On appeal from Department of Environmental Protection.
Lora and Michels. The opinion of the court was delivered by Lora, P.J.A.D.
Lom-Ran Corporation appeals from a determination of the Department of Environmental Protection (DEP) refusing to exempt certain property in Little Falls Township from a sewer connection ban imposed in 1973. Appellant, a construction firm, contracted to buy a residential lot owned by one Randolph Swenson in order to build a house upon it, the deal being contingent upon the obtaining of the necessary building approvals.
The record shows that in 1970 the Fallscal Corporation developed a residential community on a tract of land in Little Falls Township. The community included a townhouse project, and in addition the corporation developed 26 lots, which were to be sold to individual purchasers or builders who wished to construct homes upon them. Fallscal received subdivision approval from the township on August 18, 1970 and secured site plan approval for the townhouse project.
In 1971 Randolph E. Swenson purchased lot 5, block 237, from Fallscal for $18,500. Swenson intended to build a single-family dwelling on the property, but found it impractical to do so because of difficult topographical features, specifically a rock formation and a 200-foot cliff in the rear. He thereupon moved to Florida. Fallscal sold the other 25 residential lots for $22,500 each.
On February 20, 1973 DEP imposed a sewer connection ban on Little Falls Township because the local sewage treatment plant was at or beyond its capacity and instructed the Township not to approve any further connections to the sewage system until it submitted a plan for improving its facilities. However, DEP added that:
In order to minimize the impact of these requirements upon commitments already in effect locally, exceptions will be made where building permits, final subdivision and site plan approvals have been granted prior to receipt of this letter. Additionally, consideration will be given to situations where hardship situations or other special circumstances may prevail which would warrant further exceptions to be made.
On the date of the ban construction on 23 of the 26 lots sold by Fallscal had either commenced or been completed. On July 16, 1973 DEP granted exemptions from the sewer ban to two of the three remaining lots, leaving Swenson's lot as the only one of the 26 which was not exempted from the ban.
In 1976 Swenson entered into a contract with Lom-Ran Corporation to sell the property for $15,000, contingent upon receipt of necessary building approvals.
Appellant obtained a variance from setback requirements permitting construction of the proposed residence closer to the front of the lot because of the 200-foot vertical cliff in the back yard. However, the variance was conditioned upon appellant obtaining the exemption, and the building inspector refused to issue a building permit until DEP had granted such an exemption.
Accordingly, appellant, on behalf of itself and Swenson, filed an application for exemption. It was denied and appellant thereupon requested a hearing at which it argued (1) the ban did not apply to it because the parcel had been subdivided prior to its institution, (2) appellant suffered a severe personal hardship and (3) the standards for granting a hardship exemption were vague. In support of the hardship argument Swenson wrote a letter detailing the costs he had incurred, as follows: the $18,500 purchase price, $95 for searches, $95 for title insurance, $125 for an attorney fee, $375 for a topographic survey, $150 architect's fee and $3,129 in municipal taxes. In the same letter Swenson alleged that he had borrowed $15,000 from a bank for use in his business and hoped to use the proceeds of the sale to repay the loan. Lom-Ran, too, claimed a hardship because, after imposition of the ban, it had expended approximately $2,000 for borings, engineering, legal and architectural fees.
The hearing officer in his report recommended that the request for an exemption be denied. He concluded that the ban applied to appellant even though there had been subdivision and site plan approvals prior to imposition of the
ban, because N.J.A.C. 7:9-13.4(a)(1) required, in addition to such approvals, that the applicant prove that he had made substantial expenditures for improvements to the property in good faith reliance upon the approvals, and neither appellant nor Swenson had incurred any costs for improvements to the lot in question. With respect to their hardship argument, he concluded that neither Swenson nor appellant had suffered a "severe personal hardship which goes beyond the normal hardship suffered by any other property owner who is prevented from either developing or selling his property during the duration of the ban," as required by N.J.A.C. 7:9-13.4(a)(6). He further concluded that under the regulations, payment of real estate taxes and the cost of acquiring and maintaining property could not be considered grounds for an exemption.
By order dated July 5, 1977 the Acting Commissioner of the Department of Environmental Protection adopted the conclusions and recommendations of the hearing ...