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Southern Burlington County N.A.A.C.P. v. Township of Mount Laurel

A-5722-00T1 (N.J. Super. App. Div. 2003) (Unpublished)

MOUNT LAUREL—An attempt by a municipality to divest a developer of its status as an inclusionary developer is an attempt to modify a judgment and is subject to the same standards as the court’s rules impose for modification of a judgment.

In the 1980s, a developer purchased a large site intending to build a residential development. It was zoned for single-family dwellings but a portion of it was designated as an affordable housing overlay zone pursuant to a 1985 final consent order. That zoning allowed the developer to construct either market rate single-family dwellings or an inclusionary development with a set aside for affordable housing. In 1989, the municipality’s planning board granted major subdivision approval and the developer began to obtain a variety of permits. The permitting process was time consuming and complicated and resulted in a slight reduction of size of the project. In January 1993, the municipality’s planner approved the reduction in size of the project. About a month later, the Municipal Utilities Authority (MUA) imposed a moratorium on the issuance of additional sewer permits. About a year later, in response, a group of developers (including this particular developer) entered into an agreement with the MUA agreeing to pay for construction of a facility necessary to divert sewage from the MUA to a neighboring sewage authority. The developer expended a considerable amount of money in the design and permitting process. In the middle of 1994, the 1985 judgment was amended to take into account the second cycle fair share numbers and the municipality’s period of repose was extended by nine months. The new plan incorporated this particular developer’s affordable units. The new plan, however, contemplated elimination of the overlay zone because it had not successfully produced any affordable housing.

A dispute erupted before the Council on Affordable Housing and all of the parties involved agreed to a remand to the Law Division for review and approval of the second cycle fair share plan. The planning board twice extended this particular developer’s preliminary subdivision approval. When the sewer moratorium was lifted, the developer renewed its interest in proceeding with the construction of the project but there were other physical obstacles. About the same time that the sewer moratorium was lifted, the municipality repealed the overlay zone subject to court approval. The ordinance expressly stated that it did not apply to pre-existing inclusionary housing developments such as the project put forth by the developer in question. The lower court entered a consent judgment granting the municipality another six years’ immunity from builders’ remedy suits. This particular developer did not participate in the proceedings because the plan expressly incorporated its own project.

The developer met with the municipality only two months after the Court entered the consent judgment and was told that its site was no longer zoned for affordable housing. Another trip to the Court resulted and the municipality argued that the developer was not entitled to the benefits of the earlier orders because it had not diligently prosecuted its development. It also claimed that the developer “had indicated interest in modifying the project to include luxury apartments; a number of outside agency approvals had either lapsed or had never been secured and [the developer] could have constructed sewage facilities prior to the 1993 sewer ban or even thereafter.” Even though the lower court judge declined to give the developer intervenor status, he held that it was never his intent in approving the December 1997 consent judgment to eliminate this particular developer’s project. He framed the real issue as whether “a developer’s delay should result in a forfeiture of its vested rights.” To help with that determination, he directed the court-appointed Special Master to prepare a report. The Special Master rejected the municipality’s argument that the developer had shown a lack of diligence. In fact, the Special Master found to the contrary. He held that it was not unusual for a major developer to propose rezoning plans, “in part to keep pace with changing market conditions.”

After receiving the report, the lower court held that it “need not consider any alleged delay prior to the December 3, 1997 consent judgment.” Its reasoning was that “‘any issue of reasonable diligence that might have existed’ prior to the entry of the consent judgment was effectively waived when the [municipality] incorporated the [] project into the consent judgment.” It felt that if it needed to look at the entire period, it would have to order a plenary hearing, but, under these facts, the municipality was estopped from claiming a lack of due diligence when it had expressly included the original project in the 1997 consent judgment.

The Appellate Division affirmed, further holding that “[t]he attempt by the Township and the Board to divest [the developer] of its status as an inclusionary developer and to rescind the approvals obtained by it for its [project] was an effort to alter the terms of the December 1997 judgment and was subject to the standards governing motions for relief from judgment pursuant to [court rules].” The Court concluded that the lower court applied the appropriate standard by allocating the burden to the municipality and the board and properly identified that it was the December 1997 judgment from which the municipality needed to seek relief. Further, according to the Court, the developer “had not unreasonably delayed acting on its approval and designation as an inclusionary site.”


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