TOWNSHIP OF ROBBINSVILLE VS. MERCER MHC, LLC (L-0459-18, MERCER COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-5655-17T3
TOWNSHIP OF ROBBINSVILLE,
Plaintiff-Respondent,
v.
MERCER MHC, LLC, d/b/a MERCER
MOBILE HOME PARK,
Defendant-Appellant,
and
DIANA J. SORENSEN, LUCIANO
PAPA, ALICE DI AMICO, ELAINE
WALTERS, DENISE L. GORCSCOS,
RICHARD LAKIN, GIOVANNI PAPA,
RICHARD IRVIN, WENDY J.
HOPKINS, STEPHEN LIVOLSI, SCOTT
MURRAY, NICOLE PEREZ, DANIEL J.
CRAMER, LORRAINE BIRKLE,
DANIEL CULLITON, JR., HENRY
WILBUR, JULIE PETO, LORENZ
HARMS, LORI SMITH, SANDRA
VALIUS, GLENN ESTELLE, IVAN
PIDZAMKIV, REBECCA DUTTON,
MICHAEL MAGUIRE, WILLIAM C.
EASTMOND, HELEN P. SPRAGUE,
DAVID PADDOCK, ANTHONY P.
IMMORDINO, PEARL BUSCH,
CHARLES WOLLEYHAN,
AUDREY LEESE, ELSIE DELCARPIO,
BONNIE HORN, SHARON L.
KELSALL, LINDA F. PEIFFER, PAUL
CIANETTI, CARMELLA ONORATI,
NICOLE GORDON, CARLA
DIDONATO, WANDA OPACKI,
SAMUEL LOMBARDO, JUNE
SCARLATA, MICHAEL ANGELO
BARONE, BRUCE J. BRIEL, VIRGINIA
RAYWOOD, JARED BOGART,
WILLIAM A. LYNN, ANTHONY T.
CALLA, KATHLEEN WERESKI,
LILLIAN A. CHRICHTON,
ANTHONY DISTEFANO, SCOTT A.
VASBINDER, WILLIAM MONTROSS,
JAMES RUPRECHT, THERESA
KRAUSE, MARY ANNUCII, RICHARD
MANELLA, ANN GREANEY,
RUSSELL LIBENSPERGER, MICHAEL
R. FONDE, BENJAMIN JR MUHS,
HELEN KUCHNICKI, GEORGE ONDA,
MARGARET WILDGOOSE, GAIL
NICHOL EPP, JOHN HENRY,
KIMBERLY JARVIS, GIUSEPPE
SUCCI, VICTOR PADRON RONALD
MIRABELLI, CARMEN M.
SOLIMANDO, LUZ EVANS,
JOHN DOLAN, CHRISTOPHER
SEEPKOWSKI, ELIZABETH
RAYWOOD, ELEANOR MECANKO,
CORNELIA R. SITKO, CHARLES O.
HUBBARD, JR., JOHN LONGO,
MILTON WILSON, EDWARD J.
BERNHARDT, ROBERT DIFRANCO,
DIANE H. STEELE, ELLEN JOHNSON,
LAURA BROWER, DAWN L. WILT,
A-5655-17T3
2
RENEE F. DUTCHER, MICHAEL
FITZGERALD, BARBARA TKACZUK,
DONALD ARNESEN, DIANE F.
VOLKER, LEAH P. BALFOUR,
ROBERTO PEREZ, CHARLES O.
HUBBARD, FRED MADDALENA,
CARLTON CUBBERLY, PATRICIA
DIGREGORIO, TIMOTHY G. SEXTON,
ROBERT HILLAND, KATHLEEN
TARANGIOLI, MARGARET
KOLESAR, WILLIAMS WALTERS,
JOSEPH DOUGHERTY, BEATRICE
SUZCH, KENNETH E. PIERCE,
WENDY RITARDI, STANLEY
MOMOT, JOHNNY NUNEZ, GLENN
TRAIL, ANN VARANYAK, BEVERLY
A. TONNE, SALLY J. HARRISON,
JOHN HUTMAN, IRENE JASENTO,
RENE HURTADO, JOYCE REDDER,
MILLIE ROBBINS, BRENDA ELIAS,
ALEXANDRA AVALOS, CLARA
TORRES, BERNADETTE MCCARTHY,
STEPHEN BARTOLONE, LEANDRO E.
RIVAS LOREZANO, LEANNA TOTH,
SUSAN J. GOSS, MARIE DINATALE,
MICHAEL SORIERO, VIOLET I.
COMINSKI, ELIZABETH ALFANO,
GST TRANSPORT CORP, COMBINED
FORCES, and ROBBINSVILLE SIGN
SHOP,
Defendants. 1
1
The individual defendants, resident tenants at Mercer Mobile Home Park
(MMHP), were dismissed under the June 22, 2018 order. The Township was to
provide all tenants with access to all orders entered in the case and defendants
were not prohibited from seeking to participate in the matter in the future.
A-5655-17T3
3
Argued December 19, 2018 – Decided March 25, 2019
Before Judges Ostrer, Currier and Mayer.
On appeal from Superior Court of New Jersey, Law
Division, Mercer County, Docket No. L-0459-18.
Robert S. Baranowski argued the cause for appellant
(Hyland Levin, LLP, attorneys; Robert S. Baranowski,
and Julie M. Murphy, on the briefs).
Paul V. Renaud, III, argued the cause for respondent
(Mason, Griffin & Pierson, PC, and Paul V. Renaud,
III, Township Attorney; attorneys; Elissa Grodd
Schragger and Paul V. Renaud, III, on the brief).
Adam M. Gordon argued the cause for amicus curiae
Fair Share Housing Center (Fair Share Housing Center,
attorneys; Adam M. Gordon, on the brief).
Christopher J. Hanlon argued the cause for amicus
curiae New Jersey Manufactured Housing Association
(Hanlon Niemann & Wright, PC, attorneys;
Christopher J. Hanlon, on the brief).
PER CURIAM
On leave to appeal, we consider whether the municipality's eminent
domain powers permitted the condemnation of a mobile home park to fulfill its
affordable housing obligation. After a review of the record and applicable
principles of law, we are satisfied the municipality's broad eminent domain
powers authorize the taking of the mobile home park, and the subsequent deed
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restriction on the mobile homes will create and guarantee affordable housing.
We affirm.
In 2015, plaintiff Township of Robbinsville (the Township) filed suit
seeking a declaratory judgment that it was in compliance with the Mount Laurel 2
doctrine and the Fair Housing Act (FHA), N.J.S.A 52:27D-301 to -329.9. The
Fair Share Housing Center (FSHC) intervened and, with the assistance of a
special master, reached a settlement, with the court retaining jurisdiction to
ensure compliance with Mount Laurel.
To comply in part with its affordable housing obligation, the Township
sought to acquire defendant MMHP, which would provide seventy affordable
housing units. The Township intends to create affordable housing by deed
restricting the entire property, "affirmatively market[ing] to . . . new low- or
moderate-income buyer[s]," and imposing affordability controls on the existing
units as they are turned over from their current owners.
2
In re Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on
Affordable Hous., 221 N.J. 1 (2015) (Mount Laurel IV); Hills Dev. Co. v. Twp.
of Bernards, 103 N.J. 1 (1986) (Mount Laurel III); S. Burlington Cty. NAACP
v. Twp. of Mount Laurel, 92 N.J. 158 (1983) (Mount Laurel II); S. Burlington
Cty. NAACP v. Twp. of Mount Laurel, 67 N.J. 151, 174 (1975) (Mount Laurel
I).
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Defendant Mercer, LLC (Mercer) owns real property in the Township.
Lots 57.01 and 58.01 are adjoining properties, on which are located two
commercial buildings with multiple tenants. Lot 59.01 is a fourteen-acre parcel
of property on which MMHP – a 147-unit mobile home community – is located.
In 2015, the Township's Affordable Housing Administrative agent contacted the
then-management company for MMHP to discuss the Township's proposal to
include MMHP in its affordable housing plan. At the time, Mercer was the
contract purchaser of MMHP; Mercer closed on the property several weeks later.
The Township discussed the need for sewer repairs within the development and
Mercer advised it would provide the infrastructure improvements. Thereafter,
the Township's agent attempted to schedule a meeting with Mercer but was
rebuffed for more than a year – until March 2016. That meeting did not result
in any meaningful discussions and Mercer declined to attend any further
meetings.
Meanwhile, the Township reached a settlement regarding its Mount Laurel
obligations, which included the acquisition of MMHP. Township officials set a
meeting in March 2017 to discuss an amicable acquisition of MMHP, but Mercer
did not attend.
A-5655-17T3
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That same month, the Township obtained an appraisal of the property. 3
The appraisal concluded the fair market value (FMV) for the taking of MMHP
was $5,700,000.4 As the Township was also considering the acquisition of
adjoining lots 58.01 and 57.01, they were appraised and the FMV set for those
lots at $750,000 and $630,000 respectively.
The Township passed an ordinance in September 2017, authorizing the
funding to acquire MMHP and the two additional lots for $7,300,000. An
October 2017 Resolution approved the appraisal, authorized an offer to Mercer
for the properties, and initiated bona fide negotiations to acquire the lots.
On November 3, 2017, the Township made a written offer to Mercer of
$7,080,000 for all three lots. The letter reiterated it was the "Township's
preference to acquire the property by mutually acceptable agreement through
voluntary negotiations" with Mercer, but, if the negotiations were unsuccessful,
"the Township [was] authorized by law to acquire the property by the use of
eminent domain."
3
When the appraiser was retained months earlier, he contacted Mercer and
requested certain information regarding the property. Mercer declined to
provide the information. Mercer was notified of the appraiser's inspection date.
4
The appraiser deducted $1,509,832 for the required sewer improvements. The
FMV without the capital improvement deduction was $7,368,477.
A-5655-17T3
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Over the next four months, the Township and Mercer engaged in
negotiations, which included meeting with the special master, however, they
proved unsuccessful. In early February 2018, Mercer advised the Township that
the proposed terms were unacceptable and "if the Township [was] committed to
condemnation, then [Mercer would] be providing a counteroffer." In response,
the Township amended its prior offer, advising it now sought to obtain only
MMHP, not the additional lots, for the appraised value of $5,700,000. Mercer
rejected the Township's offer, and, although it made a counteroffer eleven days
later and advised an appraisal would follow within several days, no appraisal
was ever presented. After waiting two weeks for the promised appraisal, the
Township determined good faith negotiations had ended.
As a result, a third amended settlement agreement was executed in
February 2018, between the Township and FSHC. The special master
recommended the court approve the agreement. In part, the agreement stated:
[The Township] undertook negotiations with the owner
of the park . . . to deed restrict the entire park as part of
the Township's declaratory judgment action. However,
these negotiations were unsuccessful. As a result, the
Township is committed to condemning the property
utilizing money from its Affordable Housing Trust
Account supplemented with municipal bonds to fund
the acquisition cost.
A-5655-17T3
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At the fairness and compliance hearing regarding the settlement between
the Township and FSHC, counsel appeared on behalf of Mercer as an interested
party. Mercer advised it had notified the Township of its objection to the taking
of MMHP by condemnation. All agreed the determination of whether
condemnation was proper would be resolved in the newly filed condemnation
action. Following the conclusion of the fairness hearing, the court found the
settlement agreement was fair and provided a realistic plan for the Township to
meet its affordable housing obligation. In addition, the deed restriction to be
imposed on MMHP was an appropriate public purpose in accordance with the
aim of the FHA.
On May 15, 2018, the court heard oral argument on Mercer's motion to
dismiss the order to show cause and verified complaint filed by the Township.
The verified complaint sought a declaration of authority to acquire MMHP by
condemnation and for an appointment of commissioners to set the fair
compensation for the taking of the property. Mercer argued the Township had
failed to engage in bona fide negotiations.
In an oral decision, the judge found the Township had complied with the
bona fide negotiations requirement under the Eminent Domain Act, N.J.S.A.
20:3-1 to -50, by "engag[ing] in significant negotiations with the mobile home
A-5655-17T3
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park." Although the judge acknowledged the filing of the eminent domain action
was soon after the Township's February 6 offer to acquire only MMHP, "it was
always known that if the negotiations to avoid condemnation altogether failed
that [the Township] was going to move forward with all haste to take this
property." The judge also pointed out that Mercer had not appeared for
scheduled meetings or provided information requested by the Township and the
appraiser.
The judge noted she had granted Mercer additional time to negotiate with
the Township following the municipality's November 3, 2017 written offer, and
the ensuing meetings and communications that took place over the next several
months. When the Township determined negotiations had failed, it filed the
complaint. Mercer had not asked for more time to prepare and present its
counteroffer or appraisal.
The judge also addressed Mercer's argument that the Township had not
demonstrated the taking of MMHP satisfied a public purpose. The judge noted
it was previously determined, in the affordable housing settlement hearing, that
the acquisition of MMHP satisfied a portion of the Township's affordable
housing obligations. The judge referenced the FHA, and specifically N.J.S.A.
40:55D-105 providing that a municipal agency is "encouraged to review [its]
A-5655-17T3
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regulations to determine whether . . . mobile home parks are a practicable means
of providing affordable housing in the municipality." The judge reasoned a deed
restriction ensuring a property cannot be used for anything other than affordable
housing is clearly a public purpose.
The judge issued two orders on May 29, 2018. The first granted the
Township the right to exercise eminent domain over MMHP and appointed
commissioners to 1) examine and appraise the land, and 2) determine just
compensation. The second order denied Mercer's motion to dismiss.
Mercer moved for reconsideration, contending the court did not address
arguments that a taking of MMHP would not increase the number of affordable
units in the Township, and that the municipality did not have the authority to
deduct capital expenses in an eminent domain proceeding. Following argument,
the court issued an oral decision on July 6, 2018.
The judge again thoroughly explained her reasoning supporting the denial
of Mercer's dismissal motion. She found the taking of MMHP would create
affordable housing because, although "the pads may be inherently affordable,
they're not deed restricted. The people who can live there are not limited to
those who have low and moderate incomes and there's no one overseeing that
process." The Township's fifty-year deed restriction and the required affordable
A-5655-17T3
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housing guidelines would ensure the use of the pads for affordable housing well
into the future. Because the Township had substantial deference to exercise
eminent domain and the deed restriction would create a "guarantee that the
housing will remain affordable," the judge stated the Township had
demonstrated a public purpose.
Next, Mercer argued that because the Legislature omitted the word
"condemnation" under the Local Lands and Buildings Law, N.J.S.A. 40A:12-1
to -38, the statutory provision did not grant a municipality the power to make
capital expense deductions in the context of an eminent domain proceeding. 5
The judge rejected this argument, finding the capital expense deduction related
to the issue of just compensation, not condemnation authority. She stated, "I
don't think the appraisal which includes . . . an amount with and without the
capital improvement is something that requires the dismissal of the
condemnation action." Mercer's motion for reconsideration was denied on
August 8, 2018. We granted Mercer's application for leave to appeal and stayed
the May 29, 2018 order.
We apply a de novo review in considering whether a government entity
has statutory authority to condemn private property. State v. N. Beach 1003,
5
See N.J.S.A. 40A:12-5(a)(3).
A-5655-17T3
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LLC, 451 N.J. Super. 214, 229 (App. Div. 2017). However, we "defer to the
trial court's factual findings regarding the negotiations conducted by the
[governmental entity]." Ibid. (citing Tractenberg v. Twp. of W. Orange, 416
N.J. Super. 354, 365 (App. Div. 2010)). Factual findings are only reversed if
"they are so manifestly unsupported by or inconsistent with the competent,
relevant and reasonably credible evidence." Rova Farms Resort, Inc. v. Inv'rs
Ins. Co. of Am., 65 N.J. 474, 484 (1974).
On appeal, Mercer asserts the trial court erred in 1) finding Mercer was
collaterally estopped from contesting the Township's authority to condemn
MMHP; 2) finding the Township had authority to condemn MMHP; 3) finding
the Township engaged in bona fide negotiations with Mercer; 4) permitting the
Township to deduct capital improvement costs from the estimate of just
compensation; and 5) finding the Township's exercise of its eminent domain
powers was not arbitrary, capricious, and in bad faith.
In addressing Mercer's contentions, there are several arguments that
overlap with another and essentially assert that the Township was not authorized
to condemn MMHP. We are not persuaded by these arguments.
In Mount Laurel I, the Supreme Court recognized "[m]obile homes offer
an alternate, less expensive form of housing. They have long since ceased to be
A-5655-17T3
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mere 'house trailers' but have become an important form of mass produced semi-
permanent housing." 67 N.J. at 202. In Mount Laurel II, the Supreme Court
reiterated that mobile homes are "economically available for persons of low and
moderate income," thus establishing that mobile homes could be considered as
a mechanism to satisfy affordable housing needs. 92 N.J. at 275 (citation
omitted).
It is undisputed that the condemnation of MMHP as a mobile home park
is a public purpose as established by our Legislature and Supreme Court. The
acquisition and deed restriction of MMHP was part of the settlement reached
between the Township and FSHC in the affordable housing litigation. The
special master recommended approving the agreement. Mercer's counsel was
present at the fairness hearing in May 2018, where the judge found the plan for
MMHP was an appropriate public purpose and concluded the settlement
agreement was "fair and provide[d] a realistic plan for [the Township] to meet
its affordable housing obligation."
Contrary to Mercer's contention, the judge repeated her reasoning
supporting the taking of MMHP for a public purpose in subsequent rulings in
this action; she did not just rely on her prior determination. As stated, her ruling
is sound and supported by long-standing precedent.
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We are unpersuaded by Mercer's assertion that the condemnation of
MMHP will not achieve any greater number of affordable units than are already
in existence. Mercer argues that since a mobile home is inherently affordable,
the acquisition of MMHP cannot increase the number of affordable units. It is
true the Township does not seek to increase the number of pad sites at MMHP.
Rather, the acquisition of MMHP and the subsequent deed restriction on the
pads will preserve the affordable nature of those pads for at least fifty years.
Without the deed restrictions and requisite income guidelines preserving the
affordability of the pad sites, there is nothing to prevent Mercer from selling or
redeveloping its property subject, of course, to the applicable zoning ordinance.
In addition, municipalities are authorized under the powers of eminent
domain to rehabilitate or convert existing structures for use as affordable
housing. The FHA states:
[A] municipality may purchase, lease or acquire by gift
or through the exercise of eminent domain, real
property and any estate or interest therein, which the
municipal governing body determines necessary or
useful for the construction or rehabilitation of low and
moderate income housing or conversion 6 to low and
moderate income housing.
6
The FHA defines conversion as "the conversion of existing . . . residential
structures for low and moderate income housing purposes where a substantial
percentage of the housing units are provided for a reasonable income range of
low and moderate income households." N.J.S.A. 52:27D-304(g).
A-5655-17T3
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The municipality may provide for the acquisition,
construction and maintenance of buildings, structures
or other improvements necessary or useful for the
provision of low and moderate income housing, and
may provide for the reconstruction, conversion or
rehabilitation of those improvements in such manner as
may be necessary or useful for those purposes.
[N.J.S.A. 52:27D-325 (emphasis added)].
The Township has committed to rehabilitate MMHP through the much-needed
infrastructure improvements as well as the conversion to low and moderate -
income housing. The public purpose required under the FHA is satisfied under
the Township's plan.
Mercer also disputes the Township engaged in bona fide negotiations
concerning the taking of MMHP. We disagree. Mercer was apprised as early
as 2015 – when it was the contract purchaser – of the Township's plans for
MMHP. The record reflects the Township's numerous attempts over the next
several years to resolve the acquisition of MMHP. Mercer did not respond to
requests by the Township and the appraiser to provide certain information, nor
did Mercer attend scheduled meetings. Mercer did not communicate with the
Township after receipt of the appraisal.
The Township passed an ordinance in September 2017 authorizing the
funding to acquire MMHP and the two additional lots; a Resolution was passed
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in October 2017, approving the appraisal and authorizing an offer to Mercer for
the property. It was only after those municipal actions that counsel filed a notice
of appearance on behalf of Mercer as an interested party in the affordable
housing litigation. That same day, October 31, 2017, Mercer's counsel advised
the court of its plan to engage with the Township to reach a plan to satisfy the
municipality's required affordable housing credits without exercising eminent
domain. Counsel also requested a continuance of the compliance hearing and
additional time to negotiate with the Township.
After the parties' meeting on November 1, 2017, the Township made a
written offer on November 3, to Mercer of $7,080,000 for all three lots. The
letter reiterated it was the "Township's preference to acquire the property by
mutually acceptable agreement through voluntary negotiations" with Mercer,
but, if the negotiations were unsuccessful, "the Township [was] authorized by
law to acquire the property by the use of eminent domain."
Over the next three months, the parties met several times, including a
conference with the special master. Although the Township requested certain
documentation as well as the appraisal procured by Mercer, the materials were
not provided. On February 6, 2018, the Township amended its November 2017
offer, tendering $5,700,000 for the acquisition of only MMHP. The Township
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advised the court if there was no counteroffer, it intended to file a condemnation
action within several days. A counteroffer was received eleven days later, but
no appraisal was ever provided and the Township deemed the action a denial of
its offer and the end of good faith negotiations.
Before filing a complaint seeking authority to take property by eminent
domain, a plaintiff must engage in "bona fide negotiations with the prospective
condemnee." N.J.S.A. 20:3-6. The taking agency must conduct an appraisal of
the property, allowing the owner the opportunity to be present at the inspection.
Ibid. It must subsequently send an offer in writing, which includes "the property
and interest therein to be acquired, the compensation offered to be paid and a
reasonable disclosure of the manner in which the amount of [the condemnor's]
offered compensation has been calculated." Ibid. If a condemnor fails to engage
in bona fide negotiations, the complaint must be dismissed. Morris Cty. v. 8
Court St., Ltd., 223 N.J. Super. 35, 37 (App. Div. 1988). All of these
requirements were met. The record contains ample evidence supporting the
judge's determination that the Township satisfied its bona fide negotiations
requirement.
We briefly address Mercer's assertion that capital improvements should
not be deducted from the estimated fair compensation. A trier of fact will be
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charged with determining the "value that would be assigned to the acquired
property by knowledgeable parties freely negotiating for its sale under normal
market conditions based on all surrounding circumstances at the time of the
taking." State ex rel. Com'r of Transp. v. 200 Route 17, LLC, 421 N.J. Super.
168, 172-73 (App. Div. 2011). If necessary, the commissioners and a jury shall
consider Mercer's argument regarding the capital improvement. As the judge
noted, the Township has presented appraisals with and without the deduction.
Mercer has not demonstrated the taking of MMHP is in bad faith, or that
the Township abused its eminent domain authority or acted arbitrarily or
capriciously. We "will not upset a municipality's decision to use its eminent
domain power 'in the absence of an affirmative showing of fraud, bad faith or
manifest abuse.'" Twp. of W. Orange v. 769 Assocs. LLC, 172 N.J. 564, 571
(2002) (quoting City of Trenton v. Lenzner, 16 N.J. 465, 473 (1954)).
Affirmed. The stay is vacated.
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