Opinion
DOCKET NO. A-0351-11T4 DOCKET NO. A-0352-11T4 DOCKET NO. A-0469-11T4 DOCKET NO. A-0597-11T4 DOCKET NO. A-0647-11T4 DOCKET NO. A-0707-11T4 DOCKET NO. A-0719-11T4 DOCKET NO. A-1384-11T4
09-04-2013
388 ROUTE 22 READINGTON REALTY HOLDINGS, LLC, Plaintiff-Respondent, v. TOWNSHIP OF READINGTON, TOWNSHIP COMMITTEE OF THE TOWNSHIP OF READINGTON, SEWER ADVISORY COMMITTEE OF THE TOWNSHIP OF READINGTON, BELLEMEAD DEVELOPMENT CORPORATION, READINGTON COMMONS, LLC, C. DELVECCHIO, S. CARBONE, A. CARBONE, ROLF ACKERMAN, VALLEY NATIONAL BANK, RYLAND DEVELOPERS, LLC, LOT 3 DEVELOPMENT, LLC, FALLONE PROPERTIES, LLC, URB-FI DEVELOPMENT CORP., FALLONE AT SPRING MEADOW, LLC, COUNTRY CLASSICS LEGACY READINGTON, and WINFIELD MANAGEMENT, Defendants-Respondents, and MERCK SHARPE & DOHME CORP., f/k/a MERCK & CO., INC., Defendant-Appellant, and RAMYZ TADROS, SHADIA SAMAAN, WHITEHOUSE ATHLETIC ASSOCIATION, WLADYSLAW ZACIOS, JOANN ZACIOS, BETTY ANN COEBLER, CODDINGTON HOMES CO., INC., TOM JR. PROPERTY, INC., and WPS REALTY, LLC, Defendants. 388 ROUTE 22 READINGTON REALTY HOLDINGS, LLC, Plaintiff-Respondent, v. TOWNSHIP OF READINGTON, TOWNSHIP COMMITTEE OF THE TOWNSHIP OF READINGTON, SEWER ADVISORY COMMITTEE OF THE TOWNSHIP OF READINGTON, MERCK SHARPE & DOHME CORP., f/k/a MERCK & CO., INC., READINGTON COMMONS, LLC, C. DELVECCHIO, SCOTT CARBONE, A. CARBONE, ROLF ACKERMAN, VALLEY NATIONAL BANK, RYLAND DEVELOPERS, LLC, LOT 3 DEVELOPMENT, LLC, FALLONE PROPERTIES, LLC, URB-FI DEVELOPMENT CORP., FALLONE AT SPRING MEADOW, LLC, COUNTRY CLASSICS LEGACY READINGTON, and WINFIELD MANAGEMENT, Defendants-Respondents, and BELLEMEAD DEVELOPMENT CORPORATION, Defendant-Appellant, and RAMYZ TADROS, SHADIA SAMAAN, WHITEHOUSE ATHLETIC ASSOCIATION, WLADYSLAW ZACIOS, JOANN ZACIOS, BETTY ANN COEBLER, CODDINGTON HOMES CO., INC., TOM JR. PROPERTY, INC., and WPS REALTY, LLC, Defendants. 388 ROUTE 22 READINGTON REALTY HOLDINGS, LLC, Plaintiff-Respondent, v. TOWNSHIP OF READINGTON, TOWNSHIP COMMITTEE OF THE TOWNSHIP OF READINGTON, and SEWER ADVISORY COMMITTEE OF THE TOWNSHIP OF READINGTON, Defendants-Appellants, and BELLEMEAD DEVELOPMENT CORPORATION, MERCK SHARPE & DOHME CORP., f/k/a MERCK & CO., INC., READINGTON COMMONS, LLC, C. DELVECCHIO, SCOTT CARBONE, A. CARBONE, ROLF ACKERMAN, VALLEY NATIONAL BANK, RYLAND DEVELOPERS, LLC, LOT 3 DEVELOPMENT, LLC, FALLONE PROPERTIES, LLC, URB-FI DEVELOPMENT CORP., FALLONE AT SPRING MEADOW, LLC, COUNTRY CLASSICS LEGACY READINGTON, and WINFIELD MANAGEMENT, Defendants-Respondents, and RAMYZ TADROS, SHADIA SAMAAN, WHITEHOUSE ATHLETIC ASSOCIATION, WLADYSLAW ZACIOS, JOANN ZACIOS, BETTY ANN COEBLER, CODDINGTON HOMES CO., INC., TOM JR. PROPERTY, INC., and WPS REALTY, LLC, Defendants. 388 ROUTE 22 READINGTON REALTY HOLDINGS, LLC, Plaintiff-Appellant/Cross-Respondent, v. TOWNSHIP OF READINGTON, TOWNSHIP COMMITTEE OF THE TOWNSHIP OF READINGTON, SEWER ADVISORY COMMITTEE OF THE TOWNSHIP OF READINGTON, BELLEMEAD DEVELOPMENT CORPORATION, MERCK SHARPE & DOHME CORP., f/k/a MERCK & CO., INC., C. DELVECCHIO, SCOTT CARBONE, A. CARBONE, ROLF ACKERMAN, VALLEY NATIONAL BANK, RYLAND DEVELOPERS, LLC, LOT 3 DEVELOPMENT, LLC, FALLONE PROPERTIES, LLC, URB-FI DEVELOPMENT CORP., TOLL NJ I, LLC, and WINFIELD MANAGEMENT, Defendants-Respondents/Cross-Respondents, and COUNTRY CLASSICS LEGACY AT READINGTON, READINGTON COMMONS, LLC, and RYLAND DEVELOPERS, LLC, Defendants-Respondents/Cross-Appellants, and RAMYZ TADROS, SHADIA SAMAAN, WHITEHOUSE ATHLETIC ASSOCIATION, WLADYSLAW ZACIOS, JOANN ZACIOS, BETTY ANN COEBLER, CODDINGTON HOMES CO., INC., TOM JR. PROPERTY, INC., and WPS REALTY, LLC, Defendants. 388 ROUTE 22 READINGTON REALTY HOLDINGS, LLC, Plaintiff-Respondent, v. TOWNSHIP OF READINGTON, TOWNSHIP COMMITTEE OF THE TOWNSHIP OF READINGTON, SEWER ADVISORY COMMITTEE OF THE TOWNSHIP OF READINGTON, BELLEMEAD DEVELOPMENT CORPORATION, MERCK SHARPE & DOHME CORP., f/k/a MERCK & CO., INC., READINGTON COMMONS, LLC, C. DELVECCHIO, SCOTT CARBONE, A. CARBONE, ROLF ACKERMAN, VALLEY NATIONAL BANK, RYLAND DEVELOPERS, LLC, FALLONE PROPERTIES, LLC, URB-FI DEVELOPMENT CORP., FALLONE AT SPRING MEADOW, LLC, and COUNTRY CLASSICS LEGACY READINGTON, Defendants-Respondents, and LOT 3 DEVELOPMENT, LLC, and WINFIELD MANAGEMENT, Defendants-Appellants, and RAMYZ TADROS, SHADIA SAMAAN, WHITEHOUSE ATHLETIC ASSOCIATION, WLADYSLAW ZACIOS, JOANN ZACIOS, BETTY ANN COEBLER, CODDINGTON HOMES CO., INC., TOM JR. PROPERTY, INC., and WPS REALTY, LLC, Defendants. 388 ROUTE 22 READINGTON REALTY HOLDINGS, LLC, Plaintiff-Respondent, v. TOWNSHIP OF READINGTON, TOWNSHIP COMMITTEE OF THE TOWNSHIP OF READINGTON, SEWER ADVISORY COMMITTEE OF THE TOWNSHIP OF READINGTON, BELLEMEAD DEVELOPMENT CORPORATION, MERCK SHARPE & DOHME CORP., f/k/a MERCK & CO., INC., READINGTON COMMONS, LLC, C. DELVECCHIO, SCOTT CARBONE, A. CARBONE, ROLF ACKERMAN, VALLEY NATIONAL BANK, LOT 3 DEVELOPMENT, LLC, FALLONE PROPERTIES, LLC, URB-FI DEVELOPMENT CORP., FALLONE AT SPRING MEADOW, LLC, COUNTRY CLASSICS LEGACY READINGTON, and WINFIELD MANAGEMENT, Defendants-Respondents, and RYLAND DEVELOPERS, LLC, Defendant-Appellant, and RAMYZ TADROS, SHADIA SAMAAN, WHITEHOUSE ATHLETIC ASSOCIATION, WLADYSLAW ZACIOS, JOANN ZACIOS, BETTY ANN COEBLER, CODDINGTON HOMES CO., INC., TOM JR. PROPERTY, INC., and WPS REALTY, LLC, Defendants. 388 ROUTE 22 READINGTON REALTY HOLDINGS, LLC, Plaintiff-Respondent, v. TOWNSHIP OF READINGTON, TOWNSHIP COMMITTEE OF THE TOWNSHIP OF READINGTON, SEWER ADVISORY COMMITTEE OF THE TOWNSHIP OF READINGTON, BELLEMEAD DEVELOPMENT CORPORATION, MERCK SHARPE & DOHME CORP., f/k/a MERCK & CO., INC., READINGTON COMMONS, LLC, C. DELVECCHIO, SCOTT CARBONE, A. CARBONE, ROLF ACKERMAN, VALLEY NATIONAL BANK, RYLAND DEVELOPERS, LLC, LOT 3 DEVELOPMENT, LLC, URB-FI DEVELOPMENT CORP., COUNTRY CLASSICS LEGACY READINGTON, and WINFIELD MANAGEMENT, Defendants-Respondents, and FALLONE PROPERTIES, LLC, and TOLL NJ I, LLC, Defendants-Appellants, and RAMYZ TADROS, SHADIA SAMAAN, WHITEHOUSE ATHLETIC ASSOCIATION, WLADYSLAW ZACIOS, JOANN ZACIOS, BETTY ANN COEBLER, CODDINGTON HOMES CO., INC., TOM JR. PROPERTY, INC., and WPS REALTY, LLC, Defendants. 388 ROUTE 22 READINGTON REALTY HOLDINGS, LLC, Plaintiff-Respondent, v. TOWNSHIP OF READINGTON, TOWNSHIP COMMITTEE OF THE TOWNSHIP OF READINGTON, SEWER ADVISORY COMMITTEE OF THE TOWNSHIP OF READINGTON, BELLEMEAD DEVELOPMENT CORPORATION, MERCK SHARPE & DOHME CORP., f/k/a MERCK & CO., INC., READINGTON COMMONS, LLC, C. DELVECCHIO, SCOTT CARBONE, A. CARBONE, ROLF ACKERMAN, VALLEY NATIONAL BANK, RYLAND DEVELOPERS, LLC, FALLONE PROPERTIES, LLC, URB-FI DEVELOPMENT CORP., FALLONE AT SPRING MEADOW, LLC, and COUNTRY CLASSICS LEGACY READINGTON, Defendants-Respondents, and LOT 3 DEVELOPMENT, LLC, and WINFIELD MANAGEMENT, Defendants-Appellants, and RAMYZ TADROS, SHADIA SAMAAN, WHITEHOUSE ATHLETIC ASSOCIATION, WLADYSLAW ZACIOS, JOANN ZACIOS, BETTY ANN COEBLER, CODDINGTON HOMES CO., INC., TOM JR. PROPERTY, INC., and WPS REALTY, LLC, Defendants.
Christopher John Stracco argued the cause for appellant Merck Sharp & Dohme Corp., f/k/a Merck & Co., Inc. in A-0351-11 and respondent in A-0597-11 (Day Pitney, LLP, attorneys; Mr. Stracco, Jennifer Gorga Capone and Amy Valentine McClelland, on the briefs). Glenn S. Pantel argued the cause for appellant Bellemead Development Corp. in A- 0352-11 and respondent in A-0597-11 (Drinker Biddle & Reath LLP, attorneys; Mr. Pantel, Karen A. Denys and Monica Wahba, on the briefs). Ballard & Dragan, attorneys for appellants Township of Readington, Township Committee of the Township of Readington and Sewer Advisory Committee of the Township of Readington in A-0469-11, rely on the briefs of Merck Sharp & Dohme Corp., f/k/a Merck & Co., Inc. and Bellemead Development Corp. Lawrence S. Berger argued the cause for appellant/cross-respondent 388 Route 22 Readington Realty Holdings, LLC in A-0597-11; respondents Merck Sharp & Dohme Corp., f/k/a Merck & Co., Inc., Bellemead Development Corp., Township of Readington, Township Committee of the Township of Readington and Sewer Advisory Committee of the Township of Readington, 388 Route 22 Readington Realty Holdings, LLC, Winfield Management, Lot 3 Development, LLC, Ryland Developers, LLC, Fallone Properties, LLC and Toll NJ I, LLC (Berger & Bornstein, PA, attorneys; Mr. Berger, on the briefs). Deborah B. Rosenthal argued the cause for appellants Winfield Management and Lot 3 Development, LLC in A-0647-11 and appellant Winfield Management in A-1384-11 (Gebhardt & Kiefer, PC, attorneys; Robert C. Ward, on the briefs). Alexander G. Fisher argued the cause for appellant Ryland Developers, LLC in A-0707-11 and respondent in A-0597-11; respondents/cross-appellants Country Classics Legacy at Readington, LLC and Readington Commons II, LLC in A-0597-11 (Mauro, Savo, Camerino, Grant & Schalk, PA, attorneys; Darren J. Leotti, on the briefs). Thomas W. Sweet argued the cause for appellants Fallone Properties, LLC and Toll NJ I, LLC in A-0719-11. Cleary Giacobbe Alfieri Jacobs, LLC, attorneys for respondents Scott Carbone, A. Carbone and C. DelVecchio, rely on the briefs of all co-respondents.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Grall, Simonelli and Koblitz.
On appeal from Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-0751-10.
Christopher John Stracco argued the cause for appellant Merck Sharp & Dohme Corp., f/k/a Merck & Co., Inc. in A-0351-11 and respondent in A-0597-11 (Day Pitney, LLP, attorneys; Mr. Stracco, Jennifer Gorga Capone and Amy Valentine McClelland, on the briefs).
Glenn S. Pantel argued the cause for appellant Bellemead Development Corp. in A- 0352-11 and respondent in A-0597-11 (Drinker Biddle & Reath LLP, attorneys; Mr. Pantel, Karen A. Denys and Monica Wahba, on the briefs).
Ballard & Dragan, attorneys for appellants Township of Readington, Township Committee of the Township of Readington and Sewer Advisory Committee of the Township of Readington in A-0469-11, rely on the briefs of Merck Sharp & Dohme Corp., f/k/a Merck & Co., Inc. and Bellemead Development Corp.
Lawrence S. Berger argued the cause for appellant/cross-respondent 388 Route 22 Readington Realty Holdings, LLC in A-0597-11; respondents Merck Sharp & Dohme Corp., f/k/a Merck & Co., Inc., Bellemead Development Corp., Township of Readington, Township Committee of the Township of Readington and Sewer Advisory Committee of the Township of Readington, 388 Route 22 Readington Realty Holdings, LLC, Winfield Management, Lot 3 Development, LLC, Ryland Developers, LLC, Fallone Properties, LLC and Toll NJ I, LLC (Berger & Bornstein, PA, attorneys; Mr. Berger, on the briefs).
Deborah B. Rosenthal argued the cause for appellants Winfield Management and Lot 3 Development, LLC in A-0647-11 and appellant Winfield Management in A-1384-11 (Gebhardt & Kiefer, PC, attorneys; Robert C. Ward, on the briefs).
Alexander G. Fisher argued the cause for appellant Ryland Developers, LLC in A-0707-11 and respondent in A-0597-11; respondents/cross-appellants Country Classics Legacy at Readington, LLC and Readington Commons II, LLC in A-0597-11 (Mauro, Savo, Camerino, Grant & Schalk, PA, attorneys; Darren J. Leotti, on the briefs).
Thomas W. Sweet argued the cause for appellants Fallone Properties, LLC and Toll NJ I, LLC in A-0719-11.
Cleary Giacobbe Alfieri Jacobs, LLC, attorneys for respondents Scott Carbone, A. Carbone and C. DelVecchio, rely on the briefs of all co-respondents. PER CURIAM
Plaintiff, 388 Route 22 Readington Realty Holdings, LLC, filed an action in lieu of prerogative writs challenging defendant Township of Readington's denial of its request for allocation of sewer rights held but not used by property-owner defendants. When plaintiff applied for sewer rights, the unused capacity was contractually committed to other property owners. Those contracts, authorized by Readington's sewer allocation ordinance, section 187-26 of Readington's Code, financed the creation of the unused capacity at issue here. See Readington, N.J., Code § 187-26 (2003), http://ecode360.com/8746972. The Township denied plaintiff capacity because there were no additional sewer rights available for allocation by contract and the Township did not have reason for disturbing the contractual rights of those who paid for the capacity.
Some property-owner defendants were dismissed by stipulation in the trial court.
Plaintiff, in the prerogative writs action, raised facial and as applied challenges to the Township's sewer capacity allocation ordinance, section 187-26. Defendants sought dismissal of the complaint as untimely filed and barred by equitable estoppel, laches, and principles of claim preclusion.
On cross-motions treated as motions for summary judgment, the trial court remanded for development of the record and supplementation of the Township's findings and reasoning. After receiving the Township Committee's resolution, entered after a public hearing on remand, the court denied defendants' motions to dismiss the complaint as barred and plaintiff's facial challenge. The court determined, however, that the Township arbitrarily applied section 187-26 in this case and entered a writ of mandamus directing the Township to "exercise its discretion" and "provide a reasoned basis" for recapturing sewer rights "not yet in use."
The court's findings and conclusions are set forth in a memorandum of decision dated September 6, 2011.
Appeals were filed by plaintiff, the Township defendants, and several property-owner defendants — Merck Sharp & Dohme, Corp. (f/k/a Merck & Co., Inc.), Bellemead Development Corporation, Country Classics Legacy at Readington, Readington Commons, II, LLC, Ryland Developers, LLC, Lot 3 Development, LLC, Winfield Management, Fallone Properties, LLC, and Toll NJ I, LLC (substituted for Fallone at Spring Meadow, LLC). Between them, they challenge all of the court's determinations. We now consolidate the appeals.
The Township opted to rely upon briefs submitted by Merck and Bellemead. As reflected in the caption, some of defendant-appellants filed joint briefs. Several defendant-respondents — C. Delvecchio, Scott Carbone and A. Carbone — relied upon briefs of their co-defendants. Two defendants — Urb-Fi Development Corp. and Valley National Bank — declined to participate in the appeal.
In First Peoples Bank v. Township of Medford, 126 N.J. 413, 420 (1991), a case addressing facial and as applied challenges to a sewer allocation ordinance similar to section 187-26, the Court recognized that a municipality has an obligation "to assure that sewer permits are either used or repurchased so that others may use them." Informed by that decision and by a recent amendment to the Permit Extension Act (the Act), N.J.S.A. 40:55D-136.1 to -136.6 (amended by L. 2012, c. 48, §§ 1-5), we reject the facial challenge and conclude that plaintiff failed to overcome the presumption of validity afforded to municipal action. For that reason, we vacate the writ and dismiss the complaint.
Prior to oral argument, we granted the parties leave to file supplemental briefs addressing the significance of the 2012 amendments.
I
The property owned by plaintiff and the property-owner defendants is an area of Readington where wastewater is treated either by septic systems or by the Readington-Lebanon Sewerage Authority (RLSA). RLSA was established in 1976 pursuant to the Sewerage Authorities Law, N.J.S.A. 40:14A-1 to -45. N.J.S.A. 40:14A-7, -23; Readington, N.J., Code §§ 52-1 to -7 (2003), http://ecode360.com/8745841. Readington Township has access to a fixed portion of RLSA's daily capacity to treat gallons of wastewater; its current share is 939,000 gallons per day (gpd). Prior to completion of efforts to increase RLSA's capacity, which started with planning in 1986, Readington had access to only 595,000 gpd.
An additional 24,000 gpd was acquired through a project undertaken to obtain approval from the Department of Environmental Protection to increase intake by identifying unused capacity and reducing infiltration. That project is referenced in a 1987 agreement between the Township and defendant Bellemead.
The bulk of the increased capacity available to Readington, 320,000 gpd, was gained by expanding the capacity of RLSA's treatment plant. It increased RLSA's capacity by 400,000 gpd, 80,000 gpd for Lebanon and 320,000 gpd for Readington. The municipalities agreed to divide the estimated cost — $7,530,881 — in proportion to the increased capacity each would acquire. Thus, Readington's estimated cost was $6,024,704.80. As rounded to the nearest penny, the cost was $18.83 per gallon of additional capacity.
To fund its share, Readington adopted its sewer allocation ordinance, section 187-26, in November 1987. It provides for funding through contracts — sewer plant allocation expansion agreements and sewer allocation agreements — between the Township and property owners interested in acquiring capacity. The ordinance requires sewer plant expansion agreements that recover the estimated cost — a payment of $18.83 for each gpd. Readington, N.J., Code § 187-26(D) (2003), http://ecode360.com /8746972.
Readington amended section 187-26 in 2001 and 2003, but no party argues that any change in the ordinance requires consultation of the prior versions. The ordinance is set forth in full in section II of this opinion, which addresses plaintiff's facial challenge.
The ordinance requires purchasers with undeveloped properties to execute allocation agreements. Under those agreements, they must pay a user charge even though they are not using the capacity. Ibid. The charge must be paid "on a per unit basis representing 1/3 of the user charge for the first year; 2/3 of the user charge for the second year; and 100% of the user charge for the third year and thereafter." Ibid. Money paid pursuant to allocation agreements is not refundable if the agreement is terminated. Ibid. Thus, it is an additional charge for the benefit of holding unused capacity.
Plaintiff acknowledges that the property-owner defendants paid substantial amounts to obtain and retain the unused sewer rights. Nevertheless, we provide an illustration. Defendant Merck paid $2,196,763.80 for sewer rights to 141,900 gpd under its March 1999 sewer plant expansion agreement. That amount does not include the annual user charges due until development under Merck's separate allocation agreement. Merck's 2003 sewer allocation payments for the 141,900 gpd were $48,720 paid with its initial contract, $97,440 for the second year service was available and $146,160 for the third and subsequent years.
Plaintiff purchased its property in the area of Readington serviced by RLSA in December 2007, more than five years after completion of the expansion. The property had a single structure — a 62,351 square foot warehouse — and a septic system. The prior owner had not acquired sewer rights.
Plaintiff did not seek sewer rights until March 23, 2010, when it wrote a letter requesting 10,000 gpd of sewer capacity for commercial redevelopment of the warehouse and explaining that RLSA's sewer line ran directly in front of its property. The letter stated: "To the extent that all sewer capacity for Readington Township has been allocated to property owners within the sewer service area, we hereby request that the Township, pursuant to § 187-26C of the Township Code, terminate all sewer allocation agreements where the property owners" have not filed a formal application for development within two years or have failed to commence construction within two years after receipt of preliminary approval. Plaintiff's letter warned, "In the event the Township fails to allocate sewer capacity to us, it would be our intent to challenge the sewer allocations made by the Township, as well as its failure to properly administer the allocations . . . ."
The two-year timeframes for filing applications and commencing construction, referenced in plaintiff's letter, are set forth in section 187-26(C). Readington, N.J., Code § 187-26(C) (2003), http://ecode360.com /8746972. They are the conditions under which the Township Committee "may, in its discretion, terminate" an agreement with the holder of sewer rights whose "development projects . . . have not received an approval . . . at the time a request for gallonage is made . . . ." Ibid. The ordinance requires inclusion of those conditions in allocation agreements issued for such development projects. Ibid. Plaintiff did not identify any property owner whose sewer rights were subject to termination on either basis.
Within a month, the Township's attorney wrote to plaintiff and advised that the Township Committee "does not wish to terminate any of its existing sewer agreements." Four days later, plaintiff wrote, "Your letter makes it clear that the Township refuses to re-allocate any sewer capacity from other properties to the referenced property owned by the undersigned." Plaintiff sought clarification: "[W]e requested the re-allocation in the event there was no available sewer capacity which could be allocated to our property. So as to make it clear, please confirm whether or not there is any such unallocated sewer capacity."
The Township's attorney replied, indicating that she was not in a position to determine whether there was any unallocated capacity and advising that the Township Committee had voted to refer the matter to its Sewer Advisory Committee for consideration and a recommendation.
The Sewer Advisory Committee meeting was held on August 4, 2010, plaintiff's attorney appeared with a professional planner and landscape architect, who indicated that he had done "nothing more than a location plan that describes where the site" was located and researched the location of the sewer line. He described the existing structure and its on-site septic disposal field, and he indicated that if plaintiff were to develop the warehouse for retail use it would "be looking at about 6,234" gpd. He further indicated, "What we would like to do or what we were considering doing was developing the site for retail but having the opportunity to put at least one sit-down restaurant that might occupy between 3,500 [to] 4,000 square feet and have approximately 150 seats." In the planner's view, inclusion of the restaurant, which would need about 5400 gpd, would require a total of approximately 11,260 gpd. Section 187-26(A) gives priority to owners of failing septic systems, but the planner did not argue that its septic system was failing. Readington, N.J., Code § 187-26(A) (2003), http://ecode360.com /8746972. In his words, plaintiff's "hope" was to have about 11,200 gpd for retail and "possibly" a restaurant.
The Sewer Advisory Committee's chairman advised that if those property owners who had funded the sewage plant expansion in exchange for an allocation of sewage rights used all of their allotted capacity, then the Township would be slightly beyond its available capacity. The prior owner of plaintiff's property was not one of the owners who had funded the expansion and, therefore, had not been allotted any capacity. Indeed, the RLSA chart on the status of allocations as of December 2010 indicates that the chairman was correct. According to the RLSA, Readington would need 1,037,986 gpd to accommodate its present meter flow, contractually committed but unused gpd and gpd reserved for affordable housing obligations and emergencies. See ibid. (giving priority to affordable housing and failing septic systems). This total commitment, 1,037,986, exceeds Readington's 939,000 gpd allotment by 98,986. Even assuming the ability to add capacity at the $18.83 per gallon cost, the price of accommodating those needs would be $1,863,906.30.
The chairman further advised that the policy of the Township Committee "has been not to take any capacity back." In the chairman's view, because of the contracts there was not a gallon to give to plaintiff. Plaintiff was informed that the Sewer Advisory Committee's role was to make a recommendation to the Township Committee, which would make the final decision.
Plaintiff, through counsel, appeared at a Township Committee meeting in September 2010. The attorney explained plaintiff's position — there was unused capacity allocated to others available, and the Township Committee had an obligation to take it back. Again, plaintiff's representative did not refer to any property owner who had rights subject to revocation under the criteria recited in its letter. He simply argued that the Township Committee should do what it had a right and obligation to do — "recall some of that capacity." A committee member noted that its authority to recapture was discretionary.
No vote was taken at the meeting and plaintiff wrote two letters requesting a decision, respectively dated September 21 and October 14, 2010. By letter of October 14, however, the Township's administrator responded to plaintiff's first letter as follows.
Your September 21, 2010 letter . . . was addressed at the October 4, 2010 Township Committee meeting.On November 17, 2010, plaintiff filed its action in lieu of prerogative writs.
The Committee suggests that your client may want to consider presenting a conceptual plan, either through the Planning Board or Board of Adjustment, whichever is applicable, with the understanding that there is no sewer capacity available at this time and that the application would be conditioned on obtaining a suitable solution to wastewater.
Plaintiff's as applied challenge to the ordinance was filed within the time permitted by Rule 4:69-6(a), and our courts apply Rule 4:69-6(c) to permit the filing of a facial challenge to an ordinance, which is maintainable in a declaratory action, at any time. Ballantyne House Assocs. v. City of Newark, 2 69 N.J. Super. 322, 330 (App. Div. 1993).
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A chart prepared by RLSA in December 2010, reflects that the Township is allocated 939,000 gpd of RLSA's capacity, including 46,950 held in reserve for emergencies, 24,400 held for affordable housing obligations and 327,009 held but not in use pursuant to the business entities and individuals who purchased them.
The record indicates that some of the capacity has been used. Several projects for which sewer rights were acquired are underway or completed. Readington Commons II, LLC has 7628 gpd and at least one of the buildings is completed and using a portion of that capacity. Winfield Management has completed the project for which it formerly held 4700 gpd in reserve. Country Classics Legacy at Readington has substantially completed and connected its project to the main sewer for which it formerly held 9040 gpd in abeyance.
Merck has sewer rights to 146,900 gpd not in use and 130,000 gpd in use. In 2008, the Township Committee and Merck executed an amended and restated allocation agreement extending Merck's sewer rights to 141,900 gpd to a date in 2018.
Bellemead holds the second highest amount of unused sewer rights, 66,060 gpd, for its Halls Mill Farms project. Bellemead has held preliminary and final site approval for the project since August 1988, and in July 2008, the Township's planning board granted Bellemead a two-year extension of those approvals, until July 14, 2010. Although Bellemead has not commenced construction on that project, at oral argument Bellemead's attorney advised that Bellemead was ready to go.
As the trial court found, the quantity of sewer rights held and not being used by Fallone Properties, LLC, Toll NJ I, LLC (formerly Fallone at Spring Meadows, LLC) and Fallone-Renaissance are not entirely clear on this record, but it appears to be an amount between 32,000 and 38,860 gpd. Counsel represented that the infrastructure is in place on the properties involved.
The record on the status of other projects for which sewer rights were assigned is not clear. Lot 3 Development, LLC has 5000 gpd. Ryland Developers, LLC has unused sewer rights in the amount of 30,125 gpd. Ryland Office Park, LLC has additional unused sewer rights in the amount of 946 gpd. Rolf Ackerman has 350 gpd of unused capacity, and Urb-Fi Development Corp. has 2500 gpd.
II
We begin our discussion of the issues with the fundamental principles that govern review. Because the trial court resolved the case on motions treated as motions for summary judgment, we owe no deference to its factual findings. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584-85 (2012). In contrast, this court and the trial court must afford deference to a municipality's ordinance and its implementation of it. First Peoples, supra, 126 N.J. at 418-19, 425; Kramer v. Bd. of Adjustment, 45 N.J. 268, 296-97 (1965). Without question, this writ compelling action preparatory to recapture rests upon the trial court's determination that the Township's Sewer Advisory and Township Committees were implementing the ordinance in an arbitrary and unreasonable manner. In that regard, the law presumes that a municipal governing body "will act fairly and with proper motives and for valid reasons." Kramer, supra, 45 N.J. at 296; see also Fanelli v. City of Trenton, 135 N.J. 582, 589 (1994) (recognizing the presumption of validity).
As previously noted, First Peoples informs our decision on the merits. In that case, the Court addressed facial and as applied challenges to an ordinance providing for allocation of sewer permits to property owners who financed improvement that made the capacity available, which is quite similar but not identical to section 187-26. 126 N.J. at 416-18, 422. Plaintiff here lodges a facial challenge to section 187-26 on the same basis as the plaintiff in First Peoples challenged Medford's ordinance — a lack of "adequate standards to guide the municipality in determining whether to exercise its" discretion to reacquire sewer rights. Id. at 420. The Court found adequate guidance in the ordinance, read in its entirety and in light of its purposes. Id. at 421-22.
The Court specifically relied on a section providing that Medford's "allocation system [was] subject to 'the rights and interests of the Township to control the allocation of said capacity in the best interests of the Township and its residents in order that said reservation of capacity is not irrevocably committed to a proposed user who may not construct and/or build a project using part of the expanded capacity.'" Id. at 422 (quoting the Medford ordinance). The Court also looked to the policy goals indicated in the preamble of a companion ordinance and determined that Medford must consider "the public health, safety, and welfare, a reasonable and equitable allocation of costs, and the allowance of moderate growth" in determining whether to repurchase. Id. at 422-23.
Section 187-26 has no similar preamble, at least none brought to our attention. The terms of section 187-26, however, provide the guidance essential — standards sufficient "to insure the fair and reasonable exercise of municipal authority." Id. at 419.
Section 187-26 provides:
A. Order of priority; reserves.
(1) By existing joint agreement with the Readington Lebanon Sewerage Authority, the
Township of Readington has a total sewer allocation of 935,000 gpd. Upon study by the Township, there is a limited amount of sewer capacity in Readington Township at the present time. Any remaining capacity from Readington's portion of its allotted capacity in the Readington Lebanon Sewerage Authority sewer service area shall be allocated in the following order of priority, subject to availability:
(a) First, to those projects which will enable the Township to meet its future . . . affordable housing obligations; and
(b) Secondly, to remedy those properties within the sewer service area which constitute an "emergency" due to failing septic systems.
(2) The Township reserves the right to keep that portion of sewerage capacity needed for "reserve" to meet NJDEP requirements.
B. Allocations for sewer capacity from Readington's allotted portion of sewer capacity shall be made by the Readington Township Committee upon written agreement to be entered into with the applicant, after the allocation request has been reviewed and a favorable recommendation has been made by the Readington Township Sewer Advisory Committee.
C. In the case of those development projects which have not received an approval by the appropriate township board having jurisdiction at the time a request for gallonage is made, allocation agreements shall provide that if the applicant does not make formal application to the appropriate township board within two years of approval of the allocation, then the Township Committee may, in its discretion, terminate the agreement. If within two years after preliminary approval, construction has not commenced.
the Township Committee may, at its discretion, terminate the agreement. The agreement may be extended upon application to the Township if there is a showing of good cause, at the option of the Township Committee.
D. . . . . [(provisions stating terms of payment discussed above including the user charges that encourage prompt completion of projects omitted).]
E. Allocation of sewer capacity may not be transferred from the owner without prior approval of the . . . Township Committee, upon review and recommendation of the . . . Township Sewer Advisory Committee.
[Readington, N.J., Code § 187-26 (2003), http://ecode360.com /8746972 (emphasis added).]
The phrases shown in bold typeface provide for exercise of discretionary authority to reserve the Township's control over its sewer capacity — in paragraph (C), discretion to terminate agreements and discretion to extend them for good cause, and in paragraph (D), the authority to grant or deny approval of a transfer, the obvious alternative being recapture by repurchase of the capacity and reservation for redistribution by subsequent agreements. The emphasized phrases not in bold provide guidance for the exercise of the discretionary determinations — the priorities identified in paragraph (A)(1)-(2), and the two-year benchmarks that may be relaxed for good cause included in paragraph (C), obviously indicate that termination and repurchase should be considered when there is no good cause for delay and the capacity is needed for other projects ready to proceed, such as those that have an emergency need or have approvals and can make use of the capacity before a holder who is biding time.
We are satisfied, as was the trial court, that there are standards sufficient to insure "fair and reasonable exercise of" the discretion granted. See First Peoples, supra, 126 N.J. at 419. The Township, however, should consider the guidance the Supreme Court offered to Medford as modified to address section 187-26 — "Although the ordinance provides sufficient guidance to withstand such a challenge, it would better serve both the Township and property owners if it contained more specific standards defining the conditions under which" good cause for extension will and will not be found, and procedural requirements applicants interested in repurchase should follow — for example, by stating how one might acquire notice of the Township's consideration of requests for extension and what information an applicant is expected to submit. Id. at 423.
Turning to consider plaintiff's as applied challenge, we cannot conclude that the Township Committee abused its discretion in this case. When plaintiff appeared before the committee, its plan was at best speculative. Plaintiff initially sought 10,000 gpd but increased that request by over 1000 gpd at the meeting. Plaintiff's explanation of the project was at best vague, and it declined to develop a more concrete plan. The important question the Court addressed in First Peoples was whether the Township had retained sufficient control to avoid "the improper delegation of access to the sewer system to private landowners who, by purchasing permits, could prevent other owners from developing their land." Id. at 420-21.
While we agree with the trial court that the Committee simply relied on a policy of not re-taking sewer rights granted by contract, plaintiff's as applied challenge requires an evaluation of the Township and Sewer Advisory Committees' actions in this case. As a matter of law, plaintiff cannot establish that the denial of its request was arbitrary because it failed to overcome the presumption of validity to which the decision is entitled.
We reach that conclusion based upon the nature of plaintiff's request, plaintiff's preference for litigation or settlement over development and presentation of a more definitive request and plaintiff's failure to identify those who were holding sewer rights, at great expense, without good cause for delay — a factor the Court noted in rejecting the plaintiff's as applied challenge in First Peoples. See id. at 423. In these circumstances, the Township and Sewer Advisory Committees' decisions to refrain from considering recapture of sewer rights held under contract by owners who had paid significant sums to acquire them and were paying significant sums to keep them cannot be deemed unreasonable. The history of the Permit Extension Act, which the Committees referenced, embodies the Legislature's determination that there was good cause for construction delays from the time plaintiff purchased its property through the present day. See L. 2008, c. 78, §§ 3-4 (preventing governmental approvals relating to the physical development of property from lapsing during the extension period of January 1, 2007 through July 1, 2010); L. 2009, c. 336, § 3 (extending the extension period through December 31, 2012); L. 2012, c. 48, § 3 (extending the extension period through December 31, 2014).
There is no reason to decide whether all or any of these sewer agreements are protected by the Act, and indeed the record would not permit us to resolve that question in most cases. The point is that permit rights, under this ordinance, could be extended where there was good cause. It is worth noting that the Act was recently amended to specify that sewer agreements enjoy its protection. L. 2012, c. 48, § 3. In our view, that amendment is best understood as a clarification, not an extension, of the law. In any event, it is an expression of the Legislature's view that sewer agreements should be extended in times of economic downturn.
The delicate balance of fiscal considerations, encouragement of development and the interests of private owners implicated by sewer capacity involves complex questions of public policy. As to construction and reservation of rights to sewer capacity in times of economic downturn, the Legislature has indicated its determination that there is good cause to extend them.
For all of the foregoing reasons, we vacate the writ and dismiss the complaint. Our disposition makes it unnecessary to address the other issues raised in these consolidated appeals.
Reversed in part, affirmed in part.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION