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Heritage at Independence, LLC v. State

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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, dismissing the complaint. Specifically, in connection with count one, the judge noted that:

None of the prior legislative enactments that regulate land use within a region, under a regional authority such as the Meadowlands Act in l969,*fn8 CAFRA in l973,*fn9 and the Pinelands Act in 1979,*fn10 do what Heritage contends is required here: that is, be preceded by the preparation of the equivalent of a housing element and include a directive in the Act itself that any administering agency undertake such analysis prior to implementing the Act, and none has ever been considered unconstitutional under Mount Laurel.

The judge dismissed as unripe Heritage's as-applied Mount Laurel challenge (count two), its as-applied equal protection challenge that the Highlands Act discriminates arbitrarily against housing in favor of agriculture (count six), and its taking claim (count nine) because Heritage had not applied for a Highlands permit or permit waiver, COAH had not re-evaluated Independence's fair share of affordable housing in light of the RMP, and Independence had not devised a compliant affordable housing plan. The judge also rejected the facial and as-applied challenges of counts three and four, concluding that "the use of municipal boundaries to delineate the Highlands Region and its preservation and planning areas cannot be said to promote the State's interest in protecting an environmentally vital area of the [s]tate by impermissible or irrational means" and, citing OFP, LLC v. State, 395 N.J. Super. 571, 596 (App. Div. 2007), aff'd o.b., 197 N.J. 418 (2008), that the inclusion of Heritage's property within the Preservation Area was not arbitrary because "zoning lines need not be drawn with mathematical precision to scientific standards." Judge Accurso also held that the permit waiver provision, N.J.S.A. 13:20-33b, "would appear to function as a variance process sufficient to satisfy the due process challenge" of count seven. This appeal ensued.

IV.

On appeal, Heritage presents the following arguments:

I. THE TRIAL COURT'S DECISION TO DISMISS COUNT 3 AND COUNT 4 OF PLAINTIFF'S AMENDED COMPLAINT WAS IN ERR[OR] AS FACTUAL QUESTIONS EXIST AS TO WHETHER THE DEMARCATION OF THE HIGHLANDS REGION WAS ARBITRARY AND CAPRICIOUS.

II. IN GRANTING SUMMARY JUDGMENT AS TO COUNT SEVEN OF PLAINTIFF'S AMENDED COMPLAINT, THE TRIAL COURT ERRED AS THE ACT'S FAILURE TO INCORPORATE OR PROVIDE FOR ANY REASONABLE VARIANCE/AND WAIVER PROCEDURE VIOLATES THE CONSTITUTIONAL PROTECTIONS THAT SHOULD BE AFFORDED IN ANY ZONING SCHEME.

III. THE TRIAL COURT'S DECISION TO GRANT THE STATE'S MOTION FOR SUMMARY JUDGMENT ON COUNT ONE WAS IN ERR[OR] AND SHOULD BE REVERSED BY THIS COURT BECAUSE THE ACT IS FACIALLY INVALID UNDER THE MOUNT LAUREL DOCTRINE.

A. The Mount Laurel Doctrine Applies Directly to The State Through Its Promulgation of the Act

IV. THE TRIAL COURT ERRED IN DISMISSING COUNT TWO OF THE AMENDED COMPLAINT BECAUSE REQUIRING PLAINTIFF TO ESTABLISH ITS ENTITLEMENT TO CONSTRUCT AFFORDABLE HOUSING IS THE ANTITHESIS OF THE MOUNT LAUREL DOCTRINE AND SHOULD NOT BE ACCEPTED BY THIS COURT.

A. Even Assuming the Act's Framework of Affordable Housing "By Exception" Were Constitutionally Permissible, the Act's Failure to Allow for any Variance Procedure for Inherently Beneficial Uses Such as Affordable Housing is Unconstitutional.

V. THE TRIAL COURT IMPROPERLY DISMISSED COUNTS SIX AND NINE OF PLAINTIFF'S COMPLAINT BECAUSE THE ACT'S DISPARATE TREATMENT OF (i) WATER USERS INSIDE AND OUTSIDE THE HIGHLANDS AND (ii) PERMITTED USERS WITHIN THE HIGHLANDS IS VIOLAT[IVE] OF EQUAL PROTECTION GUARANTEES AND IS OTHERWISE ARBITRARY AND CAPRICIOUS.

When reviewing a grant of summary judgment, we employ the same legal standards used by the motion judge. Spring Creek Holding Co. v. Shinnihon U.S.A. Co., 399 N.J. Super. 158, 180 (App. Div.), certif. denied, 196 N.J. 85 (2008); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we determine whether the moving party has demonstrated that there were no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atlantic Mut. Ins. Co. v. Hillside Bottling Co., Inc., 387 N.J. Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). In so doing, we view the evidence in the light most favorable to the non-moving party and analyze whether the moving party was entitled to judgment as a matter of law. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523, 529 (1995). We accord no deference to the motion judge's conclusions on issues of law, Manalapan Realty, L.P., v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995), which we review de novo. Spring Creek, supra, 399 N.J. Super. at 180; Dep't of Envtl. Prot. v. Kafil, 395 N.J. Super. 597, 601 (App. Div. 2007).

We initially note it is well-settled that a "presumption of validity attaches to every statute." In re C.V.S. Pharmacy Wayne, 116 N.J. 490, 497 (1989), cert. denied, 493 U.S. 1045, 110 S.Ct. 841, 107 L.Ed. 2d 836 (1990). As a general matter, courts will presume the Legislature acted with a constitutional law in mind and intended the statute to function in a constitutional manner, and the heavy burden to prove otherwise rests on the challenger. State v. One 1990 Honda Accord, 154 N.J. 373, 377 (1998); State v. Profaci, 56 N.J. 346, 349 (1970). Moreover, we are obligated to construe a challenged statute to avoid constitutional defects if it is "reasonably susceptible of such construction." N.J. Bd. of Higher Educ. v. Bd. of Dirs. of Shelton College, 90 N.J. 470, 478 (l982) (citation and quotation marks omitted).

Based on our independent review of the record and applicable law, we do not find any of Heritage's challenges to be persuasive. We are satisfied Heritage failed to rebut the presumption of validity attaching to the Highlands Act. We affirm the summary judgment dismissing Heritage's complaint substantially for the reasons articulated by Judge Accurso in her cogent and articulate bench opinion, which followed a lengthy colloquy with counsel during oral argument. We add the following comments.

We will address the counts in order, beginning with Point III pertaining to count one, which alleges the Highlands Act was facially unconstitutional by virtue of its omission of provisions that affirmatively address affordable housing. More specifically, Heritage's position is that the Legislature was constitutionally required to plan for affordable housing before it adopted the Highlands Act, in the same manner that the FHA obligates local governments to adopt housing elements as part of their master plans, i.e., adopt an FHA-type housing element and fair share plan prior to imposing regional planning on Highlands development and tasking the Highlands Council with developing an RMP. According to Heritage, the Highlands Act is unconstitutional because it "strips" the Highlands municipalities of the power to address affordable housing, while imposing environmental restrictions that will obstruct the provision of affordable housing in the Preservation Area, thereby zoning first and planning second.

The judge rejected Heritage's arguments, finding it unsupported by case law and similar prior legislative enactments regulating regional land use, such as the Meadowlands Act, the Pinelands Act and CAFRA. She stated:

The Highlands Act is not the first time the Legislature has created a State agency to which it has delegated land use planning in a region of the State.

The Highlands Act is the fourth such statute in the last 40 years, none of which were preceded by the preparation of the equivalent of a housing element or included a directive in the Act itself that any administering agency undertake such analysis prior to implementing it.

[The Legislature's actions are] fundamentally unlike a township committee charged with adopting a zoning ordinance. Unlike a township committee, the Legislature is free to entrust performance of a particular public purpose or project to an agency it creates . . . .

The Legislature can identify a problem, make findings, set [a] direction for its solution and delegate the details to an agency it creates. . . .

The judge further noted the Legislature had shared "[t]he expertise and planning [] necessary for the protection and future development of the Highlands" among the Highlands Council, the DEP and COAH.*fn11

The Mount Laurel cases expressly recognize the importance of balancing the competing interests of preservation and development. See Mount Laurel I, supra, 67 N.J. at 186 (noting the Court's decision should not be read to "say that land use regulations should not take due account of ecological or environmental factors or problems"); Mount Laurel II, supra, 92 N.J. at 219 (reassuring that Mount Laurel is not designed to "sweep away all land use restrictions" and "[m]unicipalities consisting largely of conservation, agricultural, or environmentally sensitive areas will not be required to grow because of Mount Laurel.").

We are satisfied the Highlands Act facially recognizes the Mount Laurel principles and provides an opportunity for the affordable housing needs of a municipality to be met while preserving environmentally sensitive areas. The Highlands Act does not, as Heritage suggests, represent a legislative decision to sacrifice one interest at the expense of another. Rather, it is evident the Legislature intended the Highlands Act to work in tandem with the existing regulatory scheme in the Highlands, including the FHA. See Brewer v. Porch, 53 N.J. 167, 173, 174 (1969) (holding the Legislature is presumed to be conversant with its own enactments and "implied repealers are not favored in the law").

The Legislature appropriately delegated the responsibility to address the concerns identified in the Highlands Act pertaining to both housing and conservation to a variety of agencies in accordance with their respective areas of expertise. See N.J. Sports & Exposition Auth. v. McCrane, 61 N.J. 1, 14 (1972) (holding the "State does not have to serve or perform personally all its governmental functions or public purposes [as] [p]erformance of a particular public purpose or project may be entrusted under proper guidelines to an independent autonomous authority or agency"). For example, N.J.S.A. 13:20-23 directs COAH to consider the RMP in allocating fair share obligations among the municipalities in the Highlands region. The Highlands Act also exempts from Highlands permit requirements major Highlands inclusionary developments located in a Metropolitan or Suburban Planning Area as designated by the State Planning Commission, which developments were resolved by litigation as of March 29, 2004. N.J.S.A. 13:20-28a(17).

Contrary to Heritage's assertions, the Highlands Act does not establish a land use system in which "housing opportunities are foreclosed by virtue of overzealous environmental considerations." The Highlands Act and its regulations expressly provide the remedy of applying for a hardship waiver application from the DEP on a case-by-case basis. The remedy is available to any major Highlands development in the Preservation Area, such as the inclusionary development proposed by Heritage. See N.J.S.A. 13:20-33; N.J.A.C. 7:38-6.8. Heritage, however, chose not to avail itself of that remedy. Furthermore, the Legislature's 2008 amendment of the FHA, N.J.S.A. 52:27D-329.9, and Governor Corzine's coordinated action plan for addressing land use in the Highlands, evidence an intent to balance and further those conflicting interests within an area of undisputed environmental importance.

We turn now to Point IV, pertaining to count two, Heritage's as-applied challenge to the Highlands Act on Mount Laurel grounds. Heritage urges that its proposed development was included within Independence's compliance plan and provides necessary housing, the site physically has access to public water and sewer and is suitable for an inclusionary development under all COAH criteria, and contends the only reason it cannot be developed as planned is its inclusion in the Highlands Preservation Area.

As conceded by Heritage, the judge accepted these facts for purpose of the motion. However, the judge found the claim was not ripe for review because Heritage had not created an administrative record, specifically: 1) Heritage had not applied for a DEP permit pursuant to the Highlands Act's waiver procedure; 2) COAH had not yet recalculated Independence's fair share in light of the RMP; 3) the Highlands Council had not yet devised a regional plan in accordance with the 2008 FHA amendments; and 4) Independence had not developed a housing plan. Judge Accurso concluded:

Were DEP to grant a permit or permit waiver, Heritage's challenge here would be moot. COAH's revision of Independence's Fair Share number in light of the RMP [or] a [municipal] plan that increases density or provides for redevelopment elsewhere in the township or locates affordable housing elsewhere in the region with COAH approval, could likewise determine the outcome of any challenge on Mount Laurel grounds. These issues are properly presented [to the] DEP, Highlands Council and COAH in the first instance.

We agree. There is no basis to conclude that affordable housing cannot be constructed on Heritage's property as the property owner has not yet applied for a Highlands permit or permit waiver. See Abbott v. Burke, 100 N.J. 269, 299 (1985) (holding that even when a case implicates constitutional issues, a court may require a party to exhaust its administrative remedies, when doing so "will serve to develop a fully informed factual record and maximize the soundness of determinations through the agency's expertise"); OFP, supra, 395 N.J. Super. at 585 (concluding the trial court correctly declined to address the property owner's taking claim because it "failed to avail itself of the administrative remedy of a hardship waiver application under N.J.A.C. 7:38-6.8"); K. Hovnanian Cos. of N. Cent. Jersey, Inc. v. Dep't of Envtl. Prot., 379 N.J. Super. 1, 9 (App. Div.) (In affirming the dismissal of the developer's complaint challenging the constitutionality of the New Jersey Water Pollution Control Act for failure to exhaust administrative remedies, the court "reject[ed] the contention that the administrative remedy may be avoided simply by adding Mount Laurel arguments or constitutional contentions to the complaint."), certif. denied, l85 N.J. 390 (2005).

Heritage has a variety of forums in which to vindicate its interests because there are a number of agencies having jurisdiction over the region and Heritage's proposed project. Most obviously, Heritage can seek a permit waiver from DEP pursuant to N.J.A.C. 7:38-6.8, which, if granted, resolves the matter and, if denied, provides the court with a record for review. Heritage cannot justify its failure to submit an application for a hardship waiver "on the ground that the requirements of this regulation are unreasonably onerous, [since] it did not file an appeal challenging the validity of this administrative regulation, as it could have done." OFP, supra, 395 N.J. Super. at 586. Heritage can also employ the objection process set forth in COAH's regulations, N.J.A.C. 5:96-4.1, if it determines Independence's housing element and fair share plan fail to maximize available lands.

In Point I, addressing counts three and four, Heritage asserts facial and as-applied challenges to the Highlands Act, arguing: (1) the boundaries set forth in N.J.S.A. 13:20-7 were not based on scientific standards or narrowly drawn to achieve the objectives of the Highlands Act, are arbitrary and capricious on their face and violate the principles of due process and equal protection because they follow municipal boundaries rather than delineating the environmental resources the Highlands Act was intended to protect, and (2) inclusion of its property in the Preservation Area is arbitrary and capricious.

The court dismissed plaintiff's facial attack, reasoning that the mere fact the Legislature did not previously utilize municipal boundaries in related statutes regulating development of land was an insufficient basis to conclude the use of such boundaries is irrational. We agree.

The Highlands Act does not implicate a suspect class or fundamental right. See Gardner v. N.J. Pinelands Comm'n, 125 N.J. 193, 211-12 (l99l). Accordingly, we must uphold the constitutionality of the statute "so long as it bears a rational relation to some legitimate end." Brown v. Twp. of Old Bridge, 319 N.J. Super. 476, 505 (App. Div. l999) (citations and quotation marks omitted). The Highlands Act is susceptible to equal protection infirmity "only if the classification rests on grounds wholly irrelevant to the achievement of the State's objective." Id. at 506 (citations and quotation marks omitted). See also Brown v. City of Newark, 113 N.J. 565, 573 (l989). The Highlands Act withstands a substantive due process challenge as long as it is supported by any conceivable rational basis. Greenberg v. Kimmelman, 99 N.J. 552, 567 (1985).

We are satisfied the Highlands boundaries utilized by the Legislature, which include state and local roads, railroad right-of-ways, streams, reservoirs, wildlife management areas and metes and bounds descriptions, as well as town boundaries, are a rational basis for environmental planning of the type envisioned by the Highlands Act. N.J.S.A. 13:20-7. We further note that the Legislature consulted natural resource data from a number of external sources to define the regulated area, and specifically amended the final bill to describe the region, not only in terms of municipal boundaries, but other "on-the-ground" reference points. Senate Env't Comm., Statement to S. 1, supra, at 2.

Judge Accurso also properly rejected Heritage's as-applied challenge, relying on OFP. In that case the developer disputed the propriety of the Preservation Area boundaries and claimed the limitations on its property would not further the Highlands Act's stated purpose of preserving clean water. OFP, supra, 395 N.J. Super. at 595. Judge Skillman responded:

The stated purposes of the Act are not limited to preserving clean drinking water. The Act's purposes also include protection of the "natural resources of the New Jersey Highlands against the environmental impacts of sprawl development[,] . . . [discouragement of] piecemeal, scattered and inappropriate development, in order to accommodate local and regional growth and economic development in an orderly way . . . [and] maintenance of agricultural production and a positive agricultural business climate[.]" Consequently, even if it could be shown that a limitation of development of OFP's property would not serve to preserve clean drinking water, such a limitation still could further the other stated purposes of the Act. Moreover, the Legislature was not required to consider the condition of each individual property within the [P]reservation [A]rea in establishing its boundaries, because such boundaries are not required to "be formulated with mathematical perfection." [Id. at 595-96 (internal citations omitted, alterations in original).]

We applied this same reasoning in County of Warren v. State, 409 N.J. Super. 495, 515 (App. Div. 2009), certif. denied, 201 N.J. 153 (2010), to defeat another complaint that the Highlands Act's establishment of the preservation zone was without scientific support, commenting: "The Legislature drew boundaries relating to the Highlands Act's overall goals for water and natural resource protection in the Highlands area, and any imprecision in creating those boundaries is not for the courts to second-guess." Heritage's arguments on appeal do not establish a basis for departing from this line of cases.

Heritage's reliance on Pheasant Bridge Corp. v. Township of Warren, 169 N.J. 282 (2001), cert. denied, 535 U.S. 1077, 122 S.Ct. 1959, 152 L.Ed. 2d 1020 (2002) is unavailing. In that case, the Court struck down a zoning ordinance because it failed "to accomplish its purposes when applied to plaintiff's property[,]" finding the "means-end relationship [was] illusory." Id. at 294. That case is inapposite. As Judge Accurso observed, there is no dispute that Heritage's site has the environmental features the Highlands Act seeks to protect, such as a C1 waterway and steep slopes. Accordingly, here there is a rational nexus between the Highlands Act's restrictions and its application to Heritage's land.

Heritage's arguments in Point V, pertaining to counts six and nine, are clearly without merit and only require brief discussion. R. 2:11-3(e)(1)(E). In count six of its amended complaint, Heritage alleged the Highlands Act improperly favors agricultural uses over non-agricultural uses and the distinction drawn between the two is unjustifiable when the affordable housing use is inherently beneficial and potentially less harmful to the environment than the favored use. In count nine, Heritage claimed the Highlands Act "effects a taking" for the benefit of the State population that is served by the Highlands water and "disproportionately targets [p]laintiff and others similarly situated to pay for a public benefit."

The court appropriately rejected these arguments based on Heritage's failure to exhaust administrative remedies. As Judge Accurso recognized, Heritage was not entitled to a hearing in the trial court, or review by us, as to whether "some theoretical farm couldn't be more harmful to the environment and the aquifer than [Heritage's] proposed inclusionary development." She was further justified in dismissing the taking count in reliance on OFP, supra, 395 N.J. Super. at 582-85, which expressly held that such a claim could not be entertained by the court in the absence of an application for a hardship waiver under N.J.A.C. 7:38-6.8. There, Judge Skillman stated:

We recognize that the DEP could administer N.J.A.C. 7:38-6.8 in a manner that fails to give property owners such as OFP the hardship relief required "to avoid the taking of property without just compensation." N.J.S.A. 13:20-33(b)(3).

However, we cannot just assume that the DEP will default in this statutory responsibility. Instead, the DEP must be allowed to "arrive[] at a final, definitive position regarding how it will apply" N.J.A.C. 7:38-6.8 to the property owned by OFP and others before the courts can determine whether a regulatory taking has occurred. Williamson [County Reg'l Planning Comm'n v. Hamilton Bank of Johnson City,] 473 U.S. [172,] 191, 105 S.Ct. [3108,] 3119, 87 L.Ed. 2d [126,] 141 [(1985)]. [OFP, supra, 395 N.J. Super. at 590.]

Lastly, we reject Heritage's argument in Point II, pertaining to count seven, that the Highlands Act is facially and as-applied unconstitutional because no variance is available to "address any potential errors in the boundaries of the region" and allow a property owner to "opt-out" of the Preservation Area. As recognized by Judge Accurso, the procedural remedies of N.J.S.A. 13:20-33b and N.J.A.C. 7:38-6.8 "function as a variance process sufficient to survive a due process challenge." Contrary to Heritage's assertion, the hardship waiver provision establishes a sufficient means to prevent undue interference with a property owner's rights. N.J.A.C. 7:36-6.8 contains a litany of factors to be considered by the DEP, on a case-by-case basis, to determine waiver relief. Heritage fails to explain why these provisions could not provide recourse in circumstances where, like here, the property owner contends the environmental restrictions do not further the aims of the Highlands Act. Indeed, as we noted in OFP, supra, 395 N.J. Super. at 596, "if stringent limitations on development [of the subject] property are not required to serve any of the Highland Act's purposes, this would be an appropriate consideration in reviewing an application for a hardship waiver."

Affirmed.


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