Opposition Brief — Morris Industrial Builders, Inc. v. Township of South Brunswick

No. 92-1396

In The

Supreme Court of the United States

+

October Term, 1992

MORRIS INDUSTRIAL BUILDERS, INC., a New Jersey

Corporation,

Petitioner,

THE TOWNSHIP OF SOUTH BRUNSWICK in the County of

Middlesex, a municipal corporation of the State of New Jersey,

THE TOWNSHIP COMMITTEE OF THE TOWNSHIP OF

SOUTH BRUNSWICK, THE PLANNING BOARD OF THE

TOWNSHIP OF SOUTH BRUNSWICK,

Respondents.

On Petition for Writ of Certiorari to the Superier Court of

New Jersey, Appellate Division

RESPONDENTS’ BRIEF IN OPPOSITION

JOSEPH J. BENEDICT

Counsel of Record

BENEDICT AND ALTMAN

Attorneys for Respondents

247 Livingston Avenue

New Brunswick, New Jersey 08901

(908) 745-9000

DORIS E. McNEIL

On the Brief

Lx late BOO) 3 APPEAL + (B00) 5 APPEAL + (900) BRIEF 21

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TABLE OF CONTENTS

Page

COROUUIOMB OD FTUOGICNIOD onc vce ccccwcencnesancces ]

| CTCL ETT TTT Te CTT eT Tee 4

Reasons for Denying the Writ .... 1... cece ccc c cece 7

GEE 5 6 6 enhanaseusebal KRRaReee ead eesecune 13

TABLE OF CITATIONS

Cases Cited:

Adams Nursing Home of Williamstown, Inc. v. Mathews,

A OUT F COUN Ge OT FD 6k 0 6 8W ed 5000 cea sdeess 10

Chevron Oil Co. v. Huson, 404 U.S.97(1971) ......... 3

Daughters of Miriam Center For The Aged v. Mathews,

590 F.2d 1250, 1262 (3rd Cir. 1978) ............... 10, 11

Drop v. Belleville, 192 N.J. Super. 236, 469 A.2d 934

SIN I fad Sad en rn ee a Cr 7

Ferguson v. Skrupka, 372 U.S. 726, 83 S. Ct. 1028, 10 L.

i Fe eee Te eer Teer er Te re 7

Frank A. Greek & Sons, Inc. v. The Township of South

Brunswick, 257 N.J. Super. 94, 607 A.2d 1359 (App.

Div.), certif. denied sub nom Morris Industrial Builders,

Inc. v. The Township of South Brunswick, 130 N.J. 602,

ee Pere ere rer TT Terre rer 2,9

ul

Contents

Page

Holmdel Builders Association v. Township of Holmdel,

121 N.J. 550, 583 A.2d 277 (1990) .......-.-. 2,5, 6, 7,8, 12

McKesson v. Division uf Alcoholic Beverages, 496 U.S.

lt. ee rerrrrerrrerrr rrr etry colt 2, 42

Mourning v. Family Publications Service, Inc., 411 U.S.

356, 93 S.Ct. 1652, 36 L. Ed. 2d 318 (1973) ......... 10

Pension Benefit Guaranty Corporation v. R.A. Gray &

Company, 467 U.S. 717, 730, 104 S. Ct. 2709, 2718, 81

me) Ft, | eer rere re 7

SEC v. Chenery Corp., 332 U.S. 194, 67 S. Ct. 1575, 91 L.

Bd. DOS (IDET) 2.0 cc ccccvccccsccsuvensessecsnes 10

Shepard v. Woodland Township Committee and Planning

Board, 71 N.J. 230, 364A.2d 1005 (1976) ........-- 7,8

Southern Burlington County NAACP v. Mt. Laurel

Township, 67 N.J. 151, 336 A.2d 713, cert. denied, 423

EFS. GOB CIGTS). occ ccccwvscsvesecesesenec cs eo 3,8

Southern Burlington County NAACP v. Mt. Laurel

Township, 92 N.J. 158, 456A.2d 390 (1983) ........ 8

Williamson v. Lee Optical Co., 348 U.S. 483, 75 S. Ct. 461

99 L. Ed. 363(1955) 2... cccccveccecccccccecees 7

tt

Contents

Page

Usery v. Turner Elkhora Mining Co., 428 U.S. 1, 96S. Ct.

EE TOR CR OPED cece cecesacseseusenes 7,10

Statutes Cited:

IE To Sy 8) eer 2

ER SU eee eee eee ee 4

a kha cece see esiaeescsnccess 5

United States Constitution Cited:

CS ee ee 3

TT ee eee 3

Rule Cited:

United States Supreme Court Rule 10 ................ 2

Other Authority Cited:

CF So SSD” See ere eee eee 2

Hochman, The Supreme Court and the-Constitutionality of

Retroactive Legislation, 73 Harv L.Rev. 692, 705-06

OR ee ee 11

No. 92-1396

In The

Supreme Court of the United States

Sa

October Term, 1992

MORRIS INDUSTRIAL BUILDERS, INC., a New Jersey

Corporation,

Petitioner,

vs.

THE TOWNSHIP OF SOUTH BRUNSWICK in the Countyof

Middlesex, a municipal corporation of the State of New

Jersey, THE TOWNSHIP COMMITYEE OF THE

TOWNSHIP OF SOUTH BRUNSWICK, THE PLANNING

BOARD OF THE TOWNSHIP OF SOUTH BRUNSWICK,

Respondents.

On Petition for Writ of Certiorari to the Superior Court of

New Jersey, Appellate Division

RESPONDENTS’ BRIEF IN OPPOSITION

OBJECTIONS TO JURISDICTION

1. On June 16, i992, the Appellate Division of the Superior

2

Court of New Jersey decided Frank A. Greek & Sons, Inc. v. The

Township of South Brunswick, 257 N.J. Super. 94, 607 A.2d 1359

(App. Div.), certif. denied subnom Morris Industrial Builders, Inc.

v. The Township of South Brunswick, 130 N.J. 602, 617 A.2d 1224

(1992). Therein the Appellate Division reversed the trial court and

remanded the matter for further proceedings at the trial level, with

an instruction that the nature of such proceedings would

necessarily depend upon the outcome of the appeals challenging

the regulations passed by the Council on Affordable Housing

(“COAH”) then pending in the Appellate Division.’ The New

Jersey Supreme Court’s denial of Petitioner’s petition for

certification effectively ratified the Appeliate Division’s remand.

Thus, Petitioner’s case is still pending at the trial level and will

remain so until the question of the COAH_ regulations is resolved.

That being the status of Petitioner’s case, it is not ripe for

consideration by this Court.

2. Procedurally it appears that Petitioner’s submission does

not fall into any of the categories set forth in U.S. Sup. Ct. Rule 10,

28 U.S.C.A. (West Supp. 1992). Even if such categories are not all-

1. Uncertainty as to the length of time it would take COAH to adopt rules

and regulations was a factor in the trial court's decision. Ironically, COAH

promulgated the rules and regulations within the time estimated by counsel for

COAH during oral argument before the trial judge on the motion for summary

judgment (See Petition, pp. 16-20; Petitioner's Appendix C, pp. 20a-25a). The

rules and regulations were adopted in December, 1991, and effective in January,

1992. Petitioner implied, in its Statement of the Case, that the new COAH

regulations automatically allow municipalities to retain the fees collected before

December 13, 1990. Such is not the case. A municipality must apply to COAH

for review of its previous development fee ordinance and a determination as to

whether or not the municipality may retain some or all of the fees collected

thereunder (N.J.A.C. 5:91-15.1, et seg.). December 13, 1990 is the date the New

Jersey Supreme Court decided Holmdel Builders Association v. Township of

Holmdel, 121 N.J. 550, 583 A.2d 277 (1990), which directed COAH to

promulgate rules and regulations and is also the underlying decision upon which

Petitioner relied to prosecute its claim for a refund of the fees paid.

3

inclusive, as indicated in the Rule, it must also be noted that

Petitioner failed to raise any Fifth or Fourteenth Amendment

claims in the courts below until the petition for certification to the

New Jersey Supreme Court. At that point, Petitioner claimed that

“the Appellate Division failed to consider the developers’ Fifth

Amendment due process right to a “clear and certain remedy” for

alleged improperly collected development fees. In that petition, as

in this, Petitioner relied primarily on McKesson v. Division of

Alcoholic Beverages, 496 U.S. 18 (1990), to support its claims.

The petition was denied by the New Jersey Supreme Court.

Petitioner should not be permitted to raise here what it failed to

raise below.

3. Petitioner also raised a question of the New Jersey

appellate court’s “mistaken application of the choice-of-law

factors of Chevron Oil Co. v. Huson, 404 U.S. 97 (1971).”

Respondents recognize that Petitioner has, at this stage, merely

submitted the petition fora writ of certiorari and that a brief on the

merits will follow if the petition is granted. However, aside from a

brief reference to the Chevron case and a citation of the case which

+ applies it to New Jersey cases, Petitioner completely failed to

provide this Court with any guidance as to how it believes the

Appellate Division mistakenly applied the law or how this

“mistake” relates to Fifth and Fourteenth Amendment claims.

4. Finally, the entire affordable housing issue in the Staie of

New Jersey, from the original decision in Southern Buvlington

County NAACP vy. Mt. Laurel Township, 67 N.J. 151, 336A.2d 713,

cert. denied, 423 U.S. 808 (1975), through the decision under

consideration here, has always been a matter of state constitutional

law. The New Jersey Supreme Court found that municipalities

have an obligation under the New Jersey State Constitution to

provide a realistic opportunity for affordable housing. The

decisions regarding the mandate to provide such housing, methods

of implementation, codification through the Fair Housing Act

4

(“FHA”),? and the appropriateness of development fees as a part of

the solution to the pressing need for affordable housing in New

Jersey, have all been determined on state constitutional grounds.

The State courts are the appropriate interpreters of the State

Constitution and, therefore, this matter should not be before this

Court. Where certiorari has been sought in past affordable housing

decisions, this Court has denied the writ; so, too, is denial

appropriate in this case.

STATEMENT OF THE CASE

To avoid repetition of Petitioner’s presentation, Respondents

’ merely offer the following additions to the Statement of the Case as

set forth in the petition at p. 3, et seq.

1. Before Respondent Township of South Brunswick adopted

its affordable housing trust fund (development fees) ordinance in

1986, it had submitted to and received the approval of COAH for

the housing plan element of its zoning ordinance. This submission

was in accordance with the rules and regulations promulgated by

COAH pursuant to the FHA. That housing plan element identified

certain tracts of undeveloped land within the Township of South

Brunswick which would be suitable for inclusionary developments

(i.e. those which manditorily included affordable housing units)

and yet fit into the master plan for the-Township. The zoning

ordinance provided that developers of those-tracts could be given

certain compensations, such as density bonuses, for including a

specific percentage of low to moderate income housing within the

development. It was not until after the entire plan was in place that

the Township determined that the plan, while imposing substantial

burdens on those dewelopers who chose to develop the

inclusionary parcels, still would not be sufficient to meet the

Township’s future needs for affordable housing as set by COAH

“ from time to time.

2. N.J.S.A.52:27D-301, et seq.

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5

It was only then that the Township looked to those other

developers who benefited from the utilization of the Township's

most finite resource — land — i.e. the developers of non-

inclusionary residential tracts and commercial/industrial tracts,

for their contribution to the municipality’s housing obligation. Ihe

FHA specifically provides that municipalities do not have to

expend municipal revenues to provide affordable housing,

N.J.S.A. 52:27D-31id. In Holmdel Builders Association, supra,

121 N.J. at 573-74, the New Jersey Supreme Court interpreted this

provision of the FHA to mean that the Legislature had determined

that affordable housing does not have to be provided directly by

local governments and that local governments are, therefore,

impliedly authorized to use inclusionary-zoning devices such as

mandatory development fees to generate affordable housing. The

Court found that development fees applied to non-inclusionary

developers are the functional equivalent of the mandatory set-

asides imposed on inclusionary developers. /d. at 576. Contrary to

Petitioner’s implication, the Township is not relying solely upon

funds generated by development fees to meet the affordable

housing mandate imposed upon it by the New Jersey Constitution;

indeed, a substantial portion of that obligation is being met by

those developers who are actually including affordable housing

units in their residential developments.

2. Petit?sner claimed, in n.1 of the petition, that the only

procedure for challenging the development fees was “expensive

and protracted” litigation. In the paragraph following the footnote

reference, Petitioner described that very litigation, which was

undertaken by several builders’ associations. Petitioner was a

direct beneficiary of that litigation (without having borne the

expense of it) in that the New Jersey Supreme Court, in Holmdel

Builders Association, supra, indicated that individual developers

‘could seek refunds of the fees previously paid.

Petitioner also claimed that the Court did not address the

6

taking and due process issues raised by the builders’ associations.

In Holmdel Builders Association, supra, 121 N.J. at 558, the Court

defined the issues it would address:

This appeal raises two major substantive

issues. One is whether there is statutory

authority, derived from the FHA, the

Municipal Land Use Law (MLUL), N.J.S.A.

40:55D-1 to -129, and the general police power

of government, N.J.S.A. 40:48-2, that enables

a municipality to impose affordable-housing

development fees as a condition for

development approval. That issue raises the

related questions whether the development-fee

ordinances constitute an impermissible taking

of property or violate substantive due process

or equal protection. The second major issue is

whether affordable-housing development fees

are an unconstitutional form of taxation.

Finally, if these ordinances are invalid, the

appeal presents the issue whether a trade

organization has standing to seek a refund on

behalf of its members.

After determining that the imposition of development fees

was permitted by the FHA, MLUL and general police powers, the

Court did examine the related constitutional claims. The Court

determined that because the plaintiffs therein did not allege that

they were members of a suspect class, the alleged violations of due

process and equal protection could be resolved by reference to the

validity of the development fees as reasonable exercises of

statutory zoning and police powers. /d. at 581. The Court also

stated that, “As long as the measures promulgated are not

confiscatory and do not result in an inadequate return of

investment, there would be no constitutional injury.” /d. at 582.

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7

Finally, the Court determined that the fees were a form of

inclusionary zoning and similar to other land-use and related

exactions and thus were regulatory measures, not taxes. /d. at 585.

REASONS FOR DENYING THE WRIT

“It is by now well established that legislative Acts adjusting

the burdens and benefits of economic life come to the Court with a

presumption of constitutionality, and that the burden is on one

complaining of a due process violation to establish that the

legislature has acted in an arbitrary and irrational way.” Usery v.

Turner Elkhorn Mining Co., 428 U.S. 1, 96 S. Ci. 2882, 49 L. Ed.

2d 752 (1976). See also, Ferguson vy. Skrupka, 372 U.S. 726, 83 S.

Ct. 1028, 10 L. Ed. 2d 93 (1963); Williamson v. Lee Optical Co.,

348 U.S. 483, 75 S. Ct. 461, 99 L. Ed. 563 (1955). However,

retroactive legislation does have to meet a burden not faced by

legislation that has only future effects. The retroactive aspects of

legislation, as well as the prospective aspects, must meet the test of

due process, and the justifications for the latter may not suffice for

the former. Usery v. Turner Elkhorn Mining Co., supra, 428 U.S. at

16-17, 96 S. Ct. at 2892-2893. But that burden can be met simply

by showing that the retroactive application of the legislation is

itself justified by a rational legislative purpose. Pension Benefit

Guaranty Corporation v. R.A. Gray & Company, 467 U.S. 717,

730, 104 S. Ct. 2709, 2718, 81 L. Ed. 2d 601 (1984).

Under New Jersey case law the burden which a party must

bear to show that a legislative action violates due process or equal

protection is substantial. He must show that there is no reasonable

basis for the action, it serves no legitimate legislative purpose and

cannot be justified under any conceivable state of facts. Drop v.

Belleville, 192 N.J. Super. 236, 469 A.2d 934 (App. Div. 1983).

Alternatively, to defend an enactment, the legislative body need

only show that the distinctions drawn further an appropriate

government interest and are not arbitrary. Shepard v. Woodland

Township Committee and Planning Board, 71 N.J. 230, 364 A.2d

1005 (1976).

The government interest here is obvious, provision of low

income housing pursuant to the municipality’s obligation under the

New Jersey State Constitution to do so. The basis for imposing the

development fee only on new non-inclusionary development is

equally clear. The Mount Laurel decisions’ require municipalities |

to regulate land development in such a way as to ensure that lower

income housing needs are met. The New Jersey Supreme Court has

held that municipalities are constitutionally obligated to exercise

their zoning powers in such a way that new development will

include a regional fair share of affordable housing. Developers of

inclusionary sites are mandated by the Township’s zoning

ordinance to do their share. The development fee ordinance allows |

the municipality to obtain funds from non-inclusionary developers

to offset, in part, the increased need for affordable housing created |

by such development, an increased need which is part of the total |

affordable housing need in the Township. Moreover, whether |

development fees are utilized to satisfy an indigenous housing |

need or the need created by the new development, a development

fee ordinance bears a real and substantial relationship to a

legitimate government interest and imposes the fee on a fair and

rational basis.

The New Jersey Supreme Court, in Holmdel Builders

Association, supra, at 579-80, deferred to COAH to specify,

through its rulemaking procedures, standards for development

fees, “so that municipalities may consider employing such fees as

inclusionary-zoning devices in designing their housing elements

under the FHA. Regulatory standards will enable us to determine

3. Southern Burlington County NAACP v. Mt. Laurel Township, supra,

(Mt. Laurel I), and Southern Burlington County NAACP v. Mt. Laurel Township,

92N.J. 158, 456A.2d 390 (1983) (Mt. Laurel II).

EE

9

that persons subject to such ordinances have been reasonably

informed of their obligations, and that both municipalities and

COAH in the adoption and approval of such ordinances are acting

in conformity with the legislative intent of the FHA.” After

describing some of the areas which it expected COAH to include in

the regulations, the Court said, at 580:

COAH, in the exercise of sound administrative

discretion, should consider the desireability

and feasibility of such development fees in the

broader context of the State’s affordable

housing policy. Development fees can be a

valuable alternative that some municipalities

desire to employ in fulfilling their Mt. Laurel

obligations. Moreover, such fees should be

considered constituent parts of local housing

elements designed to meet municipal

affordable-housing obligations under the FHA.

Thus, COAH’s regulatory responsibility in this

area must be acknowledged. Accordingly, we

anticipate that COAH will properly discharge

this responsibility by promulgating

appropriate development-fee regulations.

At that point the Court determined that in the absence of such

regulations, the ordinances at issue in the case had to be set aside

and further agreed that the individual developers who had paid fees

under the ordinances could seek refunds. Some five and a half

months later Petitioner instituted this litigation seeking a refund of

development fees.

The Appellate Division, in the well-reasoned Greek decision,

supra, stated that “It is important to reiterate that the ordinances in

question were authorized by statute, i.e., the MLUL, the general

police power, and the FHA. Thus, they were not ultra vires acts by

EEE EEE

10

the municipalities. The distinction is important.” (Emphasis

added) (Petitioner’s Appendix A, at 13a). The Appellate Division

was careful to limit its holding to the issue of COAH’s “potential

power” to adopt regulations and did not pass upon the acceptability

of the content of the regulations.‘ It also set forth in substantial

detail the means by which legislation which was improperly

enacted, but is not unconstitutional or ultra vires, can be ratified or

cured (Petitioner’s Appendix A, pp. 13a-15a). In a challenge to the

retroactive application of a statute or regulation, a critical question

is how the challenger’s conduct, or the conduct of others in its

class, would have differed if the rule in issue had applied from the

start. Daughters of Miriam Center For The Aged v. Mathews, 590

F.2d 1250, 1262 (3rd Cir. 1978), citing to Usery v. Turner Elkhorn

Mining Co., supra.

Retroactive measures — whether promulgated

by a legislature or by an administrative agency

— have traditionally been subjected to stricter

scrutiny than have prospective measures. Thus,

.. the validity of a prospective regulation by

an administrative agency “will be sustained so

long as itis ‘reasonably related to the purposes

of the enabling legislation.’ ” [Mourning v.

Family Publications Service, Inc., 411 U.S.

356, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973)] In

contrast, “courts have generally compared the

public interest in the retroactive rule with the

private interests that are overturned by it” in

deciding whether to uphold a retroactive

promulgation. [Adams Nursing Home of

Williamstown, Inc. v. Mathews, 548 F.2d 1077

(1st Cir. 1977); SEC v. Chenery Corp. 332 U.S.

194, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947)} Such

4. As previously set forth in n.1, the content of the regulations is the

subject of litigation currently pending in the Appellate Division.

ee

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1]

disparate treatment is justified because

retroactive laws interfere with the legally-

induced and settled expectations of private

parties to a greater extent than do prospective

enactments. Still, retroactive rules designed to

cure defects in regulatory schemes ... are

often sustained because the “interest in the

retroactive curing of such a defect in the

administration of government outweighs the

individual’s interest in benefiting from the

defect.” [Hochman, The Supreme Court and

the Constitutionality of Retroactive

Legislation, 73 Harv.L.Rev. 692, 705-06

(1960)] Daughters of Miriam Center For The

Aged, supra, at 1259-60.

Petitioner has made no claim whatsoever that it or anyone else

would have acted differently if the ordinance had been validly

adopted from the outset. Indeed, non-inclusionary developers paid

the fees, developed their properties, and now want the fees back. If

the Township is compelled to refund all or some of the fees before

the validity of the content of the regulations and the retention of

fees collected under prior ordinances is resolved in the state courts,

there will be no way for the Township to recoup the funds. Land

which has been developed will not generate additional

development fees. If the monies are returned before a final

determination as to the retroactivity of the ordinance, substantial

resources which could be used to further the mandated housing

goals would be lost, with no guarantee that a comparable

Opportunity will ever again exist for the collection of such funds.

As a result, there is a strong public interest in the proper retention

of those funds. Moreover, it has been acknowledged by some non-

inclusionary developers who paid the fees that the costs were

passed on to subsequent purchasers/tenants as a cost of business.

To the extent that such is the case, there is only a limited private

i

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12

interest in the return of these funds — indeed, they would be a

windfall to the developers. Therefore, any action by this Court,

other than denial of the writ, would be premature at this point.

Finally, Petitioner relied on McKesson v. Division of Alcoholic

Beverages, supra, to support its claim to a due process right to a

“clear and certain remedy” for alleged improperly collected

development fees. In that case Florida enacted a tax scheme

whereby a party had to pay his taxes in full before there could be a

challenge to the tax’s validity; failure to pay would result in

penalties. This Court found that where a tax is declared

unconstitutional, the state must provide a remedy for the erroneous

or unlawful taxation. Thus McKesson deals with a situation where

a state has collected an unconstitutional tax. In the instant matter

the development fees are neither taxes nor unconstitutional.

Holmdel Builders Association, supra, 121 N.J. at 582-585.

Respondents assert that McKesson is inapposite here. |

13

CONCLUSION

Where Petitioner has (1) raised an issue which is not ripe for

consideration by this Court; (2) failed to raise the constitutional

issue claimed in the petition at the state trial and appellate levels;

(3) raised a constitutional issue as to a matter which has been

developed solely through court decisions based on the State

Constitution; and (4) failed to present this Court with adequate

factual or legal reasons for review of the court decision below, the

petition for a writ of certiorari should be denied.

Respectfully submitted,

JOSEPH J. BENEDICT

Counsel of Record

BENEDICT AND ALTMAN

Attorneys for Respondents

247 Livingston Avenue

New Brunswick, New Jersey 08901

(908) 745-9000

DORIS E. McNEIL

On the Brief