Court Opinion

ID: 9941317
Source: CourtListenerOpinion
Date Created: 2024-02-16 15:16:02.840428+00
Date Added: 2024-06-11T13:46:31.542566
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                           APPROVAL OF THE APPELLATE DIVISION
    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.

                                                    SUPERIOR COURT OF NEW JERSEY
                                                    APPELLATE DIVISION
                                                    DOCKET NO. A-1632-21

IN RE CLINTON TOWNSHIP
COMPLIANCE WITH THIRD
ROUND MOUNT LAUREL
AFFORDABLE HOUSING
OBLIGATION.

               Argued November 15, 2023 – Decided February 16, 2024

               Before Judges Currier, Firko and Vanek.

               On appeal from the Superior Court of New Jersey, Law
               Division, Hunterdon County, Docket No. L-0315-15.

               Patrick J. Mullaney argued the cause for appellant
               Kerwin-Savage Partnership.

               Jonathan Edward Drill argued the cause for respondent
               Township of Clinton (Stickel, Koenig, Sullivan & Drill,
               LLC, attorneys; Jonathan Edward Drill, of counsel and
               on the brief).

               Guliet D. Hirsch argued the cause for respondent CRC
               Communities at Headley Farm Estates, Inc. (Archer &
               Greiner, PC, attorneys, join in the brief of respondent
               Township of Clinton).

               Joshua David Bauers argued the cause for respondent
               Fair Share Housing Center (Fair Share Housing Center,
           attorneys; Joshua David Bauers, of counsel and on the
           brief).

PER CURIAM

     Kerwin-Savage Partnership (K&S) appeals from a December 2021 order

approving the Township of Clinton's (the Township) Revised Third Amendment

(Third Amendment) to its Mount Laurel 1 affordable housing plan. The order,

which followed a fairness hearing, found that the proposed Third Amendment

negotiated between the Township and the Fair Share Housing Center (FSHC)

was fair and protected the interest of low- and moderate-income households in

the region. We affirm.

     K&S is the developer of property—108 Alton Place—that is part of the

Township's affordable housing plan. In 2015, the Township filed a verified

complaint seeking declaratory judgment that it had satisfied its Third Round

obligation to provide affordable housing pursuant to Mount Laurel and

consistent with In re Adoption of N.J.A.C. 5:96 & 5:97 by the New Jersey

Council on Affordable Housing (Mount Laurel IV), 221 N.J. 1 (2015). The court

appointed a Special Master to assist in making determinations regarding

affordable housing. K&S attempted to intervene in this suit twice—the first

1
  S. Burlington Cnty. N.A.A.C.P. v. Twp. of Mount Laurel (Mount Laurel I),
67 N.J. 151, appeal dismissed and cert. denied, 423 U.S. 808 (1975).
                                                                       A-1632-21
                                     2
motion was denied without prejudice because K&S was not represented by

counsel; the second motion was denied as untimely.

      After the Township and FSHC entered into an initial settlement agreement

in 2017, the trial court conducted a fairness hearing and designated FSHC as an

intervenor-defendant.   The agreement was amended in February 2018 and

approved by the court in April 2018. After a compliance hearing, the court

entered a final judgment of compliance and repose in favor of the Township in

January 2019, declaring the Township was in compliance with its Third Round

Mount Laurel obligations. K&S did not appeal from the final judgment. We

affirmed the court's orders. In re Clinton Twp. Compliance with Third Round

Mount Laurel Affordable Hous. Obligation, No. A-2633-18 (App. Div. Jan. 30,

2020) (slip op. at 15). The Township and FSHC agreed to a second amendment

to the agreement in June 2020.

      The subject of this appeal is the May 2, 2021 Third Amendment to the

Township's Third Round affordable housing plan. The Third Amendment, as

approved, contains four sites which will produce affordable housing in the

Township under an inclusionary zoning model (as opposed to a 100% affordable

                                                                         A-1632-21
                                      3
development) and subjects three of those four sites to "durational adjustments."2

K&S's property is subject to a durational adjustment and is fourth on the priority

list. K&S objected to the proposed Third Amendment, asserting the Township

had surplus water and sewer capacity and, therefore, the durational adjustments

and priority rankings contravened the intent of the settlement—to serve the low-

and moderate-income households in the region through the development of

affordable housing.

      Thereafter, the court held a combined fairness and compliance hearing

over three dates in September and November 2021. The Township submitted

the settlement agreement resulting in the Third Amendment, a later revision to

the Third Amendment 3 and two reports from the Special Master.

      The Township also presented testimony from its municipal planner,

Thomas Behrens, who was qualified as an expert in "professional planning with

[a] specialty in the field of [a]ffordable [h]ousing." Behrens explained that the

Third Amendment was needed to replace a prior approved site to satisfy the

2
  A "durational adjustment" allows the municipality "to postpone satisfaction
of its affordable housing obligation until water and sewer service actually
become available." In re Petition for Substantive Certification, Twp. of
Southampton, 338 N.J. Super. 103, 106 (App. Div. 2001).
3
  The revisions to the Third Amendment moved one site ahead of 108 Alton
Place on the priority list, leaving 108 Alton Place fourth on the list.
                                                                            A-1632-21
                                        4
Township's Third Round Mount Laurel obligation. The prior approved site,

which was no longer available, had been subject to a durational adjustment in

the initial agreement. One of the new replacement sites was placed at the top of

the Township's priority list for water and sewer allocation because it had both

the highest percentage set-aside for affordable housing and the most units of

affordable housing of any project.

      Behrens opined that the Third Amendment and overall agreements

satisfied the five-part test under East/West Venture, a New York Partnership v.

Borough of Fort Lee, 286 N.J. Super. 311, 328 (App. Div. 1996), as it ensured

fairness to low- and moderate-income people. He also opined that the two larger

replacement sites substituted into the Third Amendment satisfied the standard

established in Allan-Deane Corp. v. Township of Bedminster, 205 N.J. Super.

87, 113 (App. Div. 1985), that "[a] municipality must provide a realistic

opportunity for the construction of its fair share."

      K&S's counsel questioned Behrens about the propriety of the durational

adjustments. Behrens stated he had reviewed the documentation submitted by

K&S. However, he asserted that K&S did not "have all the pieces of the puzzle"

because it focused on "capacity and flow" and not "allocations." As an example,

Behrens described a "Foster Wheeler site located in Union Township" that

                                                                          A-1632-21
                                         5
contracted for water and sewer capacity through the Clinton Township Sewerage

Authority (CTSA) and the Town of Clinton's Water Department (Water

Department). According to Behrens, those allocations acted as contractual

holds. Therefore, the CTSA and Water Department must keep the flow amounts

associated with those allocations available even if they are not in use. When

K&S showed Behrens a document from the Water Department regarding public

water deficit/surplus, he confirmed that it stated the Water Department had a

"supply term capacity" of 2.902 million gallons per day but again reiterated the

document did not show the "full picture," because it did not address the

allocation of the water capacity. He further testified that the Township has

"assisted in securing sewage capacity and water capacity for 100 percent

Affordable Housing sites," in accordance with its housing plan and prioritization

of sites.

       The court admitted the Special Master's reports into evidence.        The

Special Master opined that

            the modifications set forth in the . . . Third Amendment
            . . . approved by the [c]ourt are de minimis and continue
            to satisfy the standards prescribed in East/West Venture
            . . . and are, therefore, fair and reasonable, and protect
            the interest of low- and moderate-income households.

            [(italicization omitted).]

                                                                           A-1632-21
                                         6
       The Special Master further "opined that the modifications of the

Township's compliance plan . . . and the prioritization of the durational

adjustment per the . . . Third Amendment . . . continue[] to represent a realistic

opportunity for the development of affordable housing as proposed."

       After considering the testimony and evidence presented during the

fairness hearing, the Special Master issued a second report. He stated:

             The crux of the K&S objection appears to be a claim
             that there have been substantial changes in the
             underlying facts forming the basis of the [c]ourt's prior
             determination and grant of a durational adjustment
             pursuant to the COAH4 rules governing lack of sewer
             and water facilities found at N.J.A.C. 5:93-4.3. In my
             opinion no credible testimony or evidence has been
             presented by K&S that the . . . Third Amendment . . .
             or the Township's compliance plan implementing same,
             is inconsistent with N.J.A.C. 5:93-4.3 and thus not
             entitled to the continuance of the prior durational
             adjustment. Furthermore, . . . no credible definitive
             testimony or evidence has been presented that any of
             the designated affordable housing sites in question . . .
             cannot be practically connected to existing sewer and
             water collection/distribution facilities.     Questions
             remain as to the availability at this time of adequate
             allocated capacity to accommodate all four sites and
             thus establishing the appropriateness of prioritizing the
             sites to maximize the production of affordable units
             given the limits on available allocation capacity.

4
    Council on Affordable Housing
                                                                            A-1632-21
                                        7
         In addressing K&S's contention regarding the water and sewer capacity

order of priority, the Special Master stated:

              Notwithstanding K&S's claims to the contrary, the 108
              Alton Site is a "priority site" to receive water and sewer
              allocation capacity pursuant to the . . . Third
              Amendment . . . , just not the highest priority based
              upon reasonable ranking criteria . . . intended to protect
              the interest of low- and moderate-income households in
              the region.

         The Special Master continued: "While the rationale and basis for the

objection to the fourth position ranking are not supported by testimony, evidence

or COAH rule, there may be some merit to the objection as to [the] fourth

position priority ranking of the 108 Alton Site." The Master found it was

"logical" to replace the previously approved site with the new site on "a one-for-

one basis." However, the Special Master stated the court could place the third

listed site and 108 Alton Site on "equal priority footing" behind the first two

sites.

         The Master reiterated his opinion that the Third Amendment was fair and

reasonable, and "the Township ha[d] sufficiently documented its claim that the

compliance plan . . . in the . . . Third Amendment . . . continue[d] to represent a

realistic opportunity for the development of affordable housing as proposed."

The Special Master recommended the court approve the Third Amendment.

                                                                             A-1632-21
                                          8
       Michael Savage and Walter Wilson—partners with K&S—testified as lay

witnesses with personal knowledge of the construction projects. Savage stated

he calculated the actual available sewer capacity using publicly available

documents and records received pursuant to OPRA5 requests. He also relied on

billing statements from "all five sewer service areas within the Township."

       Savage concluded there was 207,340 gallons per day of available sewer

capacity at the CTSA facility, and the available capacity should be made

available for affordable housing projects. Savage then calculated that the five

projects encompassed in the Third-Round obligation required approximately

201,375 gallons per day of sewer capacity. Therefore, Savage asserted there

was sewer capacity available even after satisfying the affordable housing

projects' needs.

       Savage contended the CTSA and Township "have an obligation to

recapture sewer capacity."    However, Savage conceded that when the full

contractual allotments are taken into account, the available capacity would drop

below the threshold needed to supply sewer service to all of the affordable

housing projects under the Third Amendment.

5
    Open Public Records Act, N.J.S.A. 47:1A-1 to -13.
                                                                          A-1632-21
                                       9
      Savage also testified regarding water capacity, asserting the Water

Department was only using seventy-two percent of its capacity. According to

his calculations, there would still be available water capacity even after the five

affordable housing sites received their full usage. According to Savage, unlike

with the sewer capacity issue, it was unnecessary for the Township to reclaim

water allocations, because there was enough capacity to accommodate all

allocations.

      Wilson conducted a personal investigation of water resources available

from the Water Department, also utilizing records received from OPRA requests

and public documents. He testified that infrastructure was currently available

for water service at 108 Alton Place.

      On December 10, 2021, the court approved the settlement in a sixty-one-

page comprehensive and well-reasoned written decision.6

      The court found that the purpose of the Third Amendment was to replace

a previously approved site with two new sites and that the modification required

addressing "sewer and water capacity issues." The court noted that one of the

new sites replaced the prior site at number one in the priority list because it

6
  The decision was amended on December 13, 2021 with minimal changes not
relevant to the issues on appeal.
                                                                             A-1632-21
                                        10
provided the greatest number of affordable units among the developments

subject to the Third Amendment.

        The court also considered the Special Master's reports and agreed with the

Master's conclusion that the Third Amendment was fair and reasonable and

adequately protected "the interests of low[-] and moderate[-]income households

in the region." The court considered the Special Master's application of the five

part analysis in East/West Venture and also made its own findings and

evaluation. The court also gave weight to the FSHC's approval of the Third

Amendment. In addition, the court found Behrens's testimony was "detailed,

credible, and persuasive." The court further stated it was deferring to the

Township's determinations on priority rankings, leaving 108 Alton Place ranked

last.

        In addressing K&S's objections and contentions regarding sewer and

water capacity, the court noted K&S and its counsel appeared at the 2018

fairness hearing on the initial settlement agreement and raised the same issues

regarding available capacity and durational adjustments. However, K&S did not

object to the initial Amended Settlement agreement "which designated the 108

Alton Place site as a durational adjustment site and gave the site last priority for

sewer and water capacity among the affordable housing sites that were

                                                                              A-1632-21
                                        11
approved." In addition, the court remarked that K&S's counsel was present at

the 2018 compliance hearing but did not raise any objections. The court stated:

"In other words, not only did K&S fail to object during the two prior hearing s

but it also failed to appeal from the entry of the Final Judgment." Nevertheless,

although the court found it "unfortunate and ill-advised" that K&S did not "raise

the issue[s] at the original [f]airness [h]earings," it should not be precluded from

presenting its "colorable arguments" here.

      The court found that the Township established a prima facie case that the

Third Amendment as revised was fair and reasonable and it demonstrated

continued compliance with its affordable housing plan. Therefore, the burden

shifted to K&S to prove otherwise.

      However, according to the court, K&S did not present any evidence to

support a finding that the Third Amendment was not fair to low- and moderate-

income households. Instead, it objected to the designation of 108 Alton Place

as a durational adjustment site. In addition, K&S sought an order granting it top

priority over all the other affordable housing projects and requiring the

Township to acquire available sewer and water capacity and "claw back" unused

capacity for K&S to use. The court noted this relief would affect the rights of

other users of sewer capacity—users who were not parties to the proceeding.

                                                                              A-1632-21
                                        12
Nor was the CTSA, and as the owner and distributor of the sewer capacity, it

had an obvious interest in the outcome of the issue.

      The court stated:

                   In this [c]ourt's experience, the determination of
            the available sewer and water capacity is likely not as
            simple as the theory and mathematical analysis that
            K&S provided through its presentation of its case. It
            would not be surprising to the [c]ourt if there was
            another side, in fact perhaps many other sides, to the
            issue. . . . [I]n order to address the matter, if it is to be
            addressed at all, the issue is likely one that should be
            litigated fully with all interested parties involved before
            the [c]ourt is asked to adjudicate it.

The court concluded that because all necessary parties to consider and resolve

the issues were not present, it could not grant K&S's request for specific relief.

The court commented that K&S could litigate any relief it deemed suitable

against the CTSA and the Water Department in the appropriate proceeding.

      The court reiterated the purpose of the fairness and compliance hearing

was to determine whether the Third Amendment was fair to low- and moderate-

income households and whether the plan continued to create a realistic

opportunity to create affordable housing. However, K&S did not ground its

objections on that premise but rather asserted the Third Amendment was unfair

to its site. The court found Savage's and Wilson's testimony "was influenced by

self-interest" and merited "little credence." The court explained that

                                                                            A-1632-21
                                        13
             [b]oth witnesses have ownership interest in K&S
             meaning, of course, that these two witnesses were not
             independent individuals who researched the sewer and
             water capacity issues they raised during the hearing.
             Rather, both of these witnesses had a financial interest
             in the outcome of the proceeding. Moreover, there were
             inconsistencies or omissions from their testimony that
             causes the [c]ourt to question the accuracy of the
             information presented.

The court concluded that "the priority list was established in a reasonable way

and in a way that is fair to lower-income households." The court further found

that the priority list was logical, stating "[i]t prioritizes sites that will produce

the most affordable housing, those receiving public funds, and sites which are

further along in the development process." Referring to the top listed site, the

court stated: "It is self-evident that the site providing nearly three times as many

affordable housing units is more worthy of the necessary infrastructure and

would result in an agreement that better protects the interest of lower-income

households." The court determined K&S did not meet its burden to demonstrate

the agreement was not fair and reasonable. The court memorialized its decision

in a December 21, 2021 order.

      On appeal, K&S contends the court erred in: (1) determining the Township

established a prima facie case that the Third Amendment satisfied its affordable

housing obligation; (2) not making specific findings on the use of durational

                                                                               A-1632-21
                                        14
adjustments; and (3) finding K&S's claim could not be adjudicated because the

necessary parties were not before it.

      Our review of the results of a Mount Laurel fairness hearing is de novo.

In re Application of Twp. of Bordentown, 471 N.J. Super. 196, 217 (App. Div.

2022) (citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J.

366, 378 (1995)), certif. denied, 252 N.J. 533 (2023). We will "'not disturb the

factual findings and legal conclusions of the trial judge unless we are convinced

that they are so manifestly unsupported by or inconsistent with the competent,

relevant and reasonably credible evidence as to offend the interests of justice.'"

Rova Farms Resort, Inc. v. Invs. Ins. Co. of Am., 65 N.J. 474, 484 (1974)

(quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div.

1963)).

      We are unpersuaded by appellant's arguments and affirm substantially for

the reasons expressed in the court's cogent written opinion.          We add the

following comments.

      "Trial courts have broad discretion when reviewing a municipality's

Mount Laurel fair share plan for constitutional compliance." Bordentown, 471

N.J. Super at 217-18 (citing Mount Laurel IV, 221 N.J. at 30). "The trial court's

role is to approve or reject the proposed settlement in its entirety as written and

                                                                             A-1632-21
                                        15
the court may not revise or amend particular provisions." Id. at 217. This

framework allows trial courts to assess the "prompt voluntary compliance" of a

municipality's affordable housing obligations and avoid "lengthy delay in

achieving satisfaction of towns' Third Round obligations." Mount Laurel IV,

221 N.J. at 33.

      A proposed settlement is "fair[]" when "the settlement adequately protects

the interests of lower-income persons on whose behalf the affordable units

proposed by the settlement are to be built." East/West Venture, 286 N.J. Super.

at 328.

            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.

            [Ibid.]

      A municipality must provide a "realistic opportunity" for the development

of affordable housing. S. Burlington Cnty. N.A.A.C.P. v. Twp. of Mount Laurel

(Mount Laurel II), 92 N.J. 158, 220-21 (1983). "'Realistic' is defined by the

Court in terms of 'likelihood.'" Allan-Deane Corp., 205 N.J. Super. at 113

                                                                          A-1632-21
                                      16
(quoting Mount Laurel II, 92 N.J. at 221-22). In the context of a fairness

hearing, the court must determine "whether there is in fact a likelihood—to the

extent economic conditions allow—that the lower income housing will actually

be constructed." Mount Laurel II, 92 N.J. at 221-22.

      It is a municipality's burden at a fairness hearing to make a prima facie

case that the settlement is compliant with the town's constitutional affordable

housing obligations. Bordentown, 471 N.J. Super. at 233. Once such a prima

facie case is made, the burden shifts to the objector to show that the municipality

is not compliant. Ibid.

      As we recently stated, "[t]he purpose of a fairness hearing is not to

determine if there exists an alternative plan, which may more efficiently provide

low-income units, but rather is restricted to the question of whether" the

settlement agreement as a whole "provides 'a realistic opportunity for the

municipality to achieve its "fair share of the present and prospective regional

need for low[-] and moderate[-]income housing."'" Id. at 221 (second and third

alterations in original) (quoting Mount Laurel IV, 221 N.J. at 25) (quoting

Mount Laurel II, 92 N.J. at 205). We cautioned trial courts conducting fairness

hearings to "'stop short of the detailed and thorough investigation that it would

undertake if it were actually trying the case.'" Id. at 220-21 (quoting Sutter v.

                                                                             A-1632-21
                                       17
Horizon Blue Cross Blue Shield of N.J., 406 N.J. Super. 86, 102 (App. Div.

2009)).

      Here, the trial court recognized the focus of the fairness hearing was the

fundamental fairness of the agreement. The court accepted the testimony of the

Township's planner, Behrens, as competent and credible. Behrens testified that:

the reason for the Third Amendment was to substitute available sites for an

unavailable site to ensure the Township could comply with its affordable

housing obligations; the application of the five-part test under East/West

Venture led to the conclusion that the agreement was fair; the two new sites

substituting for a previously approved site realistically resulted in the

construction of units that would count towards the Township's obligation; and

the Township's planning board and council were active in conforming town

ordinances and zoning regulations to accommodate the proposed Third

Amendment.

      The court accorded Savage's and Wilson's testimony minimal credibility

because of their clear economic interest and evasive answers during the hearing.

Those credibility findings are well supported by the record and do not represent

an abuse of discretion. In addition, the court was within its discretion to view

K&S's exhibits on water and sewer capacity as flawed because they did not

                                                                          A-1632-21
                                      18
properly document or account for allocations within the CTSA's and the Water

Department's authority regardless of actual flow rates.

      We are satisfied the court did not err in finding the Township made its

prima facie case that the agreement and Third Amendment as revised were fair

to low- and moderate-income persons in the region, and resulted in the

likelihood that affordable units would be constructed.

      Thereafter, the court shifted the burden to K&S. After listening to K&S's

witnesses, the court determined the information presented did not undermine the

Township's prima facie case that the settlement was fair. The court provided

detailed reasons for its rejection of K&S's objections to the fairness of the

settlement.

      We only need briefly address K&S's remaining contentions. As to the

durational adjustments, as stated, a court is not permitted to modify individual

elements of a proposed affordable housing settlement. Bordentown, 471 N.J.

Super. at 217. It restricts itself to determining if the entire agreement is fair.

Bordentown, Ibid. The trial court properly assessed the fairness of the Third

Amendment; the durational adjustments are a component piece of the global

settlement.

                                                                            A-1632-21
                                       19
      K&S also challenges the court's determination that CTSA and the Water

Department were necessary parties to resolve the issue of water and sewer

capacity. There were outstanding allocations that complicated the availability

of water and sewer resources. Therefore, the court could not grant K&S's

requested relief—to move it to the top of the priority list and compel the CTSA

and the Water Department to take immediate action to supply utility to K&S's

site—without the participation of those utilities.

      Affirmed.

                                                                         A-1632-21
                                       20