PENNSGROVE ASSOCIATES LP v. CARNEYS POINT TOWNSHIP PLANNING BOARD

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

PENNSGROVE ASSOCIATES, LP

and WAVERLY ASSOCIATES, its

General Partner,

Plaintiffs-Appellants,

v.

CARNEYS POINT TOWNSHIP PLANNING

BOARD, THE TOWNSHIP OF CARNEYS

POINT, TRI COUNTY REAL ESTATE and

MAINTENANCE CO., INC., and

AFFORDABLE SALEM, INC.,

Defendants-Respondents.

____________________________________________

July 2, 2015

Before Judges Lihotz and St. John.

On appeal from Superior Court of New Jersey, Law Division, Salem County, Docket No. L-0143-12.

Samuel J. Myles argued the cause for appellants (Holston, MacDonald, Uzdavinis, Ziegler, Lodge & Myles, P.A., attorneys; Mr. Myles, on the briefs).

Allen S. Zeller argued the cause for respondents Carneys Point Township Planning Board and The Township of Carneys Point (Zeller & Wieliczko, LLP, attorneys; Mr. Zeller and Cosmas P. Diamantis, on the brief).

Jack Plackter argued the cause for respondents Tri County Real Estate and Maintenance Co., Inc. and Affordable Salem, Inc. (Fox Rothschild, LLP, attorneys; Mr. Plackter and Apple Sulit-Peralejo, on the brief).

PER CURIAM

Plaintiffs Pennsgrove Associates, LP and Waverly Associates, its general partner, appeal from the dismissal of their action in lieu of prerogative writs, in which they challenged the grant of site plan approval by defendant Carneys Point Planning Board (Board) to co-defendants Tri County Real Estate and Maintenance Company, Inc. and Affordable Salem, Inc. (collectively Tri County).1 Tri County's plan proposed construction of sixty affordable housing units at its lots on Seventh Avenue in Carneys Point. Plaintiffs claim that the agreement by Tri County to pay certain legal fees of the Township of Carneys Point and the Township's agreement to accept the payment constituted an unlawful quid pro quo arrangement, and, therefore, the action of the Board was arbitrary, capricious or unreasonable. Upon our review of the arguments presented on appeal, in light of the record and governing law, we disagree and affirm the dismissal of plaintiffs' complaint.

I.

The record discloses the following facts and procedural history.

Tri County owns Block 1, Lots 16 and 17 on Seventh Avenue in Carneys Point. In July 2009, Tri County entered into informal discussions with the Township regarding development of the tract as an affordable residential apartment complex for special-needs individuals and disabled veterans to satisfy the Township's constitutional obligation under Mount Laurel.2 In accordance with the Local Redevelopment and Housing Law (LRHL), N.J.S.A. 40A:12A-1 to -73, the Township had previously designated the area containing part of Tri County's tract as one in need of redevelopment. After discussions broke down, Tri County filed a builder's remedy suit against the Township in January 2011, challenging the Township's Redevelopment Plan on constitutional and statutory grounds.

On July 15, the trial court dismissed two counts of the complaint for lack of jurisdiction, concluding "that the proper jurisdiction over plaintiff's 'disputes involving exclusionary zoning' lies with the New Jersey Council on Affordable Housing [(COAH)] pursuant to the New Jersey Fair Housing Act, N.J.S.A. 52:27D-301 [to -329.4]." On January 13, 2012, the trial court dismissed the remaining claim with prejudice, which Tri County appealed.

On March 21, Tri County and the Township entered into a Memorandum of Understanding (MOU) regarding the litigation then pending, in part before COAH, and in part before this court on appeal. The stated purpose of the MOU was "to resolve certain preliminary issues and to lay the foundation for a Redeveloper's Agreement related to the Project to be hereafter negotiated and executed on or before April 16, 2012." The MOU contained, among other provisions, the following

2. Responsibilities of the Township

. . . .

b. [T]he Township shall negotiate a 10% Payment in Lieu of Taxes Agreement (PILOT) with Tri[]County which shall comport with the relevant rules and regulations of the New Jersey Housing and Mortgage Finance Agency.

c. [T]he proposed Redeveloper's Agreement shall provide for a waiver of the Township-controlled Inspection and Building Permit Fees . . . .

d. Subject to appropriate notice to the public . . . and provided further that the Planning Board amends its Affordable Housing Plan to include the Tri[]County project, the Township will endorse said plan and re-petition COAH for substantive certification of same.

e. [T]he Township shall adopt resolutions and take other appropriate actions to provide the support required to facilitate Tri[]County's efforts to secure funding from non-municipal sources necessary to assist the economic feasibility of the Project.

. . . .

3. Responsibilities of Tri[]County

. . . .

b. Assuming Tri[]County secures Preliminary Site Plan Approval on or before May 1, 2012 and project funding . . . Tri[]County agrees and has hereby consented to pay the Township . . . the legal fees already expended by the Township in the pending litigation and other disputes between Tri[]County and the Township, to be capped at $250,000 [hereinafter "Legal Fees Provision"].

Of the reimbursed legal fees, Tri County would pay fifty percent immediately upon its "securing tax credit funding for the Project" to be "released upon the issuance of a permanent Certificate of Occupancy," with the balance paid "simultaneous with the issuance of the permanent Certificate of Occupancy." The MOU stated explicitly that "[s]aid fees are not a condition of the Certificate of Occupancy."

The Township Committee approved the MOU that same day. Of the Township Committee's five members, only two, Charles Newton and Kenneth Dennis, participated in the vote approving the MOU. The remaining members had disqualifying conflicts. Before the public vote, an impromptu private discussion took place among Newton, Dennis, Bibeau, his attorney and the Township's attorney. The participants discussed the MOU and its contents, including the Legal Fees Provision. Shortly thereafter, at its regular public meeting, the Township Committee approved the MOU by a two-to-zero vote. No fairness hearing was conducted regarding the settlement or dismissal of Tri County's claims against the Township.3

On April 5, Tri County filed its application for preliminary approval of a major site plan for construction of affordable, multi-family housing units at its lots on Seventh Avenue. The application did not require any variances and, Tri County contends, met all zoning requirements of the Township's Redevelopment Plan. Tri County also requested fifteen "waivers" in its application, which it characterizes as "submission," as opposed to "design," waivers.

A public hearing on the application was scheduled for April 17. Tri County published notice of the meeting in the local newspaper and sent notice to all property owners within 200 feet of the site. On April 13, plaintiffs' counsel faxed a letter to the Board's secretary and attorney, advising that plaintiffs would not be able to attend the April 17 hearing, but detailing plaintiffs' specific objections to Tri County's application, including the Legal Fees Provision. The letter did not request an adjournment of the public hearing.

On April 16, the Township Committee adopted three resolutions: 2012-77, 2012-78 and 2012-79. The first waived the assessing of construction fees related to the project, the second approved the April 16 Redeveloper's Agreement between the Township and Tri County, and the third authorized a tax abatement for the property. That same day, the Township and Tri County formally entered into the Redeveloper's Agreement, which incorporated the substantive terms of the MOU. The Redeveloper's Agreement settled the litigation between the parties. Additionally, among other obligations, Tri County agreed to ensure that all units at the project shall comply "with all COAH regulations and shall result in up to sixty (60) credit worthy credits for the units constructed to be used by the Township in addressing its current and/or future Mount Laurel affordable housing obligations."

The Board heard Tri County's application on April 17. The April 16 Redeveloper's Agreement was marked in evidence and constituted part of the record before the Board. At the meeting, in addition to the testimony of Tri County representatives, the Board heard testimony from Dale Boston, Tri County's planner, and Steven Cohen, its architect, in support of the application. Boston informed the Board that, having viewed the site and reviewed the relevant regulations and documents, Tri County's application met all necessary requirements for preliminary major site plan approval, subject only to the municipality's professional reports. Cohen, who had designed the plans for the proposed project, similarly testified that the building itself was compatible and consistent with the neighborhood and pertinent design requirements.

Additionally, the Township's own experts testified at the hearing. Robert Hall, Township Planner, stated that the project was consistent with the Township's Redevelopment Plan, did not require any variances and went "a long way [towards] satisfy[ing] the town's obligation to provide for affordable housing." Hugh Doherty, Township Engineer, informed the Board he was satisfied with the application since Tri County was "going to fully comply" with the Township's ordinance governing flood and storm water control.

The Board next heard from members of the public, mostly site neighbors, on issues ranging from increased traffic, flooding and safety concerns arising from the building of low-income housing units. However, no members of the public raised objections to the Redeveloper's Agreement or its potential effect on the Board's deliberations.

Plaintiffs neither appeared at the April 17 hearing nor offered any evidence to rebut the testimony of either Tri County's or the Township's witnesses. Plaintiffs' counsel requested its letter to the Board and objections be read aloud at the hearing. The Board's counsel refused on the grounds that doing so would improperly deny the Board and the public the opportunity to cross-examine plaintiffs regarding the letter's contents.

After the closing of evidence, Joan Adams, Township Solicitor, summarized the application and testimony

This particular project does not require any variances or design waivers. As a result, it's a [by right plan]. And what that means under the law is as long as it meets the standards of the Redevelopment Plan . . . the Code and the Ordinance standards that were set out . . . and [the Board's] engineering and planning concerns, then, it's an application that deserves approval.

In this instance, there were a lot of issues raised regarding the on-site flooding . . . the water, the design, [and] the traffic. [Tri County] has attempted to address and answer most of those questions . . . and [has] consented to comply with any of the recommendations of either [the Township's] Engineer or [] Planner as [Tri County] finalize[s] the site design.

Adams further provided that Tri County's representations regarding the concerns of the Board and the public would be incorporated into the final Resolution to be adopted by the Board. The Board then unanimously approved the application for preliminary site plan approval.

On April 24, the Board adopted Resolution 2012-04, granting Tri County preliminary major site plan approval for the construction of an affordable housing complex on its property on Seventh Avenue. Notice of the approval was published on May 1, 2012.

On May 22, plaintiffs filed an action in lieu of prerogative writs against the Township, the Board and Tri County, contending the Board's adoption of Resolution 2012-04 was arbitrary, capricious or unreasonable, and seeking (1) a declaration voiding the resolution; (2) rescission and revocation of all approvals; and (3) legal fees and costs. Defendants denied liability and asserting various affirmative defenses. Plaintiffs moved for summary judgment on the issue of whether the Board's approval of the application was arbitrary, capricious or unreasonable in light of the alleged quid pro quo between Tri County and the Township. The Township and the Board filed a cross-motion (1) in limine to exclude all documents relating to the MOU as not part of the Board's proceedings approving Tri County's application; (2) objecting to plaintiffs' motion for summary judgment as procedurally improper pursuant to Rule 4:69-2; and (3) to dismiss the complaint.

After oral argument, the trial court issued its decision by written opinion and accompanying orders on November 27, 2013. First, the court held, in light of the claim of an illegal quid quo pro arrangement, Rule 4:69-2 did not preclude plaintiffs' motion for summary judgment in lieu of a trial de novo on the record. The trial court also denied the Township's and the Board's motion in limine, concluding it was "necessary that the court consider both the acts of the Township and the Board in this case," particularly because the Redeveloper's Agreement, which incorporated the MOU's terms, was an exhibit before the Board when it considered Tri County's application.

However, the trial court also denied plaintiffs' motion for summary judgment on the issue of the Board's propriety in approving Tri County's application. First, the court held, even in light of the Legal Fees Provision incorporated in the Redeveloper's Agreement, the Board's action did not exceed its discretion. The court concluded the Board's action was not arbitrary, capricious or unreasonable, and agreed with defendants that the enabling statute and the application's "by right" status rendered any alleged quid pro quo legally unsubstantiated. Further, the court determined the payments under the Legal Fees Provision "were proper under the LRHL." Second, the court concluded the Township's failure to request a fairness hearing regarding the Redeveloper's Agreement, a settlement of Tri County's prior suit against the Township, was inconsequential because "[t]here was no need for the court to conduct a fairness hearing of claims resolved through COAH Pre-Mediation." Finally, the court held that plaintiffs' challenge to the impromptu discussion immediately preceding the Township Committee's meeting on March 21, 2012, under the Open Public Meetings Act (OPMA), N.J.S.A. 10:4-6 to -21, was untimely.

Consequently, the trial court granted the Township's and the Board's motion for summary judgment, dismissing plaintiffs' complaint with prejudice. On December 3, the trial court amended its order to clarify that plaintiffs' desired relief, a declaration of Resolution 2012-04 and all accompanying approvals as null and void, was denied. It is from this denial of their motion for summary judgment, as well as the dismissal of the complaint with prejudice, that plaintiffs appeal. Neither the Township nor the Board appeals from the trial court's denial of their motion in limine to exclude all documents relating to the MOU.

II.

"[A] [planning board's] exercise of its discretionary authority based on its factual determinations will not be overturned unless arbitrary, capricious or unreasonable." Rocky Hill Citizens for Responsible Growth v. Planning Bd., 406 N.J. Super. 384, 411 (App. Div. 2009) (citation and internal quotation marks omitted). Whether before the trial court or upon appellate review, the factual determinations of a municipal planning board are presumed valid. Cell S. of N.J. v. Zoning Bd. of Adjustment, 172 N.J. 75, 81 (2002). The rationale underlying this limited review is that local officials are generally more familiar with their municipality's interests. See Kramer v. Bd. of Adjustment, 45 N.J. 268, 296 (1965). Yet, "a court is not bound by [a board]'s determination on a question of law and the [trial] court's construction of an ordinance under review is de novo." Fallone Props., L.L.C. v. Bethlehem Twp. Planning Bd., 369 N.J. Super. 552, 561 (App. Div. 2004) (citations omitted).

The burden of proof to show that a municipal action is arbitrary, capricious or unreasonable is imposed upon the party challenging that action. Toll Bros., Inc. v. Bd. of Chosen Freeholders, 194 N.J. 223, 256 (2008). The reviewing court "must focus on the validity of the Board's action," not "substitute [its] judgment for the proper exercise of the Board's discretion." CBS Outdoor, Inc. v. Borough of Lebanon Planning Bd./Bd. of Adjustment, 414 N.J. Super. 563, 578 (App. Div. 2010). In this matter, our task in reviewing the Board's action mirrors that of the trial court, namely, to determine whether the Board followed the statutory guidelines and properly exercised its discretion. See Burbridge v. Mine Hill, 117 N.J. 376, 385 (1990). We accord substantial deference to findings of fact and overturn discretionary rulings only if arbitrary, capricious or unreasonable. See Friends of Peapack-Gladstone v. Peapack-Gladstone Land Use Bd., 407 N.J. Super. 404, 424 (App. Div. 2009).

Plaintiffs contend the trial court erred, asserting Tri County's agreement to reimburse the Township pursuant to the Legal Fees Provision irrevocably tainted the Board's deliberative process, rendering the Board's decision to approve the application arbitrary, capricious or unreasonable. Plaintiffs urge our decision in Nunziato v. Edgewater Planning Board, 225 N.J. Super. 124 (App. Div. 1988), compels that result. As we held in Nunziato, the municipal authority to condition development approvals on the developer's agreement to provide or contribute to off-site improvements is limited by statute. Id. at 131. N.J.S.A. 40:55D-42 "permits such contributions only with respect to street improvements and water, sewerage and drainage facilities, and only to the extent necessitated by the reasonably anticipated impact of the development on those facilities." Twp. of Marlboro v. Planning Bd. of Twp. of Holmdel, 279 N.J. Super. 638, 642-43 (App. Div.) certif. denied, 141 N.J. 98 (1995). As we stated in Twp. of Marlboro

[W]e view the critical issue as whether the illegal exaction constitutes a blatant quid pro quo for the approval, either demanded by the municipality and acceded to by the developer or offered by the developer and accepted by the municipality in circumstances in which the exaction is unrelated to any legitimate land use concerns generated by the development application itself and the amount thereof is entirely arbitrary. If that is so, then the transaction may be fairly regarded as an interdicted sale of a municipal approval, subversive of law, anathematic to public policy, and remedial only by vitiation of the approval.

[Id. at 643.]

We conclude the payment of the legal fees was not a quid pro quo for the Board's approval for several reasons. First, we agree with the trial court the Legal Fees Provision in the Redeveloper's Agreement was permitted by N.J.S.A. 40A:12A-8 of the LRHL. Second, the approval by the Board was not in any way conditioned on the payment of the legal fees. Third, the underlying litigation had been dismissed and payment was part of the settlement of appeal between the Township and Tri County. Most importantly, as opined to the Board by the Township Solicitor, Tri County had a right to the approval since "the project does not require any variances or design waivers."

Defendants next contend the court erred by not voiding the approvals granted in the Board's Resolution 2012-04 as a result of no "fairness hearing" being conducted. Defendants rely on Serenity at Arlington Ridge, Inc. v. Town of Kearny, 243 N.J. Super. 415 (Law Div. 1990), for the proposition that a fairness hearing is required in this matter. We disagree. Serenity was a Mount Laurel case where the parties reached a settlement. Id. at 416. Resolved in that matter were questions relating to whom and how notice is to be given. Ibid. Here, the judge concluded "[t]here was no need for this court to conduct a fairness hearing of claims resolved through COAH Pre-Mediation." Although we do not disagree, there is no reason to reach that conclusion. A fairness hearing was not necessary since the project by its terms advanced the goals of Mount Laurel.

Finally, plaintiffs assert the impromptu meeting among council members and representatives of Tri County, which took place before the March 21, 2012 council meeting at which the MOU was adopted, violated the OPMA. Defendants contend the impromptu meeting did not violate the OPMA and, further, the action sought to be voided is not the action by the Township, but that of the Board. We need not reach this issue. The court properly determined the plaintiffs' complaint was untimely as it was filed more than forty-five days after the date the action sought to be voided was made public. N.J.S.A. 10:4-15(a); Burnett v. Gloucester Cnty. Bd. of Chosen Freeholders, 409 N.J. Super. 219, 240 (App. Div. 2009).

Affirmed.

1 Tri County and Affordable Salem are related entities. John Bibeau is a principal of both companies.

2 S. Burlington Cnty. NAACP v. Twp. of Mount Laurel, 92 N.J. 158 (1983).

3 Tri County informed this court of the settlement and we subsequently dismissed its appeal.