Court Opinion

ID: 9627029
Source: CourtListenerOpinion
Date Created: 2023-08-22 08:31:31.413611+00
Date Added: 2024-06-11T15:26:53.443772
License: Public Domain

VERNIERO, J.,
dissenting.
The Court holds that Bi-County, a developer that has agreed to pay up to $374,000 toward the construction of low- and moderate-income housing units, cannot connect to High Bridge’s sewer line. In so doing, it forces Bi-County to spend in excess of $600,000 on *329an alternative sewer connection without any determination concerning whether the connection to High Bridge’s sewer system would place a burden on that system or on the municipality’s taxpayers. More significant than requiring the needless expenditure of funds by this one developer, the Court’s holding limits a municipality’s flexibility in addressing its Mount Laurel obligations. I respectfully dissent.
The critical element of our Mount Laurel jurisprudence is that municipalities must undertake an affirmative act to make it “realistically possible for lower income housing to be built.” S. Burlington County N.A.A.C.P. v. Township of Mount Laurel, 92 N.J. 158, 261, 456 A.2d 390 (1983) (Mount Laurel II). This Court consistently has encouraged creativity in the ways in which municipalities can meet their affordable housing obligations. Eschewing rigid mandates, we have stated:
There are several inclusionary zoning techniques that municipalities must use if they cannot otherwise assure the construction of their fair share of lower income housing. Although we will discuss some of them here, we in no way intend our list to be exhaustive; 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 (emphasis added) (footnote omitted).]
One permissible method is the “in-lieu development fee” that is “expressly dedicated to lower-income housing.” Holmdel Builders Ass’n v. Township of Holmdel, 121 N.J. 550, 569, 573, 583 A.2d 277 (1990). In Holmdel, we stated that because such fees “are conducive to the creation of a realistic opportunity for the development of affordable housing[,]” they generally would satisfy a municipality’s fair share obligation. Id. at 573, 583 A.2d 277. The Court also noted that “development fees are the functional equivalent of mandatory set-asides[.]” Ibid (Mandatory set-asides require a developer to sell or rent a certain percentage of housing units at below their full value so that the units are affordable to lower-income households. Mount Laurel II, supra, 92 N.J. at 269, 456 A.2d 390.)
Additionally, if a development is deemed to be “inclusionary,” then that development is accorded certain protections established *330by regulations promulgated under the Fair Housing Act, N.J.S.A. 52:27D-301 to -329(FHA). Most relevant here is the protection from “cost-generating” practices of municipalities that serve to preclude the creation of affordable housing. See N.J.A. C. 5:93-10.1(a); -10.1(b); -10.2(a). Along those lines, the court in Samaritan Center, Inc. v. Borough of Englishtown held that the inclusionary developer in that case was entitled to connect to a. neighboring municipality’s sewer system. 294 N.J.Super. 437, 461, 683 A.2d 611 (Law Div.1996). The court grounded its holding in the belief that providing affordable housing in a cost-effective manner is a “regional” responsibility. Id. at 455, 683 A.2d 611. The court concluded that a neighboring municipality should allow access to' its sewer system when “[t]here is no obvious practical detriment, disadvantage or burden to [the neighboring municipality] weighed against its obligation to facilitate and assist the housing need of the most needy in the region of which it is a necessary part.” Ibid, (footnote omitted).
I am persuaded that the principles articulated in Samaritan ought to apply to the Bi-County development. In its brief submitted at our invitation, the Council on Affordable Housing (COAH or Council) makes clear that Bi-County is the equivalent of an inclusionary developer. COAH concludes: “Bi-County’s obligated payments in lieu of construction of affordable housing entitles it to the same special status as would otherwise be afforded to any other ‘inclusionary development.’ ” (The in lieu development fee described by COAH under N.J.A.C. 5:93-8.10(c) and entitling developers to certain protections is not to be confused with “residential development fees” set forth under N.J.A.C. 5:93-8.10(a).) Consistent with COAH’s conclusion, the development fee that Bi-County agreed to pay to Clinton is dedicated specifically to lower-income housing. The agreement between the parties states explicitly that Bi-County’s “[c]ontribution in lieu of an on-site set aside, ... shall be used by the Township solely for the creation of a realistic housing opportunity for low and moderate income households[.]”
*331Further, COAH’s brief expresses that agency’s strong embrace of in-lieu development fees:
The COAH policy equating sites that produce in-lieu development fees with indusionary sites that produce housing on site is important because it provides the flexibility needed by municipalities, the Council and the courts to settle Mount Laurel disputes____The in-lieu fees provide a necessary source of funding for municipalities to pursue other less intrusive methods of achieving Mount Laurel obligations. Under the FHA, municipalities are not obligated to expend their own revenues for purposes of achieving Mount Laurel compliance. N.J.S.A 52:27D-311(d). Therefore, money to finance approved affordable housing techniques, such as Regional Contribution Agreements (.N.J.SA. 52:27D-312; N.J.AC. 5:93-6.1 et seg.), rehabilitation programs (N.J.AC. 5:93-5.2), accessory apartments (N.J.AC. 5:93-5.9) or write down/buy down units (N.J.AC. 5:93-5.1), must come through development fees. Because the payment of an in-lieu development fee is generally greater than the payment of a standard maximum development fee and because the payment of an in-lieu development fee is generally equivalent to the internal subsidization required to provide a unit of affordable housing within an inclusionary development, the Council believes that developers that pay in-lieu fees should receive the same status as indusionary developers in the COAH process. Accordingly, the Council has historically treated sites that pay in-lieu fees as the equivalent of inclusionary sites where units are built on-site.
We should defer to COAH’s policy pronouncements. Holmdel, supra, 121 N.J. at 577, 583 A.2d 277 (observing that “breadth of the legislative mandate and the statutory standards creating COAH’s regulatory authority comport with the complexity and sensitivity of the subject of affordable housing”). In evaluating that policy here, I recognize that COAH’s existing regulations do not specifically address the issue at hand. Nonetheless, COAH’s wide acceptance of in-lieu development fees furnishes the basis on which to apply Samaritan to the present dispute. High Bridge is necessarily a part of Hunterdon County that includes Clinton. Based on Samaritan’s rationale, High Bridge has a regional obligation to assist in a neighboring inclusionary development so long as such assistance presents no detriment or burden to High Bridge or to its taxpayers. Within that framework, I would consider High Bridge’s refusal to allow the Bi-County connection to be a “cost-generative” practice that has no practical utility, unless a further-developed record proves otherwise.
The majority reaches a contrary conclusion by distinguishing Samaritan’s facts from the facts here. Specifically, the majority *332observes that Bi-County is not a “non-profit builder of low income housing whose entire project could have failed without access to water and sewer capacity from a neighboring municipality.” Ante at 328, (174 A.2d at 301). Rather, Bi-County is a for-profit developer that will pay a fee in lieu of setting aside affordable units, and is not encumbered by the time constraints that were present in Samaritan. Id. at 319, (174 A.2d at 301).
Those distinctions, in my view, serve only to create a hierarchy of inclusionary developers and to further complicate an already complicated field of law. Moreover, the notion of segregating developers that otherwise have acquired inclusionary status runs contrary to Mount Laurel II, supra, in which, I repeat, the Court encouraged towns to be creative in designing “devices and methods for meeting fair share obligations.” 92 N.J. at 266, 456 A.2d 390. The Court should not care whether Bi-County itself builds the affordable housing units or whether it finances their construction, so long as the units are built in furtherance of Mount Laurel’s objectives. Holmdel, supra, 121 N.J. at 573, 583 A.2d 277. Nor should the Court construe the general rule of municipal autonomy announced in Mongiello v. Borough of Hightstown, 17 N.J. 611, 614-19, 112 A.2d 241 (1955), to limit the options of developers and towns that attempt in good faith to comply with the Mount Laurel mandate.
In a sound, straightforward decision, the trial court concluded that Bi-County’s inelusionary status entitled it to the same protections as other inclusionary developers. That court also determined that forcing Bi-County to spend fifty times more than what it otherwise would have spent on sewer connections is unnecessary. I agree. Accordingly, I would permit Bi-County to connect to the High Bridge system so long as that connection does not burden that system or otherwise affect High Bridge’s current or future needs. I would remand for a full hearing to explore those issues. Such a disposition, in my view, is more in keeping with this Court’s prior jurisprudence and the policy that underlies the in-lieu development fee as articulated by COAH.
The judgment of the Appellate Division should be reversed.
*333Justice LONG joins in this opinion.
For affirmance — Chief Justice PORITZ, and Justices STEIN, COLEMAN, LaVECCHIA, and ZAZZALI — 5.
Far reversal — Justices LONG and VERNIERO — 2.