AVALON PRINCETON, LLC VS. PRINCETON, ETC.(L-1228-15, MERCER COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1992-15T2
AVALON PRINCETON, LLC,
Plaintiff-Appellant,
v.
PRINCETON, a New Jersey
municipal corporation,
PRINCETON COUNCIL,
PRINCETON PLANNING BOARD,
and MAYOR OF PRINCETON,
Defendants-Respondents.
_____________________________
Argued May 15, 2017 – Decided June 13, 2017
Before Judges Nugent, Currier, and Geiger.
On appeal from the Superior Court of New
Jersey, Law Division, Mercer County, Docket
No. L-1228-15.
Robert A. Kasuba argued the cause for
appellant (Bisgaier Hoff, LLC, attorneys; Mr.
Kasuba and Michael W. O'Hara, on the brief).
Gerald J. Muller argued the cause for
respondent Princeton Planning Board (Miller
Porter & Muller, P.C., attorneys; Mr. Muller,
of counsel and on the joint brief).
Trishka W. Cecil argued the cause for
respondents Princeton, Princeton Council, and
Mayor of Princeton (Mason, Griffin & Pierson,
P.C., attorneys; Ms. Cecil, of counsel and on
the joint brief).
PER CURIAM
In this matter, we consider the interplay between a municipal
ordinance and the Uniform Housing Affordability Control (UHAC)
regulations regarding the language in a deed restriction
pertaining to the length of affordability controls. Because the
UHAC regulation preempts the municipal ordinance under these
circumstances, we affirm the trial judge's grant of summary
judgment to defendants, Princeton, a New Jersey municipal
corporation, the Princeton Council, the Princeton Planning Board,
and the Mayor of Princeton (collectively Princeton or defendant).
In August 2013, Princeton adopted a resolution approving
plaintiff, Avalon Princeton LLC's, plan to build a 280-unit rental
community, including fifty-six affordable rental units, in the
municipality of Princeton. The resolution required in relevant
part: (1) "compl[iance] with all applicable municipal, COAH and
UHAC standards regarding affordable units, except that 13% of the
affordable units shall be for very low income households;" (2) the
execution of a developer's agreement; and (3) the submission of
affordable deed restrictions for review and approval of the Board
attorney or municipal attorney.
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In April 2014, the parties entered into a developer's
agreement (agreement). Section L of the agreement provided:
Since the PROJECT contains the
construction of fifty-six (56) affordable
rental units, the DEVELOPER is not required
to make a contribution to PRINCETON for
residential affordable housing development
fees. The affordable housing units will be
constructed and marketed in accordance with
all COAH, UHAC and local ordinance
requirements. At least 13% of the units shall
be affordable to very low income households
as defined by the Fair Housing Act and COAH
regulations. Deed restrictions shall be for
30 years.
[(Emphasis added).]
Several months later plaintiff submitted a draft deed
restriction to defendant for its review. The restriction stated
that affordability controls would remain in place for thirty years.
Defendant requested that the thirty-year control period be
replaced with the following language: "The following covenants
. . . shall run with the land for at least thirty years, determined
separately for each dwelling unit, commencing upon the date on
which the first certified household occupies the unit and
continuing thereafter until terminated by the Municipality."
(emphasis added). Plaintiff objected to the proposed change,
arguing that the language "purports to afford Princeton the ability
to unilaterally extend the affordability controls beyond 30
years." Because building permits could not be issued until the
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dispute over the deed restriction language was resolved, plaintiff
submitted a signed deed restriction "under protest" that contained
the "at least thirty years" language. Subsequently, plaintiff
commenced this action to challenge the legality of the amended
deed restriction.1
As the parties agreed that the case presented a purely legal
issue, they chose to forego discovery and motions for summary
judgment were presented for the court's consideration. In its
application, plaintiff argued that the language in its deed
restriction complied with both the municipal ordinance governing
affordability controls and the developer's agreement.2 Plaintiff
contended that the phrase "at least thirty years" gave defendant
the ability to hold the affordability controls in place in
perpetuity.
Defendant asserted that its proposed language mirrored the
language in the UHAC regulation, N.J.A.C. 5:80-26.11(a)(Section
26.11), enacted in 2004 subsequent to defendant's ordinance.
Princeton argued that at the conclusion of the thirty-year period,
the municipality must adopt an ordinance to release units from the
1
The deed restriction has been held in escrow by defendant pending
the outcome of this litigation.
2
Princeton, NJ, Code § 16-83, enacted in 1996, states that
affordability controls for newly constructed, privately financed
rental units are to be in effect for 30 years.
4 A-1992-15T2
controls. Defendant contends that since the units are controlled
for thirty years, it cannot adopt the required ordinance until
that time has elapsed.
Judge Mary C. Jacobson heard oral argument on December 7,
2015, and issued a comprehensive oral decision and order on the
same date, granting defendant's motion and denying the application
of plaintiff. She concluded that UHAC Section 26.11 set a "30-
year minimum to affordability controls. And that the controls may
be lifted only once a municipality has determined to affirmatively
lift the controls by passing an ordinance, which authorizes the
release of those units from the controls."
Judge Jacobson also considered UHAC's reference to the form
deed restriction template provided in the appendix to the
regulations that contains the "at least 30 years" language in
support of her interpretation of the regulation. She concluded
that the municipal ordinance relied on by plaintiff was preempted
by Section 26.11, and that the developer's agreement was
unenforceable as it "imposed an affordability control that
contravened UHAC regulations." She stated that the developer's
agreement "cannot trump the regulation as interpreted by the
[c]ourt . . . . Nor can a Princeton ordinance that was adopted
several years before prevent [Princeton] from relying on the
regulation as the . . . premier authority in this area."
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On appeal, plaintiff argues that the trial judge (1) erred
in concluding that UHAC was inconsistent with and preempted the
developer's agreement and municipal ordinance; (2) erred in ruling
that an ordinance must be adopted in the future for a municipality
to release an affordable unit; and (3) gave undue deference to the
regulatory history in her interpretation of UHAC. We disagree.
We review a grant of summary judgment under the same standard
as the trial court. Rowe v. Mazel Thirty, LLC, 209 N.J. 35, 41
(2012) (citations omitted). Summary judgment is proper where
there is no genuine issue of material fact when the evidence is
viewed in the light most favorable to the non-moving party, and
the moving party is entitled to prevail as a matter of law. Id.
at 38, 41 (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J.
520, 529 (1995) and R. 4:46-2 (c)). "When no issue of fact exists,
and only a question of law remains," an appellate court accords
no special deference to the legal conclusions of the trial court.
Cypress Point Condo. Ass'n v. Adria Towers, LLC, 226 N.J. 403, 415
(2016) (citing Manalapan Realty, LP v. Twp. Comm. of Manalapan,
140 N.J. 366, 378 (1995)).
Plaintiff argues that the affordability controls expire
automatically at the end of thirty years because the language in
Section L of the developer's agreement provides that "[d]eed
restrictions shall be for 30 years." Plaintiff also relies on
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Princeton Code § 16-83, which sets a thirty-year affordability
control for privately financed rental units. Plaintiff contends
that the developer's agreement and defendants' code are consistent
with UHAC's "at least 30 years" requirement for affordability
controls.
Defendants, on the other hand, assert that Section 26.11
requires affordability controls to remain in effect for a minimum
of thirty years before the municipality may elect to release units
following the passage of an ordinance authorizing such action.
Defendants argue that the fixed thirty-year control period in the
developer's agreement and its ordinance is preempted by UHAC's
requirement that the control period must be in effect at least
thirty years before any municipal action can be taken to release
the units.
Statutory interpretation is a question of law reviewed on a
de novo basis. Real v. Radir Wheels, Inc., 198 N.J. 511, 524
(2009) (citing In re Liquidation of Integrity Ins. Co., 193 N.J.
86, 94 (2007), rev'd on other grounds, 214 N.J. 51 (2013)); see
also U.S. Bank, N.A., v. Hough, 210 N.J. 187, 199 (2012) ("We
interpret a regulation in the same manner that we would interpret
a statute."). When interpreting statutory language, the court
first examines "the plain meaning of the provision at issue."
Lozano v. Frank DeLuca Constr., 178 N.J. 513, 522 (2004) (quoting
7 A-1992-15T2
Burns v. Belafsky, 166 N.J. 466, 473 (2001)). If "the statutory
language is clear and unambiguous, and susceptible to only one
interpretation, courts should apply the statute as written without
resort to extrinsic interpretative aids." Ibid. (quoting In re
Passaic County Utils. Auth., 164 N.J. 270, 299 (2000)). "Such
language should be given its ordinary meaning, absent a legislative
intent to the contrary." Burns, supra, 166 N.J. at 473 (quoting
Merin v. Maglaki, 126 N.J. 430, 434-35 (1992)). "[I]f there is
ambiguity in the statutory language that leads to more than one
plausible interpretation, . . . [where] a plain reading of the
statute leads to an absurd result or if the overall statutory
scheme is at odds with the plain language," a reviewing court may
refer to extrinsic evidence such as "legislative history,
committee reports, and contemporaneous construction." Real,
supra, 198 N.J. at 524 (quoting Daidone v. Buterick Bulkheading,
191 N.J. 557, 565-66 (2007)).
Section 26.11 of the UHAC provides in relevant part:
(a) Each restricted rental unit shall remain
subject to the requirements of this subchapter
until the municipality in which the unit is
located elects to release the unit from such
requirements pursuant to action taken in
compliance with (e) below. Prior to such a
municipal election, a restricted rental unit
must remain subject to the requirements of
this subchapter for a period of at least 30
years.
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. . . .
(e) Any municipality may elect to release any
or all of the restricted rental units in a
development from the requirements of this
subchapter at a time to be set forth in the
municipal ordinance required below, but after
the expiration of the minimum control period
specified under (a) above, provided that:
(1) The municipal election to
release the unit from the
requirements of this subchapter is
made pursuant to a municipal
ordinance authorizing such
elections with respect to units
located either in areas
specifically identified in the
Housing Element of the municipal
Master Plan or throughout the entire
municipality; and
(2) The administrative agent shall,
within 60 days of the municipal
election, execute a release . . .
of all restriction instruments with
respect to the unit(s).
[N.J.A.C. 5:80-26.11(a) and (e) (emphasis
added).]
The regulation also requires the "[d]eeds of all real property
that include restricted rental units [to] contain deed restriction
language substantially in the form set forth in Appendix E to this
subchapter." N.J.A.C. 5:80-26.11(c) (emphasis added). Appendix
E is a deed restriction template that incorporates the same "at
least 30 years" language found in Section 26.11(a). N.J.A.C.
5:80-26.11 App. E.
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The plain language of the regulation indicates that "a
restricted rental unit must remain subject to" affordability
controls for "a period of at least 30 years" prior to a municipal
election to release the controls. N.J.A.C. 5:80-26.11(a)
(emphasis added). The regulation further specifies that a
municipality may release affordability controls on any or all
rental units "after the expiration of the minimum control period"
of thirty years as required under subsection (a). N.J.A.C. 5:80-
26.11(e) (emphasis added). Furthermore, subsection (e) requires
that the release of affordability controls take the form of a
municipal ordinance. N.J.A.C. 5:80-26.11 (e).
Judge Jacobson determined that the plain language of the
regulation required a restricted rental unit to be subject to the
affordability control restrictions for at least thirty years. At
the expiration of the minimum control period of thirty years, an
ordinance was required to release the restricted units. However,
because of plaintiff counsel's representation to the court that
defendant's interpretation of Section 26.11 had not been asserted
by other municipalities, the judge looked beyond the plain language
of the regulation to its regulatory history.
Under the Fair Housing Act, N.J.S.A. 52:27D-301 to -329.19,
the Housing and Mortgage Finance Agency (HMFA) was the
administrative agency charged with the responsibility of
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establishing programs to assist municipalities in meeting their
obligation to provide affordable low- and moderate-income housing.
N.J.S.A. 52:27D-321. In carrying out its charge, HMFA was
responsible for drafting and promulgating regulations controlling
the use and sale of affordable housing units. The regulations,
known as UHAC, N.J.A.C. 5:80-26.1 to -26.26, were initially adopted
in 2001 and amended in 2004.
As part of the 2004 amendments, HMFA issued a response
document explaining the intent of the language of Section 26.11.
36 N.J.R. 5713(a) (Dec. 20, 2004). In response to a comment that
the "30-year minimum control period for rental units should be
restored and maintained without exceptions," HMFA stated:
As in N.J.A.C. 5:80-26.5 [referring to
affordability controls for ownership units],
the rule states that the municipality may
elect to release a unit from affordability
controls only after expiration of the minimum
control period, which is at least 30 years
. . . . The ability of a municipality to
release the unit from affordability controls
after the minimum restriction period is
dependent upon a municipal ordinance, which
will describe the intentions of the
municipality to release the units at a time
that they are able to replace those units
within the municipality.
[36 N.J.R. 5713(a) (emphasis added).]
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Additionally, in response to a comment requesting the agency to
"clarify the operation of the control-period provisions of
N.J.A.C. 5:80-26.11" HMFA said:
Affordability controls on restricted rental
units may be extended past the 30-year control
period by the municipality pursuant to a
municipal ordinance authorizing such
elections with respect to units located either
in areas specifically identified in the
Housing Element of the municipal Master Plan
or throughout the entire municipality.
Municipal release of affordable units is the
only way that units will be released from
affordability controls after the minimum
control period has ended, in accordance with
the municipal ordinance. Controls will not
expire automatically after the 30-year period.
[36 N.J.R. 5713(a) (emphasis added).]
It is clear from HMFA's responses to public comments that:
(1) the affordability controls on rental units are to remain for
a minimum control period of thirty years; (2) "the municipality
may elect to release a unit from affordability controls only after
expiration of the minimum control period, which is at least 30
years;" and (3) the release may only be executed by way of a
municipal ordinance. 36 N.J.R. 5713(a) (emphasis added). The
agency clarified that "[c]ontrols will not expire automatically
after the 30-year period." 36 N.J.R. 5713(a).
We generally give considerable weight to a state agency's
interpretation of a statutory scheme that the legislature has
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entrusted to the administration of the agency. In re Election Law
Enforcement Comm'n Advisory Op. No. 01-2008, 201 N.J. 254, 262
(2010) (citing Richardson v. Bd. of Trs., Police and Firemen's
Ret. Sys., 192 N.J. 189, 196 (2007)). This deference comes from
the understanding that a state agency brings experience and
specialized knowledge to its task of administering and regulating
a legislative enactment within its field of expertise. Ibid. We
will defer to an agency's interpretation of both a statute and
implementing regulation, within the sphere of the agency's
authority, unless the interpretation is "plainly unreasonable."
Ibid.The regulatory history supports defendants' and the trial
court's interpretation of Section 26.11. The language Princeton
requires of plaintiff in the deed restriction tracks the language
used in the UHAC regulations and the deed restriction template in
its appendix. We are satisfied that it was reasonable and
appropriate for defendants to require compliance with the UHAC
regulations in the deed restriction.
We next consider whether UHAC Section 26.11 is preempted by
defendants' own municipal code designating a fixed thirty-year
control period for privately financed rental units.
"Preemption is a judicially created principle based on the
proposition that a municipality, which is an agent of the State,
13 A-1992-15T2
cannot act contrary to the State." Redd v. Bowman, 223 N.J. 87,
108 (2015) (citing Overlook Terrace Mgmt. v. Rent Control Bd. of
W.N.Y., 71 N.J. 451, 461 (1976)). In Redd, the Supreme Court
reiterated the five factors that a court must consider to determine
whether state law preempts a municipal ordinance:
(1) Does the ordinance conflict with state
law, either because of conflicting policies
or operational effect (that is, does the
ordinance forbid what the Legislature has
permitted or does the ordinance permit what
the Legislature has forbidden)?
(2) Was the state law intended, expressly or
impliedly, to be exclusive in the field?
(3) Does the subject matter reflect a need for
uniformity? . . .
(4) Is the state scheme so pervasive or
comprehensive that it precludes coexistence of
municipal regulation?
(5) Does the ordinance stand "as an obstacle
to the accomplishment and execution of the
full purposes and objectives" of the
Legislature?
[Id. at 109 (citing Overlook, supra, 71 N.J.
at 461-62).]
A consideration of the factors leads to the conclusion that
the Princeton ordinance must be preempted by the UHAC regulations.
It is undisputed that the ordinance conflicts with Section 26.11;
the interpretation of the diverging language is the very issue
before us. The ordinance provides for a firm thirty-year
14 A-1992-15T2
affordability control period whereas the regulation requires a
minimum of thirty years, "at least 30 years." Unlike UHAC, the
ordinance does not provide any mechanism as to the actions to be
taken by the municipality to release the affordability controls
at the expiration of the thirty years.
The remaining factors are all indisputably met, as Judge
Jacobson noted, as the "aim of the [UHAC] regulations was to bring
uniformity to the imposition of . . . affordability controls in
New Jersey, and to further the express purposes of the Fair Housing
Act, [N.J.S.A. 51:27D-301 to -515]."
A consideration of the Redd factors weighs in favor of
preemption. The ordinance, enacted almost twenty years before
Section 26.11, cannot be used to preclude defendants from requiring
compliance with UHAC.
We similarly conclude that the developer's agreement cannot
override UHAC. "A 'developer's agreement' is a contract between
a developer and a public authority that details the manner in
which the conditions of [municipal] approval will be fulfilled."
Toll Bros. v. Burlington Cty. Freeholders, 194 N.J. 223, 248
(2008). A developer's agreement is not an independent contractual
source of obligation but "an ancillary instrument tethered to the
conditions of [municipal] approval" that "exists solely as a tool
15 A-1992-15T2
for the implementation of the resolution establishing [those]
conditions." Id. at 249.
Here, the developer's agreement runs contrary to UHAC because
it requires a firm thirty-year control period. As with the
municipal ordinance, the language in the developer's agreement
conflicts with Section 26.11's requirement of "at least 30 years"
before the release of affordability controls may be effectuated.
Accordingly, the developer's agreement is unenforceable and must
cede to Section 26.11.
Finally, we must address plaintiff's forewarning to us that
an affirmance of the trial court ruling permitting affordability
controls to remain in place "for at least thirty years" will "wreak
havoc" in the ongoing litigation in this state of determining
affordability housing compliance. We do not intend to convey in
our decision today that the duration of affordability controls
should be open ended or in perpetuity, nor do we interpret UHAC
as saying such. UHAC established a mechanism whereby a
municipality can only release a unit from affordability controls
after the expiration of the thirty-year minimum control period.
It seems reasonable that developers and towns might agree on a
short time period beyond the thirty years to accommodate the
balancing of interests, allowing for the decision-making of the
16 A-1992-15T2
municipalities, and the need and desire of the developers for the
release of the controlled units.3
Affirmed.
3
We note that plaintiff included documents in its appendix
regarding another municipality's settlement of its affordable
housing litigation. In that settlement, the municipality and
developer agreed to a thirty-five year control period. These
documents were not included in the record before the trial court.
In lieu of an order striking the documents, however, defendant
moved to supplement the record to include deed restrictions from
other projects which require compliance with Section 26.11. We
have considered all of the documents presented.
17 A-1992-15T2