OAKS DEVELOPMENT CORP v. THE PLANNING BOARD OF THE TOWNSHIP OF OLD BRIDGE
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2666-16T2
OAKS DEVELOPMENT CORP.,
JOHN J. BRUNETTI, and
MIDTOWN WATER COMPANY,
Plaintiffs-Appellants,
v.
THE PLANNING BOARD OF THE TOWNSHIP
OF OLD BRIDGE, THE TOWNSHIP OF OLD
BRIDGE, and THE OLD BRIDGE MUNICIPAL
UTILITIES AUTHORITY,
Defendants-Respondents.
____________________________________________
Argued March 6, 2018 – Decided April 30, 2018
Before Judges Yannotti, Mawla and DeAlmeida.
On appeal from Superior Court of New Jersey,
Law Division, Middlesex County, Docket No.
L-1909-05.
Eric I. Abraham argued the cause for
appellants (Hill Wallack LLP, attorneys; Eric
I. Abraham, of counsel and on the briefs;
Christina L. Saveriano, on the briefs).
Louis E. Granata argued the cause for
respondent (Louis E. Granata, PC, and
McManimom, Scotland & Baumann, LLC, attorneys;
Louis E. Granata, of counsel and on the brief;
Leslie G. London and Ted Del Guercio, III, on
the brief).
PER CURIAM
Plaintiffs Oaks Development Corporation (ODC), John J.
Brunetti (Brunetti), and Midtown Water Company (Midtown) appeal
from an order entered by the Law Division on February 20, 2017,
which affirmed a determination of defendant Old Bridge Municipal
Utility Authority (Authority) denying plaintiffs' amended
application to connect their development project to the
Authority's system without a one million gallon water storage
tank. We affirm.
I.
We briefly summarize the relevant facts and procedural
history. In the 1950's, Brunetti's father acquired about 2500
acres of land in the Township of Old Bridge (Township), and the
Township thereafter granted Midtown a franchise to operate a
private water company in that area. The State authorized Midtown
to exercise water diversion rights, and allowed it to operate as
a public utility for the withdrawal, extraction, sale, and delivery
of water. Midtown later drilled a well, built a treatment plant,
and installed certain machinery and equipment in the franchise
area.
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The Authority commenced an action to acquire Midtown's
property, machinery and equipment, and franchise rights, through
the exercise of the power of eminent domain. To resolve that
matter, Brunetti's father and the Authority entered into an
agreement, dated December 13, 1967, which provided that Midtown
would sell and convey to the Authority certain real property, as
well as its artesian well, pumps, equipment, storage tanks, and
related facilities, in exchange for the payment of certain amounts.
Midtown also agreed to relinquish all water diversion rights in
the property.
In addition, the Authority agreed to construct, at its own
cost and expense, all wells, pumps, storage tanks, and treatment
facilities necessary to furnish an ample supply of potable water
of sufficient pressure and volume so that Brunetti's father and
his grantees could develop and use their properties in the
franchise area for any lawful purpose. The Authority also agreed
to furnish, and Midtown agreed to take, up to five million gallons
of water per day through metered connections with the Authority's
mains.
Thereafter, Midtown, the estate of Brunetti's father, and the
Authority entered into an agreement, dated January 18, 1986, which
provided that all of Midtown's existing water users in the
franchise area would become the Authority's customers, without any
3 A-2666-16T2
payment by the Authority. The 1986 Agreement specified the rates
Midtown's customers would be charged for the water they used, and
provided that they would not be required to pay fees for any
connections in the franchise area.
The 1986 Agreement further provided in pertinent part:
2. In the event that the . . . [Authority]
supplies water to any other portion of the
franchise area, not currently constructed,
then, in that event, all customers who are
supplied water by the . . . [Authority] shall
become customers of the . . . [Authority] and
shall pay the prevailing water rate and any
increases as shall be approved in accordance
with law to the . . . [Authority]. It shall
be the obligation of . . . [Midtown] to
construct and bear the full costs of all lines
and other facilities within the franchise area
in order to connect with the existing . . .
[Authority] mains.
. . . .
7. In the event that . . . [Midtown] makes
any additions to the existing water
distribution system, . . . [Midtown] shall
provide the . . . [Authority] "as built"
drawings, properly certified by a licensed New
Jersey professional engineer.
8. It is the expressed understanding of
all parties that nothing in this Agreement
shall ever be construed to require the payment
by the . . . [Authority] of any monies
whatsoever for any purpose whatsoever.
In 2004, plaintiffs commenced an action in the Law Division
seeking an order directing the Township and its Planning Board to
4 A-2666-16T2
approve their application to construct a development on 433 acres
of land in Midtown's franchise area, consisting of 1312 residential
housing units and 600,000 square feet of commercial space. In
December 2004, the trial court granted the relief sought and in
March 2005, the Planning Board approved the application.
In 2006, plaintiffs submitted an application to the Authority
for water and sewer service. At that time, the proposed development
included 1380 housing units and 600,000 square feet of commercial
space. The Authority retained CME Associates (CME), a firm of
consulting engineers, to determine the impact the proposed
development would have on the Authority's water distribution
system and the improvements that would be required to provide
water to the development.
In February 2007, CME issued a report recommending, among
other things, that the Authority construct an elevated water
storage tank with a minimum of two million gallons. According to
CME, the tank would reduce the demand on the existing Browntown
treatment plant and the Route 516 pump station during peak day
demand, and provide redundancy in the event there was a supply
pump failure. At some point thereafter, it was determined that a
one million gallon storage tank would be sufficient and
improvements to the Higgins Road/Route 516 interconnection were
required.
5 A-2666-16T2
In 2009, plaintiffs filed an amended complaint in the Law
Division, alleging, among other claims, that the Authority
breached its agreement to provide an adequate supply of water to
the Oaks development, and improperly sought to "coerce" plaintiffs
to construct improvements to benefit the entire water supply
system. Plaintiffs claimed that the Authority had demanded
improvements that were not reasonably required to provide water
service to the Oaks development.
The trial court later ruled that the 1986 Agreement was the
controlling agreement between the parties, and the agreement
required plaintiffs to construct and pay for the lines and
facilities needed to provide water to the Oaks development. After
the trial court disposed of the remaining claims of the parties,
the parties appealed.
We determined that the trial court correctly found that the
1986 Agreement controlled the relationship of the parties. Oaks
Dev. Corp. v. The Planning Bd. of the Twp. of Old Bridge, No. A-
4741-11 (App. Div. Oct. 8, 2013) (slip op. at 16-17). We held that
the agreement clearly and unambiguously required plaintiffs to
bear the costs of "all lines and other facilities" required to
connect the proposed development with the Authority's water supply
system. Id. at 17. We concluded, however, that the court erred by
finding there was no genuine issue of material fact as to whether
6 A-2666-16T2
the specific improvements at issue were required to provide water
to the development. Id. at 18.
We remanded the matter to the trial court to determine whether
the improvements at issue, specifically, the water storage tank,
improvements to the Browntown treatment plant, and improvements
to the Higgins Road/Route 516 interconnection, "are reasonably
required to connect plaintiffs' properties to the Authority's
water supply system." Id. at 34.
In September 2010, plaintiffs submitted an application to the
Authority to connect the development to the Authority's system.
The application included an on-site 1.75 million gallon water
storage tank. In August 2011, plaintiffs submitted an amended
application to the Authority, which reduced the water storage tank
to one million gallons. Plaintiffs claimed the proposed tank would
be sufficient to meet domestic water and fire suppression demands
without adversely affecting the Authority's distribution system.
The Authority has a three-step approval process. An applicant
must first obtain preliminary approval. If preliminary approval
is granted, the applicant can seek tentative approval. After all
issues are resolved, the applicant then can seek final approval.
At some point, plaintiffs obtained preliminary approval of the
amended application with the one million gallon storage tank, and
7 A-2666-16T2
in September 2012, the Authority granted plaintiffs' application
for tentative approval.
In April 2016, plaintiffs sought final approval but later
submitted another application, which eliminated the one million
gallon tank. Thereafter, the trial court remanded the matter to
the Authority to conduct a hearing on the amended application. The
Authority conducted the hearing on July 20, 2016.
At the hearing, Oaks presented testimony from engineers David
G. Eareckson and Paul J. Paparella. Michael Roy, the Authority's
consulting engineer, and Michael McClelland of CME also testified.
The Authority voted to deny the application, finding that the one
million gallon storage tank was reasonably required to provide
water to the Oaks development.
Plaintiffs then sought review by the trial court of the
Authority's decision. The trial court filed a written opinion and
judgment dated February 20, 2017. In its opinion, the court noted
that the parties had not addressed the improvements to the
Browntown treatment plant and the Higgins Road/Route 516
interconnection. Thus, the only improvement at issue was the one
million gallon storage tank.
The court found that there was sufficient credible evidence
in the record to support the Authority's finding that a one million
gallon storage tank was required to provide adequate water flow
8 A-2666-16T2
to the development. The court concluded that the Authority had
sound reasons for rejecting the testimony of plaintiffs' experts,
and its decision was not arbitrary, capricious, or unreasonable.
This appeal followed.
II.
On appeal, plaintiffs argue that the Authority's decision to
require the construction of the one million gallon water storage
tank was arbitrary, capricious, and unreasonable. Plaintiffs
contend the Authority's decision is not supported by the evidence
presented at the July 20, 2016 hearing.
The decision of a local government agency is entitled to "a
presumption of validity, and a court may not substitute its
judgment for that of the [agency] unless there has been a clear
abuse of discretion." Price v. Himeji, LLC,
214 N.J. 263, 284
(2013) (citing Cell S. of N.J., Inc. v. Zoning Bd. of Adjustment,
172 N.J. 75, 81 (2002)). The court may not reverse an agency's
decision unless it is "arbitrary, capricious, or unreasonable, or
[] not supported by substantial credible evidence in the record
as a whole." In re Stallworth,
208 N.J. 182, 194 (2011) (alteration
in original) (quoting Henry v. Rahway State Prison,
81 N.J. 571,
579-80 (1980)).
At the hearing on July 20, 2016, plaintiffs presented a report
and testimony by Paparella. In his report, Paparella noted that
9 A-2666-16T2
the addition of the Oaks development could potentially have an
adverse impact on the Authority's distribution system. He said
there were two options: to increase the supply of water, or
increase the supply of water and build a storage tank. Paparella
stated that the Authority cannot obtain additional groundwater;
therefore, it must purchase additional supply from Middlesex Water
Company (MWC).
Paparella pointed out that the Authority's contract with MWC
requires it to pay a premium if it purchases more than three
million gallons per day (MGD). He stated, however, that records
from January 2007 to December 2015, indicated that the Authority
exceeded three MGD on seven hundred days, and it exceeded four MGD
on more than one hundred days. Paparella said the Oaks development
would increase demand by .35 MGD, and the Authority could increase
its purchases to 2.65 MGD, which would allow the Authority to
operate at a four MGD daily peak without premium charges.
Paparella opined that a water storage tank is not required
if the Authority increases its supply of water. He stated that
increasing supply and adding the tank would require a capital
investment of several million dollars. He asserted that if the
supply is adequate to meet daily demand, the existing storage
capacity throughout the system would be adequate to meet the system
10 A-2666-16T2
demands, including the additional demand needed to serve the Oaks
development.
Eareckson testified that the average peak flow demand for the
system with the development was 400 gallons per minute (GPM). He
also considered fire flow, which he determined was 1650 GPM. He
opined that based on his analysis, the development would not have
a negative impact on the system and a water storage tank was not
required. He agreed with Paparella that the Authority only had to
increase the supply by purchasing more water from MWC.
Roy offered a contrary view. He stated that based on his
analysis, a one million gallon storage tank was required to connect
the Oaks development to the system. In his report, Roy stated
that:
Economics are not the only concern that the
[Authority] has with increased reliance on
purchased water to meet daily and hourly
demands. Reliability for the supply of water
by MWC has become an issue as the [Authority]
has received requests from MWC to reduce its
take during high demand periods. Typically,
during the high demand summer months when the
[Authority] is experiencing increased
demands, so are other MWC customers connected
to their system. Further, the [Authority]
continues to have quality issues with the
water provided by MWC with regard to
disinfection byproducts, requiring the
[Authority] to cease its take of water from
MWC when the byproduct levels approach the
regulatory threshold.
. . . .
11 A-2666-16T2
[T]he connection of the Oaks to the existing
system has never been a supply problem. The
[Authority] has stated that there is ample
water supply available for both its existing
customers and the proposed development. The
negative impacts of the proposed development
are within the distribution system and its
ability to deliver water from the Water
Treatment Plants and interconnections to
existing connections once the proposed
development is connected. The diversion of
water from the existing connections to supply
the Oaks . . . where there is no present demand
results in decreased service to the existing
customers in terms of lower pressures and
storage tank levels.
McClelland opined that based on the computer modeling, the
Authority's distribution system could not meet the peak demand and
fire flow generated by the Oaks development without having an
adverse impact in other areas of the system. He also recommended
the construction of the storage tank.
The Authority decided that the views expressed by Roy and
McClelland were more persuasive than those provided by plaintiffs'
experts. As the trial court recognized, the Authority had the
discretion "to accept or reject" the experts' opinions. Allen v.
Hopewell Twp. Zoning Bd. of Adjustment,
227 N.J. Super. 574, 581
(App. Div. 1988). We conclude the Authority's decision to accept
Roy's and McClelland's opinions on the need for the water storage
tank was not an abuse of discretion.
12 A-2666-16T2
As Roy explained, the addition of the Oaks development did
not create a supply problem in the system. Rather, the development
had a negative effect upon the Authority's distribution system
because it diverted water from existing connections and water
storage facilities. Moreover, in his report, McClelland noted that
model runs had been performed to assess the impact of the Oaks
development on the Authority's water supply system. In that report,
he stated:
The model indicated that the system is not
capable of providing consumption demands and
the residential and commercial fire flow
demands imposed in the system at the Oaks
[development] on a [p]eak [d]ay with all pumps
running. The model indicates that the
Authority cannot maintain a minimum of [twenty
pounds per square inch] throughout the system
and stored water volumes are significantly
impacted under near future peak day conditions
with the indicated fire flow demands without
operational changes.
Thus, as the trial court found, there is sufficient credible
evidence in the record to support the Authority's determination
additional water storage capacity is required to provide service
to the Oaks development and maintain adequate water supply
throughout the Authority's service area. The evidence supports the
Authority's finding that the addition of the one million gallon
storage tank was reasonably required to provide service to the
Oaks development.
13 A-2666-16T2
III.
Plaintiffs argue that at the hearing Roy admitted additional
infrastructure is not required to connect the Oaks development to
the Authority's system. According to plaintiffs, the storage tank
will be placed in the least optimal location. Plaintiffs argue
this indicates the Authority is requiring them to construct a
storage tank that is not required for their development, but
instead needed to fix existing deficiencies in the system.
The evidence presented at the hearing indicates, however,
that the key consideration is the effect the Oaks development will
have on the Authority's distribution system, not the location of
the storage tank. Furthermore, at the hearing, the Authority's
experts did not state that the storage tank was required to fix
existing deficiencies in the system. Rather, Roy and McClelland
both testified that a water storage tank was required to address
the impacts that the addition of the Oaks development would have
on the Authority's system.
Plaintiffs further argue that the Authority intentionally
overestimated the requirements for fire flow, which led to flawed
assumptions in the water-demand computer modeling. The record
shows that Eareckson calculated fire flow of 1650 GPM. However,
McClelland stated that his firm had utilized a value of 2500 GPM
14 A-2666-16T2
in its analysis, and noted that a fire flow of 2500 GPM had been
"used for ten years."
In his report, McClelland stated:
The developer's engineer determined the needed
fire flow figures based on a number of
assumptions, such as the type of units, the
type and materials of construction, presence
or type of fire walls, the presence of
sprinklers, distance between buildings and the
contents of the commercial structures, all of
which remain unknown at this time. Further,
the maximum needed fire flow appears to be
2,150 [GPM] as noted above. Using 2,500 [GPM]
for the needed fire flow value in the model
is not overly conservative and within sound
engineering judgment given the variables
contained in the fire flow calculation
assumptions.
The Authority was not required to accept Eareckson's fire flow
analysis, and reasonably chose to rely upon the fire flow value
presented by McClelland, which was the value that had been used
for many years.
Moreover, at the hearing, Eareckson testified that 400 GPM
is the anticipated average peak flow demand of the system. He
asserted that based on that analysis, a water storage tank is not
required. Eareckson admitted, however, that regulations of the New
Jersey Department of Environmental Protection (NJDEP) require that
average peak flow demand be determined by multiplying the average
daily water demand by a factor of three. N.J.A.C. 7:10-11.5(f).
15 A-2666-16T2
Eareckson used a multiplier of 1.6. He said that is the demand
at which the Authority has been operating, but he acknowledged
that the NJDEP's approval would be required to install the new
water mains to the Oaks development. The Authority did not err by
rejecting Eareckson's calculation of average peak flow demand,
which was inconsistent with the NJDEP's regulation.
We have considered plaintiffs' other arguments and conclude
they are without sufficient merit to warrant discussion. R. 2:11-
3(e)(1)(E).
Affirmed.
16 A-2666-16T2
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