IN THE MATTER OF THE APPLICATION OF THE TOWNSHIP OF BORDENTOWN, ETC. (L-1579-15, BURLINGTON COUNTY AND STATEWIDE) ( 2022 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0357-20
IN THE MATTER OF THE
APPLICATION OF THE
APPROVED FOR PUBLICATION
TOWNSHIP OF
BORDENTOWN, COUNTY March 14, 2022
OF BURLINGTON. APPELLATE DIVISION
________________________
Argued February 9, 2022 – Decided March 14, 2022
Before Judges Sumners, Vernoia and Firko.
On appeal from the Superior Court of New Jersey,
Law Division, Burlington County, Docket No. L-
1579-15.
Bruce I. Afran argued the cause for appellant Mark
Bergman.
Michael J. Edwards argued the cause for respondent
The Township of Bordentown (Surenian, Edwards &
Nolan LLC, attorneys; Michael J. Edwards, of counsel
and on the brief; AnnMarie Harrison, on the brief).
Joshua D. Bauers argued the cause for respondent Fair
Share Housing Center (Fair Share Housing Center,
attorneys; Bassam F. Gergi, of counsel and on the
brief).
The opinion of the court was delivered by
FIRKO, J.A.D.
In this Mount Laurel 1 case, defendant-intervenor Mark Bergman appeals
from the final judgment of compliance and repose entered by the Law Division
on August 27, 2020, in accordance with Mount Laurel IV, 221 N.J. at 30. The
final judgment approved an amended settlement agreement between plaintiff,
the Township of Bordentown (the Township), and the Fair Share Housing
Center (FSHC). The agreement established the Township's Third Round fair
share obligation for affordable housing and provided a plan for its compliance.
In this opinion, we address the parameters of a fairness hearing and judicial
approval of a settlement involving the FSHC in the absence of Third Round
rules being promulgated by the Council on Affordable Housing (COAH).
On appeal, Bergman argues the trial court erred by denying his request
to testify at the fairness hearing and finding the settlement fairly and
reasonably protects the interests of low-income individuals. He also contends
special master Mary Beth Lonergan, A.I.C.P., P.P., had a conflict of interest
because she, or others in her firm, were simultaneously representing dozens of
municipalities in affordable housing settlement negotiations. We disagree and
affirm.
1
"The Mount Laurel series of cases recognized that the power to zone carries
a constitutional obligation to do so in a manner that creates a realistic
opportunity for producing a fair share of the regional present and prospective
need for housing low- and moderate-income families." In re N.J.A.C. 5:96 &
5:97, (Mount Laurel IV), 221 N.J. 1, 3-4 (2015) (footnote omitted).
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I.
On July 2, 2015, the Township filed a verified complaint seeking a
declaratory judgment that it satisfied its fair share of affordable housing for its
Third Round Mount Laurel obligation, pursuant to COAH's 2014 calculation,
and it is immune from prospective litigation. 2 On November 12, 2015, the
2
Third Round refers to a municipality's Mount Laurel obligation between the
years of 1999 and 2025. See In re Declaratory Judgment Actions Filed By
Various Muns., 227 N.J. 508, 531 (2017).
In 1999, COAH's Second Round rules expired. In re Adoption of
N.J.A.C. 5:96 & 5:97 ex rel. New Jersey Council on Affordable Hous. (Mount
Laurel IV), 221 N.J. 1, 8 (2015). As such, promulgation of COAH's Third
Round rules was originally due in 1999. Ibid. Although COAH twice
attempted to adopt Third Round rules, first in 2004, see 36 N.J.R. 5895(a)
(Dec. 20, 2004), and then in 2008, see 40 N.J.R. 237(a) (Jan. 22, 2008); 40
N.J.R. 515(a) (Jan. 22, 2008), reviewing courts found several key aspects of
COAH's two attempted Third Round rules "to be invalid and violative of the
Mount Laurel doctrine." In re Declaratory Judgment Actions, 227 N.J. at 514-
15 (citing In re Six Month Extension of N.J.A.C. 5:91–1 et seq., 372 N.J.
Super. 61 (App. Div. 2004); In re Adoption of N.J.A.C. 5:94 & 5:95 (In re
N.J.A.C. 5:94 & 5:95), 390 N.J. Super. 1 (App. Div. 2007); In re Adoption of
N.J.A.C. 5:96 & 5:97, 416 N.J. Super. 462 (App. Div. 2010)). Consequently,
for sixteen-plus years, "COAH failed to adopt a set of valid regulations to
govern the" Third Round. Ibid.In response, on March 14, 2014, the Court directed COAH if it "did not
adopt Third Round [r]ules by November 17, 2014, the Court would entertain
applications for relief . . . . [and] 'if such a request [was] granted, actions may
be commenced on a case-by-case basis before the Law Division or in the form
of "builder[']s remedy" challenges.'" See Mount Laurel IV, 221 N.J. at 9-10
(fifth alteration in original) (quoting In re Adoption of N.J.A.C. 5:96 & 5:97,
220 N.J. 355, 355-56 (2014)).
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FSHC moved to intervene. Bergman, doing business as Sage Builders, Inc.,
entered into an option agreement on April 27, 2017, to purchase 17.04 acres of
unimproved real property located at block 92.01, lot 18, on Route 528 in the
Township (the property) for the purpose of constructing 250 residential units,
which would include forty affordable housing units. He filed a motion to
intervene, which the trial court granted. The court also appointed Lonergan as
a special master in the case.
Following immunity and intervention proceedings, the parties engaged
in extensive negotiations. At the time, the property was "zoned as R-120 Low
Density Residential." The Township wanted to acquire the property for its
Green Acres open space preservation program. On April 3, 2017, the
Township awarded a contract for the appraisal of the property to J. McHale
and Associates, LLC. The property appraisal indicated "a maximum of
[thirteen] building lots" would be permitted under current zoning regulations.
The option agreement provided Bergman nine months—until January 27,
2018—to acquire all rights in the property under the terms and conditions set
forth in the agreement. Bergman could extend the initial option period for an
additional nine months by notifying the owner "in writing no later than ten . . .
business days prior to the expiration of the" option agreement—January 17,
2018—and making four $37,500.00 payments upon exercising the extended
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option period and "at [seventy-five] day intervals thereafter," for a total sum of
$150,000.00. Failure to extend the initial option period in writing by January
17, 2018, would automatically result in termination of the option on January
27, 2018.
Between May and June 21, 2017, the Township and Bergman had
preliminary discussions relative to his proposed development. Bergman did
not file an application to rezone the property or seek site plan approval
regarding his proposal. The Township informed Bergman it was in the process
of determining its affordable housing obligation.
On June 26, 2017, the Township and FSHC 3 entered into a settlement
agreement (the agreement), which set forth the Township's total affordable
housing obligations and provided a compliance plan in order to meet those
obligations. The agreement recognized the Township had the following
affordable housing obligations:
REHABILITATION OBLIGATION 11
PRIOR ROUND OBLIGATION
3
In Mount Laurel IV, the Court endorsed FSHC's interest in the Third Round
proceedings under review. The Court explained, "If a municipality seeks to
obtain an affirmative declaration of constitutional compliance, it will have to
do so on notice and opportunity to be heard to FSHC and interested parties."
221 N.J. at 24. Trial courts "will be assisted in rendering [their] preliminary
determination[s] on need by the fact that all initial and succeeding applications
will be on notice to FSHC and other interested parties." Id. at 23.
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(pursuant to N.J.A.C. 5:93) 211
THIRD ROUND (1999-2025)
PROSPECTIVE NEED, WHICH
INCLUDES THE GAP PERIOD
PRESENT NEED, RECOGNIZED BY
THE SUPREME COURT, In re
Declaratory Judgment Actions
Filed by Various Municipalities,
227 N.J. 508 (2017) 425
In order to satisfy the Township's Third Round prospective need of 425
units, the agreement identifies multiple compliance mechanisms, including:
(1) surplus credits (round two), consisting of residual credits resulting from the
Bradford Point site 4 for ten units with a rental bonus credit of ten (ten in total);
(2) Volunteers of America (VOA) – 1, a senior rental for sixty-four units and
special needs for five units (sixty-nine units in total) with a rental bonus credit
of five; (3) the Bordentown Waterfront Community (BWC) residual credits, a
family or senior rental with eighteen units; (4) the Zieger project, for 227
units, thirty-six units to be affordable housing; (5) the Nissam project, for 230
units, forty units to be affordable housing and over 13% affordable housing to
very low-income families; (6) group home (bedrooms) designated for special
4
"The Bradford Pointe Court development was approved in 2001 and
constructed in 2002 to satisfy the conditions contained in the August 16, 2000
[j]udgment of [c]ompliance and [r]epose and the entirety of the Township's
[p]rior [r]ound obligation. This site is identified as block 139, lot 11 on the
official tax map of the Township."
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needs, consisting of twenty units and sixteen rental bonus credits; (7) an
inclusionary family rental development for fifty-nine units; and (8) VOA-2, a
family rental development based on sixty-six units.
Bergman's property was not included in the agreement. Therefore, he
chose not to meet any further with the Township's representatives relative to
his development plan for the property. On September 1, 2017, Bergman filed
an objection to the Township's proposed settlement and compliance plan and
sought to include the property in the Township's affordable housing allocation.
On May 18, 2018, Bergman's attorney submitted a letter to the court
advising he and his client "would not be appearing at the fairness hearing but
that [Bergman] wished to make a statement." On June 12, 2018, Bergman
submitted a pro se written statement of his objections to the proposed
settlement to the court.
At the June 18, 2018 fairness hearing, the trial court permitted Bergman
to make a statement and cross-examine witnesses. The judge addressed
Bergman's arguments and explained:
[First], [Bergman's concerns are] not directly in
front of me today. What's in front of me today is
whether there is a realistic opportunity for affordable
housing, [which] I think that there is based on [special
master] Lonergan's testimony.
[Second], and I have this in other cases. I have
it even being more actively litigated than this. It's—
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and I get the impression you're in the real estate
business, so you know that things change, just like the
rest of life and if something changes here then we’ll
come back and we'll have to see.
....
[Third,] you may be right. As a matter of fact, I
would be surprised if you were not right, that some of
these things are not going to happen, but then the
question is what is going to happen?
And I think that response to your concerns, I'm
not going to get into whether I think your policy
arguments are right or wrong because I don't really
think that's the role of the Court. . . . I'm not here for
policies. I'm here to do what the Supreme Court says.
So based upon this[,] I do find that there's a
realistic opportunity.
On June 29, 2018, the trial court entered an order approving the
Township's settlement with the FSHC based on Lonergan's testimony. The
court noted the agreement's fair share methodology reduced the Township's
Third Round obligation by thirty-two percent "as an incentive to settle the
case," which it had "been amendable to . . . in lieu of litigating the appropriate
fair share methodology."
Notwithstanding entry of the order, during a court conference, the judge
"directed the parties to engage in discussions to see whether . . . [Bergman]'s
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proposed site could be included in the settlement." 5 In September 2017,
negotiations commenced and ultimately resulted in a proposal by the Township
permitting Bergman "to build eighty units on the property." These units,
however, "would not be affordable units, but would be market rate units."
Bergman rejected the proposal "because he wanted to buil[d] affordable [units]
as part of the project."
On January 17, 2018, Bergman did not notify the property's owner in
writing of his intention to extend the initial option period, as required in the
option agreement. A week later on January 24, 2018, the Township
announced it was ceasing all negotiations with Bergman regarding the
property and his proposed development. Three days later, on January 27,
2018, Bergman's option agreement expired. After Bergman's option
agreement expired and was not renewed by him, the property's owner
reentered into negotiations with the Township for its purchase of the
property, which culminated in the sale of the property to the Township on
May 3, 2018.
On June 7, 2019, Bergman filed a motion to set aside the trial court's
June 29, 2018 order and argued: (1) "during the court-ordered negotiations
[the Township] had taken undisclosed measures to acquire [the property] for
5
The record does not reflect the date of the court conference.
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itself for the purpose of preventing housing at that location;" and (2) the
Township "had interfered in [his] ability to advocate for inclusion of the site in
the affordable housing settlement."6
On June 11, 2019, the Township and FSHC entered into an amended
agreement, unrelated to Bergman's motion, which was submitted to the trial
court on June 18, 2019, for approval. The amended agreement also provided
for 425 units to satisfy the Township's Third Round obligation. In sum, the
Township's Third Round sites included:
• Affordable housing credit for ten existing family
rental homes, plus ten bonus credits from
Bradford Pointe, a 100% affordable
development, plus ten bonus credits
• Sixty-nine existing homes, comprised of sixty-
four age-restricted rentals and five special needs
units, plus five bonus credits for the special
needs units from a 100% affordable
development with VOA
• Eighteen proposed family or age-restricted
rental homes from an inclusionary development,
BWC
• Thirty-six proposed family rental homes, plus
thirty-six bonus credits, from an inclusionary
development with Zieger
6
Bergman claims he filed his motion to set aside the order on June 14, 2019.
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• Forty proposed family rental homes, plus forty
bonus credits, from an inclusionary development
with Nissim
• Nineteen proposed age-restricted homes from an
inclusionary development with Kevin Johnson
Senior Project
• Fourteen group homes
• Ten proposed family homes to be constructed by
Habitat for Humanity
• Eleven proposed market-to-affordable homes
• Sixty-five proposed rental homes to be built as a
100% affordable development by VOA, which
was to be publicly subsidized
A new fairness hearing was requested to address modifications to the
proposed amended agreement and to "determine whether the [a]mend[ed]
[agreement] [was] fair and reasonable to the interest of the region's low- and
moderate-income households, while simultaneously determining whether [the
Township's fair share plan], as a whole, creates a realistic opportunity for the
construction of the Township's fair share of the regional need."
On August 9, 2019, the parties entered into a consent order to set aside
Bergman's motion because the June 29, 2018 order became moot since a new
fairness hearing was required as a result of the proposed amended settlement.
As part of the parties' consent order, Bergman was "entitled to be heard and
A-0357-20
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offer lay testimony and expert witnesses and cross-examine witnesses at any
[fairness hearing] held in this matter."
On October 16, 2019, the trial court commenced the fairness hearing
over three non-sequential days. 7 During the second day of the fairness
hearing, the trial court rejected Bergman's request to testify because his
arguments were limited to his "personal situation." The trial court reiterated
its function was solely to determine "whether or not [the amended agreement]
was a fair agreement that provides a realistic opportunity for low[-] and
moderate[-] income housing." The trial court added: "There is nothing that
obligates a town to go with a specific development plan, as opposed to another
one, provided that [the chosen plan] provides the opportunity for realistic
low[-] and moderate[-] income housing."
Special master Lonergan testified in response to both the fairness of the
amended settlement agreement and Bergman's arguments, which were
previously summarized in an October 14, 2014 email to her. Lonergan
recommended the trial court approve the amended settlement agreement and
noted the housing element of the Fair Share Plan provided a realistic
opportunity for the Township to construct its fair share of the regional need for
7
The second fairness hearing was held on October 16, November 15, and
November 19, 2019.
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affordable housing. On December 10, 2019, the trial court entered a
conditional order of judgment of compliance and repose, which incorporated
the amended settlement agreement. The parties were directed to inform the
court after the terms of the conditional order were satisfied. On August 7,
2020, the trial court entered the final judgment of compliance and repose,
which is the judgment under review. This appeal followed.
II.
A final determination made by a trial court conducting a non-jury case is
"subject to a limited and well-established scope of review." Seidman v.
Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011). We review a trial court's
interpretation of law de novo. Manalapan Realty, LP v. Twp. Comm. of
Manalapan, 140 N.J. 366, 378 (1995). However, "we give deference to the
trial court that heard the witnesses, sifted the competing evidence, and made
reasoned conclusions." Griepenburg v. Twp. of Ocean, 220 N.J. 239, 254
(2015). We will "not disturb the factual findings and legal conclusions of the
trial judge unless" convinced that those findings and conclusions were "so
manifestly unsupported by or inconsistent with the competent, relevant and
reasonably credible evidence as to offend the interests of justice." Rova Farms
Resort 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)).
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A trial court's decision to approve a proposed settlement agreement is
reviewed for abuse of discretion. 8 Chattin v. Cape May Green, Inc., 216 N.J.
Super. 618, 628 (App. Div. 1987) (reviewing a class action settlement);
Builders League of S. Jersey, Inc. v. Gloucester Cnty. Utils. Auth., 386 N.J.
Super. 462, 471-72 (App. Div. 2006) (noting fairness hearings for class action
settlements and land use litigation to be the same) (citing, in part, S.
Burlington Cnty. N.A.A.C.P. v. Mount Laurel Twp. (Mount Laurel I), 67 N.J.
151 (1974)). The trial court's role is to approve or reject the proposed
settlement in its entirety as written and the court may not revise or amend
particular provisions. See Tabaac v. City of Atl. City, 174 N.J. Super. 519,
524 (Law Div. 1980); In re Cendant Sec. Litig., 109 F.Supp. 2d. 235, 255
(D.N.J. 2000).
Trial courts have broad discretion when reviewing a municipality's
Mount Laurel fair share plan for constitutional compliance. Mount Laurel IV,
221 N.J. at 30. And, trial "courts should endeavor to secure, whenever
possible, prompt voluntary compliance from municipalities." Id. at 33. A trial
court's factual "findings should not be disturbed 'when supported by adequate,
substantial and credible evidence.'" Toll Bros. v. Twp. of W. Windsor, 173
8
Without citing to any case law or legal authority, Bergman erroneously
contends a trial court's approval of a municipality's Fair Share Plan is subject
to de novo review.
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N.J. 502, 549 (2002) (quoting Rova Farms Resort, 65 N.J. at 484). Matters of
law, however, "are subject to a de novo review." Ibid. (quoting Balsamides v.
Protameen Chems., Inc., 160 N.J. 352, 372 (1999)).
A trial court must conduct a fairness hearing before it approves a
municipality's Mount Laurel Fair Share Plan. Livingston Builders, Inc. v.
Twp. of Livingston, 309 N.J. Super. 370, 374 (App. Div. 1998). The sole
purpose of a fairness hearing is to assess "whether the settlement is 'fair and
reasonable,'" i.e., "whether it adequately protects the interests of the persons
on whose behalf the action was brought." Sutter v. Horizon Blue Cross Blue
Shield of N.J., 406 N.J. Super. 86, 101-02 (App. Div. 2009) (reviewing
settlement between health insurer and class representative) (quoting Morris
Cnty. Fair Hous. Council v. Boonton Twp., 197 N.J. Super. 359, 369-71 (Law
Div. 1984)); see also Builders League of S. Jersey, 386 N.J. Super. at 471-72(noting fairness hearings for class action settlements and land use litigation to
be the same). Cf. Mount Laurel I, 67 N.J. 151.
A municipality's fair share plan settlement is fair and reasonable when it
"adequately protects the interests of lower-income persons on whose behalf the
affordable units proposed by the settlement are to be built." E./W. Venture v.
Borough of Fort Lee, 286 N.J. Super. 311, 328 (App. Div. 1996). A fairness
hearing requires the trial court to consider: (1) "the number of affordable
A-0357-20
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housing units being constructed"; (2) "the methodology by which the number
of affordable units has been derived"; (3) "any other contribution being made
by the developer to the municipality in lieu of affordable units"; (4) "other
components of the agreement[,] which contribute to the municipality's
satisfaction of its constitutional obligation"; and (5) "any other factors[,] which
may be relevant to the 'fairness' issue." Ibid. "In making a fairness
determination, a trial court 'must not forget that it is reviewing a settlement
proposal rather than ordering a remedy in a litigated case.'" Builders League
of S. Jersey, 386 N.J. Super. at 471 (quoting Armstrong v. Bd. of Sch. Dirs. of
Milwaukee, 616 F.2d 305, 314-15 (7th Cir.1980)).
In conducting a fairness hearing, a trial court has broad "discretion to
'employ the procedures that it perceives will best permit it to evaluate the
fairness of the settlement.'" Sutter, 406 N.J. Super. at 101 (quoting In re Cmty.
Bank of N. Va., 418 F.3d 277, 316 (3d Cir. 2005)). "The 'nature and extent of
the hearing . . . rests within the sound discretion of the court .'" Id. at 102
(quoting Boonton Twp., 192 N.J. Super. at 370); see also In re Pet Food Prods.
Liab. Litig., 629 F.3d 333, 358 n.33 (3d Cir. 2010) (noting trial courts are
afforded considerable "discretion 'to employ the procedures that [the court]
perceives will best permit it to evaluate the fairness of the settlement'"
(quoting In re Cmty. Bank of N. Va., 418 F.3d at 316)).
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Under Mount Laurel I, 67 N.J. at 151, a municipality has a constitutional
obligation to provide a "realistic opportunity" for the development of its fair
share of affordable housing. S. Burlington Cnty. N.A.A.C.P. v. Mount Laurel
Twp. (Mount Laurel II), 92 N.J. 158, 221 (1983). Determining if an
opportunity is "realistic" requires application of a practical and objective
standard; the court must decide "whether there is in fact a likelihood—to the
extent economic conditions allow—that the lower income housing will actually
be constructed." Id. at 221-22. "Municipalities need not guarantee that the
required amount of affordable housing will be built, but must only adopt land
use ordinances that create a realistic opportunity to meet the regional need and
their own rehabilitation share." In re Adopt. of N.J.A.C. 5:94 & 5:95, 390 N.J.
Super. at 54.
Trial courts adjudicating Mount Laurel declaratory judgment actions
"should employ flexibility in assessing a" municipality's compliance plan.
Mount Laurel IV, 221 N.J. at 33. The Fair Housing Act of 1985 (FHA) and
the Municipal Land Use Law authorize municipalities to use various means to
provide for their "fair share of low[-] and moderate[-]income housing."
N.J.S.A. 52:27D-311(a); see also N.J.S.A. 40:55D-8.7(a).
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A.
We first address Bergman's argument that the trial court erred by not
allowing him to testify at the fairness hearing. He contends his proffered
testimony was a factor "relevant to the 'fairness' issue." E./W. Venture, 286
N.J. Super. at 328. Bergman claims the term "any other factors" "embraces all
evidence that reasonably relates to the fundamental fairness of the settlement"
and "whether it provides a 'realistic' affordable housing opportunity." Because
Bergman asserts the amended settlement agreement reduced the Township's
Third Round obligations, he claims his testimony was relevant, and his
proposed development could have satisfied the Township's affordable housing
obligation.
The sole purpose of a fairness hearing is to assess whether the proposed
"settlement is 'fair and reasonable,'" Sutter, 406 N.J. Super. at 101-02 (quoting
Boonton Twp., 197 N.J. Super. at 369-71), i.e., "whether it adequately protects
the interests of lower-income persons on whose behalf the affordable units
proposed by the settlement are to be built," E./W. Venture, 286 N.J. Super. at
328. As such, the trial "court 'must eschew any rubber stamp approval in favor
of an independent evaluation, yet, at the same time, it must stop short of the
detailed and thorough investigation that it would undertake if it were actually
trying the case.'" Sutter, 406 N.J. Super. at 102 (quoting Builders League of S.
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Jersey, 386 N.J. Super. at 471). However, "[t]he 'nature and extent of the
hearing . . . rests within the sound discretion of the court.'" Ibid. (quoting
Boonton Twp., 192 N.J. Super. at 370); see also Pet Food Prods. Liab. Litig.,
629 F.3d 333, 358 n.33 (3d Cir. 2010) (noting trial courts are afforded
considerable discretion "to employ procedures that [the court] perceives will
best permit it to evaluate the fairness of the settlement" (quoting In re Cmty.
Bank of N. Va., 418 F.3d at 316)).
We discern no basis to disturb the trial court's decision barring
Bergman's testimony. The court was well within its discretion in finding
Bergman's proffered testimony was purely personal in nature—concerning his
development project. Moreover, Bergman was allowed to participate in the
fairness hearing by examining witnesses. The 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
parties' current plan 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.'" S. Burlington Cnty. N.A.A.C.P. v. Twp. of
Mount Laurel (Mount Laurel II), 92 N.J. at 205.
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B.
Next, Bergman argues the trial court erred by finding he "was seeking to
compel, in the wrong forum, a builder's remedy." A builder's remedy provides
a developer with the means to bring "about ordinance compliance through
litigation." Mount Olive Complex v. Twp. of Mount Olive (Mount Olive II),
356 N.J. Super. 500, 505 (App. Div. 2003) (quoting Allan-Deane Corp. v.
Twp. of Bedminster, 205 N.J. Super. 87, 138 (Law Div.1985)). A builder's
remedy should be granted if: (1) the "developer succeeds in Mount Laurel
litigation"; (2) the developer "proposes a project providing a substantial 9
9
"Substantial" is defined on a case-by-case basis. Mount Laurel II, 92 N.J. at279 n.37. To determine whether the provided amount of lower income
housing is substantial, trial court's should consider the following factors: (1)
"the size of the [builder's] proposed project"; (2) "the percentage of the project
to be devoted to lower income housing" (a percentage of 20% or higher is
presumptively a reasonable percentage); (3) the "proportion of the
[municipality's]'s fair share allocation [that] would be provided by the project";
and (4) "the extent to which the remaining housing in the project can be
categorized as 'least cost.'" Ibid.Here, Bergman's proposal does not include a substantial amount of lower
income housing. Bergman's original proposal included 250 units, with only
forty low-income units (16%). His forty low-income units would provide for
merely 5.28% of the Township's fair share allocation of 757 units. Finally, the
record does not reflect whether the remaining 200 units could be categorized
as "lease cost." Despite the fact that Bergman describes his proposal sets forth
a "substantial" and "sizeable" number of low-income units, the record does not
indicate his proposal would provide the Township with the substantial number
of units mandated under the Mount Laurel II factors. Ibid.A-0357-20
20
amount of lower income housing"; and (3) the developer's proposal is not
"contrary to sound land use planning." Mount Laurel II, 92 N.J. at 279–80. A
"builder's remedy [may] not be denied solely because the municipality prefers
some other location for lower income housing, even if it is in fact a better
site." Id. at 280. Builder remedies are granted "where appropriate, on a case-
by-case basis." Id. at 218.
A developer does not have an "inherent right to a builder's remedy,"
however. Tanenbaum v. Twp. of Wall Bd. of Adjust., 407 N.J. Super. 446,
457 (Law. Div. 2006), aff'd, 407 N.J. Super. 371, 376 (App. Div. 2009)
(affirming the trial court's "conclusions substantially on the basis of his written
opinion"). A builder's remedy is only appropriate "after a [trial] court has had
the opportunity to fully address constitutional compliance and has found
constitutional compliance wanting." Mount Laurel IV, 221 N.J. at 35-36.
Consequently, only a municipality that satisfies its Mount Laurel obligations
"obtain[s] immunity from a builder's remedy." Id. at 14.
Here, the trial court noted Bergman's objections to be a "bootstrapped"
builder's remedy by which to circumvent the Township's immunity.
Specifically, the court noted:
He happens to be a developer. There's a specific
remedy for developers when it comes to [Mount]
Laurel litigation, called a builder's remedy, if that's
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what he might want to do with a certain plot of land as
a developer.
. . . [I]t's one thing to object to the [Mount] Laurel
plan on fairness grounds, but if the whole reason he's
here . . . [is] as a developer, [he] want[s] [his]
property in [the plan][,] [i]sn't that a builder's remedy
as opposed to an objection to a fair share plan?
In response, the record shows Bergman's counsel admitted he had hoped by
vacating the current fair share plan, Bergman "might actually get to the same
place" as a builder's remedy "without the need for a new litigation." We are
unpersuaded. The trial court's barring of Bergman's testimony was well within
its discretion and does not warrant reversal.
C.
Finally, on the issue of his proffered testimony, Bergman argues the trial
court erred because the Township had "manipulated out of existence an actual
building opportunity." A municipality is not inherently required to rezone
property for purposes of inclusionary development. See Mount Olive II, 356
N.J. Super. at 507. If a municipality can achieve its fair-share obligation
without a specific property, i.e., the municipality's fair share plan is fair and
reasonable without the property's inclusion, then the municipality may restrict
the use of the property as reasonable. See ibid.; Mount Olive Complex v.
Twp. of Mount Olive (Mount Olive I), 340 N.J. Super. 511, 538 (App. Div.
2001). In Mount Laurel II, the Court specifically held:
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Mount Laurel is not designed to sweep away all land
use restrictions or leave our open spaces and natural
resources prey to speculators. Municipalities
consisting largely of conservation, agricultural, or
environmentally sensitive areas will not be required to
grow because of Mount Laurel. . . .
As for those municipalities that may have to
make adjustments in their lifestyles to provide for
their fair share of low[-] and moderate[-]income
housing, they should remember that they are not being
required to provide more than their fair share. . . .
[O]nce a community has satisfied its fair share
obligation, the Mount Laurel doctrine will not restrict
other measures, including large-lot and open area
zoning, that would maintain its beauty and communal
character.
[92 N.J. at 219-20.]
A municipality achieves its fair-share obligation via its "units actually
constructed, under construction, or approved by [the municipality's] final
development plan." Mount Olive II, 356 N.J. 510-11. As such, so long as a
municipality's fair share plan is fair and reasonable, the municipality has
satisfied its Mount Laurel obligations and may restrict the use of all property
not included in the plan as reasonable. But see Mount Laurel IV, 221 N.J. at
33-34 (noting if the "goal cannot be accomplished, with good faith effort and
reasonable speed, . . . then the [trial] courts may authorize exclusionary zoning
actions seeking a builder's remedy to proceed against the [municipality]").
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Nor may a trial court order additional Mount Laurel housing absent a
builder's remedy. A trial court "cannot order more Mount Laurel housing even
if the municipality could have provided more." Tanenbaum, 407 N.J. Super. at
457 (citing generally Livingston Builders, 309 N.J. Super. 370).
Here, the property was zoned as low density residential at the time
Bergman entered into the option contract. At no time did Bergman file any
application for rezoning of the property. In May 2017, the Township informed
Bergman that the property would be considered for additional affordable
housing, along with other properties. And, the proposals were "entirely
inconsistent with the Township's current zoning" regularities. During the
second fairness hearing, the Township's representative testified "[t]here was
always interest in [the] property for the purpose . . . . [of] affordable
housing. . . . [but] [i]t was rejected . . . because the [Township] was concerned
with its proximity in a blast zone to a compressor station."
Clearly, the Township had not "manipulated out of existence an actual
building opportunity," but rather rejected the property for legitimate reasons in
favor of alternative locations. Indeed, the Township achieved its fair-share
obligation without including the property and was entitled to restrict the use of
the property as it deemed reasonable. See Mount Olive II, 356 N.J. Super. at
507; Mount Olive I, 340 N.J. Super. at 538.
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D.
Next, Bergman contends the amended settlement agreement "truncates
and reduces by a large margin," approximately thirty percent, "the number of
affordable units ever to be constructed . . . . through the use of stratagems such
as rental bonus credits and deed restricting homes." Bergman summarizes
various "stratagems" that he contends the Township unconstitutionally
employed to reduce its margin, 10 but he does not argue the use of the
stratagems in and of themselves to be unconstitutional. Rather, Bergman
argues that trial courts are required to provide a "realistic opportunity" analysis
prior to accepting bonus credits or other reduction stratagems.
According to Bergman, a "realistic opportunity" analysis requires a trial
court to weigh the facts of the case, and determine whether: (1) "the economic
rationale that motivated COAH . . . to allow the use of . . . bonus credits still
prevailed at the time of hearing;" and (2) "the loss of . . . units due to rental
and other credits undermined the fundamental fairness of the settlement,"
relying on the Court's holding in Mount Laurel IV. "As the Supreme Court has
made clear, the trial court, acting in COAH's place, may apply COAH's former
rules 'if persuaded that the techniques proposed . . . will promote . . . [the
10
Bergman's summary of stratagems includes the usage of: (1) rental bonus
credits; (2) surplus units credits; (3) senior special needs credits; (4) group
home bedroom credits; and (6) market-to-affordable deed restrictions.
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municipality's] fair share of . . . low- and moderate-income housing.'"
(Emphasis added) (first, third, and fourth alterations in original) (emphasis
added) (quoting Mount Laurel IV, 221 N.J. at 30).
First, although not advanced by Bergman, the use of bonus credits and
reduction stratagems are constitutional under common law. These stratagems
were originally adopted and codified within COAH's First and Second Round
methodologies, N.J.A.C. 5:92-1.1 to -19, and N.J.A.C. 5:93-1 to -13.4
respectfully. See In re N.J.A.C. 5:94 & 5:95, 390 N.J. Super. at 23-25; Toll
Bros., 334 N.J. Super. at 104. The Court has noted various legal challenges to
COAH's Second Round methodology, including reductions for bonus credits,
have failed. See In re Adoption of N.J.A.C. 5:96 (In re N.J.A.C. 5:96), 215
N.J. 578, 592 (2013); see also In re N.J.A.C. 5:94 & 5:95, 390 N.J. Super. at
25 (noting examples of failed legal challenges to COAH's First and Second
Round rules, including bonus credits).
Most recently, in 2007, multiple appellants contested "the validity of
these credits and bonus credits" claiming "the award of bonuses and credits
unconstitutionally dilutes the affordable housing required to meet the
identified statewide need." In re N.J.A.C. 5:94 & 5:95, 390 N.J. Super. at 81.
Appellants requested this court "to hold that: (1) no unit can receive a credit
unless the unit actually exists; and (2) no unit can be credited unless it is likely
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to be occupied by a person included in the calculation of need." See id. at 83.
In response, however, we once again upheld the constitutionality of the
stratagems. Ibid. We also noted it was "reasonable for COAH to provide
incentives for housing for the very poor" and that appellants had offered "no
persuasive reasons for departing from existing precedent." Ibid.
In 2015, our Court "declared COAH defunct and eliminated the FHA's
exhaustion-of-administrative-remedies requirement." In re Declaratory
Judgment Actions, 227 N.J. at 515 (citing Mount Laurel IV, 221 N.J. at 5-6).
In response, the Court "provided for a judicial forum to adjudicate affordable
housing disputes once more" and "instructed the courts to follow certain
guidelines 'gleaned from the past.'" Ibid. (quoting Mount Laurel IV, 221 N.J.
at 29-30). Such guidelines specifically included that "Mount Laurel judges
may exercise the same level of discretion [as COAH] when evaluating a
municipality's plan for Mount Laurel compliance," including "the allowance of
bonus credits towards satisfaction of a municipality's affordable housing
obligations." Mount Laurel IV, 221 N.J. at 31-32. On October 16, 2016,
COAH's Second Round rules expired, including its reduction stratagems. See
generally N.J.A.C. 5:93-1 to -13.4.
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The record here is replete with references to the expired Second Round
rules. The trial court also noted the current ongoing confusion as to the now
expired COAH methodologies:
[H]ere let me just talk briefly about COAH and there's
been a lot of back and forth and the [c]ourt sort of
indicated, you know, sometimes where it's convenient
to talk about the COAH regulations are coming in, and
other times it's no, COAH is defunct, and does COAH
have any meaning in today's world post Mount Laurel
IV, and the [c]ourt would simply indicate that the
spirit of those COAH regulations are something that
the [c]ourt can consider in an overall analysis of
whether or not the plan is fair, and that is clearly
articulated in Mount Laurel.
The trial court held "bonus credits have been permissible from the inception of
Mount Laurel through COAH. The [c]ourt sees no reason to reject it now. It's
common, it's acceptable, it's ubiquitous and it's appropriate." The parties cite
the Second Round rules and seemingly rely on an understanding that in Mount
Laurel IV, the Court created common law 11 "Third Round" methodologies,
which include and incorporate the Second Round reduction stratagems. See In
re Declaratory Judgment Actions, 227 N.J. at 515 ("[W]e provided for a
judicial forum to adjudicate affordable housing disputes once more. . . . [and]
directed [the] [courts] [to] ascertain affordable housing need using the
11
Defining "common law" as "[t]he body of law derived from judicial
decisions, rather than from statutes or constitutions." Black's Law Dictionary
(11th ed. 2019).
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methodologies set forth in COAH's First and Second Round rules.").
Undeniably, the use of bonus credits and reduction stratagems are
constitutional pursuant to the Court's holding in Mount Laurel IV.
Second, in Mount Laurel IV, the Court specifically identified and
instructed trial courts to approve "the allowance of bonus credits towards
satisfaction of a municipality's affordable housing obligations." 221 N.J. at
31-33. Furthermore, the Court specifically "provided a process by which a
town might obtain the equivalent of substantive certification for its fair shar e
housing plan and avoid exclusionary zoning actions, after a court assessed the
town's fair share responsibility." In re Declaratory Judgment Actions, 227 N.J.
at 523 (emphasis added) (citing Mount Laurel IV, 221 N.J. at 5-6, 9-20). In
addition, the Court "gave the trial courts considerable flexibility in assessing
need, allocating it by region and municipality, and in evaluating municipal
plans for compliance, [but] did identify some parameters for the courts'
actions." Id. at 525 (citing Mount Laurel IV, at 29–33). Beyond those
parameters, the Court specifically "did not limit the work of the trial courts
except to attempt to cabin the time within which progress would be made
toward recapturing the lost opportunity to advance municipal compliance with
affordable housing obligations." Ibid. (citing Mount Laurel IV, 221 N.J. at
33).
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Bergman's "realistic opportunity" analysis directly contradicts the
Court's required process and parameters, and it ignores the Court's approval of
"allowance of bonus credits towards satisfaction of a municipality's affordable
housing obligations." Mount Laurel IV, 221 N.J. at 31. The Court even
approved the usage of additional bonuses not included in either the First or
Second Round rules. Id. at 31-32 (approving bonus credits for usage of new
construction, for units affordable to members of the "public earning thirty
percent or less of the median income," and "Smart Growth" and
"Redevelopment" bonuses).
Therefore, pursuant to Mount Laurel IV, the trial court here was not
required to provide an analysis of whether "the economic rationale that
motivated COAH . . . to allow the use of . . . bonus credits still prevailed at the
time of hearing." Thus, the trial court was free to accept all bonus credits and
reduction stratagems so long as the municipality's fair share plan, as a whole,
was fair and reasonable. E./W. Venture, 286 N.J. Super. at 328.
Third, the purpose of the Court's Mount Laurel IV decision was to
expedite municipalities' voluntary compliance with their Mount Laurel
obligations. "Rules to govern the [T]hird [R]ound cannot wait further while
time is lost . . . . A remedy must be put in place to eliminate the limbo in
which municipalities, New Jersey citizens, developers, and affordable ho using
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interest groups have lived for too long." Mount Laurel IV, 221 N.J. at 9
(quoting In re N.J.A.C. 5:96 & 5:97, 215 N.J. at 620). The Court elaborated:
[C]ourts should endeavor to secure, whenever
possible, prompt voluntary compliance from
municipalities in view of the lengthy delay in
achieving satisfaction of towns' Third Round
obligations. If that goal cannot be accomplished, with
good faith effort and reasonable speed, and the town is
determined to be constitutionally noncompliant, then
the court may authorize exclusionary zoning actions
seeking a builder's remedy to proceed against the
towns . . . .
[Id. at 33–34.]
The purpose of the Court's Mount Laurel IV decision is consistent with the
Court's long endorsed "policy of encouraging the settlement of litigation."
Boonton Twp., 197 N.J. Super. at 366; see also Mount Laurel II, 92 N.J. at 352("[T]he Mount Laurel obligation is to provide a realistic opportunity for
housing, not litigation.").
We conclude Bergman's proposed "realistic opportunity" analysis
directly contradicts the Court's avowed goal in Mount Laurel IV. First,
requiring every trial court to consider whether "the economic rationale that
motivated COAH . . . to allow the use of . . . bonus credits still prevailed at the
time of hearing" for each and every individual municipality, would
substantially delay every municipality's compliance with its individual Mount
Laurel obligation. Second, an analysis of that scale would require an in-depth
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review of important social, economic, and constitutional matters, which may
affect every municipality.
The Court has repeatedly recognized that a legislative or administrative
remedy would better handle such considerations. In re Declaratory Judgment
Actions, 227 N.J. at 531; Mount Laurel IV, 221 N.J. at 34 ("It is our hope that
an administrative remedy will again become an option for those proactive
municipalities that wish to use such means to obtain a determination of their
housing obligations and the manner in which those obligations can be
satisfied."). Third, Berman's proposed analysis would interfere with a
municipality's voluntary compliance with their Mount Laurel obligations.
Bonus credits and reduction stratagems are "part of a comprehensive
scheme to encourage municipalities and developers to build affordable . . .
units in the future." In re N.J.A.C. 5:94 & 5:95, 390 N.J. at 82 (quoting Calton
Homes, Inc. v. Council on Affordable Hous., 244 N.J. Super. 438, 457 (App.
Div. 1990)). And, such stratagems "are an appropriate tool to create incentives
for types of housing that may not otherwise be provided in the municipality."
Id. at 83 (internal quotation marks omitted). As a result, a trial court may not
interfere with a municipality's fair share plan based on the allocation of bonus
credits and reduction stratagems, so long as it is, as a whole, fair and
reasonable. E./W. Venture, 286 N.J. Super. at 328.
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III.
Finally, Bergman argues Lonergan had a conflict of interest because she,
and her firm, actively represent municipalities as both special masters and as
advisors. Bergman argues "Lonergan and her firm are caught in a revolving
door: [first] advising large numbers of courts . . . as to the validity of
municipal affordable housing proposals[;] and then . . . representing dozens of
municipalities . . . using the very same methodologies and advocating that
[such methodologies] . . . satisfy [Mount] Laurel doctrine." In response, the
Township claims Lonergan had neither "a financial interest in the matter" nor
was "directly linked" to any party who had such an interest.
A special master's role is purely advisory. Deland v. Twp. of Berkeley,
361 N.J. Super. 1, 12 (App. Div. 2003). Special masters may be appointed by
a trial court to render opinions, propose findings, issue recommendations, and
assist "the court in other similar ways as [the court] may direct." Id. at 8; see
also Mount Laurel II, 92 N.J. at 281-85 (authorizing trial courts assigned to
hear Mount Laurel cases to appoint special masters). A "special master is only
authorized to make recommendations," however, "and may not be delegated
decision-making authority." Deland, 361 N.J. Super. at 8 (citing Mount Laurel
II, 92 N.J. at 284-85). Instead, "[i]t is the trial court that must ultimately
determine, independently, whether or not the municipality has conformed to its
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judgment and to the Mount Laurel doctrine." Id. at 12 (quoting Mount Laurel
II, 92 N.J. at 284-85).
A special master is subject to "substantially the same conflict of interest
rules as judges." Ibid. Under Rule 1:12-1(g), a special master has a conflict of
interest if "there is any . . . reason which might preclude a fair and unbiased
hearing and judgment, or which might reasonably lead counsel or the parties to
believe so." Rule 1:12-1(g) does not require actual prejudice. DeNike v.
Cupo, 196 N.J. 502, 517 (2008) (quoting State v. Marshall, 148 N.J. 89, 279
(1997)).
Under Rule 1:12-1(g), a special master has a conflict of interest if a
party could have an objectively reasonable belief that the proceedings were
tainted by an appearance of impropriety or if an objective observer might
reasonably wonder whether the special master favored a party either
consciously or unconsciously. Ibid. A special master's conflict of interest,
however, does not inherently require remand. See Deland, 361 N.J. Super. at
13 (holding rulings that are primarily legal in nature can fairly be reviewed
regardless of the special master's conflict of interest); see also Mount Laurel II,
92 N.J. at 288 n.42 (noting the court need not "accept the master's suggestions
or recommendations. The master may well have substantial influence on the
outcome but only because his [or her] expertise is persuasive . . .").
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In Deland, we determined the special master assigned to the respective
Mount Laurel case had a conflict of interest due to his financial interests in the
matter. 361 N.J. Super. at 12-13. The special master assigned in that case:
(1) was actively employed as a "planner for the developer-plaintiffs in other
Mount Laurel cases"; and (2) held financial interests in both the developer-
plaintiffs and "a developer who stands to benefit from the planner's
recommendations as a special master." Ibid. Although we held the special
master's professional and financial entanglements with the developer-plaintiffs
constituted a conflict, we did not conclude the special master's alternative
employment as a planner, sans financial relationship to the developer-
plaintiffs, to have been a conflict.
"[W]e recognize[d] that most Mount Laurel special masters are planners
who serve in this role on a part-time basis and also provide advice to
developers and municipalities involved in other Mount Laurel litigation." Id.
at 12. Moreover, although the current system of appointment of special
masters for Mount Laurel cases "creates the inherent potential for conflict,"
our holding was limited to conflict of interests caused by a special master's
financial interests. See id. at 12-13 (holding once the special master became
aware of his financial interests in the matter, the special master "should have
refrained from providing any recommendation to the court").
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Bergman does not claim Lonergan had a direct financial interest in either
the Township or the benefits emanating from the amended settlement
agreement. Rather, Bergman "presents the question of whether a special
master is conflicted where [Lonergan] and her firm are simultaneously
representing dozens of municipalities in crafting affordable housing plans
containing the same methodologies on which she is advising the trial court as a
'neutral' advisor."
In Deland, we recognized that an assignment as a Mount Laurel special
master is generally part-time employment. Id. at 12. And, most Mount Laurel
special masters also serve as planners, providing "advice to developers and
municipalities involved in other Mount Laurel litigation[s]." Ibid. Thus, a
special master may "simultaneously represent[] dozens of municipalities in
crafting affordable housing plans containing the same methodologies on which
[he or] she is advising the trial court," unless the special master has a financial
interest in the case, either via his or her employment as a planner or interests
in the benefits of the case, see id. at 12-13. Based upon our careful review of
the record, Lonergan did not have a financial conflict of interest in this matter
and Bergman's argument is devoid of merit.
The COAH rules, which Mount Laurel IV requires trial courts use,
support the order under review. See 221 N.J. at 29-34. We conclude the
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record contains sufficient credible evidence to support the trial court's finding
the amended agreement sets forth a plan that provides a realistic opportunity
for the Township to meet its Third Round obligation under Mount Laurel. The
court correctly found that the Township established a prima facie case of
compliance, and the burden then shifted to Bergman to establish it failed to do
so. The court's finding Bergman failed to sustain that burden is supported by
sufficient credible evidence.
Affirmed.
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