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Elegant Properties, LLC v. Township of Hazlet

A-2028-09T3 (N.J. Super. App. Div. 2010) (Unpublished)

COAH — A lower court should wait, without incorporating a developer’s inclusionary development, until a municipality can demonstrate whether it is able to meet its fair-sharing housing obligation and should not award a builder’s remedy prematurely.

A particular property within a municipality was once intended for commercial use, but was never developed as such. In response to a commercial use application, the property was rezoned. This rezoning was inconsistent with the municipality’s master plan and ultimately permit the development of single-family homes on 7,000 square foot lots. The property was then sold to a developer who sought a use variance to permit the construction of forty-four stacked townhouses. The project was later reduced to twenty-seven, side by side townhouses in three buildings, each containing nine units. Following hearings before the zoning board, the application was denied. In response, the developer filed suit challenging the board’s decision as arbitrary. A tentative settlement was reached whereby the land would be rezoned as a medium density residential transition district, and the developer would pay an affordable housing development fee. However, the zoning ordinance was not passed and, as result, the developer filed a lawsuit seeking a builder’s remedy under New Jersey’s affordable housing program.

At the time suit was filed, the municipality had neither sought nor obtained certification from the Council on Affordable Housing (COAH) for either a housing plan element or for fair share plan pursuant to the New Jersey Fair Housing Act. Its housing ordinances contained no provision recognizing the municipality’s obligation to provide a realistic opportunity for the construction of low and moderate income housing. Its projected obligation appeared to be in excess of the number of affordable dwelling units that the developer proposed to build. The lower court ordered the municipality to submit, within four months, a zoning ordinance that was in compliance with relevant constitutional and statutory mandates. After 180 days, the municipality still had not passed a compliant ordinance. So, the lower court ordered the developer to submit to an appointed special master its proposal for a builder’s remedy. The lower court eventually approved a builder’s remedy of 48 constructed units with 10 units representing affordable housing. The order reflected that the municipality’s housing element and fair share plan had not been approved, and a conforming zoning ordinance, if required, had not been passed. The order was appealed.

The Appellate Division remanded, finding the lower court’s order was prematurely issued, as the municipality had not demonstrated whether it could meet its fair-share housing obligation without the developer’s inclusionary development, and had not passed any required re-zoning. The Court indicated that it was not suggesting the lower court’s decision to award a builder’s remedy was necessarily premature, as it appeared the municipality’s fair share housing obligation would exceed the number of units set aside in the litigated development.

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