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In re Egg Harbor Associates

Decided: August 1, 1983.

IN THE MATTER OF EGG HARBOR ASSOCIATES (BAYSHORE CENTRE); IMPOSITION OF CONDITIONS OF COASTAL AREA FACILITY PERMIT # CA 79-0231-5


On certification to the Superior Court, Appellate Division, whose opinion is reported at 185 N.J. Super. 507 (1982).

For affirmance -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock and Garibaldi. For reversal -- Justice Schreiber. The opinion of the Court was delivered by Pollock, J. Schreiber, J., dissenting.

Pollock

[94 NJ Page 361] The principal issue in this case is whether the Division of Coastal Resources (Division) of the Department of Environmental Protection (DEP) may condition its approval of a proposed development within the coastal zone on the construction of a certain number of low and moderate income housing units. Here, the Division required a developer, Egg Harbor Associates

(Associates), to set aside 10% of the residential units for low income housing and 10% for moderate income housing.

The Appellate Division held that the Coastal Area Facility Review Act, N.J.S.A. 13:19-1 to -21 (CAFRA), empowers the Division to impose "fair share" housing conditions and that the Division's exercise of this power was constitutional. 185 N.J. Super. 507 (1982). Associates perceives CAFRA as a purely environmental statute, and in its petition for certification contends that the Division exceeded its statutory authority by using CAFRA to achieve another social goal, providing needed low and moderate income housing. Associates argues further that the Division's actions were based on an impermissibly vague delegation of legislative power and that forcing a developer to build low and moderate income housing is an unconstitutional taking of property without compensation.

We granted Associates' petition for certification, 91 N.J. 552 (1982), and now affirm the judgment of the Appellate Division.

I

Associates is the owner of a 127.644-acre tract in Egg Harbor Township, Atlantic County, on which it proposes to build a residential community of 1,530 units, a 500-room hotel, a 300-slip marina, a 22-story office building, and 4,200 parking spaces. The tract is located in a "development region" (formerly designated as a "high growth" area) of the coastal area in the "Absecon-Somers Point Development Region," N.J.A.C. 7:7E-5.3, near Atlantic City.

On March 30, 1979, Associates first submitted a CAFRA application to DEP for construction of the development. Because the tract is located within the "coastal area," N.J.S.A. 13:19-3, and because the development constitutes a "facility" under N.J.S.A. 13:19-3(c)(5), a DEP permit is required. N.J.S.A. 13:19-6.

On April 30, 1979, DEP responded in a letter outlining various deficiencies in the application. Among the comments was the following:

Given the magnitude and variety of uses proposed for Bayshore Centre and the rental schedule and anticipated sales prices for the proposed apartments and townhouses, it seems appropriate that the developer address the question of fair share and least cost housing. Therefore, please present to this Division an analysis which justifies the contribution made by the project towards meeting the full range of housing needs in Egg Harbor Township and the region (Atlantic County) (emphasis in original).

This request was consistent with the then applicable "fair share housing" rule, N.J.A.C. 7:7E-8.6, which mandated that new developments "provide least cost housing where feasible," and encouraged developments that contributed to a municipality's meeting its fair share housing obligations under Southern Burlington Cty. NAACP v. Mt. Laurel Tp. (Mt. Laurel I), 67 N.J. 151 (1975), app. dism., 423 U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975). In response to that request, Associates submitted comments concerning the feasibility of low and moderate income housing within the development and off-site commitments contemplated by Associates to provide least cost housing within the region. Following various revisions, the application was deemed complete on September 27, 1979, and a public hearing occurred on December 6 in the Township of Egg Harbor. Testifying in support of the project was, among others, the mayor of the township, which had already granted its approval of the development under its zoning ordinances.

On August 29, 1980, the Division issued to Associates a conditional permit for construction of the Bayshore Centre. The subject of this litigation concerns the requirement in the permit that of the 1,530 proposed housing units 10% shall be low income units and 10% shall be moderate income units. The procedural history following the issuance of the permit was summarized by the Appellate Division:

The conditional permit was thereupon issued to Associates under date of August 29, 1980. Associates was advised that it had two avenues of appeal: to the Coastal Area Review Board whose role is restricted 'to the declaration of public policy concerning the development of the coastal area' (N.J.A.C. 7:7D-1),

or to the DEP Commissioner by 'a plenary (quasi-judicial) hearing before a hearing officer' who would 'make findings of fact, conclusions of law and recommendations to the Commissioner on whether to affirm, modify, or reverse' the decision of the Division of Coastal Resources. N.J.A.C. 7:7D-2.8.

Associates elected not to request a plenary hearing before a hearing officer and waived that right by seeking a review before the Coastal Area Review Board. N.J.A.C. 7:7D-2.8(a). However, because of apparent miscommunication between the Attorney General and Associates, no hearing before the Coastal Area Review Board was conducted and this appeal was filed. During the pendency of the appeal the Attorney General moved to remand the matter to the Coastal Area Review Board to conduct the omitted hearing; the remand was objected to by Associates and denied by this court. [185 N.J. Super. at 514-15].

II

The primary purpose of CAFRA is to protect the unique and fragile coastal zones of the State. Through CAFRA, the Legislature intended to reverse "serious adverse environmental effects . . . that would preclude or tend to preclude those multiple uses which support diversity and are in the best long-term, social, economic, aesthetic and recreational interests of all people of the State." N.J.S.A. 13:19-2. To achieve this goal, the Legislature determined that

all of the coastal area should be dedicated to those kinds of land uses which promote the public health, safety and welfare, protect public and private property, and are reasonably consistent and compatible with the natural laws governing the physical, chemical and biological environment of the coastal area. [ Id. ].

Associates contends that neither these legislative findings nor any specific provisions of the act supports the conclusion that the Legislature empowered DEP to require low and moderate income housing for approval of a CAFRA permit. We disagree.

Although CAFRA is principally an environmental protection statute, the powers delegated to DEP extend well beyond protection of the natural environment. Succinctly stated, the delegated powers require DEP to regulate land use within the coastal zone for the general welfare.

Many of CAFRA's provisions illustrate the nature of its regulatory functions. First, in determining whether to issue a

permit, the commissioner of DEP is to consider many diverse factors, including trash disposal, interference with natural life processes, and degradation of unique or irreplaceable land types (including historical or archeological areas). N.J.S.A. 13:19-10. More to the point, the commissioner must determine whether the facility "[i]s located or constructed so as to neither endanger human life or property nor otherwise impair the public health, safety, and welfare." N.J.S.A. 13:19-10(f).

Second, the statute requires the commissioner to develop strategies "which take into account the paramount need for preserving the environmental values and the legitimate need for economic and residential growth within the coastal area." N.J.S.A. 13:19-16 (emphasis added). The same section expressly provides that "[t]he environmental design . . . shall include a delineation of various areas appropriate for the development of residential and industrial facilities of various types . . . ." Id. (emphasis added). Pursuant to the statutory mandate, DEP has promulgated regulations implementing the legislative policy. N.J.A.C. 7:7E-1.1 to -8.26. The rule in effect at the time of the issuance of the permit "encouraged" the construction of low and moderate income housing and stated that "[h]ousing developments shall provide least cost housing where feasible." Since that time the rule has been modified, and in its present form, which is more detailed than the original version, it requires new residential developments to "provide an appropriate amount of affordable housing for low and moderate income households where needed and feasible." An explanation of the rationale for the rule recites that in recent decisions DEP has determined that major developments must provide at least 10% of the units for low income households and at least 10% for moderate income households.

Third, the act expressly empowers the commissioner either to deny or grant conditionally a permit for construction of a facility that violates the purposes of the statute. N.J.S.A. 13:19-11. In its findings, the Legislature emphasized the unique environmental qualities of the coastal area and stated "it

is in the interest of the people of the State that all of the coastal area shall be dedicated to those kinds of land uses which promote the public health, safety and welfare . . . ." N.J.S.A. 13:19-2.

Our determination whether the legislative mandate includes the authority to require the provision of low and moderate income housing begins with the fundamental principle that land use regulation, as one aspect of the State's police power, should be used to promote the general welfare. See, e.g., Lusardi v. Curtis Point Prop. Owners Ass'n, 86 N.J. 217, 226 (1981); Taxpayers of Weymouth Tp. v. Weymouth Tp., 80 N.J. 6, 20-21 (1976), app. dism., 430 U.S. 977, 97 S. Ct. 1672, 52 L. Ed. 2d 373 (1977); Mt. Laurel I, supra, 67 N.J. at 174. In its discretion, the Legislature may delegate this power to municipalities or to state agencies. See Meadowlands Reg. Redevelopment Agency v. State, 63 N.J. 35, 46, app. dism., 414 ...


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