On appeal from the Superior Court of New Jersey, Law Division, Essex County
Before Judges Brochin, Wefing and Braithwaite *fn1
The opinion of the court was delivered by: Brochin, J.A.D.
Two Mount Laurel *fn2 exclusionary zoning suits were instituted against the Township of Livingston and then consolidated. The plaintiffs in those suits claimed builders' remedies. *fn3 Livingston has negotiated a tentative settlement of those suits. Chestnut Hill Civic Association is an organization composed of persons who reside in the vicinity of a 9.9-acre property in Livingston owned by Short Hills West, Ltd. Chestnut Hill intervened in the consolidated action and objected to the provisions of the settlement which contemplate the rezoning and development of that property. The matter presently before us for review is Short Hills West's interlocutory appeal from an August 5, 1997 order of the Law Division. That order denied reconsideration of an April 25, 1997 order which, sustaining Chestnut Hill's objections, rejected the contemplated development of the Short Hills West site on the ground that that development would be "inconsistent with and not in compliance with applicable Mt. Laurel principles."
The objective of a Mount Laurel suit is to establish conditions reasonably calculated to result in the construction of a municipality's fair share of affordable housing. Disposition of such a suit should ordinarily result in the entry of a judgment of compliance and repose which adjudicates that "there are land use regulations and affirmative devices in place conforming to [the municipality's] constitutional obligation" with respect to the availability of affordable housing. Mount Laurel II, supra, 92 N.J. at 290.
The proposed settlement of the present litigation contemplates the entry of such a judgment. It would have an extraordinary res judicata effect and would vitally affect the rights of parties who are not themselves before the court. See Mount Laurel II, supra, 92 N.J. at 291-92; Morris County Fair Hous. Council v. Boonton Township, 197 N.J. Super. 359, 364 (Law Div. 1984), aff'd o.b., 209 N.J. Super. 108 (App. Div. 1986). Consequently, as the court and the parties to the present matter have recognized, the present litigation cannot be settled without a fairness hearing in which the court determines that the interests of affected parties have been fairly treated. See Morris County, supra, 197 N.J. Super. at 365-71.
The proposed settlement of the Mount Laurel litigation against Livingston contemplates zoning amendments which their proponents contend are reasonably calculated to result in the construction of the municipality's fair share of affordable housing. The Livingston Township Council and its Planning Board have adopted a Housing Element and Fair Share Plan which summarizes the proposed amendments and describes how the municipality expects to achieve compliance with its affordable housing obligation. See N.J.S.A. 40:55D-28 (master plan); N.J.S.A. 40:55D-62a (requiring, as a general rule, substantial consistency between the master plan and any zoning amendment); Manalapan Realty, L.P. v. Township Comm. of Manalapan, 140 N.J. 366, 384 (1995) ("`ubstantially consistent' permits some inconsistency, provided it does not substantially or materially undermine or distort the basic provisions and objectives of the Master Plan."). Livingston's Fair Share Plan contemplates the construction of 193 units of low and moderate cost residential housing. Most of these will be housing units already built or to be built within the Township. Some will be units credited to Livingston in exchange for payments under Regional Contribution Agreements pursuant to COAH (Council on Affordable Housing) regulations.
One of the properties which is to be rezoned in conformity with the amended master plan housing element in order to create a "realistic development potential," N.J.A.C. 5:93-1.3; N.J.A.C. 5:93-4.2(f), to fulfill Livingston's affordable housing obligation is the 9.9-acre site owned by Short Hills West. That property is located adjacent to the St. Barnabas Medical Center. Currently, the property is zoned R-1 residential. The Township's plan contemplates that it will be rezoned to enable it to become the site for 125 assisted living dwelling units for senior citizens and an office building of 60,000 square feet.
In accordance with the procedure prescribed by Morris County, supra, the Law Division scheduled a hearing on notice to all potentially interested parties to consider the fairness of the terms of the proposed settlement of the pending litigation. The fairness hearing was conducted on March 5, 1997. *fn4 Two witnesses testified at the hearing, both as experts.
Mr. John J. Lynch, an attorney and licensed professional planner, whom the court had appointed as a master in one of the builder's remedy suits, testified in favor of the plan and of the proposed settlement. He supported the plan's Conclusion that 193 units of affordable housing is the Township's "realistic development potential." See N.J.A.C. 5:93- 4.2(f). He stated that the assisted living units planned for the site would qualify as residential housing for the purpose of satisfying Livingston's fair share obligation. N.J.A.C. 5:93-5.8(a). But he expressed the opinion that, Judged by COAH rules, the planned number of assisted living housing units set aside for low and moderate income occupants was insufficient and that the plan was also flawed because it did not require Short Hills West to pay a development fee to build the office building. Mr. Lynch stated, however, that after the submission of his report pointing out those shortcomings, Short Hills West had agreed to increase the number of units to be set aside for low and moderate income occupants from eleven to nineteen and to pay a development fee equal to one percent of the assessed valuation of the office building. He testified that these modifications remedied all of the deficiencies in the plan which he considered relevant to the issues to be decided at the fairness hearing. He declined to testify about zoning issues because he considered those issues immaterial to the proper subject matter of the fairness hearing.
Chestnut Hill Civic Association presented the opposing testimony of P. David Zimmerman, who is also a licensed professional planner. He stated that he approved of the plan for constructing 125 assisted living housing units for senior citizens on the Short Hills West site and reserving approximately fifteen percent of them for low and moderate income occupants. That provision, he testified, "obviously addresses directly Livingston's Mount Laurel obligation." But he criticized the plan because "he inclusion of an office building on the site is extraneous to the Mount Laurel issues that the plan is seeking to address and [there is no] rationale for its being included." In response to questioning, however, he conceded that if the development fee for the office building was "made available to a housing trust or some other resource" the fee would contribute to satisfying the municipality's fair share obligation.
An order was entered on April 7, 1997, which is captioned "order approving with conditions Mt. Laurel compliance plan after fairness hearing." This order recites that "he only objections were presented by . . . Chestnut Hill Civic Association, which objected only to the zoning proposal for the Short Hills West property, which will be the subject of further proceedings." The order approved "he calculation of Livingston Township's fair share obligation" at 193 residential units, "as set forth in the adopted Housing Element and Fair Share Plan." It also conditionally approved the settlement agreements and a related contract with five specified developers other than Short Hills West. This approval was conditioned on certain modifications of the agreements, the approval of their final form by the master and the court, and the adoption of appropriate municipal resolutions and ordinances, including a "Development Fee Ordinance, Spending Plan and Ordinance setting forth administrative affordable housing regulations," "a proposed memorandum of understanding setting forth binding rights and a reasonable time frame for Livingston Township to enter into . . . regional contribution agreements," and other agreements necessary for implementation of the settlement. The order also provides that a "Final Judgment of Mt. Laurel Compliance and Repose" is to be entered, but only after the conditions have been met and upon the occurrence of the later of: 1) "final trial court resolution of all issues involving [the Short Hills West site]"; 2) "expiration of the time for appeal following adoption of all Ordinances necessary to implement the Fair Share Plan"; or 3) "a final trial court resolution of any challenge to any such Ordinance." The order expressly withholds approval of the proposed agreement for the development of the Short Hills West site pending further proceedings.
On April 25, 1997, an order was entered which rejected the Short Hills West proposal "as inconsistent with and not in compliance with applicable Mt. Laurel rinciples." The rationale for this rejection appears to be that the court interpreted those principles as disfavoring construction of an office building on part of a site whose zoning, terrain, and ...