HILLSBOROUGH PROPERTIES, L.L.C. v. THE TOWNSHIP OF HILLSBOROUGH

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

HILLSBOROUGH PROPERTIES, L.L.C.,

Plaintiff-Respondent/

Cross-Appellant,

v.

THE TOWNSHIP OF HILLSBOROUGH,

Defendant-Appellant/

Cross-Respondent,

and

THE MAYOR AND TOWNSHIP COMMITTEE

OF HILLSBOROUGH, and THE PLANNING

BOARD OF THE TOWNSHIP OF HILLSBOROUGH,

Defendants.

_____________________________________________

Argued June 2, 2015 Decided June 23, 2015

Before Judges Yannotti and Fasciale.

On appeal from Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-860-12.

Eric M. Bernstein argued the cause for appellant/cross-respondent(Eric M.Bernstein & Associates, L.L.C., attorneys; Mr. Bernstein and Mollie Hartman, of counsel; Ms. Hartman, on the briefs).

Stephen Eisdorfer argued the cause for respondent/cross-appellant (Hill Wallack, L.L.P., attorneys; Mr. Eisdorfer, on the briefs).

PER CURIAM

Defendant Township of Hillsborough (the "Township") appeals and plaintiff Hillsborough Properties, L.L.C. cross-appeals from an order entered by the trial court on December 9, 2013, which invalidated the twenty-five-acre minimum lot size for the Economic Development zone (the "ED zone"), and ordered the Township to amend its zoning ordinance to establish a minimum lot size of five acres. We affirm in part, reverse in part, and remand the matter to the Township for further proceedings.

I.

Plaintiff owns approximately 335 acres of land in the southern portion of the Township, and 308 of those acres are located within the ED zone. The zone had been created in the early 1980's in anticipation of the construction of extensions to several roadways, which were expected to serve the area where the ED zone is located. The Township believed at the time that the area should be reserved for the development of "large-scale corporate centers similar to those that have [been] developed along U.S. Route 1 in the Princeton area."

Accordingly, the ordinance required that planned developments in the ED zone have a minimum lot area of fifty acres. The ordinance stated that the purpose of the ED zone

is to recognize the interrelationships between industrial and office park development and limited retail uses. The district is intended to generate an employment area designed and developed according to a plan as a single entity containing one or more structures with appurtenant common areas to accommodate the permitted uses and to promote on-site coordination of buildings, parking, circulation, landscaping and other design criteria and economic development in this district as well as [other districts].

The permitted uses in the zone include offices and office buildings, corporate centers, restaurants, theaters, recreational facilities, banks, libraries, museums, medical centers, and hotels. The uses were permitted only as part of a unitary planned development.

In 2011, plaintiff filed a complaint in lieu of prerogative writs in the trial court, and challenged the validity of the ordinance establishing the ED zone as applied to its property. The court thereafter conducted a trial in the matter, and filed a lengthy written opinion, in which it found that a minimum lot size of fifty acres was arbitrary, capricious, and unreasonable. The court ordered the Township to adopt a new minimum lot size.

In its opinion, the court noted that the ED zone had been adopted with the expectation that certain highways would be constructed serving the property, but the anticipated highway construction had been abandoned, which negated the original rationale for the zone. Nevertheless, the court upheld the validity of the ordinance on the basis of a new rationale, drawn from the trial testimony and evidence, specifically, the views expressed by the Township's planning expert, Scarlett Doyle ("Doyle").

Doyle had conceded that the likelihood of unitary development by a single corporate user was remote, but maintained that incremental development of small office buildings would be appropriate on the site. She opined that the ordinance "contemplated such an approach," and cited a newly adopted Township ordinance, which indicated that "there could be multiple uses within each building and multiple buildings and uses on any lot" within the ED zone. Doyle also stated that she "felt that . . . small scale development" in the absence of subdivisions "might well be doable" over time "even if an overall coordinated plan was the goal."

The court accepted Doyle's rationale in part, but rejected her view that incremental, small-scale development was consistent with a fifty-acre minimum lot size. The court determined that Doyle's new rationale for the zone, as applied to plaintiff's property, based on incremental, small-scale, non-residential development, rendered the fifty-acre minimum lot size arbitrary and capricious. The court directed the Township to adopt a new minimum lot size that is more consistent with its own justifications for the ordinance and with other non-residential zones in the municipality.

Plaintiff appealed the trial court's judgment, arguing that there was no credible evidence supporting the reasonableness of the ED zone. It also argued that the trial court erred by accepting the Township's expert opinion, that the physical characteristics of the property were clearly unsuitable for the particular uses permitted in the zone, and that the property should be re-zoned to include some residential uses. We rejected these arguments and affirmed the trial court's judgment. Hillsborough Properties, L.L.C. v. Twp. Comm. of Twp. of Hillsborough, No. A-2705-11 (App. Div. May 3, 2013) (slip op. at 2).

Thereafter, the Township adopted Ordinance 2012-08 which deleted the fifty-acre minimum lot size for the ED zone, and replaced it with a twenty-five-acre minimum. Plaintiff then filed this lawsuit, which alleged, in part, that the new minimum lot size was in conflict with the order and decision entered in the prior litigation.

On December 9, 2013, the Law Division entered a lengthy written opinion, in which it concluded that the twenty-five-acre minimum was not consistent with the newly-developed rationale for the zoning district. The court rejected plaintiff's contention that a two-acre minimum lot size was required. The court ordered the Township to adopt a minimum lot size of five acres. The court memorialized its decision in an order dated December 9, 2013.

II.

In its appeal, the Township argues that the trial court erred in vacating Ordinance 2012-08 because it is not arbitrary and capricious; and that the court abused its discretion in ordering the Township to adopt a minimum lot size of five acres for the zone.

"[A] strong presumption of validity insulates a zoning ordinance from challenge," though a plaintiff may overcome that presumption "through an affirmative showing that the ordinance 'in whole or in application to any particular property' is 'clearly arbitrary, capricious or unreasonable, or plainly contrary to fundamental principles of zoning or the [zoning] statute.'" Pheasant Bridge Corp. v. Twp. of Warren, 169 N.J. 282, 289-90 (2001) (second alteration in original) (quoting Bow & Arrow Manor, Inc. v. Town of West Orange, 63 N.J. 335, 343 (1973)), cert. denied, 535 U.S. 1077, 122 S. Ct. 1959, 152 L. Ed. 2d 1020 (2002).

In determining whether a plaintiff has met its burden, "a court engages in a review of the relationship between the means and ends of the ordinance." Id. at 290. Where, as here, the plaintiff challenges the validity of a zoning ordinance, the court must examine whether the means selected to achieve the ordinance's purpose "'have real and substantial relation to the object sought to be attained[.]'" Ibid. (quoting Kirsch Holding Co. v. Borough of Manasquan, 59 N.J. 241, 251 (1971)).

We reject the Township's contention that the trial court erred by finding that the twenty-five-acre minimum was not consistent with the new rationale for the ED zone. We affirm the invalidation of the ordinance substantially for the reasons stated by the trial court in its written opinion.

The Township contends that the twenty-five-acre minimum has a substantial relationship to the purpose of fostering incremental, small-scale, non-residential development. However, as the trial court pointed out in its opinion, the uses permitted in the ED zone are similar to those in other zoning districts, but the minimum lot sizes for those districts range from one to five acres.

The Township contends that the comparison was inappropriate because the ED zone is the only non-residential zone specifically envisioned for single-entity, planned development. But, as the court pointed out, in the earlier litigation, the court had expressly rejected the purpose of a unitary, planned development as a basis for the ED zone.

We conclude that the court correctly determined that the twenty-five-acre minimum lot size was not reasonable when considered in light of the purposes of the zone and the lot sizes established for similar uses in the Township's other zoning districts.

III.

The Township further argues that the court erred by ordering it to adopt a five-acre minimum lot size for the ED zone. The Township contends that such a minimum lot size would be antithetical to the purpose of zoning in this area, and that it is just as arbitrary and capricious as a fifty-acre lot size. The Township contends that the court usurped its legislative function by ordering that it adopt the five-acre minimum.

In its cross-appeal, plaintiff also argues that the court erred by requiring the Township to adopt a five-acre minimum lot size. Plaintiff contends the ED zone is most similar to the Township's O-2, I-1, I-2, and I-3 zones, and therefore the court should have adopted minimum lot size no greater than two acres.

We agree with the Township that the court erred by ordering it to adopt a five-acre minimum lot size for the ED zone. We reject plaintiff's contention that the only reasonable minimum for the zone is two acres. We are convinced that the matter should be remanded to the Board to review the lot sizes for the other non-residential districts and determine, in the first instance, the minimum lot size less than twenty-five acres that would reasonably achieve the purpose and goals of the zone.

As stated previously, the uses in the ED zone include office buildings, fiduciary institutions, medical centers, restaurants, child and adult care centers, retail sale of goods manufactured by company, hotels/motels, corporate conference centers, theaters, gyms, tennis, pool facilities, libraries, museums, and schools.

The uses in the O-2 zone include office buildings, research labs, fiduciary institutions, hospitals, medical centers, veterinary hospitals, mortuaries, farms and agricultural uses, utilities, restaurants, and child and adult care centers. The minimum lot size for these uses in the O-2 zone is two acres. In addition, community shopping centers are permitted in the O-2 zone subject to a sixty-acre minimum lot size requirement.

Various uses are permitted within community shopping centers in the zone, including retail, restaurants, theaters, gymnasiums, offices, catering facilities, public auditoriums, libraries, museums, and parks, among others. The minimum size of an individual tenant's use must be 2000 square feet, and subdivision of community shopping centers is permitted for individual building and accessary-use ownership.

In addition, the uses in the I-1, I-2 and I-3 zones include office buildings, research labs, fiduciary institutions, medical centers, veterinary hospitals, utilities, restaurants, child and adult care centers, warehouses, lumberyards, contractor facilities, and indoor recreation. The minimum lot sizes in these zones range from one to two acres.

Furthermore, the uses in the GI general industrial zone include offices, research labs, fiduciary institutions, medical centers, veterinary hospitals, utilities, restaurants, child and adult care centers, warehouses, facilities for manufacturing products inside and outside buildings, contractor facilities, indoor recreation, retail sale of goods manufactured by the company, and hotels/motels. The minimum lot size in this zone is five acres.

Here, the trial court reasoned that the uses in the ED zone are similar to the uses in the GI zone. The court concluded that the five-acre minimum of the GI zone should also apply to the ED zone. Plaintiff argues that the comparison to the GI zone was erroneous because that zone permits heavy manufacturing and warehousing uses that are more intense and potentially detrimental than the uses permitted in the ED zone. Plaintiff contends that the most comparable zones are the O-2, I-1, I-2, and I-3 zones, which generally have minimum lot sizes of one to two acres.

Moreover, plaintiff cites the report of its planning expert, Paul Phillips ("Phillips"), who opined that the appropriate minimum lot size for plaintiff's property, consistent with the purpose of allowing small-scale development of the uses permitted, is two acres. In his report, Phillips stated that the two-acre minimum is consistent with the zoning for the O-2, I-1 and I-2 zones, and with comparable zones in surrounding municipalities.

We are convinced that the record does not support the court's finding that the ED zone is most like the GI zone. As noted, both zones permit some of the same uses. However, the GI zone allows warehouses, heavy manufacturing and similar uses that are not permitted in the ED zone. Moreover, the ED zone permits corporate conference centers, theaters, gyms, libraries, museums, and schools, which are not allowed in the GI zone.

Furthermore, some of the uses permitted in the ED zone are allowed in the O-2, I-1, I-2 and I-3 zones, but others are not. As noted, corporate conference centers, theaters, gyms, libraries, museums, and schools are permitted in the ED zone, but these uses are not permitted in the other zones, except in the O-2 zone's community shopping centers, which do not permit schools or corporate conference centers.

Thus, a comparison of the uses in the Township's non-residential zones does not compel the conclusion that the minimum lot size for the ED zone must be five acres or two acres. Rather, the lack of precise correlation between the uses in these zones suggests that the Township may, as an exercise of discretion, establish a minimum lot size less than twenty-five acres that would be reasonable under the circumstances.

Affirmed in part, reversed and remanded in part to the Township to establish a minimum lot size for the ED zone in conformity with this opinion. We do not retain jurisdiction.