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Joseph Kushner Hebrew Academy, Inc. v. Township of Livingston

Superior Court of New Jersey, Appellate Division

August 30, 2013

JOSEPH KUSHNER HEBREW ACADEMY, INC., and TMB PARTNERS, LLC, Plaintiffs,
v.
TOWNSHIP OF LIVINGSTON, LIVINGSTON TOWNSHIP COUNCIL and LIVINGSTON PLANNING BOARD, Defendants. SQUIRETOWN PROPERTIES, LLC, Plaintiff-Respondent,
v.
TOWNSHIP OF LIVINGSTON, LIVINGSTON TOWNSHIP COUNCIL and LIVINGSTON PLANNING BOARD, Defendants-Appellants. HILLSIDE-NORTHFIELD PARTNERS, LLC, Plaintiff-Respondent,
v.
TOWNSHIP OF LIVINGSTON, LIVINGSTON TOWNSHIP COUNCIL and LIVINGSTON PLANNING BOARD, Defendants-Appellants.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 8, 2013

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket Nos. L-9126-07, L-9785-07, and L-7509-08.

Gary T. Hall argued the cause for appellants (McCarter & English, LLP, attorneys; Mr. Hall, of counsel and on the briefs).

Craig M. Gianetti argued the cause for respondent Squiretown Properties, LLC (Giordano, Halleran & Ciesla, P.C., attorneys; Paul H. Schnieder, of counsel; Mr. Gianetti, on the brief).

Robert Axel Kasuba argued the cause for respondent Hillside-Northfield Partners, LLC (Bisgaier Hoff, LLC, attorneys; Mr. Kasuba, on the brief).

Before Judges Alvarez, Waugh and St. John.

PER CURIAM

Defendants Township of Livingston, Livingston Township Council, and Livingston Planning Board appeal from builder's remedies awarded to plaintiffs Squiretown Properties, LLC, (Squiretown) and Hillside-Northfield Partners, LLC (Hillside).[1]On September 1, 2009, the Township adopted a housing element and fair share plan as required by a February 20, 2009 order. Thereafter, defendants moved for reconsideration by the trial court after the Supreme Court accepted certification on In re Adoption of N.J.A.C. 5:96 & 5:97, 416 N.J.Super. 462 (2010), certif. granted, 205 N.J. 317 (2011). The relief was denied. The parties have not submitted the transcript for that hearing.

After three days of trial on Hillside's builder's remedy, on November 4, 2010, Judge Carey issued an oral decision granting plaintiffs relief.

I

We briefly discuss, for context, the history of affordable housing and the builder's remedy. In 1975, the Supreme Court held that our Constitution requires each municipality to "plan and provide, by its land use regulations, the reasonable opportunity for an appropriate variety and choice of housing, including . . . low and moderate cost housing, to meet the needs, desires and resources of all categories of people who may desire to live within its boundaries." S. Burlington Cnty. N.A.A.C.P. v. Twp. of Mount Laurel, 67 N.J. 151, 179 (1975), cert. denied, 423 U.S. 808, 96 S.Ct. 18, 46 L.Ed.2d 28 (Mount Laurel I). If a municipality has been adjudicated to be non-compliant with its obligation, and has not adequately revised its zoning ordinances, a prospective developer may seek a "builder's remedy." S. Burlington Cnty. N.A.A.C.P. v. Twp. of Mount Laurel, 92 N.J. 158, 279-80 (1983) (Mount Laurel II). "'The builder's remedy is a device that rewards a plaintiff seeking to construct lower income housing for success in bringing about ordinance compliance through litigation.'" Mount Olive Complex v. Twp. of Mount Olive, 340 N.J.Super. 511, 525 (App. Div. 2001), remanded on other grounds, 174 N.J. 359 (2002) (quoting Allan-Deane Corp. v. Bedminster Twp., 205 N.J.Super. 87, 138 (Law Div. 1985)).

A developer is entitled to a builder's remedy if it satisfies three prongs: (1) it succeeds in Mount Laurel litigation; (2) it proposes a project with a substantial amount of affordable housing; and (3) the site is suitable, that is, the municipality fails to meet its burden of proving that the site is environmentally constrained or construction of the project is contrary to sound land use planning. Mount Laurel II, supra, 92 N.J. at 279-80; Mount Olive, supra, 340 N.J.Super. at 525. Although the issue of a substantial amount of suitable housing is determined on a case by case basis, the Court characterized allocating twenty percent of a project to affordable housing as a "reasonable minimum." Mount Laurel II, supra, 92 N.J. at 279 n.37.

In 1985, the Legislature enacted the Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to -329.4, which created the Council on Affordable Housing (COAH). L. 1985 c. 222. The legislation authorized COAH with, among other things, adopting criteria and guidelines for "[m]unicipal determination of its present and prospective fair share of housing need in a given region[.]" N.J.S.A. 52:27D-307(c)(1). COAH adopted "first round" and "second round" rules establishing municipalities' affordable housing obligations for six-year periods, from 1987 to 1993, and 1993 to 1999. N.J.A.C. 5:92-1.1 to 18.20, and Appendix A to F; N.J.A.C. 5:93-1.1 to 15.1, and Appendix A to H. As we further discuss below, we have twice invalidated parts of COAH's third-round rules, for the period from 1999 to 2014. See In re Adoption of N.J.A.C. 5:96 and 5:97, supra, 416 N.J.Super. 462. It is against this backdrop that we consider this appeal.

II

Under the second-round rules, COAH determined that the Township had a first-round and second-round (1987 to 1999) fair share housing obligation of 375 units, called a "pre-credited need" or new construction housing obligation. The Township failed to prepare and submit to COAH an affordable housing plan to meet this obligation prior to the institution of Mount Laurel litigation by two developers.

On February 7, 2000, Judge Jack B. Kirsten signed a final judgment in that litigation, Livingston Builders, Inc. v. Township of Livingston, Nos. L-7641-94 and L-2148-96, finding the Township to be in compliance with its prior affordable housing obligation. The judge approved the affordable housing compliance plan that had been adopted by the Township Planning Board on February 4, 1997, and granted the Township a six-year period of repose and protection from challenges to its zoning and land development ordinances premised on claims that the ordinances do not adequately satisfy the Township's obligation to provide a realistic opportunity for low- and moderate-income housing.

As part of the judgment of repose, the judge granted the Township a "vacant land adjustment" or unmet need of 182 units resulting in a realistic development potential of 193 units. The resulting figure of 193 units represented the adjusted affordable housing obligation based on the lack of sufficient vacant developable land in the Township.

The vacant land inventory in the Township's second-round plan included lots 35 and 37 in block 5900, for a combined acreage of 9.8 acres. These two lots largely correspond to the current Squiretown property and were assigned a combined realistic development potential of eleven affordable units.

The Township fully implemented its obligation for 193 units except for twenty-two units that were to be addressed by two regional contribution agreements (RCA) that were fully funded.[2]In 2008, the Legislature cut off any further RCAs.[3] L. 2008, c. 46 § 4.

In December 2004, COAH adopted new regulations for its third round, covering a cumulative period from 1999 through 2014. 36 N.J.R. 5748(a) (Dec. 20, 2004) (substantive rules); 36 N.J.R. 5895(a) (Dec. 20, 2004) (procedural rules). Under these rules, a municipality's fair share affordable housing obligation had three components: a rehabilitation obligation; a prior-round (1987-1999) obligation; and a growth share obligation (2000 to 2014). N.J.A.C. 5:94-2.1; N.J.A.C. 5:97-2.2.

COAH recalculated municipal new construction obligations for 1987 to 1999, called the prior-rounds obligation, and determined in 2004 that the Township's prior-rounds obligation was 259 units. Thus, the Township's unmet need was sixty-six units (259 units minus the realistic development potential of 193 units).

Prior to June 21, 2011, when Judge Carey signed the final judgment adopting the Township's Housing Element and Fair Share Plan, defendants had not submitted a plan to COAH or a court that covered the third-round housing cycle as set forth in N.J.A.C. 5:94.

On January 25, 2007, we invalidated portions of COAH's third-round rules, including the growth share methodology, and required COAH to adopt new regulations. In re Adoption of N.J.A.C. 5:94 & 5:95, 390 N.J.Super. 1, 54-56, 88 (App. Div.), certif. denied, 192 N.J. 71-72 (2007). We also stated that only certain builder's remedy suits were stayed:

We also stay the filing of any builder's remedy actions for any municipality whose application for substantive certification is affected by this opinion. A stay furthers the policy of the FHA [Fair Housing Act, N.J.S.A. 52:27D-301 to -329.19] to resolve affordable housing disputes through COAH rather than in the courts. Municipalities that have acted in good faith in devising fair share plans to comply with the existing third round rules should not be subjected to an exclusionary zoning law suit.

[Id. at 88.]

Defendants admit that they received correspondence from COAH, dated March 28, 2007, which stated that COAH was still accepting petitions for substantive certification and was available to work with municipalities on individual projects or plans.

In January 2008, COAH proposed revised third-round regulations, which were adopted on May 6, 2008. 40 N.J.R. 2690(a) (June 2, 2008); 40 N.J.R. 3161(a) (June 2, 2008). Thereafter, on October 20, 2008, COAH adopted substantial amendments to the revised third-round rules, and the rules became N.J.A.C. 5:96-1.1 to -20.4 and N.J.A.C. 5:97-1.1 to -10.5 and Appendices A through F. See In re Adoption of N.J.A.C. 5:96 & 5:97, supra, 416 N.J.Super. at 471-77 (setting forth history of third-round rules).

Prior round obligations were readjusted in N.J.A.C. 5:97 Appendix C. COAH modified the growth share methodology in N.J.A.C. 5:97-2.2 with COAH projecting growth rather than municipalities. N.J.A.C. 5:97 Appendix F. COAH calculated the Township's prior-round share at 375 units, N.J.A.C. 5:97 Appendix C, and its growth share obligation at 308 affordable units. Formerly at N.J.A.C. 5:97 Appendix F(2). Squiretown's planner calculated that when combined with its prior-round obligation, the Township had a total new construction affordable housing obligation under the rules of 683 units for the third round.

In In re Adoption of N.J.A.C. 5:96 & 5:97, supra, 416 N.J.Super. at 480, 483, portions of the revised third-round rules were struck down, including the revised growth share methodology for the same reason we had invalidated the original growth share methodology. We directed COAH "to adopt third round rules that incorporate a methodology similar to the methodology set forth in the first and second round rules, which were approved by the courts in most respects." Id. at 484. The New Jersey Supreme Court granted certification in March 2011, but has not yet issued a decision. 205 N.J. 317 (2011).

III

Squiretown's site consists of a largely undeveloped mostly wooded lot designated as block 5900, lots 35, 36, 37, 42, and 44.01. Within the site, 12.37 acres are developable. It is currently zoned P-B1 Professional Office, permitting a maximum building height of forty feet and maximum impervious coverage of seventy percent, and R-2 Residential, permitting a minimum lot size of 25, 000 square feet for a gross density of 1.74 dwelling units per acre. It is within planning area 1 of the State Development and Redevelopment Plan.

IV

The Hillside site consists of 4.52 acres, block 550, lots 5 (in part), 7, 8, and 9. It is within planning area 1 of the State Development and Redevelopment Plan. The site is located in the R-3 zone, which generally permits single-family residential uses. Since the 1930s the site has been used as a nursery, and as a landscaping business since 1958. Situated on two of the lots are older, dilapidated single-family homes.

V

Squiretown requested a builder's remedy for 250 multi-family apartments with a twenty percent set aside, or fifty units, for affordable housing. David Minno, Squiretown's expert in the field of architecture, testified regarding Squiretown's proposal to construct six buildings, four stories high over parking, with a maximum height of 68.5 feet.

Harold Maltz, Squiretown's expert in traffic engineering, conducted studies in October and November 2002, for a project that was to have twenty-two units, issuing a report dated November 24, 2003. He prepared a traffic study dated July 1, 2009. Maltz did not conduct new counts of traffic because from 2002, when he previously conducted studies for the earlier project, to 2009, there were no major changes in the area that would affect traffic flows. He used traffic projections for low-rise buildings, as he considered this to be a worst-case scenario and the most conservative analysis of projected traffic. The relevant figure in Maltz's analysis was the actual number of trips generated by the project and not the percentage increase. That figure was well within the Residential Site Improvement Standards (RSIS)[4] average daily traffic maximum for a residential access street. Maltz concluded that from a traffic standpoint, the project's impact on traffic would not be contrary to sound land use planning. He conceded, however, that some mitigation should be introduced.

Creigh Rehenkamp, Squiretown's expert in planning and affordable housing, testified that since February 2008, he worked with architects, engineers, and attorneys to develop the plan that Squiretown presented to the court. Rehenkamp testified with regard to the second prong of the builder's remedy test, stating that the project's twenty percent, or fifty units, was substantial. See Mount Laurel II, supra, 92 N.J. at 279; Mount Olive, supra, 340 N.J.Super. at 525. He also testified that under the third prong he considered the site suitable and not contrary to sound planning. Rehenkamp concluded the area was appropriate for either single-family or multi-family residences. The site had ready access to streets, sewer, and water.

Rehenkamp considered the project consistent with the State plan, which places the site in planning area one, and conforming to environmental requirements. The project fulfilled COAH requirements for density and height in planning area one. The building's height over parking was typical for multi-family structures and similar to projects in other municipalities.

John Cicchino, a member of Squiretown, testified regarding efforts to develop inclusionary housing on the site prior to the builder's remedy lawsuit being filed. This included meetings with Township officials in September 2005 and February 2006, which resulted in revisions to Squiretown's plans and changes in density. Although Township officials promised to respond to further discuss the plan, nothing further was heard after Squiretown presented its third revised concept.

Janice Talley, defendants' planning consultant, testified that she did not do a site suitability analysis of the Squiretown site because it was not included in the Township's housing plan. It was specifically excluded because it had been addressed in the second round. The Township was interested in developing the site for a public works facility and not for affordable housing.

Talley submitted a planner's report responding to Squiretown's site suitability analysis. She claimed that the Squiretown proposal was contrary to sound land use planning principles because the size and scale of the buildings was inconsistent with the low-density character of the Township and the height and density of other inclusionary developments in the Township. In Talley's view, the proposal "creates problems in terms of traffic volumes on adjacent roadways."

Talley opined the proposed housing was too close to power lines and required screening. It would significantly increase traffic. Although she agreed the site was suitable for multi-family development, she opined density in the proposal was too great, the buildings too high, and that there was insufficient buffer. Talley's concern with the project was the number of units. She conceded that the original TMB settlement had a gross density of 22.4 units per acre, while this proposal was for less than 12 per acre. The final settlement approved for TMB was 14.6 units gross density per acre.

Furthermore, Squiretown's proposal was out of character for the Township because of building heights. Although at least one other development was taller, this project was different in character and was also different from regional shopping centers that are planned to be visible.

Special Master Elizabeth McKenzie issued a report submitted to the court on March 18, 2010, in which she recommended construction of approximately 220 units, of which forty-four would be affordable family rental units. A reduction in the height of the buildings would help the visual impact, and despite the decrease in the total number of units, the site would still make a substantial contribution to the Township's affordable housing stock.

McKenzie concluded the site was suitable for inclusionary, multi-family-residential development. Her conclusion was based on the surrounding land uses and environment, and access to appropriate streets. The existence of wetlands on the site did require transition between areas, but the builder's remedy did not propose to build in that area except for a crossing to create a driveway to a nearby street.

While Squiretown proposed 250 units in six buildings with four levels for residences and one for parking, McKenzie recommended the reduction in density to reduce the height of three of the buildings to bring the visual impact of those buildings down. She also recommended eliminating one building but making two others a bit longer, which would make the project less intrusive. McKenzie concluded that there was a good plan for recreation on the site.

McKenzie rejected Talley's claim that the Squiretown site's inclusion as part of the Township's realistic development potential calculation for its court-approved second-round housing element and fair share plan precluded the site from being part of a third-round plan. McKenzie concluded that this argument was not relevant in light of COAH's current rules, which require that any unmet need from the prior round be addressed in addition to the calculated realistic development potential. She added:

The grant of a "vacant land adjustment" in the prior round is viewed as having essentially divided a municipality's affordable housing obligation into that which had to be addressed within the scope of the prior round plan (the [reasonable development potential]) and that which could be addressed over time as opportunities presented themselves (the unmet need) though "softer" mechanisms designed to capture unforeseen affordable housing opportunities.
If a plaintiff in a Mount Laurel lawsuit proposes a suitable site for inclusionary residential development and such a development will address part of the unmet need, it cannot now be exempted from consideration merely because the site was not needed to meet the Court-approved [reasonable development potential].

In Judge Carey's oral decision granting Squiretown a builder's remedy, he initially noted that Squiretown fulfilled the first prong of the three-prong test as a successful Mount Laurel litigant. Next, the judge stated that the second prong of the test was not disputed because even Talley agreed that the proposals put forth by Squiretown contained a substantial amount of affordable housing. Addressing the third prong of the test, the judge accepted the special master's conclusions that the project was clearly consistent with sound land use planning.

The judge also found Minno, Maltz, and Rehenkamp extremely qualified, and he accepted their testimony. He granted the builder's remedy for 220 units, but granted the Township the opportunity in subsequent hearings to eliminate one building and incorporate those units into two others. The judge also accepted the special master's interpretation that there was no impediment to the plan based on part of the property having been counted in the second round.

VI

Minno, who also served as Hillside's architectural expert, testified about Hillside's development proposals, the surrounding area, and the presentation of plans to the Township. Hillside's plan involved construction of four three-story buildings containing eighty multi-family-dwelling units, sixteen of which would be affordable to lower-income households, and a fifth building housing a ...


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