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East/West Venture v. Borough of Fort Lee

January 5, 1996


On appeal from the Superior Court, Law Division, Bergen County.

Approved for Publication January 5, 1996. As Corrected January 17, 1996. Second Correction May 2, 1996.

Before Judges Havey, D'Annunzio & Conley. The opinion of the court was delivered by Havey, P.j.a.d.

The opinion of the court was delivered by: Havey

The opinion of the court was delivered by HAVEY, P.J.A.D.

In this Mount Laurel *fn1 builder's remedy litigation, the trial Judge, after a "fairness" hearing, approved a settlement agreement between plaintiff East/West Venture (East/West) and defendants Borough of Fort Lee, its Planning Board and the County of Bergen. The agreement represents a substantial component of Fort Lee's compliance plan, designed to meet the Borough's constitutionally imposed fair share obligation to provide 140 low- and moderate-income housing units.

Intervenor Edgewater Borough argues that: (1) the settlement agreement constitutes "contract zoning"; (2) the settlement does not provide sufficient Mount Laurel units to satisfy the minimum standards set by Mount Laurel II; (3) several provisions of the agreement are ultra vires since they conflict with the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -136; and (4) the agreement violates sound planning concepts and the purposes of zoning set forth under the MLUL. Plaintiffs Edward and Florence Bojekian, join in Edgewater's contentions, but also argue that the trial Judge erred in treating them as objectors to the settlement agreement rather than deciding their prerogative writs action separately. They also claim that the agreement is invalid because East/West's proposed market-rate complex will be constructed on a lot that has never been legally subdivided. *fn2 Except as modified, we affirm.

In 1988, East/West filed an action in lieu of prerogative writs alleging that Fort Lee's zoning regulations violated the Mount Laurel doctrine. East/West sought a builder's remedy for the construction of 1,012 high-rise units with a twenty-percent set-aside for Mount Laurel units. After Edgewater's motion to intervene was granted, Judge Skillman in the Law Division, on April 3, 1989, declared Fort Lee's land-use ordinances unconstitutional under Mount Laurel II, and, on April 17, 1989, appointed Philip B. Caton as master. The matter was transferred to Bergen County for trial.

East/West, Fort Lee, Fort Lee's Planning Board and Bergen County entered into a written settlement on March 21, 1994, which was announced at a joint meeting of the Borough's governing body and Planning Board. On April 25, 1994, the Bojekians then filed their prerogative writs action challenging the settlement agreement which was consolidated with East/West's case.

The agreement has three key components: (1) it allows East/West to construct a thirty-story, 538-unit condominium complex on a 4.88 acre tract of land; (2) East/West will construct a sixty-unit affordable housing development; and (3) East/West will contribute $800,000 to Fort Lee's Housing Trust Fund to assist the Borough in meeting its fair share obligation. Also, East/West agrees to commence construction of the affordable housing development not later than twenty-one months after a designated "start date" and to complete construction within fifteen months.

The settlement agreement also calls for the submission of the Housing Element of the master plan to the Law Division for approval, after which the Planning Board would, within thirty days, amend it to make it consistent with the agreement. Also, within thirty days, the Borough would amend the ordinance in the manner specified by the settlement. All parties agree to submit any disputes to the master for mediation, and agree that the trial Judge shall retain jurisdiction until certificates of occupancy have been issued for both the affordable housing and high-rise units. Finally, Fort Lee and its Planning Board agree, "in consideration of East/West's undertaking to build the affordable housing project in advance of the market rate development," to grant "East/West extended vesting on the market rate project site plan approval for 10 years."

On May 9, 1994, pursuant to the direction of the trial Judge, Fort Lee published a notice of hearing to be conducted by the trial Judge on June 15, 1994, to consider entry of a partial judgment approving the settlement agreement. Notice was also served by mail upon all property owners and adjoining municipalities within 200 feet of the subject sites.. The notice described East/West's proposals and stated that the full text of the agreement, the proposed ordinance revisions necessary to implement it, and a map of the sites were available to be inspected at the Borough Clerk's office. It also provided that any interested party may file objections to the proposed agreement and may appear at the hearing scheduled by the trial Judge to present evidence in support of any objections to the agreement.

Several objectors, including Edgewater and the Bojekians appeared at the five-day hearing. Witnesses testifying in favor of the settlement included planners presented by Fort Lee and East/West, as well as Caton, the court-appointed master. Edgewater elicited the testimony of a planner opposing the application. The Bojekians objected to the procedure which, they argued, would place the trial Judge's "imprimatur" on amendments to Fort Lee's master plan and zoning ordinance without the Borough first complying with the notice and hearing requirements under the MLUL.

According to the testimony elicited during the hearing, the market-rate units will be on a site which is bordered to the south by a low-rise residential area in Edgewater (developed at a density of between five and twenty-five dwelling units per acre) and to the north by a neighborhood of predominantly one- and two-family homes. East/West's market-rate proposal provides for a density of 110 units per acre. The site is presently zoned C-6, permitting commercial uses, including hotels, and structures up to thirty stories high. However, the present zoning is inconsistent with the 1988 master plan, which recommends rezoning to a residential use at a considerably lower density and height. The site is presently improved with an unfinished twelve-story concrete parking garage constructed in 1974 as part of a previous plan approving four thirty-story apartment buildings, two of which have been completed, Century Tower and River Ridge. In 1977, a developer obtained a use variance and site plan approval for a 650-room hotel on the subject site and in 1982, another developer obtained approval for a mixed use project including an eighteen-story hotel and 127 residential units.

The sixty affordable housing units proposed by the settlement will be constructed on the Kaufer Lane site, consisting of 1.41 acres, located approximately one block north of the high-rise site. The agreement contemplates closing a portion of Kaufer Lane and extending Federspiel Street to provide additional access to the affordable units. The density of fifty units per acre is consistent with the standards of Fort Lee's present master plan.

The expert testimony adduced during the hearing generally focused on two issues: (1) whether the proposals were consistent with sound planning and the purposes of zoning under the MLUL, N.J.S.A. 40:55D-2; and (2) whether the settlement agreement provided sufficient affordable housing units. As to the first issue, the planning experts for East/West and Fort Lee, as well as Master Caton, testified that East/West's proposed thirty-story tower constituted sound planning because it was compatible with the existing thirty-story tower complexes adjoining the site. East/West's expert also reasoned that current zoning would permit a thirty-story hotel structure on the site, a use which would be at least as intensive as East/West's high-rise proposal. Fort Lee's expert further noted that the proposed tower would not exceed the height of the two adjacent condominium towers. Edgewater's planning consultant disagreed, stating that the size and bulk of the tower, with its overall intensity of use, was incompatible with the adjacent low-rise and low-density residential uses in Edgewater.

As to the second issue, there was competing expert testimony as to whether the agreement should be rejected because: (1) the sixty units proposed by East/West fell below the twenty-percent minimum suggested by Mount Laurel II; and (2) construction of the market-rate and affordable units on different sites violated the spirit of Mount Laurel.

In a written opinion, the trial Judge approved the settlement agreement. Citing extensively from the Law Division decision in Morris County Fair Housing Council v. Boonton Tp., 197 N.J. Super. 359, 484 A.2d 1302 (Law Div. 1984), aff'd o.b., 209 N.J. Super. 108 (App. Div. 1986), the Judge stated that "all interested parties were given ample notice of the compliance hearing and . . . all the objectors who appeared were clearly informed and participated fully." He adopted the testimony of Master Caton, finding it to be "credible and complete," and determined that the agreement "represents sound land use planning and is in compliance with COAH regulations." The Judge also concluded that the settlement, including the provision for sixty affordable units and the $800,000 contribution to the municipality, constituted a fair and reasonable partial settlement of Fort Lee's compliance obligation, "designed to assist the Borough to meet its constitutional obligation."

The Judge entered an order which was deemed a "final judgment with respect to all issues covered by the Settlement Agreement." However, as stated, the settlement only partially satisfied Fort Lee's Mount Laurel obligation of 140 units and, pursuant to the settlement, the order requires Fort Lee to submit its entire compliance package to the court and master within six months.


Edgewater and the Bojekians first argue that the settlement agreement approved by the trial Judge constitutes unlawful "contract" zoning. They assert that Fort Lee placed the "cart before the horse" by entering into an agreement to amend its master plan and zoning ordinance in order to implement the agreement before the requisite statutory procedures necessary to adopt the amendments were followed.

Edgewater and the Bojekians correctly point out that the settlement agreement binds Fort Lee to amend its master plan and zoning ordinance to implement the settlement terms within a specified period after approval by the court.

Because zoning is inherently an exercise of the State's police power, "municipalities have no power to zone except as delegated to them by the Legislature." Taxpayers Ass'n v. Weymouth Tp., 80 N.J. 6, 20 (1976), appeal dismissed and cert. denied, 430 U.S. 977, 97 S. Ct. 1672, 52 L. Ed. 2d 373 (1977); see also Riggs v. Township of Long Beach, 109 N.J. 601, 610, 538 A.2d 808 (1988). The governing body of a municipality cannot delegate its zoning powers to others: it has the "ultimate responsibility to establish, by the adoption of its zoning ordinances and amendments thereto, the essential land use character of the municipality." Township of Dover v. Board of Adjust. of Dover, 158 N.J. Super. 401, 411, 386 A.2d 421 (App. Div. 1978). That responsibility must be carried out "in accordance with statutory and municipal procedural requirements." Riggs, supra, 109 N.J. at 612. A municipality has no power to circumvent these statutory and municipal procedural safeguards by contract with a private property owner. Warner Co. v. Sutton, 274 N.J. Super. 464, 471, 644 A.2d 656 (App. Div. 1994); Suski v. Mayor & Comm'rs of Beach Haven, 132 N.J. Super. 158, 164, 333 A.2d 25 (App. Div. 1975).

In Warner, we held that a consent order settling land-use litigation involving a substantial amendment to the municipality's zoning ordinance constituted unlawful contract zoning. Warner, supra, 274 N.J. Super. at 479-80. There, no judicial procedure of any sort, by way of a "fairness" hearing or otherwise, was conducted before entry of the consent order. Id. at 479. We rejected the developer-plaintiff's invitation to remand for such a hearing, first because there was "presently no court rule or other Supreme Court guidance as to the parameters of such a fairness hearing." *fn3 Id. at 480. Second, at least where the Judge was called upon to approve a wholesale rezoning of the municipality, he or she "must assume the role of 'an ad hoc super zoning legislature,' a role not well suited to the judiciary." Id. at 482 (quoting Pascack Ass'n v. Mayor & Council of Washington Tp., 74 N.J. 470, 487-88, 379 A.2d 6 (1977)).

We concluded in Warner that the Judge should, in such a case: (1) "make a threshold finding as to whether any of the settlement terms . . . are illegal or void as against public policy," invalidating those that are; (2) "remand to the governing body, retaining jurisdiction, for amendment" of the zoning ordinance to implement the terms of the settlement; and (3) if the ordinance is adopted and challenged by members of the public, then "decide whether the ordinance is sustainable as a valid exercise of the Township's zoning power." Id. at 483-84. Such a procedure allays the fear that the municipal governing body, presumably protecting the public at large, "may be bargaining away its legislative duties without public scrutiny or political accountability." Id. at 473. It also provides the public at large with a realistic opportunity to express its collective view at convenient and familiar forums, hearings before its own municipal Planning Board and governing body.

Fort Lee and East/West argue that the concerns expressed in Warner and other cases concerning "contract" zoning have been met here, since a "fairness" hearing was conducted by the trial Judge after notice was published and served upon all interested parties. They correctly point out that such a procedure was approved in the context of Mount Laurel litigation in Morris County, supra, 197 N.J. Super. at 366-67. Fort Lee and East/West take the firm position that, since the order appealed from here resolves not only the affordable housing and fair share issues, but also the issues concerning the soundness of the proposed master plan amendment and zoning ordinance, the ...

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