ELEGANT PROPERTIES LLC v. TOWNSHIP OF HAZLET TOWNSHIP OF HAZLET PLANNING BOARD (2010)

In this Mount Laurel litigation, the Township of Hazlet and the Township of Hazlet Planning Board (Hazlet) appeal from an order of the trial court granting a builder's remedy to plaintiff developer, Elegant Properties, LLC (Developer), that permits the Developer to construct a forty-eight dwelling unit condominium complex with a twenty-percent set-aside for affordable housing on a lot of approximately four and one-half acres, located on Poole Avenue near its intersection with New Jersey State Highway Route 36 in Hazlet.   On appeal, Hazlet presents the following arguments:

POINT I

THE TRIAL COURT DID NOT SET FORTH FINDINGS OF FACT OR CONCLUSIONS OF LAW TO SUPPORT THE BUILDER'S REMEDY.

POINT II

THE TRIAL COURT IMPROPERLY GRANTED PARTIAL SUMMARY JUDGMENT INVALIDATING HAZLET'S ZONING ORDINANCE.

POINT III

THE TRIAL COURT IMPROPERLY GRANTED A BUILDER'S REMEDY PRIOR TO A REVISION OF THE ZONING ORDINANCE.

We remand, finding this appeal to have been prematurely filed under standards established in South Burlington County N.A.A.C.P. v. Mount Laurel Township, 92 N.J. 158, 218, 285 (1983) (Mount Laurel II ).

I.

The irregularly-shaped property in question, located at 780 Poole Avenue, lies between a commercial area located to the north fronting on Route 36, a trailer park to the west that also fronts on Route 36, and a residential area located to the south and, across Poole Avenue, to the east.   The development is envisioned as consisting of four buildings ranged around a central street extending at right angles from Poole Avenue.   The property contains isolated wetlands, but the Developer had obtained a Letter of Interpretation and General Permit GP-6 from the New Jersey Department of Environmental Protection to develop the site, which is served by public water and sewer service.   The property lies in Metropolitan Planning Area PA1, shown as an area into which development is to be directed on the State Development and Redevelopment Plan adopted by the New Jersey Planning Commission pursuant to the State Planning Act, N.J.S.A. 52:18A-196 to -207.

The site was at one time zoned B-H, Business Highway, and was intended for commercial use, but was never developed as such.   According to the Developer's complaint in this matter, in or around December 2003, an application for a commercial use was filed by an entity known as Aldi Food. In response to local opposition to the application, on May 4, 2004, the property was rezoned, in a manner inconsistent with Hazlet's Master Plan, as R-100, permitting the development of single-family homes on 12,500 square foot lots.   To settle a dispute with a prior landowner, on January 25, 2005, the property was rezoned as R-70, allowing for development of single-family homes on 7,000 square foot lots.

The property was thereafter sold to the Developer, which sought a use variance to permit the construction of forty-four stacked townhouses.   The project was later reduced to twenty-seven side-by-side townhouses in three buildings, each containing nine units.   Following hearings before Hazlet's Zoning Board of Adjustment, the application was denied on June 13, 2006.   In response to the Board's action, the Developer filed an action in lieu of prerogative writs challenging the Board's resolution as arbitrary.

While the 2006 action was pending, the Developer obtained approval to construct a conforming eleven-lot residential subdivision.   However, the litigation continued, and a tentative settlement was reached whereby the land would be rezoned as a Medium Density Residential Transition (MDRT) District, and the Developer would pay an affordable housing development fee in satisfaction of Hazlet's growth share obligation.   Although Hazlet's Planning Consultant, Marcia Shiffman, recommended adoption of the proposed MDRT plan as providing an appropriate transition between commercial and residential uses and an opportunity to address Hazlet's unaddressed affordable housing obligations, the zoning ordinance was not passed.   As a result, on March 27, 2008, the Developer instituted the present suit seeking a Mount Laurel builder's remedy.   The prior prerogative writ action was at some point dismissed.

At the time that suit was filed, Hazlet had not sought or obtained certification from the Council on Affordable Housing (COAH) of a Housing Plan Element and Fair Share Plan pursuant to the Fair Housing Act, N.J.S.A. 52:27D-301 to -329.   Indeed, although a Housing Plan Element had been drafted in 1995, Hazlet had not drafted a Fair Share Plan. Its zoning ordinances contained no provision recognizing Hazlet's obligation to provide a realistic opportunity for the construction of low and moderate income housing.   Hazlet's planner, Shiffman, certified that under the adopted June 2, 2008 rules, COAH had established that the Township's fair share of low and moderate income housing for the period from 1987 to 1999 was 407 new construction units, and its fair share for the period from 2004 to 2018 was 155 new construction units.   Shiffman claimed that those figures were subject to adjustment as the result of the availability of various credits for existing inclusionary housing and as the result of the absence of developable land.   However, Hazlet had not sought such adjustments at the time that this litigation was commenced.   Moreover, even under the optimistic projections of planner Shiffman, Hazlet's obligation appeared to remain in excess of the number of affordable dwelling units that the Developer proposed to build.

On May 23, 2008, the Developer moved for partial summary judgment in the matter, arguing that Hazlet's existing zoning was unconstitutional as the result of its failure to provide a realistic opportunity for the construction of low and moderate income housing in compliance with its Mount Laurel obligation.   The motion was heard on July 18, 2008, and it was granted by the judge, who rendered an oral opinion from the bench, followed by a written opinion.   An order was entered on July 28, 2008 that granted partial summary judgment and appointed a planner, Elizabeth C. McKenzie, as special master to oversee the remedial stage of the litigation.   Additionally, the judge ordered Hazlet to submit, within four months, a zoning ordinance that was in compliance with relevant constitutional and statutory mandates.   Immunity from further Mount Laurel litigation was granted until the ordinance was adopted and approved by the judge.

When, after 180 days, Hazlet still had not passed a compliant ordinance, the judge ordered the Developer to submit to the special master for her consideration its proposal for a builder's remedy.   A period for a response and a public hearing was provided.   Further, the judge ordered Hazlet to submit its Housing Element and Fair Share Plan to the special master by a specified date, and he established a schedule for the circulation of the special master's preliminary analysis and recommendation on the builder's remedy, for receipt of comments, for submission to the judge by the special master of her written recommendation on the Developer's builder's remedy, and a hearing on the matter.

In accordance with the judge's order, the Developer submitted to the special master a preliminary plan for a fifty-three unit development.   The special master responded in a letter to the court, dated February 17, 2009, stating:

Based upon my review of the materials I have received so far from the plaintiff and my awareness that Hazlet intends to seek the Court's approval of an adjustment of its prior round and third round low and moderate income housing obligations due to insufficient vacant developable land, it is my preliminary conclusion that the proposal to develop 53 townhouse-style units on the plaintiff's site is reasonable and appropriate under the circumstances and that the property in question satisfies the site suitability criteria set forth in COAH's Rules and embraced by previous Court decisions.

While generally approving the Developer's proposal, the special master recommended that there be a twenty-five-percent set-aside for affordable housing, not the twenty-percent figure that the Developer had proposed, resulting in a total of thirteen affordable units and payment of an in-lieu fee for one-quarter of a unit.

Following a public meeting, held on February 24, 2009, Special Master McKenzie issued her final recommendation to the judge in a letter dated March 10, 2009.   In that letter, McKenzie again found that the development, which had been reduced to fifty-two units, was reasonable and appropriate for the site, that it was consistent with Bayshore Region Strategic Plan recommendations for the area, and that it satisfied the site suitability criteria of COAH's regulations and the courts' decisions.   McKenzie recommended a Mount Laurel set-aside of twenty-three percent or twelve units out of fifty-two.

In an additional letter, dated April 10, 2009, McKenzie stated that the Hazlet Planning Board had circulated a draft of is 2009 Housing Element and Fair Share Plan and scheduled a public hearing on the document.   McKenzie stated that she would review it for compliance with COAH regulations and the Fair Housing Act and prepare a recommendation for the court with respect to Hazlet's compliance with its prior round and third round fair share obligations.   She recommended that, in light of the effect that the builder's remedy might have on the plan, that a separate compliance hearing be scheduled on it once the builder's remedy had been considered and ordered by the court.   Additionally, McKenzie noted various objections to the Developer's plan that had been submitted by Hazlet.   In part, she rejected them, determining that the objections were based on lack of conformity to zoning that had been declared unconstitutional.   She deferred consideration of many of the remaining objections, determining that they would be most appropriately considered in connection with the project's site plan review.   In conclusion, McKenzie wrote:

The qualification of the plaintiff's site for a Builder's Remedy and the magnitude of the Builder's Remedy that should be awarded must be evaluated in light of the three criteria established by the Supreme Court in Mount Laurel II:

1) Has the plaintiff succeeded in demonstrating the unconstitutionality of the Township's zoning?   The answer to this question has already been decided in the affirmative by the Court.

2) Is the plaintiff proposing a substantial amount of affordable housing?   The plaintiff is proposing a density of just under 12 units per gross acre of site area with a set-aside for affordable housing of 12 units or 23 percent of the 52 total units.   While COAH's Rules permit a higher set-aside (25 percent) where the affordable units will be for sale, the 23 percent set-aside is higher than the Courts have traditionally required in Mount Laurel II cases, and is appropriate in this particular case for the reasons stated in my letter of March 10, 2009, to Your Honor.

3) Has the municipality established that because of environmental or other substantial planning concerns, the plaintiff's proposed project is clearly contrary to sound land use planning?   In my opinion, the planning concerns raised by the Township are valid but resolvable through the site plan review process.   They do not rise to the level of disqualifying the site for the recommended Builder's Remedy.

The matter was scheduled for a hearing on the builder's remedy before a different judge on November 17, 2009.   At a pre-hearing conference with the judge, the Developer had sought a builder's remedy that would permit it to construct fifty-two units, with a twelve-unit set-aside, whereas Hazlet argued for the construction of forty units, with a ten-unit set-aside.   The judge indicated his inclination to permit construction of forty-eight units with ten of them affordable or, alternatively, nine affordable units along with payment in lieu of construction for six-tenths of an additional unit.   McKenzie stated on the record that she could recommend the lower density suggested by the judge.   A proposed form of order and proposed ordinance had been drafted to reflect acceptance by the court of this figure.

Following a colloquy in which these facts were stated, the judge approved the proposed builder's remedy stating:

I am satisfied that this is an appropriate remedy for the builder in this particular instance, that it is an appropriate accommodation for the Township's Mount Laurel obligations under the circumstances, and that the recommendation of 48 units with 10 affordable or 9 plus a contribution is adequate under the circumstances for this particular property.   And accordingly I will enter the order as proposed with today's date.

An order, which the judge certified as “a complete adjudication on plaintiff's application for a Builders Remedy,” and declared to be a final judgment pursuant to Rule 4:42-2, was filed on November 17, 2009.   As the order reflects, at the time of its entry, Hazlet's Housing Element and Fair Share Plan had not been approved, and conforming zoning, if required, had not been passed.

II.

In Mount Laurel II, the Court held:

The judiciary should manage Mount Laurel litigation to dispose of a case in all of its aspects with one trial and one appeal, unless substantial considerations indicate some other course.   This means that in most cases after a determination of invalidity, and prior to final judgment and possible appeal, the municipality will be required to rezone, preserving its contention that the trial court's adjudication was incorrect.   If an appeal is taken, all facets of the litigation will be considered by the appellate court including both the correctness of the lower court's determination of invalidity, the scope of remedies imposed on the municipality, and the validity of the ordinance adopted after the judgment of invalidity.

[Id., 92 N.J. at 218.]

See also id. at 290 (“We intend by our remedy to conclude in one proceeding, with a single appeal, all questions involved.”).

That procedure was not followed in this case, and instead, the litigation was fractionated in a fashion that precludes proper appellate consideration.   While we understand that a remand further prolongs this matter, we do not view it as providing an opportunity for Hazlet to further avoid its Mount Laurel obligations, as it appears to have done to date.¹  In this regard, we note the enumeration by the Mount Laurel II Court of a non-exhaustive list of remedies for use in instances of municipal noncompliance.   See id. at 285-86.   We trust that the trial judge will make ample use of the Court's remedies, or of others, should the need arise.

We do not suggest by remanding the matter that the judge's determination to award a builder's remedy was necessarily premature in this case.   As we previously stated, it appears that Hazlet's fair share housing obligation will exceed the number of units set aside in the litigated development.   If that is the case, the Developer should be granted its builder's remedy “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” - a burden that Hazlet does not appear to have met.²  Id. at 279-80.   The builder's remedy cannot be denied “solely because the municipality prefers some other location for lower income housing, even if it is in fact a better site.”  Id. at 280.   If Hazlet succeeds in demonstrating that it has met its fair-share housing obligation without the Developer's inclusionary development, the issue of the availability of a builder's remedy can be revisited.

As a final matter, we note that a remand will permit the trial judge to make appropriate findings of fact and conclusions of law in connection with all aspects of this matter, thereby enabling a more meaningful appellate review of the case as a whole, should a further appeal be perfected.

Remanded for further proceedings in accordance with this opinion.

FOOTNOTES

FN1. We were informed at oral argument that no appreciable steps to adopt a compliant zoning ordinance have been taken..  FN1. We were informed at oral argument that no appreciable steps to adopt a compliant zoning ordinance have been taken.

FN2. We do not find the Developer to have acted in bad faith, as there is no evidence of a threat by it to bring Mount Laurel litigation if approval for an exclusionary development were not given.   See id. at 280..  FN2. We do not find the Developer to have acted in bad faith, as there is no evidence of a threat by it to bring Mount Laurel litigation if approval for an exclusionary development were not given.   See id. at 280.

PER CURIAM