The Supreme Court of New Jersey has instructed the Council on Affordable Housing (COAH) to go back to the drawing board. It rejected COAH’s proposed a “growth share” methodology for assessing prospective need in allocating a municipality’s fair share of the region’s need for affordable housing.

Under the growth share methodology, a municipality accrues its affordable housing obligation as a percentage of growth that actually occurs within its borders. The growth share obligation is based on ratios formulated from statewide—not regional—data on projected housing need, employment and residential growth.

The proposed rules invoked legal challenges from developers, municipalities and various interest groups. In In re Adoption of N.J.A.C. 5:96 & 5:97 by N.J. Council on Affordable Housing, the state’s highest court ultimately concluded that this third iteration of the “third round rules” is at odds with the Fair Housing Act (FHA).

As further detailed in the opinion, “[a]lthough that remedy imposed thirty years ago should not be viewed as a constitutional straightjacket to legislative innovation of a new remedy responsive to the constitutional obligation, the FHA remains the current framework controlling COAH’s actions. With respect to the current version of the FHA, the Third Round Rules are ultra vires.”

While the court acknowledged that there may be a reasonable basis for considering alternative approaches to promote the production of affordable housing in New Jersey, it also highlighted that any new approach must still conform to the FHA. Most notably, it found the third round rules fail to tie affordable housing obligations to prospective and present need of a housing region, as required under the FHA.

The court further concluded that the “growth share methodology is so intertwined with the new regulatory scheme that it cannot be severed.” Accordingly, it  ordered  COAH to adopt new regulations based on the previous rounds’ method of allocating fair share obligations among municipalities within five months. However, the Court also stated that “the Legislature may determine to authorize new avenues for addressing regional need and promotion of affordable housing.” The Court basically invited the Legislature to craft amendments to the FHA in lieu of more litigation.

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

While many New Jersey police officers work extra hours, holding elected office is not a permissible second job. In Adair v. Wildwood, the Appellate Division of the New Jersey Superior Court recently ruled that Wildwood police officer Gary DeMarzo could not also serve as the city’s mayor.

The Facts of the Case

DeMarzo was first elected city commissioner in 2007 while on a leave of absence from the police force. Following the election, Wildwood sued to compel DeMarzo to choose which position he would keep. In that case, the Appellate Division ruled that the doctrine of incompatibility prohibited DeMarzo from holding the two positions simultaneously. The court relied on the precedent established in Jones v. MacDonald, 33 N.J. 132, 135 (1960), in which the state Supreme Court held that “public policy demands that an office holder discharge his duties with undivided loyalty.”

While an appeal of the decision was pending, DeMarzo became the mayor of Wildwood. In an attempt to remedy the conflict of interest, DeMarzo requested to be placed on a “voluntary layoff” program from the police department. Richard Adair, a Wildwood resident, a taxpayer, and a lieutenant in the Wildwood Police Department, subsequently filed suit seeking to enforce the Appellate Division’s order that DeMarzo choose between the two positions.

The trial court concluded that DeMarzo’s layoff plan did not comply with the Appellate Division’s prior order and restrained him from taking any actions as mayor or police officer until he had chosen one of the two positions. “The Appellate Division viewed DeMarzo’s incompatible dual office holding as being contrary to the public’s interest. Every day that goes by without this situation being completely cured is contrary to the public interest and is a continuing violation of the Appellate Division’s order,” the court explained.

The Court’s Decision

The Appellate Division confirmed the trial court’s decision, finding that DeMarzo’s layoff plan did not remove the conflict of interest.

As highlighted in the opinion, “Such an arrangement continues the incompatibility that led to our order in the first instance. Whether on an unpaid leave of absence or as first-in-line on the special reemployment list, DeMarzo’s persistent involvement with the police force continued to deprive the citizens of Wildwood of ‘an independent City Commissioner capable of managing the municipality’s business unfettered by personal conflicts . . . .’”

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

The Appellate Division of the Superior Court of New Jersey recently ruled that Seaside Park may not withdraw from the Central Regional School District. The case provides a comprehensive overview of regional school funding as well as the legal process for dissolving or withdrawing from a regional school district.

The Facts of the Case

In 1954, Seaside Heights, Seaside Park, Island Heights, Ocean Gate, Berkeley Township, and Lacey Township formed Central Regional as a limited purpose school district to educate their junior and senior high school students. The district initially decided to apportion costs based on per pupil enrollment. However, in 1975, legislation altered Central Regional’s funding mechanism to an equalized property valuation basis. Although subsequent legislation in 1993 permitted further changes to the funding structure of regionalized school districts, Central Regional made no such changes.

In 1998, Seaside Park passed a resolution petitioning Central Regional to reconsider the formula for municipal contributions; however, no action was taken. Seaside Park and several other municipalities also sought to withdraw from the school district on multiple occasions over the years. In 2005, Seaside Park and its Board of Education passed resolutions formally instituting the withdrawal process by requesting that the Ocean County Superintendent of Schools conduct an investigation into the advisability of Seaside Park’s withdrawal from, or the dissolution of, Central Regional pursuant to N.J.S.A. 18A:13-51.

While the State Board of Education approved Seaside Park’s petition to conduct a referendum on dissolution, the referendum was ultimately was defeated by a majority of the overall votes in the district. The municipality subsequently filed suit to dissolve the school district, withdraw from it, or alter the funding allocations.

The Court’s Decision

The Appellate Division affirmed the lower court’s dismissal of the action, holding that it was “satisfied the Legislature has established a comprehensive scheme for plaintiffs to seek this relief, which includes a voter referendum.” The Court noted that Seaside Park was granted the opportunity to conduct a referendum, which later failed. Thereafter, plaintiffs elected not to pursue the additional statutory processes for withdrawing or altering the tax allocation method, but instead filed suit.

“We are satisfied that plaintiffs did not exhaust their administrative remedies as to withdrawal and failed to demonstrate why the doctrine should not be invoked under the circumstances of this case,” the opinion explained.

The panel further rejected Seaside Park’s argument that it was entitled to legal or equitable basis for judicial intervention and relief, including the extraordinary equitable relief afforded in Petition for Authorization to Conduct a Referendum on Withdrawal of North Haledon School District from the Passaic County Manchester Regional High School District, 181 N.J. 161 (2004). In that case, the Supreme Court of New Jersey compelled North Haledon to remain a member of a regional school district in order to maintain a racially diverse student body despite a successful referendum. Because of the unique situation, the court ordered the Commissioner of Education to implement an equitable cost allocation formula for the school district.

In the current case, the Appellate Division explained, “neither the Commissioner nor the court has mandated that Seaside Park remain a member of Central Regional in contravention of the desire of the voters in the District pursuant to the statutory scheme.” The Court further noted that Seaside Park’s case does not involve the impact of withdrawal or dissolution on racial diversity or other constitutional issues.  The Court dismissed the remaining constitutional claims and upheld the lower court’s rulings.

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

The Supreme Court of New Jersey recently ruled in the case of Ten Stary Dom Partnership v. Mauro, that the Borough of Bay Head’s planning board improperly denied a landowner’s request for a bulk zoning variance to build a one family home.  The Court found that the board placed too much emphasis on drainage concerns and failed to give other factors sufficient consideration.

The Facts of the Case

The defendant, T. Brent Mauro, owns property in the Borough of Bay Head with 10.02 feet of frontage on Willow Drive. Because the residential zone in which the property is located requires frontage of fifty feet, Mauro sought a variance from the Borough’s planning board to construct the dwelling.

At the subsequent board hearings, Mauro testified that he had unsuccessfully attempted to acquire adjacent land to conform to the frontage requirement. A licensed professional engineer and planner testified that the property would be useless without a variance, and that drainage for the site would be designed to meet appropriate engineering standards. Mauro provided architectural plans detailing the use of fire retardant building materials and a fire suppression system, and a permit authorizing the use of fill on the site. In addition, the Borough’s fire chief confirmed that emergency responders could adequately respond to the property. By a vote of 5 to 4, the board granted the variance.

After a neighboring landowner filed a prerogative writ action challenging the Board’s approval of the application, the parties confirmed that a board member had voted on the bulk variance without attending all of the meetings or reviewing all of the transcripts of the hearings.  The bulk variance application was remanded for a new vote and subsequently denied. Among other concerns, the board concluded that Mauro failed to show by “affirmative testimony… by any competent engineer… on how the applicant would address the well known drainage issues which plagued the proposed lot and more assuredly concerned the adjoining property owners.”

The Court’s Decision

On appeal, the state Supreme Court ultimately concluded that Mauro satisfied the positive and negative criteria and should be granted the requested bulk variance.

The panel noted that although Mauro was unable to cure the property’s defects by acquiring the adjacent property, the property would be useless without a variance, and that the lot satisfied all other zoning requirements. The court also found that the board disregarded evidence that Mauro satisfied many of the board’s concerns, such as the ability of the fire department to access the site; the use of fire suppression system and fire retardant materials; and the issuance of environmental permits to bring fill onto the property.

With regard to the drainage issues, which formed a significant basis for the denial, the court held that the board put too much weight on that one factor. As explained in the opinion, “In focusing on the failure of the applicant to present an engineering plan calculated to solve the identified drainage issue on the lot, the Board and trial court misperceived the weight to be afforded to that factor in evaluating whether a variance from the frontage requirements of the zone undermined the zoning plan of the Borough. That focus also ignored the authority of the Board to impose conditions, such as submission of a satisfactory plan to address on-site drainage issues, for issuance of a building permit.”

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

In TSI East Brunswick, L.L.C. v. Zoning Bd. of Adjustment of Twp. of East Brunswick, the Supreme Court of New Jersey considered the standard of proof required for securing a variance for a conditional use. The court concluded that applicants are not required to prove the negative criteria by an enhanced quality of proofs.

The Facts of the Case

The case largely involved the application of two precedents established by the court for conditional and traditional use variances. In Medici v. BPR Co., 107 N.J. 1 (1987), the court held that zoning boards must address the positive and the negative criteria found in the New Jersey Municipal Land Use Law, and required that the negative criteria be demonstrated in accordance with an enhanced quality of proofs in the context of a use variance. In so ruling, the court recognized that granting a variance is inherently at odds with the uses authorized by the governing body.

In Coventry Square, Inc. v. Westwood Zoning Bd. of Adjustment, 138 N.J. 285 (1994), the court found that the burden of proof required to obtain a use variance is too burdensome for a conditional use variance. It established a less-stringent standard for conditional use variances. However, due to the facts of the case, the new standard was only applied to the positive criteria.

The Court’s Decision

In this case, the state Supreme Court concluded that the Zoning Board was correct in not requiring the applicant to prove the negative criteria by enhanced quality of proofs. It held that the standard of proof established in Coventry Square applies to both negative and positive criteria.

As explained in the unanimous opinion, “Were we to require that the Medici standards for consideration of the negative criteria be applied in the conditional use context, we would effectively erase the distinction that a conditional use creates.  Rather than recognizing that the use is essentially permitted, albeit with conditions, we would be presuming that the use is prohibited unless the conditions are met or are proven in accordance with the standards ordinarily required to secure a use variance.  By demanding that an applicant for a conditional use variance prove the negative criteria by the enhanced quality of proofs, we would erase the distinction that the governing body drew when it designated the use as conditional.”

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

The New Jersey municipality of Mount Holly will take center stage before the U.S. Supreme Court next term. The justices have agreed to consider Mount Holly v. Mount Holly Gardens Citizens in Action, which centers on whether disparate impact claims can be brought under the Fair Housing Act.

The Fair Housing Act makes it unlawful “[t]o refuse to sell or rent after the making of a bona fide offer . . . or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” Disparate impact refers to policies or practices that are not overtly discriminatory, but still have a discriminatory effect on a certain protected classes of people.

The case involves the Township of Mount Holly’s plan to redevelop a blighted residential area known as the Gardens. The plan called for demolishing the neighborhood and building new, significantly more expensive housing units. Many Mount Holly residents objected to the redevelopment, arguing that they would no longer to be able to afford to live in the township. A group of residents eventually filed suit to prevent the redevelopment, alleging that the plan violated the Fair Housing Act by having a disparate impact on minorities.

As summarized by the Supreme Court, the Third Circuit Court of Appeals concluded that the residents presented a prima facie case under the Fair Housing Act because the municipality sought to redevelop a blighted housing development that was disproportionately occupied by low and moderate income minorities and because the redevelopment sought to replace the blighted housing with new market rate housing which was unaffordable to the current residents within the blighted area. The ruling was significant because the Third Circuit further held that a prima facie case had been made despite the fact that there was no evidence of discriminatory intent and no segregative effect.

On appeal before the U.S. Supreme Court, Mount Holly argues that unlike other federal anti-discrimination laws, the Fair Housing Act was not intended to allow for disparate impact claims. The township further argues that allowing such suit to proceed would leave municipalities open to significant liability for otherwise lawful activities. “Allowing disparate impact claims under the FHA would render illegal many legitimate governmental and private activities designed to promote the general welfare of the community,” the writ for certiorari argues.

We will be closely following this case, which will be heard sometime during the October 2013 term. We encourage you to check back for updates.

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

Earlier this month, the Supreme Court of New Jersey issued yet another decision regarding the state’s controversial affordable housing program. By a vote of 5-2, the panel held that Gov. Chris Christie’s attempt to abolish the Council on Affordable Housing (COAH) exceeded his authority.

As previously discussed on the Scarinci Hollenbeck Business Law Blog, COAH was created by the Fair Housing Act in 1985 to administer the affordable housing obligations of cities and towns, as established under the Mount Laurel cases issued by the New Jersey State Supreme Court in 1975 and 1983.

In 2011, Gov. Christie moved to abolish COAH, characterizing it as a costly and burdensome regulatory agency.  He did not seek legislative approval, but rather attempted to abolish COAH and transfer COAH’s powers, functions, and duties to the Department of Community Affairs (DCA) using his executive power under the Executive Reorganization Act of 1969. Because the Legislature failed to adopt a resolution disapproving the Governor’s reorganization plan within sixty days of the date the plan was filed, as permitted by the Reorganization Act, the Plan took effect in late August 2011.

In deciding the resulting legal challenge, the New Jersey Supreme Court ultimately held that Gov. Christie’s abolition of COAH was ultra vires. As an independent agency, COAH could only be disbanded through legislative action, the court concluded.

As explained by Chief Justice Stuart Rabner in the in the majority opinion, “Because COAH is “in, but not of,” an Executive Branch department, the plain language of the Reorganization Act, which extends the Chief Executive’s authority only to agencies that are “of the executive branch,” N.J.S.A. 52:14C-3(a)(1), does not encompass, and thus does not authorize the Governor to abolish, an independent agency like COAH. To abolish independent agencies, the legislative and executive branches must enact new laws that are passed by the Senate and Assembly and signed by the Governor.

While the decision in In Re Plan for the Abolition of the Council on Affordable Housing does not directly impact the state’s ongoing attempt to seize unused affordable housing funds, it should clear the way for the Supreme Court of New Jersey to finally issue its ruling on the latest iteration of COAH’s third round rules.

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

The New Jersey Supreme Court recently clarified whether an application for a use variance based on the assertion that the site is “particularly suitable for the proposed use” requires proof that the project must be built on that site because it is the only one available. The issue arose because the Law Division and Appellate Division had reached divergent opinions regarding the flexibility of the particularly suitable standard.

The Facts of the Case

In Price v. Himeji, L.L.C., and Union City Zoning Bd. of Adjustment, Himeji, LLC applied to the Union City Zoning Board for several use variances required for construction of a multi-unit residential building in a mixed residential zone that borders a zone permitting multi-family high-rises. During hearings before the Zoning Board, four experts and members of the public testified in support of the project. Only plaintiff Larry Price opposed it. The planning expert asserted that the property was particularly suitable for the proposed project, and that it was consistent with the municipality’s Master Plan.

After Himeji made several requested alterations to its plans, the Board approved the application, granting all of the requested variances. It issued a detailed resolution, specifically adopting the planning expert’s rationale with respect to the property’s suitability for the project. It found that the project satisfied numerous purposes of the Municipal Land Use Law (MLUL) and would not be detrimental to the public good or substantially impair the intent and purpose of the zone plan and zoning ordinance.

Price subsequently filed a complaint to pursue an action in lieu of prerogative writs in the Law Division. The court found that the Board’s conclusion that the property was particularly suitable for the proposed use was arbitrary, capricious, and unreasonable. The court asserted that satisfaction of the particularly suitable standard required the Board to determine that the proposed site was the only available location for the use and that no other viable locations requiring less extensive variances were available. On appeal, the Appellate Division reversed, finding that he trial court’s interpretation of the particularly suitable standard was too narrow. It held that the court should have evaluated the specific facts and circumstances of Himeji’s application in light of the zoning ordinance and purposes of the MLUL.

The Court’s Decision

The state Supreme Court agreed with the Appellate Division’s more flexible approach. It held that evaluation of the particularly suitable standard is fact-specific and site-sensitive, requiring a finding that the general welfare would be served because the proposed use is peculiarly fitted to the particular location.

As further explained by the panel, “Detailed factual findings that distinguish the property from surrounding sites and demonstrate a need for the proposed use may help to establish that the property is ‘particularly suitable’ for the proposed use and a lack of such findings may be fatal when tested on review.”

The court further clarified that although the availability of alternative locations is relevant to this analysis, it does not bar a finding of particular suitability. “Rather, it is an inquiry into whether the property is particularly suited for the proposed purpose, in the sense that it is especially well-suited for the use, in spite of the fact that the use is not permitted in the zone. Most often, whether a proposal meets that test will depend on the adequacy of the record compiled before the zoning board and the sufficiency of the board’s explanation of the reasons on which its decision to grant or deny the application for a use variance is based,” the court explained.

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

A recent United States Supreme Court decision clarifies a key area of administrative law while also providing telecommunications providers with potential grounds to argue that a municipality is not promptly reviewing development applications for telecommunication facilities.  In City of Arlington, Texas v. Federal Communications Commission, No. 11-1545 (May 20, 2013), the Court examined the Federal Communications Commission’s (FCC) authority to establish specific deadlines for municipalities to act on zoning applications for personal wireless service facilities, which are regulated by state and municipal law as well as the Telecommunications Act of 1996.  The specific provision of that Act that was at issue requires state or local governments to act on zoning applications “within a reasonable period of time after the request is duly filed.”

The FCC issued a Declaratory Ruling stating that the phrase “reasonable period of time” is presumptively (but rebuttably) 90 days to process an application to co-locate a new antenna on an existing tower and 150 days to process all other applications.  Certain cities filed suit, arguing that the FCC lacked the authority to adopt the Ruling.  In a 6-3 decision, the Supreme Court upheld the FCC decision and ruled that courts must apply the framework in Chevron U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (1984) to an agency’s interpretation of a statutory ambiguity that concerns the scope of the agency’s statutory authority (i.e., its jurisdiction), such as the provision at issue here.  Chevron requires courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute that the agency is charged with administering.  However, prior to this new decision, it was not settled that Chevron applied equally to jurisdictional questions.

As explained by Justice Antonin Scalia, writing for the majority, “the distinction between ‘jurisdictional’ and ‘non-jurisdictional’ interpretations is a mirage.  No matter how it is framed, the question a Court faces when confronted with an agency’s interpretation of a statute that it administers is always, simply, whether the agency has stayed within the bounds of its statutory authority.”

Justice Scalia further noted that for agencies charged with administering congressional statutes, “both their power to act and how they are to act is authoritatively prescribed by Congress, so that when they act improperly, no less than when they act beyond their jurisdiction, what they do is ultra vires.  Because the question . . . is always whether the agency has gone beyond what Congress has permitted it to do, there was no principal basis for carving out some arbitrary subset of such claims as ‘jurisdictional’ from the Chevron frame work.”

The Court rejected the arguments of the municipalities that the FCC’s interpretation inappropriately imposed FCC jurisdiction over matters of primarily local concern.  The Court noted that the FCC’s jurisdiction had already been determined by Congress when it adopted, in the Telecommunications Act, the requirement that applications be acted upon in “a reasonable period of time.”  The FCC merely sought to clarify that language with its Declaratory Ruling.  The only issue before the Court, essentially, was whether it was the federal agency or federal courts that had the right to decide what “a reasonable period of time” means.

Under New Jersey’s Municipal Land Use Law, a municipality must act on filed applications within specified time periods which, in general, are shorter than the period established by the FCC in this Declaratory Rulemaking, although the  local deadlines may be extended with consent of the applicant.  It remains to be seen to what extent telecommunication companies will use the Supreme Court’s recent decision as an opportunity to go to federal court to obtain relief when municipalities do not act within the federally established deadlines.

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Public Law Group.

The New Jersey Supreme Court recently considered what happens when more than one entity plays a role in handling a property’s sewage. The court concluded that both entities were entitled to collect a non-duplicative sewer connection fee.

The Facts of the Case

Under the New Jersey Sewerage Authorities Law, N.J.S.A. 40:14A-8, and the Municipal and County Utilities Authorities Law, N.J.S.A. 40:14B-22, entities are authorized to charge users fees in connection with sewerage services, including connection fees. In 612 Associates, L.L.C. v. North Bergen Municipal Utilities Authority, a dispute arose regarding sewage services provided to condominium complex in Union City near the border of North Bergen Township.

Due to the location of the property, the complex was connected to Union City sewer lines. which were owned by North Hudson Regional Sewerage Authority, and traveled through its pipelines for approximately 300 feet. It was then transferred to the North Bergen Municipal Utilities Authority sewer lines and ultimately treated by the North Bergen MUA’s facility. Because the two entities could not determine which entity was entitled to the connection fee, 612 Associates, L.L.C. deposited the funds into an escrow account.

In 2008, the trial court agreed with North Hudson SA that it was entitled to the fee because the property was directly connected to its lines. On appeal, North Bergen MUA argued that the trial court failed to consider purpose of the fee, which was to permit the authorities to recoup the capital costs of building the collection and treatment systems.

The Appellate Division held that both entities were entitled to charge connection fees. However, because the parties had entered into the consent order that allowed payment of the fee into escrow, it concluded that no further fee could be imposed on 612 Associates, L.L.C. On remand, the trial court divided the fee, determining that North Hudson SA was entitled to 27.1% of the escrowed amount and North Bergen MUA was entitled to 72.9 %.

The Court’s Decision

The New Jersey Supreme Court upheld the Appellate Division’s decision. It concluded that the Legislature did not intend that the connection fee could only be imposed by the entity that owned or operated the particular lines to which any user was directly connected.

Rather, the proper interpretation of the statutes is that “each sewerage authority that serves a property for the purpose of handling and treating sewage, whether through a direct or indirect connection, may charge a non-duplicative connection fee that reflects the use of its system and contributes toward its system’s cost.”

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Public Law Group.