongs: (1) it succeeds in Mount Laurel litigation; (2) it proposes a project with a substantial amount of affordable housing; and (3) the site is suitable, that is, the municipality fails to meet its burden of proving that the site is environmentally constrained or construction of the project is contrary to sound land use planning. Mount Laurel II, supra, 92 N.J. at 279-80; Mount Olive, supra, 340 N.J. Super. at 525. Although the issue of a substantial amount of suitable housing is determined on a case by case basis, the Court characterized allocating twenty percent of a project to affordable housing as a "reasonable minimum." Mount Laurel II, supra, 92 N.J. at 279 n.37.
In 1985, the Legislature enacted the Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to -329.4, which created the Council on Affordable Housing (COAH). L. 1985 c. 222. The legislation authorized COAH with, among other things, adopting criteria and guidelines for "[m]unicipal determination of its present and prospective fair share of housing need in a given region[.]" N.J.S.A. 52:27D-307(c)(1). COAH adopted "first round" and "second round" rules establishing municipalities' affordable housing obligations for six-year periods, from 1987 to 1993, and 1993 to 1999. N.J.A.C. 5:92-1.1 to 18.20, and Appendix A to F; N.J.A.C. 5:93-1.1 to 15.1, and Appendix A to H. As we further discuss below, we have twice invalidated parts of COAH's third-round rules, for the period from 1999 to 2014. See In re Adoption of N.J.A.C. 5:96 and 5:97, supra, 416 N.J. Super. 462. It is against this backdrop that we consider this appeal.
II
Under the second-round rules, COAH determined that the Township had a first-round and second-round (1987 to 1999) fair share housing obligation of 375 units, called a "pre-credited need" or new construction housing obligation. The Township failed to prepare and submit to COAH an affordable housing plan to meet this obligation prior to the institution of Mount Laurel litigation by two developers.
On February 7, 2000, Judge Jack B. Kirsten signed a final judgment in that litigation, Livingston Builders, Inc. v. Township of Livingston, Nos. L-7641-94 and L-2148-96, finding the Township to be in compliance with its prior affordable housing obligation. The judge approved the affordable housing compliance plan that had been adopted by the Township Planning Board on February 4, 1997, and granted the Township a six-year period of repose and protection from challenges to its zoning and land development ordinances premised on claims that the ordinances do not adequately satisfy the Township's obligation to provide a realistic opportunity for low- and moderate-income housing.
As part of the judgment of repose, the judge granted the Township a "vacant land adjustment" or unmet need of 182 units resulting in a realistic development potential of 193 units. The resulting figure of 193 units represented the adjusted affordable housing obligation based on the lack of sufficient vacant developable land in the Township.
The vacant land inventory in the Township's second-round plan included lots 35 and 37 in block 5900, for a combined acreage of 9.8 acres. These two lots largely correspond to the current Squiretown property and were assigned a combined realistic development potential of eleven affordable units.
The Township fully implemented its obligation for 193 units except for twenty-two units that were to be addressed by two regional contribution agreements (RCA) that were fully funded. In 2008, the Legislature cut off any further RCAs. L. 2008, c. 46 § 4.
The plan called for four RCAs; two were fully performed but the other two were prevented from proceeding due to the law change.
One RCA for eleven units had been pending at COAH since 2006 but was neither approved nor rejected.
In December 2004, COAH adopted new regulations for its third round, covering a cumulative period from 1999 through 2014. 36 N.J.R. 5748(a) (Dec. 20, 2004) (substantive rules); 36 N.J.R. 5895(a) (Dec. 20, 2004) (procedural rules). Under these rules, a municipality's fair share affordable housing obligation had three components: a rehabilitation obligation; a prior-round (1987-1999) obligation; and a growth share obligation (2000 to 2014). N.J.A.C. 5:94-2.1; N.J.A.C. 5:97-2.2.
COAH recalculated municipal new construction obligations for 1987 to 1999, called the prior-rounds obligation, and determined in 2004 that the Township's prior-rounds obligation was 259 units. Thus, the Township's unmet need was sixty-six units (259 units minus the realistic development potential of 193 units).
Prior to June 21, 2011, when Judge Carey signed the final judgment adopting the Township's Housing Element and Fair Share Plan, defendants had not submitted a plan to COAH or a court that covered the third-round housing cycle as set forth in N.J.A.C. 5:94.
On January 25, 2007, we invalidated portions of COAH's third-round rules, including the growth share methodology, and required COAH to adopt new regulations. In re Adoption of N.J.A.C. 5:94 & 5:95, 390 N.J. Super. 1, 54-56, 88 (App. Div.), certif. denied, 192 N.J. 71-72 (2007). We also stated that only certain builder's remedy suits were stayed:
We also stay the filing of any builder's remedy actions for any municipality whose application for substantive certification is affected by this opinion. A stay furthers the policy of the FHA [Fair Housing Act, N.J.S.A. 52:27D-301 to -329.19] to resolve affordable housing disputes through COAH rather than in the courts. Municipalities that have acted in good faith in devising fair share plans to comply with the existing third round rules should not be subjected to an exclusionary zoning law suit.
[Id. at 88.]
Defendants admit that they received correspondence from COAH, dated March 28, 2007, which stated that COAH was still accepting petitions for substantive certification and was available to work with municipalities on individual projects or plans.
In January 2008, COAH proposed revised third-round regulations, which were adopted on May 6, 2008. 40 N.J.R. 2690(a) (June 2, 2008); 40 N.J.R. 3161(a) (June 2, 2008). Thereafter, on October 20, 2008, COAH adopted substantial amendments to the revised third-round rules, and the rules became N.J.A.C. 5:96-1.1 to -20.4 and N.J.A.C. 5:97-1.1 to -10.5 and Appendices A through F. See In re Adoption of N.J.A.C. 5:96 & 5:97, supra, 416 N.J. Super. at 471-77 (setting forth history of third-round rules).
Prior round obligations were readjusted in N.J.A.C. 5:97 Appendix C. COAH modified the growth share methodology in N.J.A.C. 5:97-2.2 with COAH projecting growth rather than municipalities. N.J.A.C. 5:97 Appendix F. COAH calculated the Township's prior-round share at 375 units, N.J.A.C. 5:97 Appendix C, and its growth share obligation at 308 affordable units. Formerly at N.J.A.C. 5:97 Appendix F(2). Squiretown's planner calculated that when combined with its prior-round obligation, the Township had a total new construction affordable housing obligation under the rules of 683 units for the third round.
In In re Adoption of N.J.A.C. 5:96 & 5:97, supra, 416 N.J. Super. at 480, 483, portions of the revised third-round rules were struck down, including the revised growth share methodology for the same reason we had invalidated the original growth share methodology. We directed COAH "to adopt third round rules that incorporate a methodology similar to the methodology set forth in the first and second round rules, which were approved by the courts in most respects." Id. at 484. The New Jersey Supreme Court granted certification in March 2011, but has not yet issued a decision. 205 N.J. 317 (2011).
III
Squiretown's site consists of a largely undeveloped mostly wooded lot designated as block 5900, lots 35, 36, 37, 42, and 44.01. Within the site, 12.37 acres are developable. It is currently zoned P-B1 Professional Office, permitting a maximum building height of forty feet and maximum impervious coverage of seventy percent, and R-2 Residential, permitting a minimum lot size of 25,000 square feet for a gross density of 1.74 dwelling units per acre. It is within planning area 1 of the State Development and Redevelopment Plan.
IV
The Hillside site consists of 4.52 acres, block 550, lots 5 (in part), 7, 8, and 9. It is within planning area 1 of the State Development and Redevelopment Plan. The site is located in the R-3 zone, which generally permits single-family residential uses. Since the 1930s the site has been used as a nursery, and as a landscaping business since 1958. Situated on two of the lots are older, dilapidated single-family homes.
V
Squiretown requested a builder's remedy for 250 multi-family apartments with a twenty percent set aside, or fifty units, for affordable housing. David Minno, Squiretown's expert in the field of architecture, testified regarding Squiretown's proposal to construct six buildings, four stories high over parking, with a maximum height of 68.5 feet.
Harold Maltz, Squiretown's expert in traffic engineering, conducted studies in October and November 2002, for a project that was to have twenty-two units, issuing a report dated November 24, 2003. He prepared a traffic study dated July 1, 2009. Maltz did not conduct new counts of traffic because from 2002, when he previously conducted studies for the earlier project, to 2009, there were no major changes in the area that would affect traffic flows. He used traffic projections for low-rise buildings, as he considered this to be a worst-case scenario and the most conservative analysis of projected traffic. The relevant figure in Maltz's analysis was the actual number of trips generated by the project and not the percentage increase. That figure was well within the Residential Site Improvement Standards (RSIS) average daily traffic maximum for a residential access street. Maltz concluded that from a traffic standpoint, the project's impact on traffic would not be contrary to sound land use planning. He conceded, however, that some mitigation should be introduced.
The New Jersey Residential Site Improvement Standards, N.J.A.C. 5:21-1.1 to -8.1, apply to
any site improvements . . . to be carried out in connection with any application for residential subdivision site plan approval, or variance before any planning board or zoning board of adjustment created pursuant to the Municipal Land Use Law (N.J.S.A. 40:55D-1 et seq.); or in connection with any other residential development approval required or issued by any municipality or agency or instrumentality thereof.
[N.J.A.C. 5:21-1.5(a).]
Creigh Rehenkamp, Squiretown's expert in planning and affordable housing, testified that since February 2008, he worked with architects, engineers, and attorneys to develop the plan that Squiretown presented to the court. Rehenkamp testified with regard to the second prong of the builder's remedy test, stating that the project's twenty percent, or fifty units, was substantial. See Mount Laurel II, supra, 92 N.J. at 279; Mount Olive, supra, 340 N.J. Super. at 525. He also testified that under the third prong he considered the site suitable and not contrary to sound planning. Rehenkamp concluded the area was appropriate for either single-family or multi-family residences. The site had ready access to streets, sewer, and water.
Rehenkamp considered the project consistent with the State plan, which places the site in planning area one, and conforming to environmental requirements. The project fulfilled COAH requirements for density and height in planning area one. The building's height over parking was typical for multi-family structures and similar to projects in other municipalities.
John Cicchino, a member of Squiretown, testified regarding efforts to develop inclusionary housing on the site prior to the builder's remedy lawsuit being filed. This included meetings with Township officials in September 2005 and February 2006, which resulted in revisions to Squiretown's plans and changes in density. Although Township officials promised to respond to further discuss the plan, nothing further was heard after Squiretown presented its third revised concept.
Janice Talley, defendants' planning consultant, testified that she did not do a site suitability analysis of the Squiretown site because it was not included in the Township's housing plan. It was specifically excluded because it had been addressed in the second round. The Township was interested in developing the site for a public works facility and not for affordable housing.
Talley submitted a planner's report responding to Squiretown's site suitability analysis. She claimed that the Squiretown proposal was contrary to sound land use planning principles because the size and scale of the buildings was inconsistent with the low-density character of the Township and the height and density of other inclusionary developments in the Township. In Talley's view, the proposal "creates problems in terms of traffic volumes on adjacent roadways."
Talley opined the proposed housing was too close to power lines and required screening. It would significantly increase traffic. Although she agreed the site was suitable for multi-family development, she opined density in the proposal was too great, the buildings too high, and that there was insufficient buffer. Talley's concern with the project was the number of units. She conceded that the original TMB settlement had a gross density of 22.4 units per acre, while this proposal was for less than 12 per acre. The final settlement approved for TMB was 14.6 units gross density per acre.
Furthermore, Squiretown's proposal was out of character for the Township because of building heights. Although at least one other development was taller, this project was different in character and was also different from regional shopping centers that are planned to be visible.
Special Master Elizabeth McKenzie issued a report submitted to the court on March 18, 2010, in which she recommended construction of approximately 220 units, of which forty-four would be affordable family rental units. A reduction in the height of the buildings would help the visual impact, and despite the decrease in the total number of units, the site would still make a substantial contribution to the Township's affordable housing stock.
McKenzie concluded the site was suitable for inclusionary, multi-family-residential development. Her conclusion was based on the surrounding land uses and environment, and access to appropriate streets. The existence of wetlands on the site did require transition between areas, but the builder's remedy did not propose to build in that area except for a crossing to create a driveway to a nearby street.
While Squiretown proposed 250 units in six buildings with four levels for residences and one for parking, McKenzie recommended the reduction in density to reduce the height of three of the buildings to bring the visual impact of those buildings down. She also recommended eliminating one building but making two others a bit longer, which would make the project less intrusive. McKenzie concluded that there was a good plan for recreation on the site.
McKenzie rejected Talley's claim that the Squiretown site's inclusion as part of the Township's realistic development potential calculation for its court-approved second-round housing element and fair share plan precluded the site from being part of a third-round plan. McKenzie concluded that this argument was not relevant in light of COAH's current rules, which require that any unmet need from the prior round be addressed in addition to the calculated realistic development potential. She added:
The grant of a "vacant land adjustment" in the prior round is viewed as having essentially divided a municipality's affordable housing obligation into that which had to be addressed within the scope of the prior round plan (the [reasonable development potential]) and that which could be addressed over time as opportunities presented themselves (the unmet need) though "softer" mechanisms designed to capture unforeseen affordable housing opportunities.
If a plaintiff in a Mount Laurel lawsuit proposes a suitable site for inclusionary residential development and such a development will address part of the unmet need, it cannot now be exempted from consideration merely because the site was not needed to meet the Court-approved [reasonable development potential].
In Judge Carey's oral decision granting Squiretown a builder's remedy, he initially noted that Squiretown fulfilled the first prong of the three-prong test as a successful Mount Laurel litigant. Next, the judge stated that the second prong of the test was not disputed because even Talley agreed that the proposals put forth by Squiretown contained a substantial amount of affordable housing. Addressing the third prong of the test, the judge accepted the special master's conclusions that the project was clearly consistent with sound land use planning.
The judge also found Minno, Maltz, and Rehenkamp extremely qualified, and he accepted their testimony. He granted the builder's remedy for 220 units, but granted the Township the opportunity in subsequent hearings to eliminate one building and incorporate those units into two others. The judge also accepted the special master's interpretation that there was no impediment to the plan based on part of the property having been counted in the second round.
VI
Minno, who also served as Hillside's architectural expert, testified about Hillside's development proposals, the surrounding area, and the presentation of plans to the Township. Hillside's plan involved construction of four three-story buildings containing eighty multi-family-dwelling units, sixteen of which would be affordable to lower-income households, and a fifth building housing a club facility. The gross density in the proposal was 17.7 units per acre based on the entire tract area.
Thomas Auffenorde, Hillside's environmental regulations expert, found no wetlands, streams, category one waters, or threatened or endangered species habitat on the site. He did find one wetland area off-site, and one wetland transition area that encroached the site but posed a very insignificant impact on development.
Michael Schweitzer, Hillside's expert in compliance with environmental regulations, testified about due diligence work performed on-site to identify potential contamination. Due to prior use of the land as farmland, a nursery, or an orchard, the potential existed for elevated levels of pesticides. In 2007, testing showed levels of chlordane above the Department of Environmental Protection's clean-up standard. Schweitzer's company collected soil samples and determined that the only impact to the site would be the cost of remediation and soil disposal, which was not unusual.
Stanley Omland, Hillside's civil engineering expert, testified about the location of the project, soils, coverage of the site, storm water, proposed ingress and egress, and proximity to highways. He noted that after development of a more detailed design, a traffic study might be warranted.
Jonathan Schwartz, a member of Hillside, testified about the company's history of developing properties and the negotiations with the Township for the Hillside property. He stated that Hillside decided to file suit in September 2008. Hillside was the contract purchaser of the site since April or May 2008, and prior to that time, Sheldon Dubrow, the owner, had had discussions with another developer about the site.
The previous prospective purchaser and developer had meetings with Township officials concerning a project with fifty-five to seventy units. Schwartz testified that before filing suit, Hillside knew that the Township had not been interested in the project moving forward. After Hillside filed suit, there were meetings with Township officials and plans presented for the site. Due to Township concerns about density and buffers, Hillside revised plans to lower the number of units.
Willy Dittmar, Hillside's licensed home inspector, testified about two single-family homes on the Hillside site, located at 245 and 247 Northfield Avenue, and submitted reports about the conditions of the two homes. He concluded that 247 had a problematic bulge on the right side wall, had termite damage, defects in the main girder, columns, and footers in the basement, and a floor joist which had been cut completely in half. The water heater, plumbing, and electricity were defective. The first floor pitched to the right, the attic had a cracked roof rafter, and there were mice in the crawl space.
His report incorrectly lists the house number of 247 as 257.
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The house at 245 Northfield Avenue had a worn out roof that was three layers deep, and the roof below the chimney and extending to the rear addition was rotten, including the roof sheathing and part of the rafters. The structure itself was infested with carpenter ants, a basement window was rotten, and the chimney was in poor condition. The detached garage appeared so structurally unsound and unsafe that Dittmar did not enter, and the electrical power to the garage was improperly connected. The basement had a cracked floor joist and floor framing that was too wide. There was evidence of water in the basement and crawl space, and termites. The plumbing had frozen, and the water heater was leaking. A wall-mounted heater had the wrong voltage for its outlet and could be a fire hazard.
Dittmar concluded that both homes were in such poor condition that necessary repairs to make them habitable would cost more than their value. Both houses were vacant although tenants had recently occupied them.
Art Bernard, Hillside's professional planner, testified about the suitability analysis he conducted regarding the construction of affordable housing on the site. He opined that Hillside's proposal was consistent with sound land use planning principles. The site had access to appropriate streets, was relatively free of environmental constraints with access to public water and sewer, and was compatible with land uses. From a planning perspective, he saw no justification for not allowing demolition of the two single-family homes.
Talley also testified for defendants about the Hillside proposal. She stated that the plan was too dense and should be reduced to twelve units per acre, allowing for a total of forty-six units with nine of them being affordable. She also wanted greater distance for setback for parking and between buildings.
Talley agreed that the redevelopment of the site was a good idea because it converted a preexisting non-conforming use to one that is more conforming to the neighborhood. However, she concluded that Hillside's plan was contrary to sound land use principles based on the project's size and potential impact on surrounding land uses. Talley also wanted to maintain the two single-family houses.
McKenzie endorsed Hillside's proposal and agreed with the opinions in Bernard's and Omland's reports. She opined that the site was suitable for the proposed development.
McKenzie addressed an issue raised by Talley concerning the two existing houses on lots 8 and 9:
Each of these lots contains an existing single-family home and is less than two acres in area. Talley cites the Fanwood amendment to the Fair Housing Act (N.J.S.A. [52:27D-]311.1 and 313.1), which specifically exempts single-family homes on lots of two acres or less from being required to be demolished to make way for inclusionary development. The Fair Housing Act does, however, articulate certain extenuating circumstances under which such demolitions would be permissible.
Among these circumstances is a situation where the residential structure in question has either been declared unfit for human occupancy or is found to be unfit but not as a result of negligent or willful action during the preceding three years.
In McKenzie's opinion, it was appropriate from a land use planning perspective to include the lots on which the two homes were located as part of the site. She considered the two houses on the site to be currently unfit for human occupancy and to have been so for a period longer than three years. While they could be made habitable, she was not an expert as to whether the cost of the repairs would exceed the ultimate value of the houses. However, generally with houses of this type, a buyer knocks the houses down and builds new. McKenzie did not think these houses would survive on individual single-family lots. For these reasons, she stated it was better to include the two lots in the project.
McKenzie confirmed that there had been meetings in 2006 and 2007 between another developer, the owner of the property, and the Township. The intent was to include affordable housing on the site, but nothing came of those meetings. While there were no meetings with Hillside prior to filing this lawsuit, McKenzie concluded that negotiations would have been futile. The Township was aware that the site was available for inclusionary purposes and chose not to amend its zoning to accommodate the proposals that had been submitted.
McKenzie also addressed the issue that portions of the third-round rules had been invalidated. She noted that the total number of affordable units that the Township will get from all four plaintiffs on all four sites would still not completely address the Township's second round unmet need. Thus, there was nothing about the Appellate Division's ruling that would preclude a builder's remedy for the Hillside site as part of the fulfillment of the prior round obligation for the Township.
Judge Carey issued an oral decision granting the remedy. He concluded that his February 2, 2009 order fulfilled the first prong of the applicable test that Hillside was a successful Mount Laurel litigant. The judge found that it was uncontested that Hillside satisfied the second prong that the project provide a substantial amount of affordable housing.
Addressing the third prong, the judge concluded that Hillside engaged in good faith negotiations and was not barred from litigating the claim. He agreed with McKenzie's analysis that the site was appropriate for multi-family dwellings. Using a balancing test, the judge found that the two houses were "a nightmare," out of character for the area, served no valid planning purpose, and agreed with McKenzie's recommendation to remove the homes. From a land planning perspective it was both appropriate and reasonable to include the two lots. He concluded that Hillside met its burden to establish all three prongs of the test, and granted the builder's remedy.
VII
On appeal, defendants raise the following points of error:
POINT I
THE NON-SETTLING PLAINTIFFS WERE NOT ENTITLED TO BUILDER'S REMEDIES BECAUSE LIVINGSTON REMAINED IN COMPLIANCE WITH ITS ADJUSTED SECOND ROUND AFFORDABLE HOUSING OBLIGATION.
POINT II
THE BUILDER'S REMEDIES AWARDED TO HILLSIDE-NORTHFIELD WAS NOT APPROPRIATE UNDER MOUNT LAUREL II AND SUBSEQUENT SUPREME COURT DECISIONS.
POINT III
HILLSIDE'S BUILDER'S REMEDY CLAIM IS BARRED BY THE FAILURE TO PRESENT A BONA FIDE AFFORDABLE HOUSING PROPOSAL PRIOR TO FILING SUIT, AS UNAMBIGUOUSLY REQUIRED BY MOUNT LAUREL II.
POINT IV
HILLSIDE'S BUILDER'S REMEDY CLAIM SHOULD BE REVERSED BASED ON THE PROHIBITION IN N.J.S.A. 52:27D-313.1.
POINT V
SQUIRETOWN'S BUILDER'S REMEDY CLAIM IS BARRED BY PRIOR EXCLUSION OF THE PROPERTY FROM REZONING FOR AFFORDABLE HOUSING IN THE COURT-APPOINTED SECOND ROUND PLAN CONSISTENT WITH N.J.S.A. 52:27D-307(c)(2) AND N.J.A.C. 5:94-4.2.
POINT VI
BOTH BUILDER'S REMEDIES ARE CONTRARY TO SOUND LAND USE PLANNING PRINCIPLES.
A. THE APPROPRIATE LEGAL STANDARD.
B. THE BUILDER'S REMEDY AWARDED TO HILLSIDE.
C. THE BUILDER'S REMEDY AWARDED TO SQUIRETOWN.
D. SUMMARY.
VIII
Defendants contend that Hillside and Squiretown were not entitled to builder's remedies because the Township remained in compliance with its adjusted second-round housing obligation. They assert that Judge Carey's decision elevated form over substance by disregarding the specific character of the Township's adjusted affordable housing obligation as previously determined and the Township's continuing actions to address the obligation. Defendants claim that there was no basis for the assumption that the Township became noncompliant when the six-year period of repose expired on February 7, 2006. Defendants, however, are mistaken. The compliance judgment specifically states that the "period of repose shall run for a period of six years from the date of this Final Judgment."
Defendants rely on Toll Brothers, Inc. v. Township of West Windsor, 334 N.J. Super. 77, 94-95 (App. Div. 2000), certif. denied, 168 N.J. 295 (2001), for the proposition that the courts have clearly recognized that compliance judgments do not expire when the period of repose ends. Defendants have taken the language in that decision out of context.
In Toll Brothers, the owners of two tracts of land entered into consent judgments in 1985 as part of the settlement of a Mount Laurel action brought by an affordable housing corporation. Id. at 85-86. The landowners did not want their properties rezoned for affordable housing, but both eventually acceded. Id. at 86. The consent judgments specifically delineated their rights and obligations, and under the settlement, the municipality obtained repose for six years until July 22, 1991. Ibid.
In 1993, Toll Brothers sought a builder's remedy. Ibid. During the pendency of that action, the municipality notified the two landowners whose property had been rezoned as part of the 1985 Mount Laurel litigation that it intended to delete their sites for affordable housing. Id. at 87. The landowners objected and attempted to intervene in the Toll Brothers' litigation. Ibid.
The trial judge directed the landowners to file a separate action to enforce their rights under the 1985 consent judgment, which the judge then consolidated with the Toll Brothers' action "for limited purposes." Ibid. In 1998, after a trial, the judge entered a final judgment and an order of repose which authorized the municipality to delete the landowners' sites and treated all orders entered in the 1985 litigation as "having expired." Ibid.
On appeal, the Appellate Division rejected the characterization of the 1985 judgment as having expired after six years. Id. at 94-95. The judgment protected the municipality from litigation for that period only, but the judgment itself did not expire. Id. at 94. The Appellate Division observed that if Mount Laurel judgments simply "expired after six years, municipal defendants would have every incentive to delay approval of inclusionary developments or other unpopular affordable housing plans." Id. at 95. Since the judgment was still in effect, the Appellate Division held that the question of whether it should be modified to delete the sites was governed by Rule 4:50-1(e), which allowed relief where a "'judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application.'" Id. at 98 (quoting R. 4:50-1(e)). The Toll Brothers judgment survived and was subject to the rules pertaining to modification because no part of the judgment provided for its expiration.
Thus, Toll Brothers stands for the proposition that after the repose period expires, a developer may file a builder's remedy suit challenging the validity of a municipality's zoning and land use regulations even though the municipality had previously received a judgment of repose approving a compliance plan. The opinion has no impact on Hillside's and Squiretown's right to builder's remedies.
It is notable that beginning in January 2006, Talley advised the Township to voluntarily prepare an affordable housing plan to comply with its affordable housing obligations. She testified that she agreed that from February 7, 2006, the Township was vulnerable to a builder's remedy lawsuit.
In support of their arguments, defendants also claim that the prior vacant land adjustment reducing the Township's affordable housing obligation from 375 units to 193 units did not expire. For this proposition, they rely on N.J.A.C. 5:97-5.1(c), which provides:
A vacant land adjustment that was granted as part of a second round certification or judgment of compliance shall continue to be valid provided the municipality has implemented all of the terms of the substantive certification or judgment of compliance. If the municipality failed to implement the terms of the substantive certification or judgment of compliance, [COAH] may reevaluate the vacant land adjustment.
Defendants further claim that the Township's continuing obligation was to seek to capture additional affordable housing obligations when developed properties became available for redevelopment. In their view, the record is clear that the Township complied with that obligation by discussing redevelopment proposals with owners of developed property, JKHA and TMB. As a result, they argue that it was improper to render a judicial finding of noncompliance absent a finding that the Township was being unreasonable in its negotiations.
The problem with defendants' argument is that they became noncompliant because RCAs became illegal and were halted. Thus, defendants were in noncompliance for failing to transfer twenty-two units. Under N.J.A.C. 5:97-5.3(a), COAH "shall review the municipality's mechanisms to address unmet need and may require the municipality to amend or add additional mechanisms" to meet unmet need. Given the amount of affordable housing opportunities that were available in the Township, defendants could have done more to address unmet need before plaintiffs filed suit.
Defendants also maintain that the technical finding of noncompliance was based solely on the absence of a filing with COAH based on third-round regulations that have been invalidated twice by the Appellate Division, with the last appeal pending before the New Jersey Supreme Court. While defendants are correct about portions of the regulations, COAH continued to accept filings and those municipalities that did file are entitled to be considered in a different category from defendants.
Defendants correctly state that because of litigation, municipalities that filed with COAH have not had to implement their plans, while defendants voluntarily implemented settlements with TMB and JKHA. Defendants assert that it is difficult to believe that the Supreme Court intended broad statements written more than twenty-seven years ago in Mount Laurel II to be applied to achieve this result.
COAH was still accepting petitions for substantive certification after January 2007. On March 28, 2007, COAH wrote to all municipalities that were required to submit a cumulative Housing Element and Fair Share Plan by May 15, 2007, under N.J.A.C. 5:95-15.3 concerning how to proceed in light of In re Adoption of N.J.A.C. 5:94 & 5:95, supra, 390 N.J. Super. 1. COAH wrote: "COAH is continuing to accept petitions for substantive certification and is available to work with you on an individual project or on the plan as a whole in keeping with the Appellate Division decision. Alternatively, you may submit a request for a waiver pursuant to N.J.A.C. 5:95-15.3." Defendants could have followed that route but failed to do so.
Therefore, there is no merit to defendants' argument that Hillside and Squiretown were not entitled to builder's remedies because the Township remained in compliance with its adjusted second-round housing obligation. Neither is there merit to defendants' assertion that they have no further obligations because third round regulations were invalidated.
IX
Defendants maintain that Hillside's builder's remedy was not appropriate under Mount Laurel II and subsequent Supreme Court decisions, and that even if second-round compliance is ignored and the Township is deemed to be technically non-compliant because a third-round affordable housing plan was not filed with COAH, a builder's remedy award is not appropriate. They contend that builder's remedies should not be blindly awarded without consideration of other legal principles recognized by the Court. Affordable housing was being achieved in the Township and the Court did not intend for developers such as Hillside and Squiretown to override that.
Defendants further contend that Judge Carey relied on an erroneous mechanistic reading of Mount Laurel II, improper because compliance was already compelled as a result of the initial litigation by JKHA and TMB. In their view, this is particularly applicable to Hillside, because it cannot be characterized as having succeeded in this litigation by belatedly joining it.
Defendants take the position that the Township was in compliance with its affordable housing obligation as set forth in the final judgment that approved a vacant land adjustment consistent with the FHA. There was no determination that the Township failed to implement the court-approved plan. In addition, finalization and adoption of a judicially acceptable affordable housing plan was inevitable once litigation was initiated by JKHA and TMB.
Defendants emphasize that the builder's remedy should ordinarily be rare. It is true that in Mount Laurel II, supra, 92 N.J. at 207, the Court cited to Oakwood at Madison, Inc. v. Township of Madison, 72 N.J. 481, 551-52 n.50 (1977), where the Madison Court had stated that "[s]uch relief will ordinarily be rare, and will generally rest in the discretion of the court, to be exercised in the light of all attendant circumstances." But Mount Laurel II then acknowledged that experience had demonstrated that "builder's remedies must be made more readily available to achieve compliance with Mount Laurel." Id. at 279.
Furthermore, the Court revisited the builder's remedy in Toll Brothers, Inc. v. Township of West Windsor, 173 N.J. 502 (2002). The intent behind builder's remedies is to incentivize affordable housing construction, and the Court in Toll Brothers recognized that the developer in that case was the catalyst for change to push the municipality to comply with its constitutional obligation. Id. at 560.
The record in this case shows that four different plaintiffs all sought to build affordable housing in the Township. While defendants settled with two out of the four plaintiffs, that does not mean that defendants fulfilled their continuing obligation to provide affordable housing.
Here, Talley conceded that Hillside was an appropriate site for multi-family dwellings and that it was a good idea to take a pre-existing non-conforming use and create something more conforming to the neighborhood. Her main concern was the density of units. McKenzie's report and testimony also supported the conclusion that Hillside's proposal was proper for the site. Thus, this situation is not one where excessive plaintiffs weaken municipal planning options.
Builder's remedies come into play when a municipality has failed to properly address the lower-income housing required under its constitutional obligation. We agree with defendants that builder's remedy litigation is public interest litigation in which the true parties in interest are low-income individuals, not developers who pursue such litigation to advance their economic self-interest. Here, the interests of lower-income persons are furthered by Judge Carey's grant of a builder's remedy to Hillside.
Defendants' negotiated agreements with JKHA and TMB do not fulfill the Township's obligation. Those agreements call for a total construction of fifty-seven units while the Township's unmet prior round obligation was 134 units. By granting builder's remedies to both Squiretown and Hillside, the judge has furthered litigation that is in the public interest.
Additionally, Judge Carey was correct in concluding that Squiretown and Hillside were technically entitled to partial summary judgment that the Township was not in compliance with its current third-round affordable housing obligation. The record shows that unlike many other municipalities, the Township never submitted a third-round plan to COAH. Municipalities that did not submit third-round plans to COAH are not insulated from builder's remedy suits.
Defendants incorrectly state that JKHA and TMB are the only plaintiffs that would have been entitled to builder's remedies and that settlements with them preclude the award of a remedy to Hillside. If the settlements and changes to the zoning ordinance and fair share element had taken place before Hillside filed suit, then perhaps there would be more substance to defendants' claim. Instead, when Hillside filed suit, negotiations were ongoing with JKHA, TMB, and Squiretown, and a prior developer had approached the Township concerning a plan for affordable housing on the Hillside site. In this scenario, the settlement with two out of four plaintiffs did not preclude the judge's award of a builder's remedy to Hillside.
The goal of a builder's remedy suit is to compel the adoption of a municipal affordable housing compliance plan creating the reasonable opportunity for the provision of affordable housing. See Mount Olive, supra, 340 N.J. Super. at 525. Here, the combination of projects on four sites creates that opportunity. Hillside as a developer and plaintiff has carried out a meaningful role compelling the Township to take action to allow construction of affordable housing. Judge Carey therefore correctly concluded that Hillside's proposal for affordable housing fit the criteria for a builder's remedy.
Defendants rely on In re N.J.A.C. 5:96 & 5:97, supra, 416 N.J. Super. at 462, where we invalidated COAH regulations that were based on the growth share concept. In that context, we held that stays of litigation should be considered by trial courts based on consideration of the "status of the individual municipality's compliance with its affordable housing obligations and all other relevant circumstances." Id. at 512. However, defendants concede that we did not make any reference to consideration of the impact of a stay on builder's remedy plaintiffs. The goal is still to advance the fulfillment of the constitutional obligation to provide affordable housing. While we invalidated the growth share portion of COAH's regulations, municipalities still have that obligation and the Township can fulfill part of its obligation with Hillside's proposal for affordable housing.
Defendants emphasize that the Court in Hills Development Co. v. Township of Bernards, 103 N.J. 1, 42 (1986), stated that "the builder's remedy itself has never been made part of the constitutional obligation." However, the Court explained that the builder's remedy is simply a method for achieving the constitutionally mandated goal. Ibid. That goal remains, and the path where plaintiffs filed builder's remedy suits could have been avoided if defendants had chosen to file with COAH. They failed to do so and do not have a basis for overturning the builder's remedy awarded to Hillside.
There is no merit to defendants' argument that Hillside's builder's remedy was not appropriate under Mount Laurel II and subsequent Supreme Court decisions.
X
Defendants assert that Hillside's builder's remedy claim is barred by the failure to present a bona fide affordable housing proposal prior to filing suit.
Defendants are correct that the Court stated that a precondition to the potential award of a builder's remedy is a determination that "the plaintiff has acted in good faith [and] attempted to obtain relief without litigation[.]" Mount Laurel II, supra, 92 N.J. at 218. But a developer prior to Hillside made a bona fide affordable housing proposal for this site before litigation was instituted. The Township refused to rezone the parcel for an inclusionary development on the Hillside site, and Talley was unaware of these meetings when she prepared an analysis of available properties in the Township to address its affordable housing obligations. Schwartz testified that Hillside was aware of these unproductive negotiations when it entered into its contract to purchase the property. Hillside emphasizes that it also knew it was seeking a higher density than the previous developer, so it is fair to conclude that negotiations for an even higher density would not have been fruitful.
Defendants argue that Hillside did not attempt to comply with this requirement. Instead they state that there was only a "vague proposal" involving some affordable housing presented by a prior prospective purchaser of the property well over one year before Hillside sued. In addition, Hillside did not assert that it took any follow-up actions regarding that proposal, so defendants claim it is not evidence of a bona fide good faith effort.
Defendants claim that Hillside could have inquired and learned that the Township was concluding proposed settlements with JKHA and TMB, had obtained a second-round compliance judgment, was continuing to implement the second-round compliance judgment, and was finalizing an overall third-round affordable housing plan. But the record demonstrates that there were drawn out negotiations with other developers and that the Township was not interested in any affordable housing on Hillside's property. The bona fide offer by the prior developer of Hillside's property is therefore sufficient.
There is no merit to defendants' argument that Hillside's builder's remedy claim is barred by the failure to present a bona fide affordable housing proposal prior to filing suit.
XI
Defendants claim that the prohibition in N.J.S.A. 52:27D-313.1 bars Hillside's builder's remedy claim. Defendants and their planner argued to the trial judge that the Fanwood amendment to the FHA, N.J.S.A. 52:27D-311.1 and -313.1, barred Hillside's builder's remedy. N.J.S.A. 52:27D-311.1 provides:
Nothing in the act to which this act is supplementary, P.L.1985, c.222 (C.52:27D-301 et al.), shall be construed to require that a municipality fulfill all or any portion of
its fair share housing obligation through permitting the development or redevelopment of property within the municipality on which is located a residential structure which has not been declared unfit, or which was within the previous three years negligently or willfully rendered unfit, for human occupancy or use pursuant to P.L.1942, c.112 (C.40:48-2.3 et seq.), and which is situated on a lot of less than two acres of land or on a lot formed by merging two or more such lots, if the development or redevelopment would require the demolition of that structure. Any action heretofore taken by the Council on Affordable Housing based upon such a construction of P.L.1985, c.222 is invalidated.
N.J.S.A. 52:27D-313.1 provides:
The Council on Affordable Housing shall not consider for substantive certification any application of a housing element submitted which involves the demolition of a residential structure, which has not been declared unfit, or which was within the previous three years negligently or willfully rendered unfit, for human occupancy or use pursuant to P.L.1942, c.112 (C.40:48-2.3 et seq.), and which is situated on a lot of less than two acres of land or on a lot formed by merging two or more such lots, unless an application for development has been previously approved by the municipal planning board or municipal zoning board pursuant to procedures prescribed by the "Municipal Land Use Law," P.L.1975, c.291 (C.40:55D-1 et seq.).
Defendants claim additional support for their position is found in Hills Development Co., supra, 103 N.J. at 37, where the Court noted that judicial decisions in Mount Laurel litigation should conform to COAH's various determinations. Thus they assert that an express legislative policy that COAH not compel municipalities to achieve affordable housing objectives by destruction of residences that have not been declared to be unfit for human habitation should equally apply to builder's remedy suits. Hillside responds that there is no known decision applying these provisions to limit the property that may be used for a builder's remedy.
Defendants contend Judge Carey improperly disregarded the legislative policy. However, since the legislation specifically refers to COAH, we do not believe it applies to builder's remedy actions. In any event, McKenzie concluded that the houses on the site were neglected for a period of time longer than three years and were unfit for human habitation. Nothing in the record supports the proposition that making the structures habitable was economically viable. There is no merit to defendants' argument that the prohibition in N.J.S.A. 52:27D-313.1 bars Hillside's builder's remedy claim.
XII
Defendants maintain that Squiretown's builder's remedy claim is barred by prior exclusion of the property from rezoning for affordable housing in the court-approved second-round plan that is consistent with N.J.S.A. 52:27D-307(c)(2) and N.J.A.C. 5:94-4.2. Defendants consider the builder's remedy awarded to Squiretown to be contrary to N.J.S.A. 52:27D-307(c)(2).
N.J.S.A. 52:27D-307 provides:
It shall be the duty of [COAH] . . . to:
. . . .
c. Adopt criteria and guidelines for:
. . . .
(2) Municipal adjustment of the present and prospective fair share based upon available vacant and developable land, infrastructure considerations or environmental or historic preservation factors and adjustments shall be made whenever:
(a) The preservation of historically or important architecture and sites and their environs or environmentally sensitive lands may be jeopardized,
(b) The established pattern of development in the community would be drastically altered,
(c) Adequate land for recreational, conservation or agricultural and farmland preservation purposes would not be provided,
(d) Adequate open space would not be provided,
(e) The pattern of development is contrary to the planning designations in the State Development and Redevelopment Plan prepared pursuant to sections 1 through 12 of P.L.1985, c.398 (C.52:18A-196 et seq.),
(f) Vacant and developable land is not available in the municipality, and
(g) Adequate public facilities and infrastructure capacities are not available, or would result in costs prohibitive to the public if provided.
Defendants emphasize that the consideration that COAH had to make for available vacant and developable land was set forth in former N.J.A.C. 5:92-8.1 to 8.5 (superseded in 1994) and N.J.A.C. 5:94-4.1 and 4.2. They assert that consistent with and in reliance on these regulations, they previously accounted for and addressed the affordable housing obligation associated with development of the Squiretown property. They then maintain that prior court approval of that action was nullified by Judge Carey's award of a builder's remedy for the same property.
The court approved the Township's second-round plan by adjusting the second-round affordable housing obligation from 375 to 193 units based on a vacant land adjustment and realistic development potential analysis conducted in accordance with N.J.A.C. 5:94-4.1 and 4.2, which required an inventory of all vacant land and assessment of its potential suitability for inclusionary multi-family development, resulting in the projected cumulative yield of affordable housing units if all such sites were rezoned. Defendants assert that the resulting figure, the realistic development potential, represents the adjusted affordable housing obligation based on lack of sufficient vacant developable land, as provided by N.J.S.A. 52:27D-307(c)(2).
The vacant land inventory in the second-round plan included lots 35 and 37 in block 5900, with a combined acreage of 9.8 acres. These two parcels largely correspond with the developable portion of the current Squiretown property, are suitable for multi-family development, and are assigned a reasonable development potential of eleven affordable units. That number was included in the Township's total reasonable development potential of 193 units, which represented the Township's adjusted affordable housing obligation.
Defendants state that consistent with N.J.A.C. 5:93-4.2(g), they determined to address through other means the eleven units arising from the reasonable development potential for lots 35 and 37, thus reserving the property for other uses, single-family residences consistent with the zoning designation.
Hence defendants reason, the result Squiretown persuaded Judge Carey to adopt is indistinguishable from the result rejected by the Appellate Division in In re Petition for Substantive Certification filed by Borough of Roseland, 247 N.J. Super. 203, 210 (App. Div. 1991), rev'd on other grounds, 132 N.J. 1 (1993). The argument lacks merit.
The Court in Borough of Roseland addressed a vacant land adjustment from the first round. Id. at 208-09. After applying to COAH, the municipality received an adjustment for vacant land. Id. at 209. Here, defendants did the same thing in the second round and were permitted to do so under COAH's second-round regulations. In Borough of Roseland, the Public Advocate was opposed to the use of an RCA and the Court rejected the argument. Id. at 210.
McKenzie rejected Talley's claim that because the Squiretown site had been included as part of the Township's realistic development potential calculation for its court-approved second-round housing element and fair share plan it could not be part of a third-round plan. McKenzie concluded that this argument was not relevant in light of COAH's current rules, which require that any unmet need from the prior round be addressed in addition to the calculated realistic development potential. She concluded that if a plaintiff in a Mount Laurel lawsuit proposes a suitable site for inclusionary residential development and such a development will address part of the unmet need, it cannot be exempted from consideration merely because the site was not needed to meet the court-approved reasonable development potential.
Defendants do not explain how this result is unfair. Judge Carey accepted this explanation and found no basis for not allowing this property to be considered. There is no merit to defendants' argument that Squiretown's builder's remedy claim is barred by prior exclusion of the property from rezoning for affordable housing in the court-approved second-round plan.
XIII
Defendants contend that Hillside's and Squiretown's builder's remedies are contrary to sound land use planning principles. A careful analysis of the language set forth by the Court and the record in this case show that this position is also without merit.
In Mount Laurel II, supra, 92 N.J. at 279-80 (footnote omitted), the Court discussed the builder's remedy:
Experience since [Oakwood at Madison, Inc. v. Township of Madison, 72 N.J. 481 (1977)] . . . has demonstrated to us that builder's remedies must be made more readily available to achieve compliance with Mount Laurel. We hold that where a developer succeeds in Mount Laurel litigation and proposes a project providing a substantial amount of lower income housing, a builder's remedy should be granted unless the municipality establishes that because of environmental or other substantial planning concerns, the plaintiff's proposed project is clearly contrary to sound land use planning. . . .
After the builder's remedy suit is filed, the judge must initially determine whether the municipality's zoning ordinance satisfies its Mount Laurel obligation. Id. at 281. If the obligation is not satisfied, he or she orders the municipality to incorporate into a new ordinance devices that are most likely to lead to the construction of lower-income housing. Ibid. To help with the revisions, the judge may appoint a special master to assist the municipality in developing constitutional zoning and land use regulations. Ibid.
Next, ninety days later, the municipality must present its revised plan and ordinances to the judge, and the special master, if one was appointed, gives his or her opinion as to the municipality's compliance with its Mount Laurel requirements. Id. at 284. If the revised ordinance meets the obligations, the judge issues a judgment of compliance. Id. at 285. If not, or if no revised ordinance is submitted within the time period, the judge has other orders available respecting compliance. Id. at 284-90.
In a footnote, the Court explained:
What is "substantial" in a particular case will be for the trial court to decide. The court should consider such factors as the size of the plaintiff's proposed project, the percentage of the project to be devoted to lower income housing (20 percent appears to us to be a reasonable minimum), what proportion of the defendant municipality's fair share allocation would be provided by the project, and the extent to which the remaining housing in the project can be categorized as "least cost." The balance of
the project will presumably include middle and upper income housing. Economically integrated housing may be better for all concerned in various ways. Furthermore, the middle and upper income units may be necessary to render the project profitable. If builder's remedies cannot be profitable, the incentive for builders to enforce Mount Laurel is lost.
[Id. at 279 n.37.]
Defendants claim that the decision to award builder's remedies should have been made in the context of 2010 and not the context of the 1983 Mount Laurel II decision; that in 1983 there was frustration with widespread municipal disregard of the Mount Laurel doctrine, but since then the Legislature adopted the FHA, and the Court decided Hills Development Co., supra, 103 N.J. at 74, a ringing endorsement of the FHA. Defendants thus conclude that the high density developments authorized by Judge Carey are excessive and inappropriate from a land use planning perspective and should not have been forced on defendants by the judge.
Nonetheless, defendants' planner agreed that both sites were appropriate for multi-family use, the main difference of opinion being the density and number of units. McKenzie reviewed the projects and made recommendations that Judge Carey accepted. Defendants have not identified convincing reasons why these projects are contrary to sound land use planning. Defendants rely on East/West Venture v. Borough of Fort Lee, 286 N.J. Super. 311, 330 (App. Div. 1996), where the court stated:
Imposition of the constitutionally-mandated obligation to provide affordable housing "does not require bad planning." [92 N.J.] at 238, 456 A.2d 390. The specific location of "decent housing for lower income groups" continues "to depend on sound municipal land use planning considerations in this State." Id. at 211, 456 A.2d 390.
Defendants also find it significant that the Court in Toll Brothers did not address the substance of the builder's remedy awarded by the trial court, since the specifics were to be addressed at a later date. See Toll Brothers, supra, 173 N.J. at 510. However, that builder's remedy involved conventional, single-family detached housing on small lots, id. at 518-19, rather than high density multi-family development, thus there was no discussion of "sound land use planning" considerations in relation to the builder's remedy.
Here, Talley did not conclude that the only proper dwellings for these properties would have been single-family houses. Instead, she conceded that multi-family dwellings were appropriate. Builder's remedies only come into play when a municipality has failed to follow other procedures and failed to adequately address the obligation for affordable housing.
Addressing Hillside's builder's remedy, defendants note that it involves construction of four three-story buildings containing eighty multi-family-dwelling units, sixteen of which would be affordable to lower-income households. Without any citation to the record, defendants explain that this represents a proposed density of 17.73 units per acre based on the entire tract of approximately 4.6 acres, which includes the area occupied by two single-family residences that will be demolished. They state that the Township's current plan recognizes that multi-family development is appropriate in order to advance affordable housing objectives, but with a density of twelve units per acre. The current plan contemplates retention of the two single-family residences and the front portions of the two lots, resulting in a remaining tract of approximately 3.91 acres that would be rezoned for multi-family development.
Implementation of this recommendation would allow development of approximately forty-seven multi-family units, of which nine would be affordable rental units, all on the portion of the property not occupied by the two single-family units.
But this information does not mean Hillside's plan as accepted by the court is contrary to sound land use planning. Instead, both the court approved plan and the Township's current plan could be proper and sound land use planning.
Defendants also argue that while it was appropriate for Judge Carey to give due consideration to the special master's comments, the final decision on this issue was made by the trial judge. Defendants have not identified any errors committed by the judge.
Addressing Squiretown's builder's remedy, defendants explain that it involved construction of five five-story buildings, with heights from sixty-seven to seventy-three feet, containing 250 multi-family-dwelling units. Defendants state that most of the developable portion of the property and the surrounding area are in the R-2 zone, which provides for single-family housing with a minimum lot size of 25,000 square feet.
From these facts, defendants argue that the judge improperly evaluated Squiretown's proposal based on the gross density of the project and that such an analysis is clearly contrary to sound land use planning. Since the site has a considerable amount of wetlands and required transition areas where there can be no building, the density of housing is quite different when using gross density as opposed to net density. When looking at the site, Talley was equally concerned with the size and scale of the buildings and how the project fit with the character of the area. However, differences of opinion as to specific density do not indicate that the judge's decision was not based on the record or that he failed to independently analyze the proposed remedy. Nothing in defendants' argument shows that the Squiretown project as approved is contrary to sound land use planning. See Mount Laurel II, supra, 92 N.J. at 280.
Defendants have not convinced us that Hillside's and Squiretown's builder's remedies are contrary to sound land use planning principles.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION
They were promulgated by the Department of Community Affairs pursuant to the Residential Site Improvement Standards Act, N.J.S.A. 40:55D-40.1 to -40.7. Norris v. Borough of Leonia, 160 N.J. 427, 445 (1999).