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Heritage at Independence, LLC v. State

August 18, 2010

HERITAGE AT INDEPENDENCE, LLC, PLAINTIFF-APPELLANT,
v.
THE STATE OF NEW JERSEY, THE NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, THE NEW JERSEY HIGHLANDS WATER PROTECTION AND PLANNING COUNCIL, AND THE NEW JERSEY COUNCIL ON AFFORDABLE HOUSING, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Warren County, Docket No. L-316-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: May 26, 2010

Before Judges Axelrad, Sapp-Peterson and Espinosa.

Plaintiff Heritage at Independence, LLC ("Heritage"), a developer who sought to construct an inclusionary development on environmentally sensitive lands in the Townships of Independence and Hackettstown ("Independence and Hackettstown") within the Highlands Preservation Area, appeals from summary judgment dismissing seven of the eleven counts of its amended complaint in lieu of prerogative writs against the State of New Jersey ("State"), the New Jersey Department of Environmental Protection ("DEP"), the New Jersey Highlands Water Protection and Planning Council ("Highlands Council") and the New Jersey Council on Affordable Housing ("COAH") (collectively "defendants"). Heritage had sought a judgment declaring the Highlands Water Protection and Planning Act ("Highlands Act"), N.J.S.A. 13:20-1 to -35, unconstitutional, both facially and as-applied to its property, an order barring the State from regulating Heritage's proposed development in the Preservation Area of the Highlands region ("Highlands"), and a builder's remedy to allow construction of its proposed development. We affirm.

I.

We briefly provide some statutory and regulatory background to place this litigation into context. The Highlands Act was enacted on August 10, 2004. In doing so, the Legislature recognized that the Highlands is an essential source of drinking water for half the population of New Jersey and "contains other exceptional natural resources such as clean air, contiguous forest lands, wetlands, pristine watersheds, and habitat for flora and fauna," as well as sites of historic significance and recreational opportunities. N.J.S.A. 13:20-2. As the Legislature determined, the then-existing land use and environmental regulation system could not protect the resources from the impact of unplanned land development and sprawl often resulting from the "uncoordinated land use decisions of 88 municipalities, seven counties, and a myriad of private landowners," so it established a regional approach to planning land use in the Highlands. Ibid. The legislation created the Highlands Council with responsibility for land use planning in the region, N.J.S.A. 13:20-4, including the obligation to adopt, in consultation with other state agencies such as the DEP, a regional master plan ("RMP"). N.J.S.A. 13:20-2, -6i, -8. The Highlands Council adopted a final RMP by Resolution 2008-27 on July l7, 2008, which became effective on September 8, 2008. 40 N.J.R. 5852 (Oct. 6, 2008).*fn1

Additionally, on July l7, 2008, the Fair Housing Act ("FHA") was amended to authorize regional planning entities, such as the Highlands Council, to identify and coordinate opportunities for affordable housing on a regional basis. N.J.S.A. 52:27D-329.9. On September 5, 2008, Governor Corzine signed Executive Order No. ll4 ("EO114") directing the Highlands Council, COAH and the DEP to coordinate their efforts with respect to affordable housing in the Highlands, and, in part, requiring COAH and the Highlands Council to enter into a Memorandum of Understanding ("MOU") to coordinate procedures and maximize affordable housing opportunity in the Highlands while preserving its critical environmental resources. On October 30, 2008, the two agencies entered into an MOU to effectuate EOll4. http://www.state.nj.us/dca/affiliates/coah/regulations/highlands /mou.pdf.

About ten years earlier, on or about October 17, 1998, Independence received substantive certification from COAH for its first round housing obligations for the 1987 to 1993 period. On or about February 20, 2004, Independence petitioned COAH for substantive certification of its second round compliance plan, covering housing obligations from l993 to l999, which included, in part, Heritage's proposed inclusionary development. However, following the enactment of the Highlands Act, COAH staff questioned the feasibility of Heritage's inclusionary development and two other inclusionary sites in the Preservation Area.*fn2 On December 16, 2005, Independence submitted its third round compliance plan, seeking vacant land and other adjustments to its fair share obligation, claiming that by virtue of the Highlands Act, it has "no lands available with any realistic development opportunity for inclusionary housing zoning." See N.J.A.C. 5:97-5.2.

The Highlands Act also delegated responsibility to the DEP to establish a Highlands permitting review program for all major development in the Preservation Area, N.J.S.A. 13:20-31 to -35, including the authority to provide for a waiver of any of the Highland Act's provisions, on a case-by-case basis, where adherence would: (1) imperil public health and safety; (2) interfere with redevelopment in previously developed areas; or (3) cause a "taking of property without just compensation." N.J.S.A. 13:20-33b(1)-(3). The DEP adopted the implementing regulation, N.J.A.C. 7:38-6.8.*fn3

II.

Heritage owns approximately 113 acres of undeveloped, primarily forested land in Independence and Hackettstown in Warren County, located within the Preservation Area of the Highlands region.*fn4 Heritage proposed to develop 46.48 acres of its property, largely in Independence (Block 4, Lots 28-29), with a small portion in Hackettstown (Block l36, Lot 26). The proposed development consists of 15 buildings, comprised of l04 age-restricted dwelling units and 14 units of affordable housing. The lands adjacent to Heritage's property in Independence along Overlook Drive are developed with residential uses and the lands in Hackettstown immediately adjacent to Heritage's property along Hamilton and Countryside Drives are fully developed with residential, commercial and retail uses.

On September 18, 2006, the Independence Planning Board ("Board") declared complete the application for major site plan approval submitted by Heritage's predecessor-in-title, K-Land Corp., to construct the ll8-unit residential project. On May 21, 2007, the Board granted K-Land's application, including variance and waiver requests, subject to the condition, in part, that it obtain "approval, exemption or other form of acceptance" from either or both the Highlands Council and DEP and obtain public water and sewer service from the Hackettstown Municipal Utilities Authority ("HMUA") to adequately serve the proposed development. The Resolution noted the site contains the Bower's Brook, a tributary of the Musconetcong River, which is classified as a Category One waterway,*fn5 as well as freshwater wetlands and steep slopes.

Hackettstown and designated surrounding areas, including Heritage's property, are serviced by the HMUA for public sewer and water. The Highlands Act, however, revoked all sewer and water services to any property within the Preservation Area that, like Heritage's, did not have a waste water collection system installed by August 10, 2004, along with associated treatment works approvals, unless the development was exempt from the permitting requirements of the Highlands Act. N.J.S.A. 13:20-28; N.J.S.A. 58:11A-7.1. The Highlands Act similarly prohibited the extension of water service to new developments in the Preservation Area unless exempt. N.J.S.A. 13:20-28, -32i; N.J.S.A. 58:12A-4.1. Because Heritage did not have a water or sewer collection system installed on its property by the designated date and was not exempt from the permitting requirements, the HMUA excluded Heritage's property from its water and sewer service.

It is undisputed that Heritage's site is not exempt from the permitting requirements of the Highlands Act. N.J.S.A. 13:20-28.*fn6 At the time of the litigation, Heritage had not applied to DEP for a Highlands permit, N.J.S.A. 13:20-30, or a permit waiver, N.J.S.A. 13:20-33b; N.J.A.C. 7:38-6.8.

III.

In July 2007, Heritage filed a nine-count complaint in lieu of prerogative writs against defendants, and an amended complaint with two additional counts. Pertinent to this appeal, count one alleged the Highlands Act is facially unconstitutional due to the Legislature's failure to plan for the production of any affordable housing in the Highlands prior to the Highlands Act's promulgation; count two asserted an as-applied challenge to the Highlands Act on Mount Laurel*fn7 grounds; counts three and four asserted a facial challenge and as-applied challenge to the Highlands Act, respectively, based on the use of municipal boundaries to delineate Planning and Preservation Areas; count six asserted a facial and as-applied challenge to the Highlands Act based upon alleged discrimination in access to Highlands water supplies; count seven asserted a facial and as-applied challenge alleging lack of a variance to "opt-out" of the Preservation Area; and count nine alleged a taking of property without just compensation.

Defendants filed a motion pursuant to Rule 4:6-2(e) to dismiss the amended complaint for failure to state a claim upon which relief may be granted. The trial court converted the motion to a motion for summary judgment. Heritage filed opposition and cross-moved for partial summary judgment on counts one, seven, eight, ten and eleven. Defendants filed opposition.

The court heard oral argument on November 18, 2008. In a comprehensive oral opinion on November 21, 2008, memorialized in an order of April l5, 2009, Judge Allison Accurso rejected Heritage's challenges to the Highlands Act, denied its motion for partial summary judgment and entered summary judgment in favor of defendants, ...


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