In this action, in lieu of prerogative writs, Public Advocate of the State of New Jersey, Alfred A. Slocum, challenges the reasonableness of the beach admission fees charged by the defendant, Borough of Belmar, for the use of its ocean beach area, and seeks the following declaratory and injunctive relief from this court:
1) that defendant establish a beach admission fee setting process that conforms to the requirements of an appointed public trustee;
2) that the court direct Belmar to institute a test year at a "$2" daily beach admission fee for the remainder of the 1989 summer season and for the 1990 season; and
3) that any beach admission fee revenue collected by Belmar in excess of that lawfully recoverable under N.J.S.A. 40:61-22.20 be refunded to the public in the form of future reductions of beach fees.
The complaint in this case was filed on May 22, 1987. The parties engaged in extensive discovery.*fn1 Prior to trial, Belmar's third-party complaint seeking relief against 22 other New Jersey shorefront communities was dismissed, and Belmar's motion for partial summary judgment barring plaintiff's claim
for repayment of beach admission fee overcharges under the New Jersey Tort Claims Act, N.J.S.A. 59:1-1 et seg., was denied. Public Advocate v. Belmar Bor., 233 N.J. Super. 437, 559 A.2d 17 (Law Div.1989). Six expert witnesses testified on behalf of the litigants in an eight-day trial.
In resolving this controversy, the court is required to address the following issues of law:
1) whether Belmar's beach admission fee setting policies conform to the municipality's duties and responsibilities under the public trust doctrine as a trustee of a public beach area;
2) whether Belmar's daily beach admission fees operate as a bar to public access, thus discriminating against nonresidents in violation of the public trust doctrine and Article 1, paragraph 1 of the New Jersey Constitution; and
3) whether the daily beach admission fees charged by the Borough of Belmar violate N.J.S.A. 40:61-22.20.
Specifically, this court must determine whether the beach fees imposed by Belmar produce revenues in excess of that necessary to offset legitimate beachfront related expenditures, and therefore, exceed the fees permissible under N.J.S.A. 40:61-22.20; and whether the beach admission fees imposed by Belmar are unreasonably high and unaffordable to many beachgoers.
Belmar is an oceanfront resort community located in Monmouth County, New Jersey, maintaining a year-round population of approximately 6,700 residents which nearly doubles during the summer months. In addition to the summer increase in resident population, Borough Clerk Charles Ormsbee, testified that as many as 25,000-35,000 people visit Belmar on peak summer days. The reason for the influx of seasonal residents and day visitors in the summer is Belmar's ocean beach.
Belmar's land area is approximately one square mile, with a beachfront area that extends 1.4 miles along the eastern boundary
of the municipality. Belmar's ocean beaches run the entire length of the municipal border east of Ocean Avenue. Ocean Avenue is parallel to the boardwalk and connects Belmar with Avon to the north, Spring Lake to the south, and Shark River to the west.
The average width of Belmar's beaches, depending upon the tide and the location, is 270 feet. This provides approximately 46.9 acres of beach. According to Borough Engineer, William Birdsall, the recreational capacity of the beach, using the "comfort zone" standard of 870 people an acre a day, is just over 40,000.
An elevated wood boardwalk, which is 30 feet wide, runs the entire length of the beach at its western edge. Access to Belmar's boardwalk is provided at 21 points by both ramps and stairways to Ocean Avenue and to the beach itself. Drinking fountains and freshwater showers are located on the beach at the base of each access ramp. Public facilities on the boardwalk include five restrooms, lockers for bathers, a pavilion, a first-aid station, numerous benches and trash containers. All of the facilities and equipment on the beach and boardwalk are owned and maintained by Belmar.
To the west of Ocean Avenue, there are many commercial establishments, including numerous restaurants, bars and retail shops, as well as Belmar's "Playland." Additionally, on Shark River there is a municipally owned marina and a public parking lot servicing the borough and its visitors. These attractions generate a substantial amount of summer season traffic "irrespective of the beach."
Several major roadways provide access to the municipality from almost every part of New Jersey, as well as the Philadelphia and New York metropolitan areas. State Highway 35, which runs in a north-south direction through Monmouth and Ocean Counties, is Belmar's westernmost roadway. The eastern end of Interstate 195 terminates in Belmar. An entrance-exit interchange for the Garden State Parkway is located at the
parkway's intersection with Interstate 195, approximately three miles west of Belmar. New Jersey Transit provides rail and bus access from the Newark and New York areas.
Belmar began charging a beach admission fee in 1933. Today, the purchase of a beach badge is required for admission onto Belmar's beaches from 9:00 a.m. until 5:00 p.m. throughout the summer season. Belmar's summer season opens on the Saturday of the Memorial Day weekend, and continues until Labor Day. Badges are not required on weekdays until approximately June 15th.
Under Belmar's beach fee ordinances, children under the age of 14 are not required to have beach badges. Senior citizens, defined by the borough as anyone over 65 years of age, are offered a discount on the price of season badges. No badge is required and no fee is charged for the summer season use of the beach after 5:00 p.m. and before 9:00 a.m., as well as for any time during the non-season. Furthermore, no badge is ever required for the use of the boardwalk. Currently, for the 1989 season, Belmar charges "$3" for daily weekdays, "$6" for daily weekend fees, and "$40" for a seasonal pass. This year, Belmar has formed a beach utility to oversee the operation of the beach and its related accounts.
The Public Trust Doctrine.
The public trust doctrine has always been recognized in New Jersey and is deeply engrained in our common law. Van Ness v. Bor. of Deal, 78 N.J. 174, 179, 393 A.2d 571 (1978); Arnold v. Mundy, 6 N.J.L. 1 (Sup.Ct.1821). The doctrine is premised on the common rights of all citizens to use and enjoy tidal land seaward of the mean high water mark. Lusardi v. Curtis Point Prop. Owners Ass'n, 86 N.J. 217, 228, 430 A.2d 881 (1981). It acknowledges that ownership, dominion, and sovereignty over land flowed by tidal waters, that extends to the mean high water mark, is vested in the State in trust for
the people. Matthews v. Bay Head Imp. Ass'n, 95 N.J. 306, 312, 471 A.2d 355 (1984). The Supreme Court in Bor. of Neptune City v. Bor. of Avon-by-the-Sea, 61 N.J. 296, 294 A.2d 47 (1972), extended the public trust doctrine to include the upland sand area as well.
[W]here the upland sand area is owned by a municipality -- a political subdivision and creature of the state -- and dedicated to public beach purposes, a modern court must take the view that the public trust doctrine dictates that the beach and the ocean waters must be open to all on equal terms and without preference and that any contrary state or municipal action is impermissible. [ Id. at 308-309, 294 A.2d 47; emphasis supplied]
The Court further stated:
The public rights in tidal lands are not limited to the ancient prerogatives of navigation and fishing, but extend as well to recreational uses, including bathing, swimming, and other shore activities. [ Id. at 309, 294 A.2d 47]
Furthermore, the public trust doctrine should not be considered fixed or static, but should be molded and extended to meet the changing conditions and needs of the public it was created to benefit. Ibid. Accordingly, in order to exercise rights guaranteed by the public trust doctrine, the public must have access to municipally owned dry sand areas as well as the foreshore. Id. at 321-322, 294 A.2d 47.
The Public Advocate contends that Belmar has failed to adopt beach fee setting policies that conform to the municipality's duties and responsibilities under the public trust doctrine as a trustee of a public beachfront. Belmar claims that the fact that it is required to administer its dry sand beach in trust for the use and enjoyment of all the citizens of the State does not convert the municipality into a trustee.
A trustee is defined as the person appointed, or required by law, to execute a trust; one in whom an estate, interest, or power is vested, under an express or implied agreement to administer or exercise it for the benefit of another. Black's Law Dictionary (5 ed. 1979) at 1357. Generally, the duties of a trustee depend upon the terms of the trust, and where there is no provision, express or implied, within the terms of the trust, the trustee's duties are determined by principles and rules
N.J.S.A. 40:61-22.20 impliedly appoints Belmar as trustee over its beaches.
Lands bordering on ocean, tidal water bays or rivers; government and policing; fees.
The governing body of any municipality bordering on the Atlantic ocean, tidal water bays or rivers which owns or shall acquire, by any deed of dedication or otherwise, lands bordering on the ocean, tidal water bays or rivers, or easement rights therein, for a place of resort for public health and recreation and for other public purposes shall have the exclusive control, government and care thereof and of any boardwalk, bathing and recreational facilities, safeguards and equipment, now or hereafter constructed or provided thereon, and may by ordinance, make and enforce rules and regulations for the government and policing of such lands, boardwalk, bathing facilities, safeguards and equipment; provided, that such power of control, government, care and policing shall not be construed in any manner to exclude or interfere with the operation of any State law or authority with respect to such lands, property and facilities. Any such municipality may, in order to provide funds to improve, maintain and police the same and to protect the same from erosion, encroachment and damage by sea or otherwise, and to provide facilities and safeguards for public bathing and recreation, including the employment of lifeguards, by ordinance, make and enforce rules and regulations for the government, use, maintenance and policing thereof and provide for the charging and collecting of reasonable fees for the registration of persons using said lands and bathing facilities, for access to the beach and bathing and recreational grounds so provided and for the use of the bathing and recreational facilities, but no such fees shall be charged or collected from children under the age of 12 years. L.1955, c. 49, p. 165, sec. 1, eff. June 7, 1955. [Emphasis supplied.]
The statute grants the municipality the power to make and enforce rules and regulations for the governing and care of the beach and its facilities. New Jersey courts have traditionally recognized that the sovereign's ownership is "in trust for the benefit of the public." Cobb v. Davenport, 32 N.J.L. 369, 378 (Sup.Ct.1867), reh'g 33 N.J.L. 233 (Sup.Ct.1868); Arnold, supra, 6 N.J.L. at 71. The New Jersey Supreme Court recognizes the municipality's trustee obligation over public beaches by characterizing the lands subject to the public trust doctrine as "trust lands." Avon, supra, 61 N.J. at 306, 308, 294 A.2d 47. Accordingly, Belmar is a trustee over its beach area and the
public is the beneficiary of the trust lands. As such, I find that Belmar has breached its duties and obligations as a trustee.
A public trustee is endowed with the same duties and obligations as an ordinary trustee. That is, the trustee owes to the beneficiary a duty of loyalty, Branch, supra, 99 N.J. Super. at 295, 239 A.2d 665, a duty of care, Commercial Trust Co. of N.J. v. Barnard, 27 N.J. 332, 142 A.2d 865 (1958), and a duty of full disclosure, Branch, supra, 99 N.J. Super. at 306-307, 239 A.2d 665. Additionally, a trustee has the duty to keep clear and adequate records and accounts. In re Herr, 22 N.J. 276, 125 A.2d 706 (1956). When the trustee fails to keep proper accounts, all doubts are resolved against him. Societa Operaia, etc. Villalba v. Di Maria, 40 N.J. Super. 344, 349, 122 A.2d 897 (Ch.Div.1956).
I find that the borough, as trustee, has shown little care and foresight in regard to its beneficiaries -- the beachgoing public. The evidence in this case clearly indicates that Belmar breached its duty of loyalty to the public by increasing beach admission fees, rather than real estate taxes, in order to raise the borough's general revenues. The borough failed to keep clear and adequate records of beachfront expenditures. Belmar's expenditures were not traceable to any records maintained by the borough but rather were based upon guesses and estimates by the borough clerk and staff. Belmar commingled its general revenues with its beachfront related revenues. It operated the beach area as though it were a commercial business enterprise for the sole benefit of its taxpayers. This conduct resulted in surplus beach fee revenues being used to subsidize other municipal expenditures for the exclusive benefit of the residents of Belmar, rather than being set aside to meet future beach-related costs. These actions place the interest of Belmar's residents before those of the beachgoers, in violation of the borough's duty under the public trust doctrine. Additionally, I find that the appointment of a trustee, as requested by the Public Advocate, is unnecessary. Belmar, as trustee
over its beach area, shall follow the guidelines set forth by this court in this opinion to ensure that the interests of the beachgoing public are protected.
Discrimination Against Nonresidents.
The public trust doctrine mandates that the beach be open to all on equal terms without preference. Van Ness, supra, 78 N.J. at 179, 393 A.2d 571. The Court in Avon stated that the enactment of a statute authorizing a municipality to charge beach user fees did not manifest legislative intent to authorize discrimination in fees between residents and nonresidents. Avon, supra, 61 N.J. at 301, 294 A.2d 47. The Court went on to hold that municipalities may validly charge reasonable fees for use of their beaches but may not discriminate in any respect between residents and nonresidents. Id. at 310, 294 A.2d 47.
This court finds that Belmar's price structure for beach fees discriminates against nonresidents by imposing a disproportionately and inequitably high fee on daily and weekend beach badge purchasers.
Active discrimination is a mental process in which one willingly chooses one alternative over another. Parker v. Dornbierer, 140 N.J. Super. 185, 188-189, 356 A.2d 1 (App.Div.1976). This intent to discriminate is found by examining what was said and done in the circumstances of the entire transaction. Id. at 188-189, 356 A.2d 1.
Belmar experienced extreme overcrowding on the beach and boardwalk during the 1985 season. There was tension and antagonism among community residents towards outsiders. This outcry led the commissioners to raise the 1986 fee, effectively precluding many nonresidents from using the beach. The October 7, 1985 commissioners' agenda meeting, and the
testimony presented at trial clearly show that Belmar intended to discriminate against nonresident beachgoers.*fn2
Evidence of Belmar's intent to discriminate is apparent by the double fee charged on weekends as compared to weekdays. Any additional costs that Belmar may incur in operating and maintaining the beach on weekends should be offset by the additional revenues that will be collected by the increased number of beachgoers. Additionally, the disproportionate price gap between seasonal and daily admission fees is further evidence of Belmar's intent to discriminate against nonresidents. The majority of weekend badge purchasers were nonresidents and the difference between the cost per day for a seasonal badge and the cost per day for a weekend daily badge was quite extreme. By paying a vastly greater per day price for their badges, the daytrippers have been subsidizing season badge holders. Additional proof of this discrimination is the fact that Belmar, without justification, has raised the price of daily and weekend badges faster than the price of seasonal badges.
Reasonable Fees Under N.J.S.A. 40:61-22.20.
N.J.S.A. 40:61-22.20 sets forth the statutory authority to charge beach user fees. The Public Advocate claims that the statute only includes costs associated with the operation and maintenance of the beachfront. Belmar contends that beach related expenses include all those expenditures which the municipality would not incur if it was not a beachfront community.
The avenue this court must take in resolving this issue is one of statutory interpretation. The primary aim in interpreting
a statute is to determine the fundamental purpose for which the legislation was enacted, and where a literal reading will lead to a result not in accordance with the essential goals of the act, the spirit of the law will control the letter. New Jersey Builders, Owners & Managers Ass'n v. Blair, 60 N.J. 330, 288 A.2d 855 (1972). Where there is no explicit indication of a special meaning, statutory words are given their ordinary and well understood meaning. Matter of Schedule of Rules for Barnert Memorial Hospital, 92 N.J. 31, 455 A.2d 469 (1983); Levin v. Parsippany-Troy Hills, 82 N.J. 174, 411 A.2d 704 (1980). In this case, the phrase "reasonable fees" requires statutory interpretation.
It is clear that N.J.S.A. 40:61-22.20 was enacted for the purpose of authorizing shore municipalities to charge beach user fees in order to reimburse the municipality for its costs associated with the beachfront. The determination of what costs may be reasonably allocated to the beach badge purchaser is the thrust of this case.
The Court in Avon acknowledged the burdens placed upon oceanfront municipalities and discussed the rationale behind the statute. The Court found that in determining a reasonable fee, municipalities "may consider all additional costs legitimately attributable to the operation and maintenance of the beachfront, including direct beach operational expenses, additional personnel and services required in the entire community, debt service of outstanding obligations incurred for beach improvements and preservation, and a reasonable annual reserve designed to meet expected future capital expenses." Avon, supra, 61 N.J. at 311, 294 A.2d 47; emphasis supplied.
It is clear that the statute directs its "reasonable fee" standard to the municipality, however, this fee must be reasonable in relation to the municipality's expenses incurred as a result of the beachfront. That is not to say that Belmar can "fantasize" that it is an inland community and allocate any additional costs
above and beyond its imaginary expenses as an inland community.*fn3
Belmar, as a beachfront municipality, benefits overall from the shore attraction. This is an added benefit, or in some cases, a burden to the municipality that comes with the territory. See Van Ness, supra, 78 N.J. at 174, 393 A.2d 571; Avon, supra, 61 N.J. at 299, 294 A.2d 47. The collection of reasonable fees directly related to the beachfront was designed to offset these community burdens. The Legislature understood that there would be an enormous impact on the community spirit, as well as the community finances. Thus, the statute is designed to subsidize the costs related directly to the beachfront.
It is this court's obligation to determine what constitutes reasonable expenditures in light of N.J.S.A. 40:61-22.20 for the benefit of both the beachgoer and the Belmar community.
Michelle Bowman, an expert in the field of accounting, with a special emphasis on trust accounting, financial reporting and cost allocation, testified on behalf of the Public Advocate. This witness, who supported her testimony with a written report, examined 30 separate items of expenditure relating to beachfront activities and recommended how each of these items should be allocated to the operation of Belmar's beachfront facility. In support of Belmar's position, Robert Hulsart, a certified public accountant, registered municipal accountant, and expert auditor in municipal finance, testified that the allocations of beach related expenses devised by the Borough Clerk, Charles Ormsbee, were reasonable under N.J.S.A. 40:61-22.20. This ...