Holmdel Builders Ass'n v. Township of Holmdel

Page 550

121 N.J. 550

583 A.2d 277

HOLMDEL BUILDERS ASSOCIATION, Plaintiff-Respondent and Cross-Appellant, v. TOWNSHIP OF HOLMDEL in the County of Monmouth, a municipal

corporation of the State of New Jersey, the Township

Committee of the Township of Holmdel and the Planning Board

of the Township of Holmdel, Defendants-Appellants and

Cross-Respondents,

and

Township of Cherry Hill, Intervenor-Appellant.

NEW JERSEY CHAPTER OF THE NATIONAL ASSOCIATION OF INDUSTRIAL AND OFFICE PARKS, Plaintiff-Respondent, v. TOWNSHIP OF SOUTH BRUNSWICK in the County of Middlesex, a

municipal corporation of the State of New Jersey, the

Township Committee of the Township of South Brunswick, the

Planning Board of the Township of South Brunswick and the

Zoning Board of Adjustment of the Township of South

Brunswick, Defendants-Appellants,

and

Township of Cherry Hill, Intervenor-Appellant.

NEW JERSEY BUILDERS ASSOCIATION, Plaintiff-Respondent and Cross-Appellant, v. The TOWNSHIP OF CHESTER in the County of Morris, a municipal

corporation of the State of New Jersey and the Mayor and

Township Council of the Township of Chester,

Defendants-Appellants and Cross-Respondents,

and

Township of Cherry Hill, Intervenor-Appellant.

CALTON HOMES, INC., Plaintiff-Respondent, v. TOWNSHIP OF MIDDLETOWN in the County of Monmouth, a

municipal corporation of the State of New Jersey

and the Township Committee of the

Township of Middletown,

Defendants-Appellants,

and

Township of Cherry Hill, Intervenor-Appellant.

Supreme Court of New Jersey.

Argued Feb. 13, 1990.

Decided Dec. 13, 1990.

Alfred L. Ferguson, for defendants-appellants and cross-respondents Township of Chester, etc., et al. (McCarter & English, attorneys, Alfred L. Ferguson and Gary T. Hall, on the briefs).

William F. Dowd, for defendants-appellants Township of Middletown, etc., et al. (Dowd & Reilly, attorneys).

Joseph J. Benedict, for defendants-appellants Township of South Brunswick, etc., et al. (Benedict and Altman, and Howard W. Weber, attorneys, Joseph J. Benedict and Howard W. Weber, on the brief).

Ronald L. Reisner, for defendants-appellants and cross-respondents Township of Holmdel, etc., et al. (Gagliano, Tucci, Iadanza and Reisner, attorneys, S. Thomas Gagliano and Eugene A. Iadanza, of counsel).

Francine I. Axelrad, Municipal Attorney, for intervenor-appellant Township of Cherry Hill.

Henry A. Hill and Thomas F. Carroll, III, for plaintiff-respondents and cross-appellants (Wallack & Masanoff, attorneys; Mitchell Newman, on the briefs).

Stephen Eisdorfer, Asst. Deputy Public Advocate, for amicus curiae Public Advocate of New Jersey (Thomas S. Smith, Jr., Acting Public Advocate, attorney).

William H. McCarty, Jr., for amicus curiae Township of Princeton (Mason, Griffin & Pierson, attorneys, Edwin W. Schmierer, of counsel).

Kenneth E. Meiser for amici curiae Civic League of Greater New Brunswick and the League of Women Voters (Frizell, Pozycki & Meiser, attorneys).

The opinion of the Court was delivered by

HANDLER, J.

In 1975, this Court held that developing municipalities are constitutionally required to provide a realistic opportunity for the development of low- and moderate-income housing. Southern Burlington County NAACP v. Mount Laurel Township, 67 N.J. 151, 336 A.2d 713, cert. denied, 423 U.S. 808, 96 S.Ct. 18, 46 L.Ed.2d 28 (1975) (Mt. Laurel I ). In the years following, many municipalities failed to comply with the clear mandate of Mt. Laurel I. The failure to provide the necessary opportunity for affordable housing led to a new legal challenge. We clarified and reaffirmed the constitutional mandate set forth in Mt. Laurel I, imposing an affirmative obligation on every municipality to provide its fair share of affordable housing. Southern Burlington County NAACP v. Mount Laurel Township, 92 N.J. 158, 456 A.2d 390 (1983) (Mt. Laurel II ). We enumerated several possible approaches by which municipalities could comply with the constitutional obligation, including lower-income density bonuses and mandatory set-asides. We stressed that "municipalities and trial courts are encouraged to create other devices and methods for meeting fair share obligations." Id. at 265-66, 456 A.2d 390. Subsequently, the Legislature codified the Mt. Laurel doctrine, including its available compliance measures, by enacting the Fair Housing Act, L.1985, c. 222; N.J.S.A. 52:27D-301 to -329 (FHA). We have since upheld the constitutionality of the FHA. Hills Dev. Co. v. Bernards Township, 103 N.J. 1, 25, 510 A.2d 621 (1986).

The cases that comprise this appeal arise out of attempts by several municipalities to comply with their obligation to provide a realistic opportunity for the construction of affordable housing under our ruling in Mt. Laurel II and the provisions of the FHA. The Townships of Chester, South Brunswick, Holmdel, Middletown, and Cherry Hill all adopted ordinances to provide for low- and moderate-income housing. The ordinances, in varying forms, impose fees on developers as a condition for development approval. The fees are dedicated to an affordable-housing trust fund to be used in satisfying the municipality's Mt. Laurel obligation.

Several builders' associations initiated suits challenging those ordinances, claiming that each was an ultra vires act, exceeding the authority of the zoning and police powers and the Fair Housing Act; an invalid tax in violation of the uniform property taxation requirement of the New Jersey Constitution; a taking without just compensation in violation of both the United States and New Jersey Constitutions; and a denial of due process and equal protection in violation of both the United States and New Jersey Constitutions. Plaintiff New Jersey Builders Association sought a refund of the monies paid into the Chester Township affordable-housing trust fund plus accrued interest.

The trial courts in each case except Cherry Hill ruled that the ordinance at issue was facially unconstitutional because it imposed an unauthorized tax on a select group of individuals. The trial court in Chester also held that the New Jersey Builders Association lacked standing to seek a refund on behalf of its members. The courts did not address the due-process, equal-protection, and taking claims. In each case except Cherry Hill, they granted summary judgment to plaintiffs. In denying plaintiff's summary-judgment motion in Cherry Hill, the trial court ruled that the ordinance was constitutional and within the scope of municipal power. We denied the unsuccessful defendants' motions for direct certification.

Defendants, and Cherry Hill as intervenor, appealed the grants of summary judgment on the substantive issues, and plaintiff New Jersey Builders Association cross-appealed on the standing issue. Consolidating the cases on appeal, the Appellate Division affirmed each case except Holmdel. The Appellate Division concluded that mandatory provisions for "in lieu" development fees are unauthorized revenue-raising devices. Holmdel Builders Ass'n v. Township of Holmdel, 232 N.J.Super. 182, 193, 556 A.2d 1236 (App.Div.1989). As such, it deemed mandatory development fees invalid taxes. It agreed with the trial courts that shifting a public responsibility to a limited segment of the community violates the State Constitution's rule of uniform taxation. Id. at 193-94, 556 A.2d 1236. The court further concluded that ordinances requiring mandatory set-asides are valid only if accompanied by zoning incentives, such as a density bonus, that bear a reasonable relationship to the cost incurred in constructing the mandatory-set-aside housing. Id. at 201, 556 A.2d 1236. The court ruled that a voluntary provision allowing a developer to choose between constructing affordable housing or paying an "in lieu" development fee into an affordable-housing trust fund is valid provided that the fee bears a reasonable relationship to the benefits conferred by the density bonus. Ibid. With respect to the cross-appeal, the Appellate Division determined that a trade organization does not have standing to seek a refund on behalf of its members. Id. at 204, 556 A.2d 1236.

Accordingly, the Appellate Division ruled that the ordinances of the Townships of Chester and South Brunswick, which require payment of a mandatory development fee, were invalid because they imposed an unauthorized tax. Middletown Township's ordinance was held invalid because one section imposed a mandatory development fee, while another section required a mandatory set-aside without providing a compensating benefit. The court concluded that the voluntary nature of Holmdel's ordinance and its optional provision for an increase in density, giving the developer a compensating benefit, was facially valid; it remanded the Holmdel case for a plenary hearing with respect to the validity of Holmdel's ordinance as applied. The Appellate Division did not rule on intervenor Cherry Hill's ordinance.

We granted defendants' and intervenor's petitions, as well as the cross-petitions for certification of plaintiffs New Jersey Builders Association and Holmdel Builders Association. 117 N.J. 150, 151, 564 A.2d 871, 872 (1989). We also granted motions for leave to submit amicus briefs by the Public Advocate, the Civic League of Greater New Brunswick and the League of Women Voters, and Princeton Township.

This appeal raises two major substantive issues. One is whether there is statutory authority, derived from the FHA, the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -129, and the general police power of government, N.J.S.A. 40:48-2, that enables a municipality to impose affordable-housing development fees as a condition for development approval. That issue raises the related questions whether the development-fee ordinances constitute an impermissible taking of property or violate substantive due process or equal protection. The second major issue is whether affordable-housing development fees are an unconstitutional form of taxation....