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Bi-County Development of Clinton, Inc. v. Borough of High Bridge

June 18, 2001


Before Judges Skillman, Wecker and Lesemann. On appeal from Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L- 153-98.

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


Argued February 21, 2001

The issue presented by this appeal is whether a developer that pays money into a municipality's affordable housing fund in lieu of constructing a percentage of housing units affordable to lower income households may compel an adjoining municipality to allow the developer to connect into its municipal sewer system. We conclude that such a developer does not have a right to connect into the sewer system of an adjoining municipality which has elected to reserve the use of its system for its own residents.

Plaintiff Bi-County Development of Clinton, Inc. (Bi-County) owns a 46.2 acre tract of land in Clinton Township (Clinton). In 1987, Bi-County brought a Mount Laurel*fn1 exclusionary zoning suit against Clinton, which was subsequently transferred to the Council on Affordable Housing (COAH). In 1990, Bi-County and Clinton entered into a settlement agreement under which Clinton agreed to rezone Bi-County's property to allow for construction of as many as 187 residential units and as much as 10,000 square feet of commercial and/or office space. The agreement gave Bi- County the option of either making 10% of the proposed residential units affordable to low and moderate income households or contributing $2,000 per unit to Clinton's affordable housing fund. In 1992, Bi-County and Clinton agreed that Bi-County would make the stipulated monetary payment to the affordable housing fund rather than constructing lower income housing.

In 1994, Bi-County obtained preliminary subdivision approval from Clinton's Planning Board for a development containing 187 detached single family homes and a 10,000 square foot commercial building.*fn2 The resolution approving Bi-County's subdivision application provided that the development could not be constructed until public water and sewer service became available. The resolution further provided that Bi-County would obtain sewer treatment capacity from the Clinton Township Sewerage Authority (Sewerage Authority) and that Bi-County would extend a sewer line along Route 31 to provide sewer service to the proposed development.

In 1997, Bi-County obtained a partial summary judgment against the Sewerage Authority in other litigation under which Bi-County was allocated 56,100 gallons per day of sewer treatment capacity.

Subsequently, Bi-County devised a plan to avoid the cost of constructing a new sewer line along Route 31 by contracting with the Department of Environmental Protection (DEP) to tie into a State owned sewer line that extends from the Spruce Run Recreation Area to the Borough of High Bridge sewage conveyance system. The High Bridge system consists of municipal sewer lines and a pump station which pumps sewage to the Sewerage Authority treatment facility. In 1970, High Bridge entered into an agreement with the DEP, pursuant to which the DEP constructed a sewer line from Spruce Run that runs along Route 31 and connects into the High Bridge system. The DEP indicated its willingness to consider Bi-County's proposal for the Sewerage Authority to take over ownership and maintenance of the DEP sewer line and allow Bi-County's proposed development to connect into the line. The Sewerage Authority initially indicated that it was receptive to this proposal, but when High Bridge refused to permit Bi- County's sewage to flow through its lines, the Sewerage Authority declined to pursue the proposal further.

After High Bridge refused to consent to Bi-County's plan to utilize its municipal sewer system to convey sewage from Bi- County's proposed development to the treatment plant, Bi-County brought this action against High Bridge, the State, and the Sewerage Authority, for declaratory and injunctive relief establishing its right to tie into the DEP-High Bridge sewer conveyancing system. The legal theory of Bi-County's complaint was that, because it will be making a monetary contribution to Clinton's affordable housing fund in lieu of making 10% of the residential units in its development affordable to low and moderate income households, the development should be considered an "inclusionary" Mount Laurel development, and High Bridge has an obligation to eliminate any "undue cost generating practices." Bi-County further alleged that High Bridge's system had excess capacity that could accommodate the anticipated sewage flow from its proposed development, and consequently, High Bridge's refusal to allow Bi-County to utilize the system constituted a prohibited "undue cost generating practice."

The case was brought before the trial court by cross motions for summary judgment. Bi-County and High Bridge submitted expert reports in support of their motions. One of Bi-County's expert reports concluded that "adequate conveyanc[ing] capacity [exists] in the High Bridge wastewater system to accept [Bi-County's] development flows under all flow scenarios . . . without making improvements to the existing facilities." However, High Bridge's expert concluded that High Bridge would need to construct costly improvements to its sewage conveyancing system to accommodate the anticipated flow from Bi-County's proposed development. The Sewerage Authority's expert report reached the same conclusion.

The trial court concluded that because Bi-County is contributing to Clinton's affordable housing fund in lieu of constructing housing that would be affordable to lower income families, "it qualifies as an inclusionary development" under the Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to -329, and Mount Laurel doctrine. The court also concluded that the "[c]onstitutional obligation to enable the creation of a realistic housing opportunity requires public entities to eliminate unnecessarily burdensome and undue cost[]-generating policies and regulatory provisions, and to cooperate with the developer such as plaintiff to minimize development costs." In addition, the court found on the basis of the expert reports and other evidential materials submitted on the cross-motions that "there is ample conveyancing capacity in the State line and the High Bridge conveyancing system to handle the anticipated sewerage flow from [Bi-County's] property[,]" and that "there is a very substantial cost differential to [Bi-County] if it is required to construct a new line on [Route] 31 as opposed to being allowed to utilize the State line and the High Bridge conveyancing system." Consequently, the court concluded that High Bridge's refusal to allow Bi-County "to connect to the State line and the High Bridge conveyancing system would have an undue cost-generative impact on this inclusionary development." Accordingly, the court entered a summary judgment in favor of Bi- County directing that "[s]ubject to agreement between the State of New Jersey and [Sewerage Authority] regarding transfer of the State line, High Bridge shall permit sewage conveyancing capacity for the amended Bi-County Development (32,500 gpd) access through the High Bridge conveyancing system, which shall be subject to service and connection fees[.]" The court dismissed Bi-County's complaint against the State, but indicated that that dismissal did not "preclude the State from voluntarily negotiating with the [Sewerage Authority] regarding transfer of the State line." The court did not grant plaintiff any specific relief against the Sewerage Authority.

On appeal, High Bridge argues that a developer such as Bi- County is not entitled to "Mount Laurel protection" simply because it makes a "monetary contribution in lieu of constructing affordable housing[,]" and therefore, the trial court had no authority to direct High Bridge to grant Bi-County access to its sewage conveyancing system. In the alternative, High Bridge argues that the court erred in granting summary judgment because there are contested issues of fact as to whether the High Bridge system has excess conveyancing capacity and whether High Bridge's refusal to grant Bi-County access to that system is an "undue cost generating" practice. Bi-County has not cross appealed from the summary judgment in favor of the State.

We conclude that the trial court had no authority to compel High Bridge to grant Bi-County access to its municipal sewer. This conclusion makes it unnecessary to decide whether High Bridge presented contested factual issues concerning the existence of excess capacity in the system or whether the denial of access to the system would impose undue costs upon Bi-County. Accordingly, we reverse the summary judgment in favor of Bi- County and remand for the entry of judgment in favor of High Bridge.

Initially, we note that Bi-County does not argue that a municipality which operates a sewer system has a statutory or common law duty to allow a property owner in another municipality to connect into that system. When a municipality constructs a public improvement, such as sewer lines, it ordinarily has no obligation to afford residents of another municipality access to that service. See Mongiello v. Borough of Hightstown, 17 N.J. 611, 614-19 (1955). The only exception to this rule is where a municipality enters into an agreement with another municipality to provide services to residents of that municipality. See ibid. Bi-County does not claim that High Bridge and Clinton have any agreement under which property owners in Clinton are entitled to ...

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