In re Twp. of S. Brunswick

1

IN THE MATTER OF THE APPLICATION OF THE TOWNSHIP OF SOUTH BRUNSWICK FOR A JUDGMENT OF COMPLIANCE AND REPOSE AND IMMUNITY FROM MOUNT LAUREL LAWSUITS.

No. A-3344-20

Superior Court of New Jersey, Appellate Division

July 12, 2023

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

Argued May 23, 2023

On appeal from the Superior Court of New Jersey, Law Division Middlesex County, Docket No. L-4433-17.

Marguerite M. Schaffer argued the cause for appellant/cross-respondent Township of South Brunswick (Schaffer Shain Jalloh PC, attorneys; Donald J. Sears, on the briefs).

Thomas F. Collins, Jr. argued the cause for appellant/cross-respondent Township of South Brunswick Planning Board (Vogel, Chait, Collins & Schneider, PC attorneys; Thomas F. Collins, Jr. and Thomas J. Molica, Jr., of counsel and on the briefs).

Kenneth D. McPherson, Jr. argued the cause for respondent/cross-appellant South Brunswick Center LLC (Waters, McPherson, McNeill, PC, attorneys; Kenneth D. McPherson, Jr., of counsel and on the briefs; Mark J. McPherson and Natasha Montalvo, on the briefs).

Adam M. Gordon argued the cause for respondent Fair Share Housing Center (Fair Share Housing Center, attorneys; Adam M. Gordon, of counsel and on the brief).

Richard J. Hoff, Jr. argued the cause for respondent AvalonBay Communities, Inc. (Bisgaier Hoff, LLC, attorneys; Richard J. Hoff, Jr., and Danielle N. Kinback, on the brief).

Bryan D. Plocker argued the cause for respondents Windsor Associates and Monmouth Mobile Home Park Land Development, Inc. (Hutt & Shimanowitz, attorneys, join in the briefs of respondents Fair Share Housing Center, K. Hovnanian New Jersey Operations, LLC and AvalonBay Communities, Inc.).

John A. Sarto argued the cause for respondent American Properties at South Brunswick, LLC (Giordano, Halleran & Ciesla, PC, attorneys, join in the briefs of Fair Share Housing Center, K. Hovnanian Shore Acquisitions, LLC, and AvalonBay Communities, Inc.).

Henry L. Kent-Smith argued the cause for respondent K. Hovnanian New Jersey Operations, LLC (Fox Rothschild, LLP, attorneys; Henry L. Kent-Smith, on the brief).

Richard J. Allen, Jr. argued the cause for amicus curiae New Jersey League of Municipalities and New Jersey Institute of Local Government Attorneys (Kipp & Allen, LLC, attorneys; Richard J. Allen, Jr., on the brief).

Before Judges Geiger, Susswein and Berdote Byrne.

PER CURIAM

In this Third Round Mount Laurel IV^[1] declaratory judgment action plaintiffs, Township of South Brunswick (Township) and Township of South Brunswick Planning Board (Board), appeal a final judgment of compliance and repose of the Township's 2019 Amended Third Round Housing Element and Fair Share Plan (HEFSP). The Board adopted the plan "under protest" following a series of rulings by the trial judge,^[2] wherein the judge: (1) determined that the 1,000-unit cap on affordable housing obligations^[3] set forth in N.J.S.A. 52:27D-307(e) applied to separate ten-year periods within the twenty-six years (19992025) encompassing the gap period and the prospective need period, rather than the entirety of that period, resulting in a 2,600-unit cap; (2) ruled that those municipalities qualifying for the 1,000-unit cap for the current prospective need period (2015-2025) could address their affordable housing need attributable to the gap period in equal shares over the Third, Fourth and Fifth Rounds; (3) determined that any credits to which a municipality was entitled must be applied first to reduce its gap period need obligation and then to its prospective need obligation; (4) revoked the Township's immunity from builder's remedy lawsuits^[4]; and (5) determined the Township's pre-credited and uncapped Third Round fair share obligation totaled 3,016 units, comprised of 109 present need (rehabilitation) units, 1,374 gap period units, and 1,533 prospective need units.

A second judge molded the Township's obligation by: (1) reducing the number of needed gap period units by 124 credits and directing that the remaining 1,250 gap period units be addressed by the Township over the course of Third, Fourth, and Fifth Rounds, at a rate of 417 units per round; and (2) capping the number of prospective need units at 1,000 in accordance with N.J.S.A. 52:27D-307(e). The Township's current Third Round fair share obligation stands at 109 present need units, which the Township does not dispute and has already fulfilled, 417 gap period units, and 1,000 prospective need units. Although the Township disputes the pre-capped number of prospective units needed, it does not dispute at least 1,000 units are needed, leaving its additional unadjusted 1,374-unit gap period obligation as the primary issue.

In this appeal, plaintiffs argue that the first judge's rulings are tainted by an appearance of impropriety due to his prior representation of a former owner of respondent South Brunswick Center LLC's (SBC) property and his personal connections to a developer uninvolved in this matter. Plaintiffs also argue the judge erred in: (1) his interpretation of N.J.S.A. 52:27D-307(e); (2) revoking the Township's immunity from builder's remedy lawsuits; and (3) authorizing Special Hearing Officers (SHO) to conduct hearings and issue recommendations to the court for the approval of builder's remedy site plans in place of the Board. Plaintiffs further argue that the judge who presided over the later compliance hearings on South Brunswick's 2019 HEFSP erred in granting final site plan approval to SBC given the excessive number of exceptions from Residential Site Improvement Standards (RSIS) incorporated in that plan.

SBC cross-appeals from orders entered on December 5, 2018, November 27, 2019, and July 6, 2021, contending the orders improperly permitted the Township and Board to appeal the 2019 HEFSP.

Respondent-intervenor Fair Share Housing Center (FSHC) supports the decisions rendered by the trial court. Respondents AvalonBay Communities, Inc. (AvalonBay) and K. Hovnanian New Jersey Operations, LLC (Hovnanian), developers of properties included in the Township's 2019 HEFSP, which have since received final site plan approval, also support the trial court's decisions. AvalonBay and Hovnanian assert that because plaintiffs have not challenged any aspect of their respective approvals, any such challenge must be deemed waived.

Amicus curiae New Jersey League of Municipalities and New Jersey Institute of Local Government Attorneys argue the trial court erred by: (1) failing to apply the 1,000-unit cap in the manner prescribed by the Legislature; (2) failing to follow the fair share methodology mandated by the Supreme Court; (3) applying an incorrect standard to revoke the Township's immunity from builder's remedy lawsuits; and (4) granting intervenor status to third parties contrary to the Supreme Court's mandate in Mount Laurel IV.

Considering the record, the arguments raised by the parties on appeal, and the applicable legal principles, we affirm in part and reverse in part.

PRIOR MOUNT LAUREL OBLIGATION COMPLIANCE

On August 3, 1987, the Council on Affordable Housing (COAH) granted substantive certification to the Township's First Round (1987-1993) HEFSP, which addressed the 669 units (66 present need (rehabilitation)/603 prospective need) of low- and middle-income housing deemed its fair share obligation for that round. On February 4, 1998, COAH granted substantive certification to the Township's Second Round (1987-1999) HEFSP, which addressed its assigned fair share obligation of 937 low- and middle-income housing units (95 rehabilitation/842 new construction) for that round. The Township satisfied its First and Second Round obligations leaving a credit of four units to be applied to the Third Round.

In 2004, COAH revised its substantive rules for calculating Mount Laurel obligations for the Third Round, incorporating a new "growth share" methodology. 36 N.J.R. 5895(a) (Dec. 20, 1994). In December 2005, the Township petitioned for substantive certification of its Third Round HEFSP, which was prepared in accordance with COAH's revised rules. Before COAH acted upon the Township's plan, we invalidated COAH's growth share methodology and other new rules and directed COAH to adopt revised rules. In re N.J.A.C. 5:94 &5:95, 390 N.J.Super. 1 (App. Div. 2007).

"COAH's third round substantive rules [were] designed to permit municipalities to meet a cumulative fair share beginning in 1987 and ending on January 1, 2014." Id. at 27 (citing N.J.A.C. 5:94-1.1(d)). We explained:

There are three major components: (1) a municipality's "rehabilitation share" based on the condition of housing revealed in the data gathered for the 2000 Census, previously known as a municipality's indigenous need; (2) a municipality's unsatisfied prior round obligation (1987 through 1999), satisfaction of which will be governed by the second round rules; and (3) a municipality's "growth share" based on housing need generated by statewide job growth and residential growth from 1999 through 2014. N.J.A.C. 5:94-1.2. The "delivery period" for the growth share obligation is ten years, from January 1, 2004 to January 1, 2014.

[Ibid. (citing N.J.A.C. 5:94-1.1(d)).]

The Township prepared an amended Third Round HEFSP consistent with COAH's further revised Third Round rules, which proposed 984 units of affordable housing (36 rehabilitation/948 new construction). The Township then petitioned for substantive certification on December 31 2008. Before COAH could certify the amended plan, we invalidated COAH's revised Third Round rules. In re N.J.A.C. 5:96 &5:97, ...