SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-0736-94T3
A-0737-94T3
EAST/WEST VENTURE, a New York
Partnership,
Plaintiff-Respondent,
v.
BOROUGH OF FORT LEE, a municipal
corporation of the State of New
Jersey, located in Bergen County,
New Jersey, THE MAYOR AND COUNCIL
OF THE BOROUGH OF FORT LEE, THE
PLANNING BOARD OF THE BOROUGH OF
FORT LEE,
Defendants-Respondents,
and
THE BOROUGH OF EDGEWATER,
Intervenor-Appellant,
and
RIVER RIDGE CONDOMINIUM ASSOCIATION,
INC.,
Intervenor.
____________________________________
EDWARD BOJEKIAN and FLORENCE
BOJEKIAN,
Plaintiffs-Appellants,
v.
FORT LEE PLANNING BOARD, MAYOR
AND COUNCIL OF THE BOROUGH OF
FORT LEE, EAST/WEST VENTURE, a
Partnership of the State of New York;
THE COUNTY OF BERGEN and RIVER RIDGE
CONDOMINIUM ASSOCIATION,
Defendants-Respondents.
____________________________________
Argued November 13, 1995 - Decided January 5,
1996
Before Judges Havey, D'Annunzio & Conley.
On appeal from the Superior Court, Law
Division, Bergen County.
Robert T. Regan argued the cause for
intervenor-appellant Borough of Edgewater
(Mr. Regan on the brief).
Frederick L. Bernstein argued the cause for
appellants Edward and Florence Bojekian
(Frederick L. Bernstein, P.A., attorney;
Mr. Bernstein, on the brief).
Henry A. Hill argued the cause for respondent
East/West Venture (Hill Wallack, attorneys;
Stephen Eisdorfer, on the brief).
Frederic S. Kessler argued the cause for
respondents Borough of Fort Lee and Mayor and
Council of the Borough of Fort Lee (Tompkins,
McGuire & Wachenfeld, attorneys; Mr. Kessler,
of counsel and on the brief).
No briefs were filed by the remaining
respondents.
The opinion of the court was delivered by
HAVEY, P.J.A.D.
In this Mount LaurelSee footnote 1 builder's remedy litigation, the
trial judge, after a "fairness" hearing, approved a settlement
agreement between plaintiff East/West Venture (East/West) and
defendants Borough of Fort Lee, its Planning Board and the County
of Bergen. The agreement represents a substantial component of
Fort Lee's compliance plan, designed to meet the Borough's
constitutionally imposed fair share obligation to provide 140
low- and moderate-income housing units.
Intervenor Edgewater Borough argues that: (1) the settlement
agreement constitutes "contract zoning"; (2) the settlement does
not provide sufficient Mount Laurel units to satisfy the minimum
standards set by Mount Laurel II; (3) several provisions of the
agreement are ultra vires since they conflict with the Municipal
Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -136; and (4) the
agreement violates sound planning concepts and the purposes of
zoning set forth under the MLUL. Defendants Edward and Florence
Bojekian, join in Edgewater's contentions, but also argue that
the trial judge erred in treating them as objectors to the
settlement agreement rather than deciding their prerogative writs
action separately. They also claim that the agreement is invalid
because East/West's proposed market-rate complex will be
constructed on a lot that has never been legally subdivided.See footnote 2
Except as modified, we affirm.
In 1988, East/West filed an action in lieu of prerogative
writs alleging that Fort Lee's zoning regulations violated the
Mount Laurel doctrine. East/West sought a builder's remedy for
the construction of 1,012 high-rise units with a twenty-percent
set-aside for Mount Laurel units. After Edgewater's motion to
intervene was granted, Judge Skillman in the Law Division, on
April 3, 1989, declared Fort Lee's land-use ordinances
unconstitutional under Mount Laurel II, and, on April 17, 1989,
appointed Philip B. Caton as master. The matter was transferred
to Bergen County for trial.
East/West, Fort Lee, Fort Lee's Planning Board and Bergen
County entered into a written settlement on March 21, 1994, which
was announced at a joint meeting of the Borough's governing body
and Planning Board. On April 25, 1994, the Bojekians then filed
their prerogative writs action challenging the settlement
agreement which was consolidated with East/West's case.
The agreement has three key components: (1) it allows
East/West to construct a thirty-story, 538-unit condominium
complex on a 4.88 acre tract of land; (2) East/West will
construct a sixty-unit affordable housing development; and (3)
East/West will contribute $800,000 to Fort Lee's Housing Trust
Fund to assist the Borough in meeting its fair share obligation.
Also, East/West agrees to commence construction of the affordable
housing development not later than twenty-one months after a
designated "start date" and to complete construction within
fifteen months.
The settlement agreement also calls for the submission of
the Housing Element of the master plan to the Law Division for
approval, after which the Planning Board would, within thirty
days, amend it to make it consistent with the agreement. Also,
within thirty days, the Borough would amend the ordinance in the
manner specified by the settlement. All parties agree to submit
any disputes to the master for mediation, and agree that the
trial judge shall retain jurisdiction until certificates of
occupancy have been issued for both the affordable housing and
high-rise units. Finally, Fort Lee and its Planning Board agree,
"in consideration of East/West's undertaking to build the
affordable housing project in advance of the market rate
development," to grant "East/West extended vesting on the market
rate project site plan approval for 10 years."
On May 9, 1994, pursuant to the direction of the trial
judge, Fort Lee published a notice of hearing to be conducted by
the trial judge on June 15, 1994, to consider entry of a partial
judgment approving the settlement agreement. Notice was also
served by mail upon all property owners and adjoining
municipalities within 200 feet of the subject sites.. The notice
described East/West's proposals and stated that the full text of
the agreement, the proposed ordinance revisions necessary to
implement it, and a map of the sites were available to be
inspected at the Borough Clerk's office. It also provided that
any interested party may file objections to the proposed
agreement and may appear at the hearing scheduled by the trial
judge to present evidence in support of any objections to the
agreement.
Several objectors, including Edgewater and the Bojekians
appeared at the five-day hearing. Witnesses testifying in favor
of the settlement included planners presented by Fort Lee and
East/West, as well as Caton, the court-appointed master.
Edgewater elicited the testimony of a planner opposing the
application. The Bojekians objected to the procedure which, they
argued, would place the trial judge's "imprimatur" on amendments
to Fort Lee's master plan and zoning ordinance without the
Borough first complying with the notice and hearing requirements
under the MLUL.
According to the testimony elicited during the hearing, the
market-rate units will be on a site which is bordered to the
south by a low-rise residential area in Edgewater (developed at a
density of between five and twenty-five dwelling units per acre)
and to the north by a neighborhood of predominantly one- and two-family homes. East/West's market-rate proposal provides for a
density of 110 units per acre. The site is presently zoned C-6,
permitting commercial uses, including hotels, and structures up
to thirty stories high. However, the present zoning is
inconsistent with the 1988 master plan, which recommends rezoning
to a residential use at a considerably lower density and height.
The site is presently improved with an unfinished twelve-story
concrete parking garage constructed in 1974 as part of a previous
plan approving four thirty-story apartment buildings, two of
which have been completed, Century Tower and River Ridge. In
1977, a developer obtained a use variance and site plan approval
for a 650-room hotel on the subject site and in 1982, another
developer obtained approval for a mixed use project including an
eighteen-story hotel and 127 residential units.
The sixty affordable housing units proposed by the
settlement will be constructed on the Kaufer Lane site,
consisting of 1.41 acres, located approximately one block north
of the high-rise site. The agreement contemplates closing a
portion of Kaufer Lane and extending Federspiel Street to provide
additional access to the affordable units. The density of fifty
units per acre is consistent with the standards of Fort Lee's
present master plan.
The expert testimony adduced during the hearing generally
focused on two issues: (1) whether the proposals were consistent
with sound planning and the purposes of zoning under the MLUL,
N.J.S.A. 40:55D-2; and (2) whether the settlement agreement
provided sufficient affordable housing units. As to the first
issue, the planning experts for East/West and Fort Lee, as well
as Master Caton, testified that East/West's proposed thirty-story
tower constituted sound planning because it was compatible with
the existing thirty-story tower complexes adjoining the site.
East/West's expert also reasoned that current zoning would permit
a thirty-story hotel structure on the site, a use which would be
at least as intensive as East/West's high-rise proposal. Fort
Lee's expert further noted that the proposed tower would not
exceed the height of the two adjacent condominium towers.
Edgewater's planning consultant disagreed, stating that the size
and bulk of the tower, with its overall intensity of use, was
incompatible with the adjacent low-rise and low-density
residential uses in Edgewater.
As to the second issue, there was competing expert testimony
as to whether the agreement should be rejected because: (1) the
sixty units proposed by East/West fell below the twenty-percent
minimum suggested by Mount Laurel II; and (2) construction of the
market-rate and affordable units on different sites violated the
spirit of Mount Laurel.
In a written opinion, the trial judge approved the
settlement agreement. Citing extensively from the Law Division
decision in Morris County Fair Housing Council v. Boonton Tp.,
197 N.J. Super. 359 (Law Div. 1984), aff'd o.b., 209 N.J. Super.
108 (App. Div. 1986), the judge stated that "all interested
parties were given ample notice of the compliance hearing and . .
. all the objectors who appeared were clearly informed and
participated fully." He adopted the testimony of Master Caton,
finding it to be "credible and complete," and determined that the
agreement "represents sound land use planning and is in
compliance with COAH regulations." The judge also concluded that
the settlement, including the provision for sixty affordable
units and the $800,000 contribution to the municipality,
constituted a fair and reasonable partial settlement of Fort
Lee's compliance obligation, "designed to assist the Borough to
meet its constitutional obligation."
The judge entered an order which was deemed a "final
judgment with respect to all issues covered by the Settlement
Agreement." However, as stated, the settlement only partially
satisfied Fort Lee's Mount Laurel obligation of 140 units and,
pursuant to the settlement, the order requires Fort Lee to submit
its entire compliance package to the court and master within six
months.
Edgewater and the Bojekians first argue that the settlement agreement approved by the trial judge constitutes unlawful "contract" zoning. They assert that Fort Lee placed the "cart before the horse" by entering into an agreement to amend its master plan and zoning ordinance in order to implement the agreement before the requisite statutory procedures necessary to adopt the amendments were followed.
Edgewater and the Bojekians correctly point out that the settlement agreement binds Fort Lee to amend its master plan and zoning ordinance to implement the settlement terms within a specified period after approval by the court.
Because zoning is inherently an exercise of the State's police power, "municipalities have no power to zone except as delegated to them by the Legislature." Taxpayers Ass'n v. Weymouth Tp., 80 N.J. 6, 20 (1976), appeal dismissed and cert.
denied,
430 U.S. 977,
97 S.Ct. 1672,
52 L.Ed.2d 373 (1977); see
also Riggs v. Township of Long Beach,
109 N.J. 601, 610 (1988).
The governing body of a municipality cannot delegate its zoning
powers to others: it has the "ultimate responsibility to
establish, by the adoption of its zoning ordinances and
amendments thereto, the essential land use character of the
municipality." Township of Dover v. Board of Adjust. of Dover,
158 N.J. Super. 401, 411 (App. Div. 1978). That responsibility
must be carried out "in accordance with statutory and municipal
procedural requirements." Riggs, supra, 109 N.J. at 612. A
municipality has no power to circumvent these statutory and
municipal procedural safeguards by contract with a private
property owner. Warner Co. v. Sutton, 274 N.J. Super. 464, 471
(App. Div. 1994); Suski v. Mayor & Comm'rs of Beach Haven, 132
N.J. Super. 158, 164 (App. Div. 1975).
In Warner, we held that a consent order settling land-use
litigation involving a substantial amendment to the
municipality's zoning ordinance constituted unlawful contract
zoning. Warner, supra, 274 N.J. Super. at 479-80. There, no
judicial procedure of any sort, by way of a "fairness" hearing or
otherwise, was conducted before entry of the consent order. Id.
at 479. We rejected the developer-plaintiff's invitation to
remand for such a hearing, first because there was "presently no
court rule or other Supreme Court guidance as to the parameters
of such a fairness hearing."See footnote 3 Id. at 480. Second, at least
where the judge was called upon to approve a wholesale rezoning
of the municipality, he or she "must assume the role of `an ad
hoc super zoning legislature,' a role not well suited to the
judiciary." Id. at 482 (quoting Pascack Ass'n v. Mayor & Council
of Washington Tp.,
74 N.J. 470, 487-88 (1977)).
We concluded in Warner that the judge should, in such a
case: (1) "make a threshold finding as to whether any of the
settlement terms . . . are illegal or void as against public
policy," invalidating those that are; (2) "remand to the
governing body, retaining jurisdiction, for amendment" of the
zoning ordinance to implement the terms of the settlement; and
(3) if the ordinance is adopted and challenged by members of the
public, then "decide whether the ordinance is sustainable as a
valid exercise of the Township's zoning power." Id. at 483-84.
Such a procedure allays the fear that the municipal governing
body, presumably protecting the public at large, "may be
bargaining away its legislative duties without public scrutiny or
political accountability." Id. at 473. It also provides the
public at large with a realistic opportunity to express its
collective view at convenient and familiar forums, hearings
before its own municipal Planning Board and governing body.
Fort Lee and East/West argue that the concerns expressed in
Warner and other cases concerning "contract" zoning have been met
here, since a "fairness" hearing was conducted by the trial judge
after notice was published and served upon all interested
parties. They correctly point out that such a procedure was
approved in the context of Mount Laurel litigation in Morris
County, supra, 197 N.J. Super. at 366-67. Fort Lee and East/West
take the firm position that, since the order appealed from here
resolves not only the affordable housing and fair share issues,
but also the issues concerning the soundness of the proposed
master plan amendment and zoning ordinance, the master plan
amendment and ordinance (upon enactment) are not subject to
substantive challenge by any person, whether or not that person
appeared at the fairness hearing.
In Morris County, the Public Advocate, a developer and a
municipality settled a Mount Laurel builder's remedy action. Id.
at 367. Analogizing the case to a class action, Judge Skillman
in the Law Division held that Mount Laurel litigation could be
settled, but only after a finding by the court that the
settlement had apparent merit: (2) notice to all members of the
class and others who may have an interest in the settlement was
given; (3) a court hearing was conducted where those affected had
sufficient time to prepare; and (4) the court concludes, based
upon adequate findings of fact, that the settlement was "fair and
reasonable" to the members of the protected class. Id. at 369.
The procedures outlined in Morris County were designed to
ensure that the settlement adequately protects the interests of
the lower-income people on whose behalf the suit was brought.
"The hearing on the proposed settlement is not a plenary
trial[.]" Id. at 370. Rather, the court should determine,
"based upon the relative strengths and weaknesses of the parties'
positions, whether the settlement is `fair and reasonable,' that
is, whether it adequately protects the interests of the persons
on whose behalf the action was brought." Ibid. (citing
Armstrong v. Board of School Directors,
616 F.2d 305, 314-15 (7th
Cir. 1980)).
The hearing described in Morris County necessarily focuses
on whether the components of the settlement protect lower-income
persons by satisfying, in whole or in part, the municipality's
constitutional obligation to provide affordable housing. Nothing
in Morris County suggests that the "fairness" hearing procedure
is intended to adjudicate in advance the validity of proposed
amendments to the master plan or zoning ordinance necessary to
implement the settlement. Nothing said in the opinion forecloses
an interested party from instituting a prerogative writs action
challenging an amendment to the master plan or zoning ordinance
based on the well-established criteria for testing the validity
of a land-use ordinance.See footnote 4
Although factually distinguishable, Alexander's Dep't Stores
v. Paramus Borough, 243 N.J. Super. 157 (App. Div. 1990), aff'd,
125 N.J. 100 (1991), is instructive on this point. There, we
held that substantive certification granted by the Council on
Affordable Housing (COAH) under the Fair Housing Act, N.J.S.A.
52-27D-301 to -329, did not foreclose a plaintiff (who did not
participate in the agency action) from filing a Law Division
action claiming that: (1) the municipality had "illegally" sold
zoning concessions; (2) it had unlawfully bound itself to amend
its zoning ordinance; and (3) the proposed zoning ordinance
permitting the Mount Laurel housing constituted "spot zoning."
Id. at 165-66. We concluded that such challenges are
traditionally made by an action in lieu of prerogative writs, and
"did not ripen until after COAH granted substantive
certification, when the governing body took action on the zoning
amendments." Id. at 166. The same is true here. Any procedural
or substantive challenges to the proposed master plan and zoning
amendments had not "ripen[ed]" at the time the partial judgment
approving the settlement was entered.
We conclude that a trial judge may approve a settlement of
Mount Laurel litigation after a "fairness" hearing to the extent
the judge is satisfied that the settlement adequately protects
the interests of lower-income persons on whose behalf the
affordable units proposed by the settlement are to be built.
That analysis involves a consideration of the number of
affordable housing units being constructed, the methodology by
which the number of affordable units has been derived, any other
contribution being made by the developer to the municipality in
lieu of affordable units, other components of the agreement which
contribute to the municipality's satisfaction of its
constitutional obligation, and any other factors which may be
relevant to the "fairness" issue. See Morris County, supra, 197
N.J. Super. at 371-73. Approval, of course, is conditioned upon
compliance with the procedural safeguards defined in Morris
County. Id. at 372.
However, absent an amendment to R. 4:69 to the contrary, see
supra, n.3, the judge should not adjudicate the zoning and
planning issues implicated by the agreement. Upon a finding that
the agreement is "fair," the judge, without entering judgment,
should first determine whether any of the provisions of the
settlement are ultra vires or otherwise invalid. He or she
should then remand for appropriate amendments to the master plan
and zoning ordinance necessary to implement the agreement. This
procedure will assure compliance with pertinent statutory
safeguards. See e.g., N.J.S.A. 40:49-2; N.J.S.A. 40:49-2.1;
N.J.S.A. 40:55D-13 to -16; N.J.S.A. 40:55D-26, -28 and -62.
If the municipal action is challenged in a separate
prerogative writs action, the judge should consolidate that
action with the pending proceeding and hear and decide the
challenge prior to entry of a final judgment of compliance. The
judge must decide whether passage of the master plan amendment
and ordinance, aside from the affordable housing issues raised in
the prior fairness hearing, constitutes a valid exercise of the
township's zoning power and is otherwise procedurally and
constitutionally valid. See Riggs supra, 109 N.J. at 611-12. Of
course, at that point, the ordinance will enjoy a presumption of
validity. Id. at 610-11. If the municipal action is
sustainable, a final judgment of compliance should be entered.
Thus, resolution of all issues relevant to the settlement and to
the municipality's fair share obligation will be resolved in a
single proceeding.
This procedure is, in our view, consistent with the
directive of our Supreme Court in Mount Laurel II. There, the
Court made clear that the remedies authorized by its opinion were
intended to achieve compliance with the constitutional mandate
"without interminable trials and appeals." Mount Laurel II,
supra, 92 N.J. at 290. For example, municipalities are no longer
able to appeal a trial court's invalidation of the ordinance and
thereafter appeal the court-imposed remedy. Ibid. The Court
intended an all-inclusive remedy "to conclude in one proceeding,
with a single appeal, all questions involved"; that is, entry of
"a judgment of compliance . . . signifying the trial court's
conclusions that there are land use regulations and affirmative
devices in place conforming to the constitutional obligation
. . . ." Ibid. (emphasis added). When the trial judge here
entered an order approving the settlement agreement, the amended
master plan and ordinance were not yet "in place."
We recognize that the questions of sound planning and the
"fairness" of providing affordable housing are overlapping
concepts. There is no doubt that any fair share proposal raises
substantive zoning and planning concerns for the municipality.
Imposition of the constitutionally-mandated obligation to provide
affordable housing "does not require bad planning." Id. at 238.
The specific location of "decent housing for lower income groups"
continues "to depend on sound municipal land use planning
considerations in this State." Id. at 211.
Moreover, the Fair Housing Act directs COAH to carry out its
statutory duties "in accordance with sound regional planning."
N.J.S.A. 52:27D-304a. COAH regulations provide that sites for
low- and moderate-income units should be "suitable," N.J.A.C.
5:92-9.1(a); that is, "a site . . . adjacent to compatible land
uses." N.J.A.C. 5:92-1.3. See also In re Township of Denville,
247 N.J. Super. 186, 200 (App. Div. 1991), certif. denied,
127 N.J. 557 (1992), rev'd on other grounds,
132 N.J. 1 (1993).
But the soundness of the planning of Mount Laurel housing
and the "suitability" of the site implicate the exercise of the
municipality's legislative powers in amending its master plan and
zoning ordinance, as well as all of the statutory notice and
public hearing safeguards provided to the public under the MLUL
and other pertinent provisions of Title 40. Nothing in Mount
Laurel II or other controlling case law allows shortcutting those
legislative safeguards.
We hold that any person or entity who did or did not attend
the "fairness" hearing, with the exception of Edgewater, is not
bound by the trial judge's determination that the proposed master
plan amendment and ordinance were valid from a zoning and
planning perspective. We so hold first because, as stated, the
jurisdictional reach of the hearing should have been limited to
consideration of whether the settlement was fair to the persons
who will be accommodated by the Mount Laurel housing.
Second, the published notice of the hearing was ambiguous as
to the consequences of any order approving the proposed
settlement entered after the hearing. After giving the time,
place and purpose of the hearing, the notice states:
The Borough of Fort Lee has also determined
to submit proposed revisions to its Zoning
Ordinance relating to the plaintiff's
property and certain neighboring areas which
will address the Borough's obligation to
provide realistic opportunities for low and
moderate income housing. If the ordinance
provisions are approved by the Court, the
Borough will be entitled to a Judgment of
Compliance upon their adoption with respect
to the sites which are the subject of the
rezoning. The parties will request that the
Judgment be deemed final for purposes of
appeal.
In our view, a reader of this notice would not know that an
adjudication approving the settlement agreement would foreclose a
subsequent prerogative writs action challenging the ordinance
provisions on substantive grounds.
Third, except for Edgewater, none of the objectors who
appeared at the court hearing was permitted to cross-examine the
experts produced by East/West and Fort Lee. Further, many of the
objectors expressed confusion concerning the parameters of the
hearing. Others objected to the proceeding because they had
insufficient time to retain an expert planner, and, as stated,
others complained that the entire proceeding was shortcircuiting
the procedural safeguards provided under the MLUL. Indeed, when
one objector expressed a concern about the legal effect of
vacating part of Kaufer Lane, the judge stated:
Depending on the outcome of this case -
two possible outcomes. I approve the plan or
I disapprove the compliance package in the
settlement. Assume I approve the settlement
-- this entire package then goes back to the
Planning Board for the whole question of site
suitability. I'm not passing on site
suitability at all. That all goes back to
the Planning Board for a full and
comprehensive hearing. Full and
comprehensive hearing.
So much of your argument, should the
plan be approved -- depending on what the
Planning Board does and the Municipality does
-- those are the places [the planning board
and governing body], I would suggest, that a
lot of that argument is going to have to be
made. I'll let you make the record today so
you're prepared on the record and your record
is complete, but depending on the outcome,
there will be other -- other proceedings
before various and sundry boards not having
anything to do with this Court, unless some
nonprevailing party there decides to take the
matter back to the Court.
[Emphasis added.]
In our view, these comments would render fair doubt in the minds of reasonable objectors concerning the scope and purpose of the hearing and the consequences of a judgment approving the settlement. It would therefore be fundamentally unfair to
preclude the objectors from challenging subsequent amendments to
the master plan and zoning ordinance on procedural and
substantive grounds.
Edgewater's participation in the hearing, however, is
another matter. Edgewater has been in this case since 1989, when
it was granted leave to intervene, and has never challenged the
scope of the hearing conducted by the trial judge. To the
contrary, from the outset it endorsed the procedure followed by
the judge and proceeded on the premise that all issues would be
adjudicated. Not only was Edgewater permitted to vigorously
cross-examine the parties' experts and Caton on all issues, but
it also produced an expert who testified that the proposal was
incompatible with sound planning concepts and the purposes of the
MLUL. See N.J.S.A. 40:55D-2d (development in one municipality
should not conflict with development and general welfare of
neighboring municipalities); N.J.S.A. 40:55D-28d (municipality's
master plan should consider master plans of contiguous
municipalities).
Accordingly, since the substantive zoning and planning
issues were "fully and fairly" litigated during the fairness
hearing between Edgewater and the parties to the settlement,
Edgewater should be collaterally estopped from relitigating those
issues in any subsequent challenge to the amendment to the master
plan and the zoning ordinance Fort Lee adopts.See footnote 5 See N.M. v.
J.G., 255 N.J. Super. 423, 431 (App. Div. 1992). Collateral
estoppel applies since, at least from the viewpoint of the trial
judge, Edgewater, East/West and Fort Lee, adjudication of the
zoning and planning issues was necessary to support the judgment
declaring the settlement fair. In re Estate of Dawson,
136 N.J. 1, 20 (1994) (for collateral estoppel to apply, it must be shown
that determination of the issue was essential to the prior
judgment); see also Restatement (Second) of Judgments, § 27,
comment j. (1982) (the "question . . . is whether the issue was
actually recognized by the parties as important and by the trier
as necessary to the first judgment"). Also, despite our
observation that the present appeal is interlocutory, no one has
questioned the trial judge's determination, for the purposes of
finality, see In re Estate of Dawson, supra, 136 N.J. at 20, that
"[t]his order shall constitute a final judgment with respect to
all issues covered by the Settlement Agreement." (Emphasis
added).
For the limited purpose of defining the preclusive effect
upon Edgewater of the trial judge's findings, we affirm the
judge's legal determinations on the zoning and planning issues
essentially for the reasons expressed in his comprehensive
written opinion dated August 10, 1994. The judge's factual
findings and legal conclusions are soundly based on substantial
evidence, particularly the compelling testimony and comprehensive
report presented by the court-appointed master. See Rova Farms
Resort, Inc. v. Investors Ins. Co.,
65 N.J. 474, 484 (1974).
Edgewater, however, is not foreclosed from challenging
subsequent amendments to the master plan and zoning ordinance on
procedural grounds. Also, Edgewater and all other interested
parties are not precluded from contesting subsequent planning
board determinations concerning whether East/West's site plan or
subdivision applications comply with pertinent municipal
ordinance standards. See Pizzo Mantin Group v. Township of
Randolph,
137 N.J. 216, 229 (1994); Lionel's Appliance Center,
Inc. v. Citta, 156 N.J. Super. 257, 268-69 (Law Div. 1978).
Edgewater also argues that the settlement agreement should be rejected because it fails to provide sufficient low- and moderate-income housing. It notes that of the 598 units to be constructed, only ten percent are affordable units. This figure, Edgewater claims, falls far short of the twenty-percent minimum set by the Supreme Court in Mount Laurel II, supra, 92 N.J. at 279 n.37. (in deciding the percentage of a project to be devoted to lower-income housing, "20 percent appears to us to be a reasonable minimum").
East/West claims that Edgewater lacks standing to press this claim. See Alexander's Dep't Stores, supra, 243 N.J. Super. at 165. But whether or not Edgewater has standing, we still must decide if the settlement agreement is "fair and reasonable," that is, whether it adequately protects lower-income persons by providing substantial lower-income housing.
We do not read Mount Laurel II as mandating that every
development which is part of a compliance plan include a minimum
of twenty percent affordable housing units. The Court noted that
a builder's remedy should be granted where the developer
"proposes a project providing a substantial amount of lower
income housing." Mount Laurel II, supra, 92 N.J. at 279. What
is "substantial" is to be decided on a case-by-case basis by the
trial judge considering a variety of factors. See ibid. n.37.
Moreover, the suggested "twenty percent" minimum pertained to
inclusionary developments, and was made in the context of
contested litigation, not, as here, in deciding the fairness of a
proposed settlement agreement, reached after careful review and
input by a court-appointed master. In fact, COAH regulations
require a twenty percent minimum set-aside only when a
municipality receives a vacant land adjustment. See N.J.A.C.
5:93-5.6(b)1. Otherwise, the municipality is free to determine
its own set-aside level, subject to COAH review. N.J.A.C. 5:93-5.6(b).See footnote 6
Caton testified that the sixty affordable units, together
with East/West's $800,000 payment to Fort Lee constituted a
"substantial" contribution toward satisfying Fort Lee's fair
share obligation. He noted that under COAH regulations the
$800,000 was equivalent to forty units ($20,000 per unit) if Fort
Lee utilizes the RCA alternative, N.J.A.C. 5:93-6.4(b), and even
more if a portion of the contribution is dedicated to
rehabilitation of existing units. Caton added that the remainder
of the affordable units could be accounted for in Fort Lee's
subsequent plan necessary to satisfy its remaining fair share
obligation.
According to Caton, of even more importance is the
uniqueness of the "phase in" provision of the settlement
agreement. He stated that any perceived shortage of affordable
units in Fort Lee's plan is insignificant in view of the
developer's commitment to construct the affordable units within a
specific period of time. As we understand the agreement, this
commitment must be honored irrespective of when construction of
the market-rate units is commenced.
Mount Laurel II recognizes the potential for a developer's
foot-dragging where the developer receives density benefits in
exchange for agreeing to construct affordable units.
Mandatory set-asides can be rendered
ineffective if a developer builds all its
conventional units first and then reneges on
the obligation to build the lower income
units. To avoid this problem, municipalities
and courts should require that a developer
phase-in the lower income units as the
development progresses.
[Mount Laurel II, supra, 92 N.J. at 270.]
This "phase-in" requirement has been codified by COAH regulations
which require commencement of the construction of affordable
units only after more than twenty-five percent of the market-rate
units have been completed. N.J.A.C. 5:93-5.6(d).
East/West's commitment here is greater than that required by
either Mount Laurel II or COAH's regulations. Its willingness to
risk its capital to construct the affordable units,
notwithstanding the uncertainties of the real estate market,
deserves consideration. Judge Skillman made this point in Morris
County: in deciding whether a settlement is "fair," the judge
must consider "whether the proposed settlement will result in the
expeditious construction of a significant number of lower income
housing units." Morris County, supra, 197 N.J. Super. at 372.
Edgewater also asserts that separating the affordable
housing from the market-rate units violates the spirit of Mount
Laurel. But we know of no judicial or legislative rule mandating
inclusion of the affordable and market-rate units on a single
site. The focus of the Mount Laurel doctrine is to provide
housing by curing economic discrimination, not to achieve
economic or racial balance. In re Denville, supra, 247 N.J.
Super. at 194. A municipality may provide its fair share of
affordable units by "means of any technique or combination of
techniques" which satisfy its Mount Laurel obligation. N.J.S.A.
52:27D-311a. COAH regulations even permit a transfer of up to
fifty percent of the affordable units out of the municipality
entirely by way of an RCA. N.J.A.C. 5:93-6.1(a). Finally, as
Caton noted, building the market-rate and affordable units on the
same site could frustrate East/West's commitment to construct the
affordable units in advance, since prohibitive costs and
depressed sales of the market units may necessarily delay
construction of the structure intended to house both types of
units.
We conclude that the settlement agreement is "fair and
reasonable." See Morris County, supra, 197 N.J. Super. at 339.
Edgewater also contends that various components of the settlement agreement are invalid because they violate specific provisions of the MLUL.
The settlement gives East/West "extended vesting on the market-rate project site plan approval for 10 years." This provision clearly conflicts with N.J.S.A. 40:55D-49, which states that a site plan approval grants the developer three years of immunity from major zoning changes. Nevertheless, in our view, this discrete provision is sustainable in the context of this Mount Laurel litigation.
Caton defended the extended vesting because East/West had agreed to build the affordable housing first, and the high-rise project was a very sizable one consisting of over 1,000,000 square feet. He reasoned that, considering the probable delays in construction of the high-rise project because of its complexity and size, the developer should have some residuum of protection in consideration for that commitment. We agree.
Further, notwithstanding the absence of express authority in the MLUL, we are satisfied that the challenged provision comports with the express vesting provisions of the MLUL, if not the letter. Although N.J.S.A. 40:55D-49 grants immunity for only a three-year period, the planning board may grant two one-year
extensions. N.J.S.A. 40:55D-49c. Also, final site plan approval
immunizes the developer from zoning changes for two years with
the planning board authorized to grant three one-year extensions.
N.J.S.A. 40:55D-52a. Finally, the MLUL authorizes the board to
grant extended protection for large residential developments and
nonresidential sites having floor area of 200,000 square feet or
more, taking into consideration "economic conditions" and "the
comprehensiveness of the development." See N.J.S.A. 40:55D-49d;
N.J.S.A. 40:55D-52b. East/West's project does not qualify under
these provisions.
But the project would qualify if the high-rise were to be
used as a hotel, since its gross floor area exceeds 200,000
square feet. In our view, it would offend the implied spirit of
both the MLUL and the Mount Laurel doctrine to hold that extended
vesting should be denied here simply because the residents in the
East/West project will live there year round, rather than as
short-term hotel guests, particularly since the vesting provision
is essential to implementing a plan which will provide Mount
Laurel housing.
In Mount Laurel II, the Court encouraged the use of a number
of devices not expressly sanctioned by the MLUL, including
density bonuses, mandatory set-asides and builder's remedies.
Mount Laurel II, supra, 92 N.J. at 266-81. The vesting provision
simply prohibits Fort Lee from rezoning the high-rise site for
enough time to enable East/West to complete the project.
Clearly, a court may prohibit a municipality from rezoning a site
designated for affordable housing under a settlement as part of
the court's remedial power to enforce the municipality's Mount
Laurel obligation. Morris County Fair Housing Council v. Boonton
Tp., 220 N.J. Super. 388, 399 (Law Div. 1987), aff'd as modified,
230 N.J. Super. 345 (App. Div. 1989); see also N.J.A.C. 5:93-5.11(b) and N.J.A.C. 5:91-13.1 (defining COAH's continued
regulatory control over zoning implemented by municipalities who
receive substantive certification for their 1987-1993
obligations). In short, the affordable-housing and high-rise
sites are part of one comprehensive compliance package, and it is
likely that, even absent the ten-year repose in the settlement,
the court would grant a developer reasonable time to finish the
market-rate units after the developer has already paid
substantial sums to enable the municipality to meet its Mount
Laurel obligation. We therefore uphold the provision.
Edgewater also argues that the waiver of East/West's
obligation to pay impact and linkage fees violates the MLUL.
The agreement provides that the planning board "agrees in
concept that it will not subject either of East/West's
applications to off-site improvement obligations . . . or impact,
development or `linkage' fees." Edgewater does not specify why
the provision is illegal, but presumably it relies on N.J.S.A.
40:55D-42, which authorizes a municipality to adopt ordinances
requiring that developers pay their fair share of reasonable and
necessary off-site improvements.
However, off-tract improvement ordinances are not mandated
by the MLUL. Moreover, Mount Laurel II held that, to meet their
fair share, "municipalities must remove zoning and subdivision
restrictions and exactions that are not necessary to protect
health and safety." Mount Laurel II, supra, 92 N.J. at 259
(footnote omitted). In our view, the clause in question complies
with that mandate.
Edgewater's claim that East/West "purchased" zoning benefits
stems from the developer's agreement to pay the Fort Lee $800,000
into Fort Lee's Mount Laurel Trust Fund to assist the Borough in
meeting its affordable housing obligation in exchange for
favorable zoning of the high-rise site. Edgewater relies
primarily on Nunziato v. Planning Bd. of Edgewater, 225 N.J.
Super. 124 (App. Div. 1988), where the planning board exacted an
ad hoc monetary contribution in exchange for site plan approval
and a variance for a high-rise complex. We invalidated the
approval on the theory that, in the absence of an ordinance with
pertinent standards, municipalities could not demand and
developers could not pay substantial sums of money in exchange
for zoning benefits. Id. at 134.
But, as we recently observed, Nunziato presented an
extraordinary situation, "a process which bore all the hallmarks
of a public auction intended to obtain the highest possible
bid[.]" Township of Marlboro v. Planning Board of Holmdel, 279
N.J. Super. 638, 644 (App. Div.), certif. denied,
141 N.J. 98
(1995). Not every irregularity in the process of negotiating
linkage fees or exactions warrants invalidation of an approval.
Id. at 647. There is nothing unlawful about a municipality
granting a developer more favorable zoning in order to produce
affordable housing. Also, municipalities have the authority to
compel a developer to contribute to an affordable housing trust
fund, see Holmdel Builders Ass'n v. Township of Holmdel,
121 N.J. 550, 586 (1990), and COAH regulations authorize negotiated
development fees, subject to COAH review. N.J.A.C. 5:93-8.10.
Here, the contribution figure of $800,000 was reached after
extensive negotiations under the supervision of a court-appointed
master. Moreover, distribution from Fort Lee's Trust Fund will
be subject to the continued jurisdiction of the trial judge. The
contribution component of the agreement is fully sustainable.
Finally, Edgewater objects to the provision which requires
"expedited review" by the Planning Board of East/West's site plan
and subdivision applications, and to the use of the master to
mediate disputes. There is nothing "expedited" about the
timetable set forth in the agreement: the Planning Board has
forty-five days to review East/West's applications, the maximum
allowed by the MLUL. N.J.S.A. 40:55D-10.3. Further, the board
has 180 days within receipt of a complete application to issue
final decision, considerably more time than the maximum of
ninety-five days allowed for major subdivisions or site plan
review. N.J.S.A. 40:55D-46c; N.J.S.A. 40:55D-48c. Moreover, a
court has the power to order compliance with "expedited review"
requirements in a settlement agreement in Mount Laurel
litigation. Morris County, supra, 220 N.J. Super. at 398.
Nor is there anything illegal about the provision
authorizing the master "to mediate at the request of any party
any controversy that might arise during site plan approval and
construction." Trial judges have been encouraged to utilize
outside experts to determine and to enforce a municipality's
Mount Laurel obligation, including assistance by the master in
ensuring compliance. See Mount Laurel II, supra, 92 N.J. at 293.
The Bojekians contend that the settlement is illegal because it calls for the construction of East/West's high-rise on a portion of a lot that has never been approved by the County Planning Board. As stated, the 538-unit high-rise is to be built on a 4.88-acre tract known as lot 2C. Prior to 1982, the tract was part of a 7-acre tract known as lot 2, block 3302. In June 1982, a prior developer was granted subdivision approval which divided lot 2 into a 1.97-acre lot (lot 2B) on which River Ridge is located, and lot 2C, the subject tract.
The Bojekians argue that the Bergen County Planning Board never approved the subdivision, a necessary step in the approval process since lot 2C abuts two County roads. N.J.S.A. 40:27-6.2c. The record does not establish one way or the other whether the County in fact approved the subdivision creating lot 2C.
However, we agree with Fort Lee that it does not matter. This is an issue that can and should be addressed during East/West's subsequent site plan or subdivision applications. Indeed, Bergen County is a party to the settlement agreement and
has agreed on behalf of itself and the County Planning Board to
properly review the East/West development applications. If
County Planning Board approval was required and not obtained in
1982, that oversight can be easily remedied.
The remaining issues raised by the Bojekians on appeal are
without merit. R. 2:11-3(e)(1)(E).
Except as modified, the partial judgment approving the
settlement is affirmed.
Footnote: 1Southern Burlington County N.A.A.C.P. v. Township of Mount Laurel, 67 N.J. 151, appeal dismissed and cert. denied, 423 U.S. 808, 96 S.Ct. 18, 46 L.Ed.2d 28 (1975) (Mount Laurel I); Southern Burlington County N.A.A.C.P. v. Township of Mount Laurel, 92 N.J. 158 (1983) (Mount Laurel II). Footnote: 2Edgewater's appeal is interlocutory in nature, since no final judgment of compliance has been entered. The August 29, 1994 order appealed from by Edgewater approves the settlement "as a component of Fort Lee's compliance package" and directs Fort Lee to submit its entire compliance plan to the master and trial court within six months and to "thereafter move for a Final judgment of Compliance and Order for Repose." The fact that the order provides that it shall constitute "a final judgment with respect to all issues covered by the Settlement Agreement" does not render the order final for purposes of an appeal as of right. R. 2:2-3(a)(1). Nevertheless, we now grant Edgewater leave to appeal nunc pro tunc, R. 2:4-4(b)(2), in view of the age of the case and to expedite resolution of all remaining issues before the trial judge considers entry of a final judgment of compliance. Footnote: 3A subcommittee of the Supreme Court Committee on Civil Practice is presently considering a proposal to amend R. 4:69 which would permit land use litigation to be settled upon approval by the court, provided appropriate procedural safeguards are established and followed. Warner, supra, 274 N.J. Super. at 477; see Hon. Richard S. Cohen, et al., Settling Land Use Litigation While Protecting the Public Interest: Whose Lawsuit Is This Anyway?, 23 Seton Hall L. Rev. 844, 857 (1993), for a comprehensive discussion of the issues relating to the settlement of land use cases. Footnote: 4Zoning ordinances must (1) advance one of the purposes of zoning, as set forth in the MLUL, (2) be substantially consistent with the land use and housing elements of the master plan, unless
the municipality adopts a resolution explaining the inconsis-tency, (3) comport with constitutional constraints on the zoning power, such as due process, and (4) be adopted in accordance with statutory and municipal procedural requirements. Riggs, supra, 109 N.J. at 611-12. Footnote: 5We were advised during oral argument that Fort Lee has recently adopted the proposed ordinance and that Edgewater has filed a prerogative writs action challenging it. Footnote: 6Our Supreme Court in Hills Dev. Co. v. Township of Bernards, 103 N.J. 1, 63 (1986), has directed that "proceedings before a court should conform wherever possible to the . . . criteria[] and guidelines of [COAH]."