August 1, 2012
CITIZENS FOR STRATHMERE & WHALE BEACH, PLAINTIFF-APPELLANT,
TOWNSHIP COMMITTEE OF THE TOWNSHIP OF UPPER, THE TOWNSHIP OF UPPER AND THE UPPER TOWNSHIP PLANNING BOARD, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Cape May County, Docket No. L-0432-09.*fn1
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 21, 2012
Before Judges Cuff, Lihotz and St. John.
Plaintiff, Citizens For Strathmere & Whale Beach appeals from an October 25, 2010 trial court order granting the motion filed by defendants the Township of Upper (the Township), the Township Committee of the Township of Upper (the Committee), and the Upper Township Planning Board (Planning Board) for summary judgment, and dismissing plaintiff's complaint for deannexation with prejudice. After reviewing the record in light of the arguments advanced on appeal, we determine the trial court's conclusions were correct and should be affirmed.
Plaintiff is a not-for-profit community organization comprised of residents and property owners of Strathmere and Whale Beach. The geographic area that is the subject of the litigation is located in the Township. The sections of the Township referred to as Strathmere and Whale Beach (collectively, Strathmere) are located on a portion of Ludlam Island, a coastal barrier island in Cape May County. The Township is on the mainland and not contiguous to Strathmere.
Plaintiff sought to deannex Strathmere from the Township in order to annex it to Sea Isle City, its contiguous neighboring municipality occupying the remainder of Ludlum Island.
In 2007, plaintiff petitioned the Committee for deannexation pursuant to N.J.S.A. 40A:7-12 (the statute).*fn2 The Committee held a special meeting to consider plaintiff's petition. At the conclusion of the meeting, the Committee, without referring the matter to the Planning Board as required upon acceptance of a properly prepared written petition, adopted a resolution denying plaintiff's request to initiate the deannexation process due to its failure to meet the statute's requirements, On October 2, 2007, plaintiff filed its complaint, requesting injunctive relief to require that the Committee submit the petition to the Planning Board. By order dated October 18, 2007, the motion judge denied plaintiff's request for injunctive relief; dismissed the complaint with prejudice; and affirmed the Committee's decision rejecting plaintiff's petition.
On November 27, 2007, plaintiff submitted an amended petition for deannexation, which was accepted by the Committee.
While the statute requires a minimum of 60% of the registered voters in Strathmere sign the petition, plaintiff's petition was signed by nearly 90% of Strathmere's voters. Pursuant to the statute, the Committee referred the petition to the Planning Board to "report to the governing body on the impact of the annexation upon the municipality."
The Planning Board conducted eighteen public meetings between February 2008 and April 2009. The hearing testimony centered on Strathmere's residents' complaints about the lack of adequate municipal services provided by the Township, compared to the perceived superior services provided by Sea Isle City to its citizens.
The Township's experts testified regarding the fiscal effect of Strathmere's deannexation upon the municipality. The Township's auditor, Leon Costello explained that, because of energy funds received from hosting an electric generating plant, the Township was the only municipality in Cape May County that did not have a tax used to fund the municipal operations, known as a local purpose tax. Costello opined that deannexation would result in approximately $400,000 in annual savings to the Township from its reduction in services to Strathmere. However, removing Strathmere's ratable property of $393,461,300 would reduce the Township's bonding capacity of approximately $70 - $80 million to approximately $60 million. Costello also explained that the Township had issued only two multi-million dollar bonds in the past, the proceeds of which were used for beach restoration.
Other witnesses testified that children in the Township attended four different schools in two separate municipalities. Students in the lower grades went to Township schools, and high school students went to Ocean City's high school. As of 2007, the Township had 2388 students, and only four were from Strathmere. Nevertheless, the Township received nearly $4 million per year in school tax revenue directly from Strathmere's residents. Deannexation would cause a 20-cent increase in the Township's school tax rate, resulting in the owner of a $350,000 house paying approximately $700 more per year in taxes, yet would reduce the Township's school budget by only $19,515.
On April 16, 2009, the Planning Board issued its report, which found Strathmere's deannexation would result in positive effects to its residents because they would: receive faster police response from Sea Isle City; pay between forty to fifty percent lower property taxes; receive more frequent trash services; and be annexed to a contiguous barrier island community. Deannexation also would result in positive effects to the remaining portion of the Township, saving $400,000 per year after eliminating services to a non contiguous barrier island, $15,505 per year in tuition costs, and $4400 per year in school transportation costs while adding an additional $13,499 in State aid under the then current formula.
The report also itemized negative effects to the Township and its residents by Strathmere's deannexation including: (1) the loss of two commercial liquor licenses now held by local establishments; (2) the loss of free access to and parking at Strathmere's beaches; (3) the lessening of social diversity; (4) the loss of more than $393,461,300 in tax ratable property; (5) the increase in school tax by 19.7%; and (6) the significant reduction of bonding capacity. The Planning Board recommended the Committee deny deannexation because plaintiff had not satisfied its burden of proving that a refusal to consent to deannexation was detrimental to the economic and social well-being of a majority of Strathmere's citizens, and that the deannexation would not cause a significant social or economic injury to the Township's well-being.
In May 2009, the Committee held public hearings on the deannexation petition, and no new evidence was introduced. On May 26, 2009, the Committee denied the deannexation petition, memorializing its decision in Resolution No. 133-2009. The Committee found:
1. The Strathmere and Whale Beach sections of Upper Township make up less than 1% of the total area of Upper Township, but constitute 17.5% of the total tax ratable of Upper Township;
2. Experts for both the Petitioner and the Township testified and agreed that the deannexation of Strathmere and Whale Beach will result in an estimated tax increase to the balance of the residents of the Township of $700.00 to the owner of a home assessed at $350,000.00 and the tax rate for the balance of the Township would increase 20 cents per $100 of assessed value. With the deannexation of the Strathmere and Whale Beach sections of the Township the municipality would lose over $393 million worth of tax ratable property;
3. With the deannexation of Strathmere and Whale Beach the overall bonding capacity of the municipality will be reduced;
4. The deannexation of Strathmere and Whale Beach will not provide a significant reduction in municipal services to offset the loss of ratables. Deannexation will result in substantial injury to the well being of Upper Township resulting primarily from a substantial loss in tax ratable property and an estimated school tax rise of 19.7%. In addition, the significant and substantial reduction in tax ratable property will affect the Township in the future when a local purpose tax becomes necessary;
5. Deannexation will affect the economic and social well being of the majority of the residents of Strathmere and Whale Beach as follows:
a. They will receive a tax reduction of 40% to 50% if annexed to Sea Isle City;
b. They would be annexed to a contiguous barrier island with similar geographic aspects;
c. They will be part of a homogenous community but would suffer a loss of social and economic diversity as well;
d. With respect to police response time, general response times may be less but it is questionable whether this will have any positive effect on an already very low crime rate compared to Sea Isle City and other municipalities;
e. Emergency medical services and fire safety services may suffer given the fact that representatives of Strathmere and Whale Beach previously requested that backup to these services be provided by Ocean City rather than Sea Isle City due to their dissatisfaction with such services from Sea Isle City; and
f. There may be an increase in frequency of trash pickup if annexed to Sea Isle City.
6. If deannexation were to occur Upper Township would suffer a loss of social diversity in that it would lose one of the most prestigious and upscale communities within its borders. Upper Township would also lose its only beachfront community.
7. Upper Township is made up of numerous villages and individual communities, one of which is Strathmere and Whale Beach. Each such community has its own character and history as part of Upper Township. Upper Township would lose one of its most significant villages if deannexation were to occur.
8. Many of the complaints regarding municipal services and police protection were not raised to the Township Committee or the municipality. Rather, these complaints surfaced at the Planning Board deannexation petition hearings. The State Police barracks has no record of complaints regarding response time from residents of Strathmere and Whale Beach.
9. The State Police response times in Strathmore and Whale Beach are acceptable as evidence by the low crime rate compared to other municipalities. The response time is uniform throughout the Township and is acceptable.
10. The testimony at the Planning Board of a number of individuals in favor of deannexation, as well as statements on the Petitioners' web site and press releases of the Petitioners in the record, indicate that the motivation for the petition was taxes. Since "tax shopping" is not a permitted basis for deannexation, Petitioners were advised on their initial web site to focus on a lack of municipal services. Consequently, the testimony and evidence presented at the Planning Board hearings encompassed numerous complaints regarding municipal services, many of which were never raised prior to the filing of the deannexation petition. The complaints are not credible evidence that the denial of the Petition is detrimental to the well being of a majority of the residents of Strathmere and Whale Beach.
The matter in controversy involves the motion judge's dismissal of plaintiff's Complaint in Lieu of Prerogative Writs, as amended. On appeal, plaintiff argues the trial judge erred in relying on injury to the school district, an entity separate and distinct from the Township, as a basis for finding significant injury to the Township sufficient to deny deannexation. Plaintiff further asserts the Township imposed the wrong standards when evaluating plaintiff's petition and the trial court improperly sanctioned the improper process.
In light of the record and legal principles, we affirm substantially for the reasons expressed by Judge Valerie Armstrong in her thorough and well-reasoned written opinion of October 25, 2010. R. 2:11-3(e)(1)(A). We add only the following comments.
An action in lieu of prerogative writs based on a municipality's decision, may be dismissed summarily, "where the pleadings, affidavits and answers to interrogatories fail to raise a genuine issue of material fact." Mitchell v. City of Somers Point, 281 N.J. Super. 492, 500 (App. Div. 1994). Where a "municipality seeks summary judgment dismissing a complaint . . . it has the same burden as any other civil litigant to show that 'there is no genuine issue as to any material fact' and that it 'is entitled to . . . judgment . . . as a matter of law.'" Hirth v. City of Hoboken, 337 N.J. Super. 149, 166 (App. Div. 2001) (quoting R. 4:46-2(c)). See also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995).
The application of N.J.S.A. 40A:7-12 and N.J.S.A. 40A:7-12.1 are questions of law. Avalon Manor Improvement Ass'n v. Twp. of Middle, 370 N.J. Super. 73, 101 (App. Div.), certif. denied, 182 N.J. 143 (2004). N.J.S.A. 40A:7-12 governs the procedure for annexation or de-annexation. The statute provides that a petition for annexation must be signed by 60% of the legal voters on the land, or 60% of the owners of the land, if the land is vacant, and that a resolution must be adopted by two-thirds of the governing body of the municipality where the land is located. Ibid.
On judicial review of a municipality's refusal to grant a deannexation petition, the petitioner ha[s] the burden of establishing that the refusal to consent to the petition was arbitrary or unreasonable, . . . refusal to consent to the annexation is detrimental to the economic and social well-being of a majority of the residents of the affected land, and . . . the annexation will not cause a significant injury to the well-being of the municipality in which the land is located.
In analyzing the standards of judicial review, we stated in D'Anastasio Corp. v. Township Of Pilesgrove, 387 N.J. Super. 241, 246 (App. Div. 2006):
The first element is simply an expression of the standard of arbitrariness and unreasonableness. The second element requires that the petitioner demonstrate deannexation will be beneficial to a majority of the residents of the land being deannexed. The third element requires that the petitioner show deannexation will not cause a significant injury to the well-being of the deannexing municipality. [(Citations and quotation marks omitted).]
Prior to the Legislature's enactment of N.J.S.A. 40A:7-12.1, on a challenge to a denial of a petition of deannexation, "the burden was on the municipality to prove the unreasonableness of the requested" petition. Avalon Manor, supra, 370 N.J. Super. at 90. As Judge Gilroy noted in D'Anastasio, supra, 387 N.J. Super. at 246, "The enactment of N.J.S.A. 40A:7-12.1 manifests the Legislature's preference for preserving historical boundaries by shifting the burden of persuasion to the petitioner to establish the 'unreasonableness' of the municipality's action."
Plaintiff contends the motion judge erred by sanctioning the Committee's decision to rely on the reduction in tax revenue for the school district, as a basis for finding significant injury to the Township sufficient to deny deannexation. We disagree.
A closer examination of Avalon Manor and D'Anastasio, in which we affirmed the trial courts' decisions upholding the denial of deannexation, is helpful in assessing economic impact on the school district. In Avalon Manor, the deannexing municipality relied upon very significant economic consequences to the schools and township, as well as the resultant increases in taxes to the remaining residents. Supra, 370 N.J. Super. at 86. In D'Anastasio, the expert's report discussed "the need for ratables to defer school costs. If the subject parcel were developed, the ratables loss would be $4,000,000 out of $240,000,000, or 1.7% under current zoning and $12,000,000 out of $240,000,000, or 5% if rezoned." D'Anastasio Corp. v. Twp. of Pilesgrove, 387 N.J. Super. 247, 259-60 (Law Div. 2005), aff'd, 387 N.J. Super. 241.
The issue of the school district's negative economic impact was not directly asserted as error in either case, as it is here. We agree with Judge Armstrong that the Committee applied the proper legislative standard when it determined that the deannexation would cause significant injury to the well-being of the municipality in which the land is located as a result of the loss of revenues to the school district, and the concomitant increase in property taxes for the remaining taxpayers.
Plaintiff's contention that the word "municipality" in N.J.S.A. 40A:7-12.1 means the municipal government and not any of the municipality's constituent parts, such as a school district, a municipal sewage authority, municipal fire district, a municipal water authority, or other municipal entities is too constrained a reading of the word and is not consistent with the legislative intent or jurisprudence interpreting the statute.
We are in accord with Judge Armstong's determination that the Township's denial of plaintiff's petition for deannexation was neither arbitrary nor unreasonable, and was a reasonable exercise of the Committee's discretion. As such, it does not provide a valid reason for altering the Township's otherwise historical municipal boundaries.