PROTECT WENONAH: DO THE RIGHT THING v. COMBINED PLANNING/ZONING BOARD OF ADJUSTMENT OF THE BOROUGH OF WENONAH

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

PROTECT WENONAH: DO THE RIGHT

THING, an association of seven

or more persons,

Plaintiff-Appellant,

v.

COMBINED PLANNING/ZONING BOARD OF

ADJUSTMENT OF THE BOROUGH OF WENONAH

and WENONAH ASSOCIATES, LLC,

Defendants-Respondents.

___________________________________

June 25, 2014

Argued May 21, 2014 Decided

Before Judges Grall and Accurso.

On appeal from Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1499-12.

Mark Cimino argued the cause for appellant.

Dale T. Taylor argued the cause for respondent Combined Planning/Zoning Board of the Borough of Wenonah.

Costa Vetra LaRosa & Costa, attorneys for respondent Wenonah Associates, LLC, join in the brief of respondent Combined Planning/Zoning Board of Adjustment of the Borough of Wenonah.

PER CURIAM

"Protect Wenonah: Do the Right Thing" (plaintiff) appeals the dismissal of its action in lieu of prerogative writs challenging a development approval granted by the Combined Planning/Zoning Board of the Borough of Wenonah, County of Gloucester (the Board). Plaintiff contends that the Board misapplied Chapter 82 of the Laws of 2009, "An Act concerning affordable housing and the development of non-age-restricted communities . . . ." L. 2009, c. 82, 1-15 (N.J.S.A. 45:22A-46.3 to -46.16) (Conversion Act or Act). On the Board's motion for summary judgment, the trial court rejected plaintiff's claims, and for the reasons that follow, we affirm the order.

The primary issue on this appeal is the meaning of a statute governing local boards' exercise of statutory authority to extend the deadline for filing an application to convert an approved age-restricted development to a non-restricted development provided in N.J.S.A. 45:22A-46.6. That is a question of law that requires de novo review. See In re Liquidation of Integrity Ins. Co., 193 N.J. 86, 94 (2007).

The secondary issue is whether the Board acted arbitrarily in extending the time period and granting this applicant approval. On that question, we owe no deference to the trial court because we review the Board's decision under the same standards applied by the trial court. N.Y. SMSA v. Bd. of Adjustment of Twp. of Weehawken, 370 N.J. Super. 319, 331 (App. Div. 2004).

The Legislature adopted the Conversion Act to address a shortage of housing available to the "general workforce population" and an "oversupply" of municipally approved "age-restricted housing," in light of the "currently eroding economic conditions." N.J.S.A. 45:22A-46.3a, e. The Legislature found that "[w]hile no policy [was] . . . singularly responsible . . . zoning practices have resulted in a lack of land approved for housing which meets the needs of households requiring smaller housing units." N.J.S.A. 45:22A-46.3d. The Legislature further determined that "[t]he shortage of affordably priced workforce housing ha[d] been exacerbated in recent years by a municipal preference for age-restricted . . . housing approvals . . . ." N.J.S.A. 45:22A-46.3e.

On those findings and

[u]nder currently deteriorating national economic conditions, [the Legislature deemed it] appropriate to take immediate action . . . to create the opportunity to increase the production and supply of workforce housing through the conversion of the over-supplied age-restricted market to meet the needs of New Jersey's residents who require, smaller, more reasonably priced homes.

[N.J.S.A. 45:22A-46.3h.]

The Conversion Act provides a comprehensive statutory scheme for eliminating age restrictions in residential development projects previously approved as age-restricted developments. Under the Act, a "converted development" is "a proposed age-restricted development that will be marketed instead with no age restrictions." N.J.S.A. 45:22A-46.4. The conditions a developer seeking approval for a converted development must establish are stated in N.J.S.A. 45:22A-46.5: the developer must have a board's approval for an age-restricted development on the land in question that was granted prior to the Act's effective date, which is July 1, 2009;1 the developer may not be holding a deposit on or have sold any age-restricted unit; and the developer must agree to make twenty percent of the units in the non-restricted development "affordable units," within the meaning of regulations adopted pursuant to the Fair Housing Act, L. 1985, c. 222.

The Act also addresses submission and approval of applications for a converted development. A developer seeking approval for a converted development must file an application with the board that previously approved the age-restricted development and must give notice as required by a provision of the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-12. N.J.S.A. 45:22A-46.6a. The developer also must demonstrate compliance with the "State Uniform Construction Code Act," N.J.S.A. 45:22A-46.7, and "Residential Site Improvement Standards," N.J.A.C. 5:21-4.14 to -4.16. N.J.S.A. 45:22A-46.6b(1); N.J.S.A. 45:22A-46.7.

Through this Act, the Legislature expressly exempts converted developments from several important requirements of the MLUL. It prohibits local boards from considering an application for a converted development as a "'use variance' or other '"d" variance' application" under another provision of the MLUL, N.J.S.A. 40:55D-70. N.J.S.A. 45:22A-46.6a(1). In addition, it provides for local boards to "grant amended approvals for a converted development without the need to seek relief pursuant to [N.J.S.A. 40:55D-70d]." N.J.S.A. 45:22A-46.6a(1). The Legislature explained that it intended "such converted developments . . . to be considered permitted uses in the zoning district in which they are located." Ibid. In addition, the Legislature directed boards to permit modification of the previously approved site plan to accommodate the non-age restricted development. N.J.S.A. 45:22A-46.8a.

In the Conversion Act, the Legislature also addressed decisions rendered by local boards on applications for a converted development. N.J.S.A. 5:22A-46.6. Most significantly, the Legislature directed that local boards "shall" grant an application if the requirements of the Conversion Act are met and if the "conversion can be granted without substantial detriment to the public good, and will not substantially impair the intent and purpose of the zone plan and zoning ordinance." N.J.S.A. 45:22A-46.6b, c.

The provision of the Conversion Act at issue in this case provides a limited time period, twenty-four months, for a developer to seek approval to convert an approved age-restricted project to a non-restricted development. N.J.S.A. 45:22A-46.11. Consistent with its findings, however, the Legislature authorized local boards to extend the period for an additional twenty-four months if they find "that poor economic conditions continue to adversely affect the real estate market in New Jersey." Ibid. In pertinent part and with emphasis added, N.J.S.A. 45:22A-46.11 states:

An application for approval to change a development from age-restricted to non-restricted status, . . . may be submitted . . . at any time before the first day of the 25th month next following [July 1, 2009,] the effective date of [the Act]; provided, however, that the approving board may extend this time period by an additional 24 months[, until August 1, 2013,] if it finds, at the end of the initial period, that poor economic conditions continue to adversely affect the real estate market in New Jersey.

Plaintiff's argument turns on the Legislature's use of the word "may" in the clause emphasized above. Plaintiff contends that the word "may" is permissive and, therefore, that local boards have discretion to grant or deny an extension of the filing period, which this Board failed to exercise. In the alternative, plaintiff contends that the Board was required, but failed, to explain why it decided not to deny the extension.

A court's primary goal when interpreting a statute is to determine the Legislature's intent. Higgins v. Pascack Valley Hosp., 158 N.J. 404, 418 (1999). The inquiry begins with the language of the statute, which generally controls when the meaning is clear. Ibid. As the Court most recently explained, "If the plain language chosen by the Legislature 'leads to a clearly understood result' that is consistent with the legislative objectives of the statute and its context with related provisions, we apply the law as written." State v. Robinson, ___ N.J. ___, ___ (2014) (slip op. at 12) (quoting State v. Hudson, 209 N.J. 513, 529 (2012)). Thus, "[w]hen all is said and done, the matter of statutory construction . . . will not justly turn on literalisms, technisms, or the so-called formal rules of interpretation; it will justly turn on the breadth of the objectives of the legislation and the commonsense of the situation." Jersey City Chap. of the Prop. Owner's Protective Ass'n v. City Council of Jersey City, 55 N.J. 86, 100 (1969). Consistent with those principles, our courts generally focus on the context and the purpose of the law when deciding on the significance of the Legislature's use of the word "may" rather than "shall." See, e.g., Aponte-Correa v. Allstate Ins Co., 162 N.J. 318, 325 (2000); Natural Medical, Inc. v. N.J. Dept. of Health and Senior Servs., 428 N.J. Super. 259, 268-69 (App. Div. 2012).

Because this comprehensive Act provides only one standard for local boards to apply in deciding whether to extend or decline to extend the filing period, a finding that the specified condition for extension exists is the only explanation required. We conclude that the Legislature did not use the word "may" because it intended to give local boards the discretion to decide whether to extend the two-year period for any reason other than the continuation of poor economic conditions "adversely affect[ing] the real estate market in New Jersey." N.J.S.A. 45:22A-46.11.

The terms of the grant of authority provide only one ground on which boards may grant or deny an extension that the poor economic conditions adversely affecting the real estate market in this State persist at the end of the initial two-year period. Thus, the statute is best understood as expressing the Legislature's intention to authorize local boards to grant an extension only if the boards find that such conditions persist and to deny one if they find that such conditions have not continued.

Nothing in the statutory scheme suggests that the Board should look beyond N.J.S.A. 45:22A-46.11 in determining whether to extend the time period for submission of an application. As the preceding discussion of the Conversion Act demonstrates, the Legislature has provided standards for the grant or issuance of approval for a converted development that are similar but not identical to those in the MLUL. In crafting this law, the Legislature has referred to provisions of the MLUL and other laws where it intends local boards to consider and apply them. See, e.g., N.J.S.A. 45:22A-46.5 to -46.10; N.J.S.A. 45:22A-46.12 to -46.16.

For all of the foregoing reasons, we decline to infer that the use of "may" in this statute expresses the Legislature's intention to grant local boards the discretion to craft reasons for declining an extension of the time period where there are unused approvals for age-restricted residential developments in the jurisdiction and the poor economic conditions adverse to the real estate market and development of residences affordable to the general workforce population persist.

Plaintiff's claim that the Legislature intended local boards to address considerations related to the criteria found in the MLUL in deciding to grant an extension of the period for filing an application is inconsistent with the Act, which delineates the provisions of the MLUL that apply when the merits of an application are being considered. Moreover, the broad grant of discretion in the grant or denial of extensions by local boards that plaintiff perceives, unaccompanied by standards to guide its exercise, would be inconsistent with the purpose of the Act and the Legislature's finding that "[t]he shortage of affordably priced workforce housing has been exacerbated in recent years by a municipal preference for age-restricted housing which has resulted in an oversupply of age-restricted housing approvals . . . ." N.J.S.A. 45:22A-46.3e.

That said, we find no merit in plaintiff's claim that the Board's resolution is arbitrary or provides an inadequate explanation for its separate determinations to extend the filing period and grant this approval. The resolution demonstrates that the Board made both decisions in accordance with the Act and on factual findings that are supported by sufficient credible evidence on the record as a whole.

In part pertinent to the extension, Section 4 of the resolution provides:

D. The Applicant now proposes to convert the approved project from an Age-Restricted Residential Community to a Non Age-Restricted Residential Community, in accordance with N.J.S.A. 45:22A-46.3 through 46.16 (commonly known as the "Conversion [Act]") signed into effect on July 2, 2009.

E. The only major revision that the Applicant is proposing is to reduce the total number of units from forty (40) to thirty-four (34). The purpose for the reduction in the number of units is to offset the additional parking demands brought forth by the conversion of an Age-Restricted Residential Community to a Non Age-Restricted Residential Community. In doing so, the Applicant is able to provide sufficient parking accommodations while at the same time allowing the parking design and layout to remain as previously approved by the Board.

F. In 2009, the New Jersey [L]egislature found that, although the economic recession has resulted in reduced housing costs, the cost of both renting and homeownership remained unaffordable to a large percentage of New Jersey's residents. The [L]egislature also found that the shortage of affordably priced housing had been exacerbated by the municipal preference for age-restricted housing, which resulted in an oversupply of age-restricted housing approvals. On July 2, 2009, the State Legislature enacted the Conversion [Act] to provide a mechanism to allow an age-restricted development to be converted to a non age-restricted development in order to meet demographic needs and increase the supply of smaller, more reasonable priced homes.

G. The Conversion [Act] outlines the application procedure and approval process for the conversion of an age-restricted development and further provides a list of conditions that must be met in order to be eligible for the conversion. In accordance with the law, an Application for an amended approval seeking the authority to construct a converted development is not to be considered a "use variance" or other "'d' variance" pursuant to Municipal Land Use Law (N.J.S.A. 40:55D-70). In other words, converted developments are to be considered permitted uses in the zoning district in which they are located.

H. The Conversion [Act] expired on August 1, 2011. However, there is a provision in the law that allows an approving Board to apply a 24 month extension if the Board finds that poor economic conditions continue to adversely affect the real estate market in New Jersey (N.J.S.A. 45:22A-46.11). Therefore, the Board will have to make a determination based upon testimony provided by the Applicant that such poor economic conditions still exist in order for the 24 month extension to take effect.

I. If the Planning Board determines that the requirements of [the Conversion Act] have been satisfied, and the conversion can be granted without substantial detriment to the public good and will not substantially impair the intent and purpose of the Zone Plan and Zoning Ordinance, the Application for the conversion must be approved.

Sections 5 through 12 provide:

5. Mr. Kernan, the Applicant's expert in planning, provided testimony as to why the Applicant felt that poor economic conditions continue to adversely affect the real estate market, and therefore, the conditions upon the Applicant as to the burden of proof regarding N.J.S.A. 45:22A-46.11, have been met. In particular, Mr. Kernan pointed out that since the Application was filed after August 1, 2011 but before August 1, 2013, the Combined Board must also find that poor economic conditions continue to adversely affect the real estate market in New Jersey. Building permits for housing units in New Jersey fell 4.3 percent last year (2011). Data for New Jersey and Gloucester County in particular for the preceding decade was summarized by Mr. Kernan as follows:

Housing Units Authorized by Building Permits

Year New Jersey Gloucester County

2000 34,585 1,337

2011 13,005 591

6. Mr. Kernan testified that New Jersey and Gloucester County housing construction peaked in 2005 at 38,588 units and 2,075 units, respectively. While New Jersey rebounded somewhat in 2010 from a low of 12,396 units in 2009 to 13,525 units, Gloucester County continued to drop from 865 units in 2009 to 716 units. New Jersey's rebound was short-lived, dropping to 13,505 units last year, which Gloucester County continued to drop to only 591 units, a 17.5% decline from the previous year.

7. Mr. Kernan testified that, statewide, the number of residential permits issued in 2011 was approximately one-third the number issued in 2006. In fact, from the period 1993-2007 the number of new units per year had never been below 25,000.

8. Mr. Kernan testified that for the first four months of 2012, New Jersey had issued 4,882 permits and Gloucester County 161 permits and for the same period in 2011, 3,778 units and 162 units, respectively. So while New Jersey's January April 2012 residential permits are 29% greater than the same period last year, Gloucester County has remained flat.

9. Mr. Kernan testified that the New Jersey Housing Price index is down 4% for the first quarter 2012 versus first quarter 2011 according to a news release from the Federal Housing Finance Agency dated May 23, 2012. So even though interest rates continue to be at or near historic lows and home values continue to decline, making homes more affordable than ever, limited access to credit continued to hinder the marketplace.

10. Mr. Kernan testified that with regard to unemployment, the national rate was 4.7% in January 2006, 9.3% in July 2009 when the Act began, 9.4% in August 2011 when the Act expired and 9.2% now. So the unemployment rate has changed little from either the beginning of the Act, the end or almost one year later.

11. Mr. Kernan testified lastly, the Real Gross Domestic Product (Real GDP) in the United States was up 1.5% in 2011 after a 3.1% increase in 2010 while New Jersey's Real GDP was down 0.5% for the same period, according to the US Commerce Department, Bureau of Economic Analysis.

12. Mr. Kernan testified that in summary, State housing permits are only a third of what they were in 2006 and only a couple hundred more than in 2009 and County housing permits in 2011 were half of what they were in 2006 and almost 300 less than 2009. Housing prices continue to plummet. The national unemployment rate is nearly double what it was in 2006 and nearly the same as it was when the statute was adopted and last year. For all of these reasons, poor economic conditions continue to adversely affect the real estate market in New Jersey.

And, Sections 20, 21 and 26 provide:

20. Considerable discussion took place by and between members of the Board and Mr. Kernan regarding the data that Mr. Kernan cited and its applicability to determining whether or not poor economic conditions existed in the Borough of Wenonah. In particular, questions were raised as to whether or not such data really was sufficient enough in order to grant the Applicant a twenty-four (24) month extension under the now "expired" Conversion [Act].

21. Mr. Abate testified that he had placed the age-restricted development project up for an auction recently, with no reserve being required. As an indication of the poor economic conditions, especially for age-restricted developments in Gloucester County, Mr. Abate testified that not one bidder showed up or bid on the approved age-restricted product [sic]. In addition, Mr. Abate testified that he had spoken to no less than six (6) major real estate developers of homes, including age-restricted communities, in Gloucester County. None of the developers that he spoke to expressed any interest in the subject development, citing the fact that in their opinion there was already an over abundance of age-restricted housing available in Gloucester County and that no market under current economic conditions exists for new age-restricted dwellings. Mr. Abate also testified that one of the problems regarding the lack of a market for age-restricted housing, was that before someone could enter into a contract to purchase an active-adult or age-restricted property, they would first have to sell their existing home. Mr. Abate testified that it is well known that the current real estate market is extremely soft and when single-family homes are sold they are more often than not sold far below what otherwise would have been fair market value. Mr. Abate emphasized that if people wished to downsize and go from a single-family residence into an age-restricted residence or community, they first had to sell their original home. This created a lack of demand for active-adult or age-restricted homes since few people could afford to purchase them without first selling their existing home.

26. After considerable discussion by and between the Board and the Applicant, a motion was made . . . which was seconded, to grant the twenty-four (24) month extension under the Conversion [Act] as set forth in N.J.S.A. 45:22A-46.11 . . . . There were no abstentions or recusals. The motion was carried, having received five (5) affirmative votes and four (4) negative votes. The resulting vote indicated a finding by a majority of those voting that Mr. Kernan's testimony regarding current economic conditions which led to the adoption of the Conversion [Act], continue to exist, and that such conditions continue to adversely affect the real estate market in New Jersey and Gloucester County with respect to the market for age-restricted housing.

In addition to the foregoing findings and reasons explaining the Board's decision to extend the time for filing, the resolution continues and addresses each statutory requirement an applicant for a converted development must meet accompanied by a discussion of the evidence supporting the Board's conclusion that the applicant satisfied or agreed to comply with each of those conditions.

After reviewing the record and resolution in light of additional arguments plaintiff presents on appeal, we have concluded that none of those arguments has sufficient merit to warrant additional discussion in a written opinion. R. 2:11-3(e)(1)(E). Plaintiff's characterizations of the Board's resolution as consisting of a mere recital of the evidence and the testimony that is followed by a baldly stated ultimate conclusion is, at best, unfair.

Affirmed.

1 The Act was approved on July 1, 2009 and took effect immediately. L. 2009, c. 82, 15.