IN RE MARLBORO TOWNSHIP

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

IN RE MARLBORO TOWNSHIP, MONMOUTH

COUNTY, MOTION SEEKING ACCELERATED

DENIAL OF MARLBORO'S THIRD ROUND

HOUSING ELEMENT AND FAIR SHARE PLAN

Argued March 11,2015 Decided August7, 2015

Before Judges Alvarez, Waugh, and Maven.

On appeal from the New Jersey Council on Affordable Housing, Docket No. 10-2226.

Louis N. Rainone argued the cause for appellant/cross-respondent Township of Marlboro (DeCotiis, FitzPatrick & Cole, LLP, and Goldzweig, Green, Eiger & Biedzynski, L.L.C., attorneys; Mr. Rainone, of counsel; Edward J. Boccher, Gregory J. Bevelock, and Kenneth W. Biedzynski, of counsel and on the briefs).

Thomas Daniel McCloskey argued the cause for respondents/cross-appellantsAshbel Associates, LLC, Pallu Associates, LLC, Gihon Associates, LLC, Great River Corp., Elon Associates, LLC, and Windridge Manor, LLC [the "Weitz Entities"] (Fox Rothschild LLP, attorneys; Mr. McCloskey, Henry L. Kent-Smith, and Irina B. Elgart, of counsel and on the briefs).

Ronald L. Shimanowitz argued the cause for respondent/cross-appellantAmerican Properties at Marlboro (Hutt & Shimanowitz, PC, attorneys; Mr. Shimanowitz of counsel and on the brief; Jonathan G. Burnham, on the brief).

George N. Cohen, Deputy Attorney General, argued the cause for respondent New Jersey Council on Affordable Housing (John J. Hoffman, Acting Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel;, Mr. Cohen, on the briefs).

Laura Smith-Denker argued the cause for Fair Share Housing Center, respondent pro se (Adam M. Gordon and Ms. Smith-Denker, on the brief).

BisgaierHoff, LLC, attorneys for respondent/ cross-appellant Fieldcrest Holdings, LLC join in the briefs of respondents Ashbel Associates, LLC, Pallu Associates, LLC, Gihon Associates, Great River Corp., Elon Associates, LLC, and American Properties at Marlboro, LLC.

Accisano Law Offices, attorneys for respondents/cross-appellantsKenneth Stattel, William Stattel, and the Robert Stattel Testamentary Trust join in the briefs of respondents American Properties at Marlboro, LLC, and Ashbel Associates, LLC.

PER CURIAM

The Township of Marlboro appeals the September 9, 2010 decision by the Council on Affordable Housing (COAH) denying its third-round re-petition for substantive certification. On that date, COAH also dismissed Marlboro from its jurisdiction.

The Supreme Court later stayed the appeal pending its decision in In re Adoption of N.J.A.C. 5:96 and 5:97, 215 N.J. 578 (2013) (In re Adoption I). Thereafter, at our direction,

the parties filed supplemental briefs. Prior to oral argument, the Court decided In re N.J.A.C. 5:96 and 5:97, 221 N.J. 1, 20 (2015) (In re Adoption II), in which it returned implementation of the Fair Housing Act of 1985 (FHA or the Act), N.J.S.A. 52:27D-301 to -329, to the courts "as the forum of first instance for evaluating municipal compliance with Mount Laurel." The history of the FHA and now-defunct COAH has been exhaustively described elsewhere. See, e.g., In re Adoption I, supra, 215 N.J. at 587-94.

We affirm COAH's decision and therefore conclude that Marlboro is subject to builder's remedy litigation as if it had never submitted to COAH's jurisdiction in the first instance. See In re Adoption II, supra, 221 N.J. at 22-23.

Before discussing the facts and circumstances leading to this appeal, we briefly address Marlboro's argument that it should receive "participating" status. That status enables a municipality to "come before the courts seeking to obtain approval of an affordable housing plan[.]" Id. at 27. Such approval could immunize a town from exclusionary zoning actions while it develops its housing element and implements its affordable housing plans. Marlboro contends that, merely by filing a petition for substantive certification of its thirdround affordable housing obligation, it is entitled to that protection.

COAH found, however, that Marlboro failed to act in good faith in the completion of its second-round obligations and in its submissions for third-round certification. Because COAH concluded that Marlboro was "not participating in the COAH process in a manner designed to expeditiously advance the substantive certification process," it dismissed Marlboro from its jurisdiction.

Since we affirm COAH's decision, Marlboro cannot enjoy the benefits the Court outlined for participating municipalities. To decide otherwise would render the term "participation" meaningless.

I

Turning to the events leading to this appeal, in a December 24, 1985 consent judgment, Marlboro was granted a period of repose until December 24, 1991, which was extended at its request to April 6, 1995. To address Marlboro's second-round obligations, its fair share plan included land known as the Bluh and Butelli site, the Northpointe site, and land at two locations known as 9A and 9B. Since then, Marlboro has proposed to eliminate the Northpointe and Bluh and Butelli sites, and has allegedly developed projects at other locations. By the time Marlboro began to engage in COAH-moderated mediation of its third-round obligations, it was including proposals which would simultaneously satisfy its second-round obligations.

Marlboro has fulfilled only a fraction, approximately onefifth, of its 1019-unit second-round obligation. The township has avoided its obligations by obtaining multiple postponements during the COAH review process, shifting project sites, and requesting additional postponements when confronted by COAH's demands for further information. After years of inaction, counsel for various developers, led by American Properties, filed a motion in May 2010 for Marlboro's accelerated dismissal from COAH's jurisdiction.

Marlboro not only opposed the application, but also sought a further extension of time in which to negotiate. The township attributes some of the delay to factors beyond its control, such as the governor's executive order suspending COAH operations, appeals challenging the third-round regulations, and the introduction of legislative proposals designed to alter the affordable housing laws. Due to the sheer volume of information regarding prior Marlboro-related proceedings, COAH referred the motion and cross-motion to a task force for review. The task force reported back to the entire body.

While the task force considered the matter, on July 23, 2010, Marlboro re-petitioned COAH with a revised housing element and fair share plan. In charts summarizing projects that it intended to rely upon, Marlboro identified 9A and 9B, as well as the Bluh and Butelli site. The Weitz entities filed opposition to the re-petition since Marlboro neither waited for COAH's ruling on its motion for leave to re-petition nor complied with COAH's rules, specifically Appendix F, as required by N.J.A.C. 5:97-2.3(a). Marlboro relied instead upon State Planning Commission (SPC) projections in its submissions. Responses and replies were also filed, including quotations from individual COAH members who expressed their frustration with Marlboro's repeated delays over the years during the application process.

At COAH's September 8, 2010 meeting, its chief counsel represented that the task force had met on July 8 and recommended granting American Properties's motion for accelerated dismissal. A second task force had met on August 25, 2010 to reconsider the motion in light of the July 2010 repetition, and also recommended that the motion for accelerated dismissal be granted. Upon receiving these recommendations, COAH voted to grant the motion and dismissed Marlboro from its jurisdiction.

Marlboro now contends on appeal that its petition for substantive certification should have been granted and that it should not have been dismissed from COAH's jurisdiction.

II

Unless a court finds that an administrative agency's action was arbitrary, capricious, or unreasonable, the agency's ruling should not be disturbed. In re Warren, 117 N.J. 295, 296 (1989). The court "can intervene only in those rare circumstances in which an agency action is clearly inconsistent with its statutory mission or with other State policy." George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 27 (1994).

Our Supreme Court "places great weight on the interpretation of legislation by the administrative agency to whom its enforcement is entrusted." Peper v. Princeton Univ. Bd. of Trs., 77 N.J. 55, 69-70 (1978). An agency's regulations enacted pursuant to legislative authority and to implement legislative policy enjoy a presumption of validity. In re Twp. of Warren, 132 N.J. 1, 26 (1993). The "principle of judicial deference to agency action is particularly well-suited to our review of administrative regulations adopted by COAH to implement the [FHA]." Id. at 27.

As described in In re Adoption of N.J.A.C. 5:94 & 5:95, 390 N.J. Super. 1, 30-31 (App. Div.), certif. denied, 192 N.J. 71-72 (2007), the Township of Warren Court

emphasized the legislative and executive branches' response to the constitutional obligation and the broad powers bestowed on COAH by the legislature to address "'one of the most difficult constitutional, legal and social issues of our day--that of providing suitable and affordable housing for citizens of low and moderate income.'" Twp. of Warren, supra, 132 N.J. at 27 (quoting Hills Dev. Co. [v. Twp. of Bernards], 103 N.J. [1,] 21 [(1986)]). Due to the novelty of the legislative scheme and the evolving nature of the process, the Court has declared that COAH "'is entitled to a reasonable degree of latitude, consistent with the legislative purpose . . . .'" Ibid. (quoting Van Dalen [v. Wash. Twp.], supra, 120 N.J. [234,] 246, [(1990)]). On the other hand, "[t]he breadth of COAH's discretion in selecting methodologies to implement the [FHA] . . . does not dilute COAH's duty to adopt regulatory methods that are consistent with the statutory goals."

[Id. at 28.]

Stressing that the ordinary review standard requires ensuring that COAH faithfully carries out its statutory mandate, we said

COAH's regulations must be consistent with the central purpose of the FHA to provide affordable housing on a regional basis consistent with both sound planning principles and the Mount Laurel doctrine, and COAH may not adopt any regulation that undermines its methodology for calculating or allocating regional fair share obligations.

[In re N.J.A.C. 5:94 & 5:95, supra, 390 N.J. Super. at 32 (citing Twp. of Warren, supra, 132 N.J. at 28, and Non-Profit Affordable Hous. Network v. N.J. Council on Affordable Hous., 265 N.J. Super. 475, 479 (App. Div. 1993))].

A.

Marlboro first asserts that COAH violated its administrative due process rights by delegating review of its substantive certification petition to an unnamed task force, and by failing to give it an opportunity to review and comment on the task force's reports. Marlboro analogizes assignment to a task force to assignment of a dispute for adjudication to a hearing officer or administrative law judge (ALJ) as provided by the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to 15, under which a participant may file exceptions to the recommendation before final administrative agency action is taken. N.J.S.A. 52:14B-10(c). Hence Marlboro claims that it should have been afforded the opportunity to respond to the task force's reports.

Marlboro further argues that, by electing to employ a task force as opposed to a referral to the Office of Administrative Law or a hearing before the full COAH board, COAH violated its own rules. We do not agree.

COAH made its referral due to the extensive material submitted in support of the motion and cross-motion after hearing argument by the parties at meetings of the full board. Without question, the entire COAH board had the opportunity to review the available motion record. Therefore, this situation is not analogous to a hearing officer or ALJ creating a record based on a process different from that engaged in by the final decisionmaker.

As a result, Fifth Street Pier Corp. v. City of Hoboken, 22 N.J. 326 (1956), upon which Marlboro relies, is inapposite. In Fifth Street, the Court decided that the appellant should have had the opportunity to file exceptions to a report created by a panel of the Division of Tax Appeals that heard testimony and summarized the matter. Id. at 330-31. Since the COAH task force's work did not involve a factfinding hearing in which testimony was taken, the full board did not rely on the task force to weigh testimony or make credibility determinations. COAH's internal administrative process of assigning a task force to make a recommendation was thus well within its authority. In this case, individual board members had all the relevant information available to them, were familiar with Marlboro's history, heard arguments, and had the option to vote against the task force's reports.

Furthermore, our independent review of the record reveals that Marlboro engaged in dilatory tactics throughout the application process. Not only were the township's third-round substantive proposals significantly flawed, but it also fell woefully short of fulfilling its second-round commitments. COAH's vote denying Marlboro's third-round re-petition for substantive certification was neither arbitrary, capricious, nor unreasonable.

B.

Marlboro further contends that, by dismissing its substantive certification petition, COAH contravened the legislative intent of the FHA, which strongly prefers the administrative process over litigation. COAH's own rules, however, authorize dismissal on an accelerated basis. N.J.A.C. 5:96-12.2 states that "[a]t any time, upon its own determination, or upon the application of any interested person, [COAH] may deny substantive certification without proceeding further with the mediation and review process." COAH enumerated many factors, supported by the record, weighing in favor of its determination to dismiss pursuant to the rule. In any event, since COAH is no longer available to implement the FHA, this argument is moot except insofar as review is necessary to explain our decision that Marlboro was not a "participating" municipality within the meaning of the term as employed by the Supreme Court in In re Adoption II.

COAH gave Marlboro years of opportunities to perfect its plans. That Marlboro chose not to do so triggered the consequences it now faces. Hence we see no error on COAH's part in deciding that the Mount Laurel issues were best addressed before a judge, as Marlboro simply failed to engage in the alternative process in good faith. This conclusion was neither arbitrary, capricious, nor unreasonable.

C.

Marlboro also challenges COAH's finding of bad faith based on its use of outside, unapproved housing and job projections from the SPC. Even if this argument had merit, which it does not, COAH's principal basis for dismissing Marlboro from its jurisdiction was the municipality's longrunning failure to comply with its second-round housing obligations, much less to make a good-faith effort to formulate and submit a third-round plan. This argument does not warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E).

D.

Marlboro contends that COAH's dismissal was based in part on an erroneous finding that it reached a verbal agreement with the Weitz entities during the COAH mediation process but later refused to execute a written agreement. Marlboro claims that nothing in the motion record supports the finding that "the mediator concluded mediation with the assumption that Marlboro would execute the agreement."

Under COAH's rules, the mediator was required to issue a mediation report, which would have specified the agreements reached and given Marlboro the opportunity to correct any errors. N.J.A.C. 5:96-8.4(d). COAH could have issued an order to show cause if the mediation agreement was not signed. N.J.A.C. 5:96-8.4(c). Although Marlboro's attorney handled the mediation, only by way of ordinance or resolution could the municipality have formally reached a settlement. Indeed, COAH's rules acknowledge that only signed written agreements are binding on mediation participants. N.J.A.C. 5:96-8.4(f).

But COAH found that

during mediation, [Marlboro] entered into a verbal mediation agreement with the Weitz [e]ntities, the developer of two sites in Marlboro's plan, one of which, the Northpointe project, has been in [Marlboro]'s plan since [Marlboro] received a [c]onsent [j]udgment in 1985. Marlboro failed to execute the agreement, refusing to bring the agreement to the full Township Council for a vote. Notwithstanding this conduct, [Marlboro] still requests credit for these two projects in its plan, despite the existing disagreements between the developer and [Marlboro].

Therefore Marlboro's argument mistakenly focuses on whether COAH could hold it responsible for a tentative agreement requiring formal action for approval. The issue was Marlboro's failure to bring the matter to a vote, not reliance on conduct not ratified by its Township Council.

COAH also concluded that if Marlboro wanted to assert that it had no agreement with the Weitz entities, it could not rely upon this fact to support its substantive certification petition. In both its 2008 petition and its proposed 2010 repetition, Marlboro included as planned affordable-housing locations the subjects of the purported agreement, namely the Northpointe site and the 9A and 9B sites. Yet Marlboro contends that its failure to formally endorse the tentative agreement was improperly employed by COAH as a basis for finding bad faith, while at the same time seeking to rely upon the purported agreement to establish substantive certification. The township's inconsistent positions undermine its argument.

E.

Finally, Marlboro asserts that COAH's criticism of its failure to provide information was erroneous, in part because the information sought related to sites no longer part of Marlboro's fair share plan under the 2010 re-petition. Marlboro claims that COAH requested information as to only three items, of which two, the Multiple Sclerosis Project and the Ingerman Project, were no longer part of Marlboro's fair share plan. As to the third item, the Weitz sites, Marlboro was allegedly unable to provide information because the Weitz entities had filed a builder's remedy lawsuit. Thus, Marlboro argues, it was unfair under the circumstances for COAH to find that it acted in bad faith by failing to provide that information.

COAH first raised this issue in November 2009, when Marlboro was considering moving plans for a 100% affordable housing project from Ticetown Road to Amboy Road, and Marlboro twice sought and obtained extensions relating to that proposed change. Despite this, Marlboro did not file for re-petition until July 23, 2010. This delay was unexplained.

Additionally, COAH waited for information to be supplied on projects that Marlboro ultimately excluded from the 2010 repetition. These delays related to properties eventually removed from the process and did nothing to advance the completion of additional housing units. Until at least late July 2010, Marlboro's December 2008 petition was the plan for which it sought approval, yet it never supplied COAH with the information necessary to support that plan. Marlboro claimed credit in both its December 2008 and July 2010 plans for the Weitz entities' projects, while acknowledging that it had not given COAH all the necessary supporting information about the sites, even after repeated requests since June 2009. That failure to provide information was never explained. We therefore consider this basis for dismissal to also be sound. Marlboro did not timely provide the information COAH requested, the record suggests, because its development plans at specific locations shifted without warning or meaningful explanation.

F.

That COAH's decision dismissing Marlboro from its jurisdiction tangentially implicated the now-invalidated thirdround regulations is irrelevant. COAH's decision was lawful, supported by the record, and necessary to advance the legislative policies embodied in the FHA.

Regardless of the Court's invalidation of the third-round methodology, Marlboro has hundreds of outstanding affordable housing units from its second-round obligations alone. Whether or not the third-round rules were invalidated, Marlboro faces the same unmet second-round Mount Laurel obligation today as it did two years ago, four years ago, and ten years ago.

Continued delays will not further FHA compliance. The record overwhelmingly supports COAH's decision. If Marlboro indeed intends to fulfill its obligations in good faith, it can now make that demonstration to a judge.

Affirmed.